Economics of a Dollar Slice

This post could be a trendy infographic, but I’ll spare you the pain of Yet Another Infographic.

via flickr @jasonlam

7

 

The # of current locations each for the kings of NYC dollar slices.

In the past year, the 99-cent Fresh Pizza and 2 Bros. have doubled their operations. 99-cent Fresh Pizza has seven stores in Manhattan and is in negotiations to open an eighth, said owner Mohammad Abdul Hai, a Bangladeshi immigrant and former news stand operator.

Eli Halali, who owns 2 Bros. Pizza with his brother, said the operation has seven Manhattan shops, with an eighth expected to open in Brooklyn next month.

40

 

The estimated % cost of ingredients per dollar slice.

According to Tom Miner, a consulting principal at Technomic, a Chicago-based food services industry consulting firm, the wholesale food cost of a dollar slice of pizza is roughly 40 to 45 cents. That’s high. The average food cost for the pizza industry is more like 25% to 30% of the selling price, he said. Mr. Miner estimated that the cost of making a slice include about a nickel for the sauce and 10 to 12 cents for the dough. Cheese is the wild card—depending on the type and amount used—and is currently averaging 25 to 30 cents per slice.

5

 

The $ cost per slice of plain pizza at Di Fara, one of NY’s most acclaimed NYC pizza destinations. Contrast the $5 per slice to the $2.75 for two slices and a can of soda at dollar pizza stores.

The price of a slice increased to $5 on July 1, up from $4, the cost for the past year and a half. Just about everything else went up as well: Plain round pies are $25 and specialty square pies are $35.

450

 

The # of pizzas made in a day at a dollar pizza store.

He said that he made roughly 15 cents to 20 cents profit per slice and that it was not unusual for one 99¢ Fresh location to produce up to 450 pies a day. His pizza is so cheap some customers treat him like a wholesaler, ordering dozens of pies in the morning and selling the slices elsewhere — for $2 each.

Foodspotting 1Q11

Some food photos, mostly downtown Manhattan.

Pho & Taro PMT @ Vicky's Vietnamese

Go Go Curry

Taiwanese Pork Chops @ Bian Dian (Food Court 32)

Blueberry Pancakes with Maple Butter @ Clinton St Baking Co

Grilled Corn Mexican Style @ Café Habana

Roast Pork with Noodles @ Big Wing Wong

Burger with Onion Rings @ Wall Street Burger Shoppe

Chihuahua & Tater Tots @ Crif Dogs

Shack Stack @ Shake Shack UWS

Pre-Set Menu @ Ayurveda Cafe

Cheeseburger & Cheese Fries @ Steak 'n Shake

Team EF Lens Mount

via flickr @kevinv033

Bloomberg:

In the market for cameras with interchangeable lens, or single lens reflex cameras, Canon controlled 44.5 percent of the market, followed by Nikon with 29.8 percent and Sony with 11.9 percent, according to the data.

The good news is that Canon is #winning, even if Apple is really winning?

The bad news is that prices are going up:

There’s lots of reports of price increases across the globe. This was bound to happen as retailers were and are still unsure what stock levels are going to be like.

Retail Clutter and Web Design

NYTimes:

… it turns out that lots and lots of stuff piled onto shelves or stacked in the middle of store aisles can coax a shopper to buy more.

After the recessionary years of shedding inventory and clearing store lanes for a cleaner, appealing look, retailers are reversing course and redesigning their spaces to add clutter.

This finding surprises me. Before this article, I assumed less clutter + more organization = always better for sales. Apparently, a cleaner look signals higher prices.

Retailers are putting their money where their mouths are by “adding items — and a little bit of mess — back to shelves.”

Does this retail insight hold for web design? Which site would you assume has higher prices based on the design/look?

Furniture Site A screenshot, logo redacted

Furniture Site B screenshot, logo redacted

The two websites shown above were picked for their state of web design (and not for the brand/company).

Looking past the world of retail furniture, does a website with clean design signal higher prices to you?

eBay homepage screenshot

eBay has a relatively modern design (whether it is clutter-free is up for debate). Does the homepage signal high or low prices to you?

GoDaddy homepage screenshot

Media Temple homepage screenshot

GoDaddy’s design is arguably more cluttered, and their prices are much lower for hosting than mt.

In a physical retail environment, clutter signals lower prices to consumers. On the internet, this may or may not hold true. Perhaps websites with cheaper prices skimp on the design bill? A website can offer affordable/cheap service and have great, clutter free design.

As a person interested in great user experiences, I’d like to believe that great design is a competitive advantage and not a trait that subconsciously signals higher prices.

Foursquare Check-in Places Default Sort

Foursquare is a great service to keep track of places I’ve been.

In the screenshot below, the closest location (521 ft) should be the first result. As I scroll down, I’d expect to find places further away.

Check-in Places Search Results

The concept of the service is to check-in to the place you are currently at. The search results should default to show closest locations at the top.

In the above screenshot, this isn’t an issue with only four Whole Foods to choose from. Imagine trying to find the right Chipotle location among dozens when the list is not sorted by closest geographical match.

Doing Business 101

Excellent, lengthy presentation from Mike_FTW about doing business as a freelancer designer (via Zeldman). This applies to any field, especially startups. I am not a lawyer, nothing here is legal advice.

2011/03 Mike Monteiro | F*ck You. Pay Me. from SanFrancisco/CreativeMornings on Vimeo.

TL;DR:

Get a contract in place before you perform any work that is reviewed by your own lawyer. Contracts are in place to benefit both parties and remove uncertainty.

Management Philosophy

A couple pieces on business management (via HN).

Matthew Stewart, founder of a consulting firm that eventually grew to 600 employees, cuts to the heart of management theory:

Between them, Taylor and Mayo carved up the world of management theory. According to my scientific sampling, you can save yourself from reading about 99 percent of all the management literature once you master this dialectic between rationalists and humanists. The Taylorite rationalist says: Be efficient! The Mayo-ist humanist replies: Hey, these are people we’re talking about!

For any given management theory, the support is from numbers (where Stewart mentions, “[pacifying] recalcitrant data with entirely confected numbers“) or emotions (where Stewart says, “And who would want to take a stand against creativity, freedom, empowerment, and—yes, let’s call it by its name—love?“).

Ben Horowitz, CEO of Opsware (acquired by HP in 2007), describes the difference between peace and wartime CEOs:

Peacetime in business means those times when a company has a large advantage vs. the competition in its core market, and its market is growing. In times of peace, the company can focus on expanding the market and reinforcing the company’s strengths.

In wartime, a company is fending off an imminent existential threat. Such a threat can come from a wide range of sources including competition, dramatic macro economic change, market change, supply chain change, and so forth.

The piece goes over the top in describing the difference in thinking of peace VS war CEOs. That said, it does a great job of explaining that different CEO roles are needed when a company is looking for the right product/market fit (aka a viable business plan) VS growing their market share.

Updated Free Kindle Forecast

The Kindle is now available for $114 with Special Offers (aka advertising).

Based on prior charts, I created an updated forecast:

The idea of the free Kindle explained by Kevin Kelly:

Since then I’ve mentioned this forecast to all kinds of folks. In August, 2010 I had the chance to point it out to Jeff Bezos, CEO of Amazon. He merely smiled and said, “Oh, you noticed that!” And then smiled again.

It is interesting that the forecasted free Kindle date is slipping. (Forecasted to be free after June 2011, then forecasted for after November 2011.)

Money on the Wall

Armand de Brignac (via bking / Flickr)

A quick juxtaposition involving Armand de Brignac and arithmetic.

In 2008, a LES bar announced its’ opening with the following brazen quote:

The entire left wall displays the Armand de Brignac. We have $650,000 worth of Champagne on the wall. We have more Rosé Armand de Brignac on the wall than the entire state of New York.

Less than three years later, the bar closed.

This month, The Atlantic posted and subsequently retracted a great piece exposing the history of Armand de Brignac. (A mirror is available here.)

Armand de Brignac tends to score in the low nineties on the industry-standard 100-point wine rating scale, which places it on par with wines that sell for $50 or less

This is because Armand de Brignac is repackaged Antique Gold.

He points across the bar to a bottle of another Cattier champagne, Antique Gold, strik­ingly similar to the empty Armand de Brignac sitting in front of us. “That bottle there, a friend of mine brought it back from Monaco,” he says. “It’s like 60 dollars, 70 dollars, 80 dollars in the store.”

I nod, realizing the magnitude of what Branson has just said. Antique Gold has been around for decades. Armand de Brignac looks nearly identical and costs four or five times as much. Both are made by Cattier. The only real difference seems to be the Ace of Spades label slapped on the more expensive bottle.

The LES bar claims $650,000 worth of champagne on the wall. Assuming all the champagne is Armand de Brignac (retails for $300), the $650,000 of product is only worth $108,333 (650K * 50/300).

For full disclosure, I’m a big fan of Jay-Z’s music. This Atlantic article shows just how great of a business man Shawn Carter is.

One more choice quote from The Atlantic:

Jay-Z may tout Armand de Brignac in his songs and videos, but to some champagne industry veterans, it’s at best a medi­ocre product masquerading as a high-end delicacy. “It tastes like shit,” says Lyle Fass, an independent wine buyer in New York. “At least Cristal tastes good.”

And one from Jay-Z in Off That:

the Cris’ we off that,
Timbs we off that, Rims we off that,
Yeah, we off that, is you still on that?
And we still makin’ money ‘cause we still on that