Category: Winter 2015
By: Stanley I. Buchin, D.B.A.
Last year, restaurant trends stretched from a rise of dining in retail stores to paleo and gluten-free menus. According to Baum + Whiteman 2015 Food & Beverage Forecast, this year’s trends will include technology like tablets immersed into the dining experience, expanding on diners restless palates who have had enough Sriracha, bacon, and craft beer, and creating new concepts to fill in a restaurant or bar’s “down time”. With trends changing so rapidly, restaurants and bars must be more proactive than ever before to continuously stimulate business and prepare for a products natural life cycle (PLC).
According to Dr. Jean-Paul Rodrigue of Hofstra University, product life cycle is “the period that starts with the initial product design (research and development) and ends with the withdrawal of the product from the marketplace” and is characterized by four stages: introduction, growth, maturity, and decline. A typical product life cycle observes rapid growth in its first eight months followed by a gradual decline to plateau as customer populations are depleted, and as trends and needs shift. As a business owner in today’s market, it is vital to understand product life cycle and how to apply current trends to strategically stimulate business.
This article explores a model of predicting PLC and strategic practices that can extend the mature phase of a restaurant or bar.
First-time Trial Customers
Product life cycle is partly caused by a combination of two types of customers, first-time trial and repeat. Trial purchasing follows the typical pattern of rapidly increasing purchases during the first seven months of business and steadily decreasing as the population of first time customers is exhausted.
This is a result of the following new customer behavior:
• Customer first-time trial purchases start slowly while the market is first learning about the new restaurant or bar.
• New first-time customer interest begins to surge several months after the restaurant or bar opens until it hits a peak.
• New customer interest falls off after this peak and gradually drops off to zero (or a very small fraction of the market, when you run out of new first-time customers in your target market.)
Repeat Purchasing Behavior
Each group of first-time customers has the following typical subsequent repeat purchasing behavior:
This repeat purchasing behavior has the following characteristics:
• Only some fraction of the trial customers will return to the restaurant or bar for a first repeat visit.
• This fraction will decline for subsequent repeat visits.
• The rate of decline depends on two major drivers;
• Customer satisfaction with the products/services being offered
• Number and strength of new products/services being offered
Forecasting Future Behavior of New Trial and Repeat Purchase Behavior
Once a restaurant or bar has reached its peak monthly new trial and repeat demand, the following purchase behaviors are observed (Graph 1, Graph 2).
An Excel regression analysis can be used to fit an exponential curve, like the new trial purchase behavior after its peak performance, to the actual observations.
In Excel terms, the “best fit” exponential equation has the following format:
New trial purchasers per month = Constant1 * EXP(-Constant2 * Months since opening of restaurant/bar lounge)
Repeat purchasers per month = Constant3 * EXP(-Constant4 * Months since opening of restaurant/bar lounge)
This “best-fit” exponential equation yields forecasts of new trial or repeat purchase behavior for future months.
Forecasting Total Demand
Customer visit and spending data is used to convert the above customer forecasts into monthly demand forecasts. This information is usually determined by using both trial and repeat customer purchasing information from market research and/or internal financial data.
The primary data requirement for tracking the product life cycle of a restaurant/bar is the ability to differentiate between the purchases of first time trial customers and repeat customers. Even if information is not available for 100% of the customers, a sample of the customers is usually sufficient.
The forecasts below were determined using the above “best-fit” regression equations from step one, and converting them to demand forecasts.
These are then converted to demand forecasts using the equation:
Demand = Customers x Average number of visits per month x Average spending per visit
If the breakeven demand per month was $3,000 per month, our forecasts indicate we will reach this level by month about month 35 or 10 months from today if this is calculated in month 25. It is now known that corrective action is vital and within just 10 months.
Corrective Actions to Reverse Declining Purchasers per Month
Corrective actions such as introducing new products, like McDonald’s and their breakfast menu, re-branding, or changing target markets should be strategically decided upon, taking the mission, brand, goals, and market into consideration. There are two dominant classes of corrective actions:
• Stimulate new first-time trial purchasers
• Stimulate repeat purchase purchasers
Stimulating New Trial Demand
Stimulating first-time trial customers typically involves basic, but risky, actions. If carefully determined and employed, successfully stimulating trial customers come with higher return. Properly engaging new first-time customers at a restaurant or bar requires the following criteria:
• Finding new target markets that the current restaurant or bar does not currently appeal to
• Re-theming the restaurant or bar to make it feel like a new product.
• Offering a new menu that is perceived in the market as being significantly different from the current menu.
In-depth target market research is key to deciding which markets will be worth the risk of making major changes to a restaurant or bar. After deciding on the most valuable target market, a combination of the following can be used to stimulate these potential new customers (in order of decreasing risk):
• Relocating the establishment
• Re-theming the current restaurant or bar
• Making major revisions in the restaurant or bar current menu offerings and prices
Currently, Starbucks is rolling out new plans to make food sales account for 25% of total sales by fiscal year 2019, up 9% from 2010 by adding high quality menu items that will capitalize on breakfast and the especially under-utilized lunch customer. Even more, the coffee company plans to introduce evening hours and menu items, like wine, to approximately 2,000 stores (almost 25% of their portfolio) by fiscal year 2019. Meanwhile, it’s more casual competitor, Dunkin’ Donuts instilled ‘happy hours’ at many of its franchises, offering discounted drinks during late afternoon hours.
Stimulation of Repeat Purchase Demand
Narrowing an establishment’s focus on operations and service quality is often the base of stimulating repeat customers and include the following strategies:
• Operations focus on service quality and customer satisfaction
• Customer loyalty programs
• Special pricing for repeat customers
• Online restaurant reservations
In 2014, Chili’s installed tablets at every table in its 823 restaurants allowing customers to order appetizers, desserts, and drink refills, plus play interactive games and pay their bill all from the personal device. The strategy was meant to not only increase revenue through additional beverage, food, and gaming sales, but to increase customer satisfaction as they now have the ability to pay their bill faster.
Starbucks and Dunkin Donuts have both created repeat customer strategies using customer loyalty programs and special pricing programs. Both coffee shops have popular mobile apps that reward customers with points for every purchase like free or discounted drinks, food items, or the coveted premium Starbucks Gold Card, and encourage easy mobile payment directly from a customer’s phone.
Starbucks took the “happy hour” strategy one step further by providing afternoon discounts to morning customers who brought their receipt back between 3-5pm to make another purchase.
Classic Stimulation: McDonald’s Breakfast
By 1975, successful fast-food chain, McDonald’s had been in business for 27 years and remained loyal to hamburgers with a few additions including chicken, fish, roast beef sandwiches, and the legendary Big Mac. Wanting to increase new and repeat customer visits, franchisee owner Jim Delligatti sought to fill the morning hours with profitable menu items. After trial and error with coffee, doughnuts, sweet rolls, pancakes and sausage, the Egg McMuffin sandwich was developed, turning new profits and making the additional business hours worthwhile. The creation of a popular breakfast menu stimulated customer behavior and has remained strong; breakfast items make up 15% of McDonald’s annual sales.
As hospitality trends and consumers needs rapidly change, the product life cycle and brand loyalty of a typical restaurant or bar is trending shorter. Combining market and customer data, current and predicted trends, and by calculating an establishments product life cycle, it is possible to develop corrective strategies to remain a strong, profitable brand.
Dr. Stanley I. Buchin is a Professor of the Practice Emeritus at the BU School of Hospitality Administration and Chair of the Faculty. He had been at the School since 1997 after a long career in management consulting and teaching. Dr. Buchin was a founder and president of Applied Decision Systems, a senior vice president at Temple, Barker & Sloane (now Mercer Management Consulting) and a principal at Arthur D. Little. His hospitality consulting clients include Harrah’s, Hilton, Holiday Inn, Hyatt, Marriott, Norwegian Cruise Lines, Royal Caribbean Cruise Lines, Sheraton and United Parcel Services. He has been a faculty member at Harvard Business School, Templeton College at Oxford University and the Arthur D Little School of Management (now the Hult International Business School). Dr. Buchin has also been president of Boston-Bermuda Cruising and General Ship Cruising. He is a graduate of the Massachusetts Institute of Technology and the Harvard Business School.
By: Bradford Hudson, Ph.D.
The steamship Britannia arrived in Boston Harbor on a July evening in 1840. This concluded the inaugural voyage for the flagship of the newly established Cunard Line, which has since become one of the oldest and most distinguished travel companies in the world. To commemorate the occasion, Cunard will send its current flagship Queen Mary 2 along the same route – from Liverpool to Halifax to Boston – during July of 2015. This will not only serve as the capstone event for the 175th anniversary celebrations of the Cunard brand, but it should also remind us about the special relationship that existed between Bostonians and the Cunard Line during its early years.
The company founder Samuel Cunard was born in Halifax, Nova Scotia in 1787. His parents were of German and British descent, but had come to Canada from what is now the United States, during the Loyalist Emigration of 1783. His father Abraham was a native of Pennsylvania and his mother Margaret was born in South Carolina. They met aboard a ship from New York, which was part of a larger fleet that carried Americans who remained loyal to the monarchy toward their new lives in Canada. When they arrived in Halifax, they were joined by former residents of many British colonies to the south, including a large number of loyalists from Boston.
Abraham eventually became involved in international trade and invested in real estate, including a waterfront parcel and several thousand acres of wooded property inland. The early career of Samuel included appointment as a clerk at the government lumber yard in Halifax. He also lived for a while in Boston, where he served as a clerk for a ship brokerage.
The father and son founded a business together around 1812 to exploit their timber holdings, expand their trading activities throughout the northern Atlantic and the Caribbean, and operate a growing fleet of sailing ships. A few years later, they secured a valuable contract to carry mail for the British government between Halifax and Bermuda. This was soon expanded to include the route from Bermuda to Boston.
Vehicles equipped with the new technology of steam propulsion were becoming increasingly common during the first quarter of the nineteenth century. Samuel Cunard was among those who understood that steamships could deliver passengers and cargo – particularly mail – much faster and more reliably than ships powered by sail alone. However, he also knew these would be much more expensive vessels to build, and that operations would require more sophisticated systems of management and logistics.
In 1838, the British government requested proposals from private ventures to carry mail by steamship from England to North America, via Halifax and Boston. Cunard aptly perceived that a significant contract from a stable government would provide the guaranteed revenue necessary to ensure the success of his new company and instill confidence in an extended network of investors. He was determined to secure this contract for himself.
Cunard first approached investors in Halifax and Boston, but with little success. He then traveled to Britain, where he spent several months lobbying the government, appealing to investors, and developing plans with shipbuilders. Eventually, he was awarded a seven-year contract to commence in 1840. He subsequently convinced several investors to support the venture, which enabled him to establish the ‘British and North America Royal Mail Steam Packet Company.’ This company would be renamed several times over the following century, eventually becoming the ‘Cunard Line’ we know today.
The contracted route would depart from Liverpool in northwestern England, proceed non-stop to Halifax in eastern Canada, and then continue onward to Boston in the northeastern United States. For this, Cunard would need fast vessels that would be seaworthy on the open ocean, with capacity for relatively large amounts of cargo and numerous passengers. He subsequently ordered four new steamships from shipyards on the River Clyde in Scotland.
The flagship would be Britannia. The vessel resembled a clipper ship, with a wood hull 207 feet in length and three masts for sails, two of which were square-rigged. The ship was also equipped with steam engines fueled by coal, which powered two enormous paddle wheels amidships. It had a single funnel or smoke stack, which was painted bright red with a black band at the top to conceal the soot. This color scheme would become a distinctive design feature of subsequent Cunard vessels, including the funnel on the current flagship Queen Mary 2.
Cunard was also contracted to provide mail service inland from Nova Scotia to Quebec, along a route that included the St. Lawrence River. Cunard would need smaller and less expensive vessels for this role. He subsequently acquired the existing ship Unicorn, which was a sail-steam hybrid resembling his larger ships still under construction. This became the first vessel in the new Cunard fleet. It would serve as an advance scout for logistics on the transatlantic route, and then be transferred to the shorter Quebec route after Britannia was ready.
The first transatlantic voyage for the Cunard Line occurred in 1840. Contrary to popular opinion, Britannia was not the first Cunard liner to enter Boston Harbor. Unicorn departed from Liverpool, traveled to Halifax, and then continued onward to Boston, arriving on June 3. Samuel Cunard was not aboard. His son Edward was leading the contingent, which was charged with planning for the subsequent arrival of Britannia.
The welcome celebration for Unicorn was impressive, with thousands of people turning out to view the arrival. A few days later, the mayor hosted a banquet for the ship’s captain and several hundred guests. The latter included Henry Wadsworth Longfellow, who opined: “Steamships! The pillars of fire by night and cloud by day, which guide the wanderer over the sea.”
Britannia departed Liverpool one month later on July 4. It followed the same route to Halifax, and then proceeded southwest to its final destination in Boston, arriving on the evening of July 18. Samuel Cunard was aboard his flagship during the journey, which is now considered the official inaugural voyage for the company.
The civic and business leaders of Boston orchestrated a ‘Cunard Festival Day’ shortly thereafter to celebrate the occasion. This included a parade with two thousand participants, who marched from the Cunard pier at East Boston to a grand banquet under a tent connected to the Maverick House hotel. The attendees included Samuel Cunard, the British Consul in Boston, the Governor of Massachusetts, and the Mayor of Boston.
The citizens of Boston subsequently presented an enormous trophy to Samuel Cunard, crafted by a firm that later evolved into the famous jeweler Shreve, Crump & Low. This ornate silver cup, which stands almost three feet tall, remains in the ownership of the Cunard Line and is currently displayed aboard the flagship Queen Mary 2. It serves as the primary historical artifact from the founding era and it offers tangible authentication of the Cunard brand legacy.
A Special Relationship
The arrival celebrations signified the beginning of a close relationship between the people of Boston and the Cunard Line. In most cases, this connection manifested itself in a multitude of unheralded interactions with passengers arriving and departing, citizens receiving mail, and merchants arranging for the shipment and receipt of cargo.
Sometimes these interactions would become public events. One such incident occurred in February 1844, when Britannia became icebound in Boston Harbor. A group of merchants quickly became involved, motivated by a sense of civic duty and also concern about the reputation of Boston as a reliable port. They financed the excavation of a path through the ice to the open ocean, which reportedly involved 1,500 people working over three days, and resulted in a channel seven miles long and a hundred feet wide. The achievement was captured for posterity in a famous engraving by prominent sculptor John Crookshanks King, which has been duplicated by numerous artists over the years.
The outpouring of affection and material support for a transportation company may seem odd to modern sensibilities, especially if compared to the recent addition of new carriers at Logan Airport. However, it can be explained in several ways.
Transportation powered by steam was a technological and financial sensation during the nineteenth century. Much has been written about the influence of railroads on the American civilization and economy, but steamships had a similar effect. The establishment of Boston as the anchor point for a new transatlantic steamship line would perhaps be the equivalent today of Google or Apple moving its headquarters to the Bay State.
This enthusiasm can be attributed partly to the significant practical benefits that steamships offered to individuals and business firms. The duration of travel across the Atlantic was reduced from about six weeks by sail to about two weeks by steam. Although the cost of building and operating these vessels was significantly higher than those under sail, the proportional cost was sometimes lower, because of greater capacity and the distribution of expenses across a larger number of customers. As a result, the pace of leisure and commerce accelerated significantly.
The cultural icons of the era were also much different than today. The discord of the American Revolution was fading, while the British Empire was ascending politically and economically. Anglophilia was on the rise. Meanwhile, America was in the midst of the Industrial Revolution. People were fascinated by leaders in technology and enterprise who were generating new inventions and amassing huge fortunes. Samuel Cunard would perhaps be the equivalent today of Hollywood director Stephen Spielberg or business tycoon Donald Trump, in terms of his popularity and social status.
The relationship with Boston was also important to the Cunard Line. Boston was the terminus for its transatlantic route and its primary point of access for the American marketplace. There were numerous critical moments both small and large, exemplified by the icebound incident, when Bostonians and Cunard employees worked together to ensure their mutual success. It would be no exaggeration to conclude that, without the enthusiastic support of Bostonians, the Cunard Line would not have been successful during its infancy and would not have survived its first decade.
The Early Years
Cunard was soon conducting biweekly transatlantic service with four ships of similar design, including the original flagship Britannia and the newer ships Acadia, Caledonia, and Columbia. Samuel Cunard stressed safety and reliability in his operations, which became a hallmark of Cunard during the following century and offered a point of competitive advantage. During the early years, Cunard also enjoyed a near monopoly on fast transportation to and from Europe, especially from ports in New England.
Cunard steamers instantly became a popular way to cross the Atlantic, attracting an array of wealthy and famous passengers. Among these was the English novelist Charles Dickens, who made his first visit to the United States aboard Britannia, arriving at Boston in January 1842. He subsequently mentioned the ship in his travelogue American Notes.
Although its first generation of ships focused on ‘cabin class’ passengers, Cunard eventually also served a more humble clientele. During the second half of the nineteenth century, the population of the United States quadrupled, due in large measure to immigration from Europe. About one-third of the total immigrants from all countries passed through the port of Liverpool. Although Cunard was certainly not the only shipping line to embark such immigrants, it did handle a substantial number, due to the size of its vessels and the frequency of its departures. A notable proportion of Cunard revenue derived from passengers in ‘steerage’ class who were traveling to new lives in America.
Within two decades, the inaugural route via Halifax was abandoned. The majority of Cunard ships traveling from Liverpool to Boston would thereafter make their intermediate stop in Queenstown, Ireland (Cobh) on the eastern side of the Atlantic. This change can be attributed to the shifting demand for mail and cargo, but also to patterns of immigration. Passenger traffic from Ireland accelerated significantly during the 1840s and continued unabated for several decades thereafter.
The population of Boston doubled during this era and its ethnic complexion changed. Although fewer than 30% of Bostonians were foreign born in 1840, more than 60% were first generation Americans by 1880. The vast majority of this increase can be attributed to Irish immigrants, many of whom arrived aboard Cunard vessels.
A Changing Seascape
Although Samuel Cunard had personal experience with Boston, the port was selected for inclusion on the original route by the British Admiralty, and it was specified in the government contract that enabled him to secure investors. The reasons for this were twofold.
The primary purpose of the contract was to convey mail to North America, especially the British possession of Canada. Halifax was the major port in the maritime provinces of Canada. Boston was the major port in the New England region, and was about 200 nautical miles closer to Halifax than its nearest American rival, New York.
Boston had also been the traditional capital of British America. Established in 1630, it developed into the larg¬est city and the busiest seaport during the century from 1650 to 1750. Although it was thereafter eclipsed in population by Philadelphia and New York, the transition was still a recent phenomenon when the mail contract was devised. Boston retained strong associations in the collective memory of England, and the British Admiralty was a conservative institution.
Nonetheless, the ascendancy of New York would have been unmistakable to anyone paying attention on this side of the Atlantic. As evidence, consider the dollar value of export cargo conveyed through the two ports. In 1821, export activity was nearly identical in Boston and New York. Four decades later in 1860, exports moving through New York were valued at more than eight times those of Boston. Furthermore, by this time, the vast majority of passengers who were new immigrants were also arriving in the port of New York.
Samuel Cunard was a visionary adept at detecting emerging trends in technology and commerce. He was also an ambitious builder intent on growing his company and gaining advantage over his competitors. One of the unsuccessful competing bids for the original mail contract came from the Great Western Steamship Company, which operated the grandest steamship of its era Great Western. Cunard had personally traveled aboard this ship from Britain to New York, toward his ultimate destination of Boston, to make arrangements for his own service after winning the mail contract. He was undoubtedly aware of the growing importance of New York.
Two related events occurred during 1847. The Great Western Company failed, resulting in sale of Great Western to a new firm, which transferred the ship to its India route. That same year, the initial term of the contract between the British government and Cunard expired. Cunard perceived an opportunity and arranged for the contract renewal to include the conveyance of mail to New York City.
The steamship Hibernia was the first Cunard liner to arrive at New York in 1847. Cunard was soon operating a second flotilla in weekly service between Liverpool and New York. Edward Cunard, who had been managing all operations in the United States from an office in Boston, moved his headquarters to New York.
The strategy was immensely successful. In 1848, customs duty collections for cargo conveyed aboard Cunard vessels in Boston were about three times those in New York. Only two years later, the proportion had reversed. The focus of Cunard operations in the United States had permanently shifted from Boston to New York. The people of Boston maintained their enthusiasm for Cunard, but the company had its own priorities driven by business results.
The biweekly service between Liverpool and Boston was suspended on several occasions during the last quarter of the nineteenth century due to weak or inconsistent demand. As an example, the company considered withdrawing service in 1874, due to disappointing financial results from the port. This was caused partly by the local system for billing inland freight charges, which was unfavorable in comparison to New York. The withdrawal was averted when rates charged by the Boston & Albany Railroad were renegotiated and various parties in Boston agreed to improve the pier facilities used by Cunard.
The growth of railroads also affected the comparative advantage of port facilities. When Cunard founded his company, there were about 3,000 miles of railroad track in the United States. Fifty years later, there were more than 150,000 miles of track in active use. As a result, it became increasingly feasible and affordable to quickly move cargo or passengers from coastal ports to distant points inland. Even destinations near Boston could now be reached effectively from New York by rail transfer.
The Edwardian Era
Despite its diminished status, Boston continued to be an important secondary port for Cunard through the early part of the twentieth century. Between 1900 and 1914, four new ships were assigned to Boston. These included two that were built especially for the purpose – Franconia and Laconia – and two that were transferred from other routes – Caronia and Carmania.
The piers used by Cunard were always located across the harbor in East Boston. The surrounding waterfront experienced a series of fires over the years, which threatened the Cunard facilities repeatedly. A major fire in 1895 destroyed several piers and damaged the Cunard liner Cephalonia, while a similar blaze in 1908 destroyed three warehouses and four piers, including the one used by Cunard. Its replacement, which was completed in 1909, was briefly that largest pier on the Atlantic coast.
The Cunard management and sales offices, which were originally located on Lewis Wharf, had been moved to a succession of locations on State Street. Early in the twentieth century, the company moved into its own building at 126 State Street, near the Custom House Tower and Quincy Market. Although this building was sold by Cunard a few decades later, and recently has been converted to residential condominiums, it still displays the name ‘Cunard Building’ in its carved stone facade.
A Turbulent World
During the first half of the twentieth century, Cunard experienced two prolonged interruptions of shipping traffic during wartime. These affected operations in Boston much more profoundly than those in New York.
The first interruption occurred in 1914, when the British Admiralty requisitioned numerous private vessels for service as troop ships during the First World War. Cunard continued to operate in New York, but responded to the equipment shortage by suspending regular service to Boston.
Consumer demand was also suppressed by concerns about safety, after the Cunard liner Lusitania was torpedoed and sunk by a German submarine in 1915. Although the ship had departed from New York, several passengers were from Boston and the incident cast a shadow upon all transatlantic travel. In subsequent years, two Cunard liners associated with service in Boston – Franconia and Laconia – were also destroyed by submarine attack. Cunard did not resume consistent weekly transatlantic service from Boston until 1922.
Operations were similarly halted during the Second World War. Again, capacity evaporated as ocean liners were requisitioned to transport ground forces, and consumer demand was diminished by concerns about attacks from German submarines operating off the coast of Massachusetts. Cunard vessels did still visit on occasion. The flagship Queen Mary, which had been converted into a troop ship, was damaged during a collision with a British destroyer during convoy operations in 1942. It subsequently arrived at Boston Naval Shipyard for repairs to its bow section.
By the time that peacetime service could be resumed, it was readily apparent to the executives that Boston was a secondary port. Although the company had recurrent plans to continue operations, and despite offering special voyages periodically, the Cunard Line never again offered weekly transatlantic service from the port of Boston.
Decline and Renaissance
The demand for travel by ocean liner declined precipitously following the introduction of transatlantic passenger service by jet aircraft in 1958. The passenger shipping industry was devastated and numerous companies were eventually driven into bankruptcy. A few survived by repositioning themselves from operators of transportation to purveyors of leisure.
Cruising was nothing new. The Peninsular & Oriental Steam Navigation Company (P&O) introduced the idea of cruising in 1837, when it offered itineraries to the Mediterranean as part of the ‘Grand Tour’ experience. The difference was one of emphasis. In the previous era, revenues were generated from the necessary conveyance of people, mail and cargo from one point to another. Now passengers were making discretionary voyages as a form of entertainment and indulgence.
Cunard had itself been offering leisure voyages to exotic locations for decades. However, the exclusive focus on cruising represented a momentous shift in strategy, operations and culture that proved overwhelming. The Cunard Line eventually foundered and was acquired by the British diversified conglomerate Trafalgar House in 1971.
Cunard operated under its new corporate parent during the next two decades. For the most part, it preserved its reputation for luxury and tradition, and maintained an avid following among older cruise passengers and historical brand aficionados. It even offered weekly transatlantic service during the summer months, from New York to Southampton aboard Queen Elizabeth 2. However, the financial performance of the company continued to be both inconsistent and disappointing. Eventually in 1996, Cunard was sold again, this time to the Norwegian shipbuilding firm Kvaerner.
During the Trafalgar House era, the cruise industry had been revolutionized by the American upstart Carnival Cruise Lines, which pioneered economy cruising from Miami starting in 1972. Two decades later, Carnival had become the largest passenger shipping company in the world, with annual revenues of about $2 billion. It operated more than 30 major ships within every significant cruise segment and region, and its portfolio included the upscale brand Holland America and the luxury brand Seabourn.
The heir to the Carnival empire, Micky Arison, had always been interested in Cunard, in part because his family had immigrated to the United States years earlier aboard the Cunard liner Mauretania. He was also inspired by the recent release of the blockbuster movie Titanic, which generated enthusiasm for historic ocean liners among its young audience.
Arison seized the moment and acquired Cunard from Kvaerner in 1998. He proceeded to reinvigorate the brand by building a new ship with the style and grandeur of the classic ocean liners. The immense Queen Mary 2, which cost nearly $1 billion to construct, was designated as the flagship of Cunard for its maiden voyage in 2004. It also assumed the transatlantic itinerary for which Cunard had become famous, traveling from New York to Southampton on a weekly basis during the summer months.
The Cunard fleet was subsequently expanded with the construction of Queen Victoria and Queen Elizabeth (the third Cunard liner with this name). Although these smaller ships have periodically been dispatched along the transatlantic route, they spend much their time in the Mediterranean, the Caribbean and the Pacific.
The era of weekly transatlantic ocean travel from Boston is now a distant memory. Limited schedules of roundtrip cruises have been offered recurrently for decades by a variety of cruise lines to destinations such as Canada, Bermuda, the Bahamas, and the Caribbean. Last year, the port of Boston hosted more than 100 cruise departures with more than 300,000 passengers embarked.
Boston is no longer a point of embarkation for Cunard ships, which typically start and end their voyages elsewhere. However, it does remain a popular interim stop for occasional Cunard voyages, especially those on the route between New York and Canada. These typically include a cruise every summer by Queen Mary 2, which departs from New York and then returns via Halifax and Boston, reproducing the final segment of the original voyage of Britannia. Boston also represents an important source of passengers who travel by air to embark on Cunard vessels departing from ports elsewhere.
The role of Boston in the founding of Cunard has been featured repeatedly in Cunard advertising and public relations campaigns. Anniversary reminders started to appear in Boston Globe articles during the 1930s and continued through the 1960s. Boston was also occasionally mentioned in advertisements placed in national magazines, including a starring role in a series of advertisements promoting the 90th anniversary in 1930.
The tradition of recognizing such anniversaries has been renewed this year, with Cunard taking full advantage of its history for marketing purposes. The current website and recent paper brochures make prominent mention of the 175th anniversary, feature a special ‘175’ logo and a painting of the original flagship Britannia, and offer several anniversary events to prospective customers.
The capstone of these celebrations will be a re-enactment of the first voyage of Britannia. Cunard will send Queen Mary 2 from Southampton to New York as usual, but the itinerary will be altered to include interim stops along the original route in Liverpool, Halifax and Boston. This special journey will occur during the same month as the original voyage, but on slightly different dates, with Queen Mary 2 scheduled to arrive in Boston Harbor on July 12, 2015.
Every so often, a new venture fits perfectly with the economic, technological, and cultural conditions of its era. The value proposition for such a company often extends beyond the utilitarian benefits that are offered, to include a variety of psychological and sociological dynamics in consumer behavior. If such a company is well capitalized, managed adroitly, and fortunate in its circumstances, then it may survive over extended periods of time. As it grows older, the firm becomes laden with associations that are interlinked with powerful cultural narratives and its brand achieves iconic status. Brand heritage becomes an important element of competitive advantage, and corporate anniversaries offer moments to promote and celebrate the unique status of such organizations.
The Cunard Line is certainly one of these companies. It was an instantaneous sensation on both sides of the Atlantic upon its founding, it subsequently became symbolic of glamorous travel, and over time it attained an enduring position in our collective memory. Although its prominence among consumers and investors is more limited today than it was a century ago, the Cunard brand continues to have a strong following among enthusiasts throughout the world. Despite the facts that most Americans now travel to Europe by air, and that most transatlantic voyages now depart from New York, the historic relationship between Bostonians and the Cunard Line continues.
The arrival of Queen Mary 2 in Boston Harbor later this year will commemorate the 175th anniversary of the Cunard Line. The event should remind Cunard executives of the important role that Boston played in assuring the existence of their company during its infancy. It should also remind Bostonians, albeit perhaps in bittersweet fashion, about the historic prominence of the city in population, commerce and transportation. Together, the company and the city will celebrate nearly two centuries of seafaring tradition. ■
ABOUT THE RESEARCH
Primary sources for this article included published proceedings of the British parliament (1839), the census of Boston (1845), timetables from the Cunard Line (1880 and 1901), and Cunard promotional brochures such as Franconia and Laconia (1912) and Historic Boston (1914). Other historical sources included articles and advertisements from newspapers and periodicals (1840 onward) such as Boston Globe, Boston Post, Merchants Magazine and New England Magazine. Primary sources also included the recent website and brochures from the Cunard Line (2014), and the recent website of the Massachusetts Port Authority (2014). The author was also informed by his personal experience as a management consultant to Cunard during the Trafalgar House era (1992), which included interviews with Cunard executives at the corporate headquarters and two transatlantic crossings aboard Queen Elizabeth 2. Some years later, the author was also a regular passenger aboard Queen Mary 2, during a voyage from Halifax to Boston (2008). Secondary sources for this article included the books Cunard and the North Atlantic by Francis Hyde, Steam Lion by John Langley, Devils on the Deep Blue Sea by Kristoffer Garin, Portrait of a Port by W.H. Bunting, Rise of New York Port by Robert Albion, and Historical Statistics of the United States from Cambridge University Press. Secondary sources also included the articles “Reinventing Boston” by Edward Glaeser in Journal of Economic Geography (2005) and “Brand Heritage and the Renaissance of Cunard” by Bradford Hudson in European Journal of Marketing (2011).
Bradford Hudson is Associate Professor of the Practice of Marketing in the Carroll School of Management at Boston College. He is also Assistant Chairperson of the Marketing Department at Boston College. Previously, he was Associate Professor of the Practice of Marketing in the School of Hospitality Administration at Boston University. He is also a former corporate executive and management consultant. His clients with historic brands included AT&T, Cadbury Schweppes, Cunard Line, Harley-Davidson, and Nestlé. He holds a Ph.D. in business history from Boston University, a master’s degree in services marketing from the Cornell Hotel School, and a certificate in strategy from Harvard Business School. He is a former Fulbright Scholar to Canada. Email email@example.com
Photos: Cunard in Boston: QM2 arriving in Boston, by the author; Boston Cup, by the author; Cunard pier, from postcard in collection of the author; QM2 profile, from Cunard Line used with permission.
By: Rachel DeSimone
At the historic intersection of Cambridge Street and Brighton Avenue in Allston, Mass., you might find yourself wondering if you’ve been blasted back in time, say, to the ’50s. Before you stands a small retro-diner style building with a shiny silver overhang and an enormous sign towering over the roof that reads, “Twin Donuts.” Written in dated red script letters, “Twin” is illuminated, while the “Donuts’” lights are out. Even more old-fashioned are the visible white slats behind the sign, visibly holding it up. This childhood diner throwback sits directly on the point of the sidewalk where the two streets cross and has maintained that spot for almost 60 years now.
When you walk inside Twin Donuts, the smell of toasting bagels and coffee waft around you. The walls are mostly white. Maroon tables fill the interior, along the sides and down the middle, set with wooden chairs that have maroon seat cushions, which all rest on maroon floor tile. Once you weave your way past all of the tables to the back right, arriving at the counter, fresh baked doughnuts are directly in your line of sight. Above the counter is a white menu board made up of red and blue letters that are clipped on and have begun drooping to either side. There are large, almost floor to ceiling windows lining both sides of the shop, some consisting of thick, clear glass tiles. Newspapers are strewn around most tables, and some stray empty plates linger showing smears of ketchup and potato remains. A group of college students sits at the first big table chattering about what they are going to wear to a party. Next to them, at the “round table,” is a pair of older gentlemen conversing about peanut butter and jelly sandwiches, cream of wheat and pickles. Then there are some single customers sitting quietly on the outskirts with the morning paper.
In a town where hordes of college students come and go each year, a city that runs on constant change also finds vitality in its antiquity. The building itself that Twin Donuts inhabits has been there since the 1800s, formerly occupied by the Odd Fellows Hall, a local movie theater. This iconic doughnut shop has been in its same spot since 1955, seeing its way through four or five different owners. The Taing family, who took over in 2001, currently owns the shop. Catherine and her two brothers, Woo and Wayne, manage Twin on a daily basis, in addition to Café Mirror and the Brighton Café, both of which the Taing family also owns.
Catherine’s Father, Leang Sim Taing, and Mother, Chiang Sou Pang, purchased the business from its previous owner, Henry La, who now owns The Depot Coffee Shop in Newton, Mass. Both Mr. and Mrs. Taing were born in Cambodia, though are ethnically Chinese. They survived the Khmer Rouge, escaped as refugees to Thailand, then the Philippines and eventually to the U.S. They both attended school in Cambodia, gaining about the equivalent to an eighth grade/early high school education. Mr. Taing went to both Cambodian and Chinese school, while Mrs. Taing only attended Chinese School.
With limited education and language barriers, Mr. and Mrs. Taing began work at various Massachusetts companies on the assembly line, making an hourly wage. Soon Mr. Taing realized his dream was to become a business owner, not having to work for anyone else but himself. “I always say it was his idealistic dream because in actuality it’s a lot harder than working for someone else,” says Catherine, “I feel he needed a goal to work towards, something more that just putting in 40-hours at the company.” Mr. Taing never worked for anyone outside of his family until he moved to the U.S.; he grew up in a family that owned their own business raising and selling pigs and meat, amongst other things.
Twenty years after Mr. Taing expressed his dream, it became a reality. Mrs. Taing was hesitant at first, but eventually gave in. “Mom is the practical one who understood the hard work of owning your own business and understood that my Dad’s dream was just that, a dream,” says Catherine. At the time Mr. and Mrs. Taing’s three children were very young and Mrs. Taing knew that neither of them were ready to put in the long hours. When it did happen in 2001, the purchase of Twin Donuts was a joint decision and effort, “neither could have done it on their own,” says Catherine. At that point their youngest child was 13-years-old.
Unfortunately, Mr. Taing only got to live his dream for one year, as he passed away in April of 2002. Rather than closing the shop’s doors, the Taings kept it running in honor of their father/husband. “We continued his dream, it’s a nice sentiment,” says Catherine. As other businesses have come and gone throughout the years in the Allston-Brighton neighborhood, business has continued to do well for Twin Donuts, even through the 2008 recession. They have maintained very reasonable prices, a doughnut only costing 89 cents. Catherine, on behalf of her and her family, expressed great gratitude for this fortunate reality.
Twin sees a variety of customers, along with their steady regulars, some of whom have been coming since it opened in ’55. Arguably the most important part of the whole establishment, the “round table,” inhabited by the regulars, has been around for about 25 to 30 years. The table is held up by a large aluminum pole that is scratched and covered in duct tape, which stands, hard to miss, in the middle of the restaurant. When the Taing family took over in 2001 they did some minor renovations, adding more sit-down tables to cater to the full-service breakfast that they pioneered, but left the “round table” untouched.
Today three members of the “round table” remain from the about eight that originated it. Gail is one of the members, a long-time Allston resident who used to work in auditing. Dressed in loose jeans, a navy windbreaker, and white sneakers with a long black purse draped over her shoulder, she has short wavy white hair and wears a medium shade of red lipstick. Gail comes to Twin three to four times a week now to enjoy her small coffee and Boston cream doughnut that she has always ordered. “I come to talk to people,” says Gail who is greeted with a warm long-time familiarity by the other two older gentlemen at the table, both of whom are still wearing their coats and have wrapped up their pickle conversation. A fourth friend, a shorter gentleman wearing a Bruins jacket, who apparently doesn’t come around as often stops by and the three “round table” members joke with him to “stay out of trouble.”
Before the “round table” crew arrives, Twin Donuts opens in the wee hours of the morning, at 4 am, to host a crowd of bartenders just getting off work and truck drivers starting their day. Catherine arrives bright and early to start the coffee, preparing some customer’s cups just how they like it before they even reach the counter. Throughout the day you can find Catherine serving food and drinks to people at their tables, manning the counter, re-organizing the Sriracha and ketchup bottles, maintaining the valuable relationships with the regulars, making new ones and making sure that the shop runs smoothly.
Mrs. Taing currently deals with most of the finances and paperwork. Once she retires, the family is not sure if they will continue the business, according to Catherine, who is an English major from Tufts. She never imagined that she would be running a doughnut business. “My pipedream is to write a book,” once her three children have matured that is. The family also stays busy running the Brighton Café, which they acquired in 2003 and Café Mirror, which they acquired in 2004.
Why doughnuts though? “It’s an Asian thing,” says Catherine, “especially in California,” where she has cousins who also own doughnut shops. The Taing family is part of a larger Cambodian-American owned doughnut shop movement that really started around 1975 with Ted Ngoy, according to Audrey Magazine. The man who has been behind Twin Donut’s doughnuts for 25 to 30 years has carried over from the previous owners. In his tiny kitchen he provides all of the doughnuts for Twin, Café Mirror and the Brighton Café.
In an area that once held Allston-Brighton’s agricultural community and cattle trade, remains one essential piece of history that has endured, continuing to carry on Union Square’s historic legacy, thanks today to the Taing family. Twin Donuts still remains the culmination of Mr. Taing’s long-awaited dream. Sometimes the American Dream can be as sweet as doughnuts. “The shop is our livelihood, we may not be crazy passionate about doughnuts, but I think that’s our subdued personalities, we have become a part of the Brighton community, a force amongst the Dunkins,” says Catherine.
Rachel DeSimone, a native New Yorker, is passionate about unique food and it fuels her writing. She is currently Editor-in-Chief of Spoon University, an online food resource for college students made up of over 1,800 contributors at more than 50 campuses. Rachel is a senior at Boston University in the School of Hospitality Administration and minoring in journalism. After graduation, she hopes to participate in the BU Gastronomy Masters program.
By: Christopher Muller, Ph.D.
A century of commercial competitive conflict between the grocery (food at home or “FAH”) and restaurant (food away from home or “FAFH”) distribution channels is now being fought on an unexpected but previously contested battlefield: who will own the “convenience” of delivery in the consumer’s mind.
Just one hundred years ago access to food across New England was very different than what we know today. In 1915 the vast majority of people would have bought the food they did not grow or raise themselves at small, local, full-service general stores. In larger towns and cities independent specialty retailers such as butchers, bakers, delicatessens and the occasional green grocers supplemented the available product list.
“Retailers face competition not only from other retailers, such as mass merchandisers who offer groceries, but also from other retailers who sell substitutes for groceries. Because convenience is becoming more of an issue for American consumers, they are more likely to eat out than to cook at home. Therefore, another competitor for grocery stores is fast-food restaurants. To respond to this threat, supermarkets have added large prepared food sections to their deli department.”
– Barbara Kahn, Grocery Revolution, 1997
The First Home Delivery System
The traditional practice was for a homemaker to personally place an order with an independent shopkeeper for staples such as flour, butter, salt, sugar, coffee, tea, bacon or lard. As a convenience and sign of personalized service he would then select her items and have the large bundles of provisions delivered to her home later in the day by a delivery boy. Most women were accomplished cooks, responsible for the planning and preparation of daily meals from these mostly basic raw materials. Working men (and yet unregulated working children) ate the majority of their meals, including at midday, at home or when necessary brought a lunch pail filled with home prepared items with them to the workplace.
The traditional restaurant fell into one of two distinct types a century ago, both required dining on-the-premises. There were full-service, “white tablecloth” establishments catering to the wealthy or the middle class for special occasions. Alternatively there were limited service coffee shop-style counter service places aiming to supply everyday meals to a working or transient group who had no access to a home-cooked meal. Social and eating clubs were genteel substitutions used by the affluent professional requiring away from home meals both at lunch and dinner, while a roadhouse, small family owned “mom & pop” or diner provided the occasional prepared meal for those of less means or with less time to dine.
Direct-to-Consumer Home Delivery
With good reason, grocers rarely envisioned themselves as in head-to-head competition with meals prepared away from home. If grocers and shopkeepers saw any competitive threat, it was from the direct-to-consumer home delivery provided by the growth of commercial dairy producers such as H.P. Hood in Charlestown, MA or the expanding reach of large bakeries such as Dugans as they moved from New York into Connecticut and Western Massachusetts. Following in the literal footsteps of itinerant horse-cart tinkers and merchants, these newly organized, wide ranging and efficient “truck route” sales models delivered fresh staples daily to the front doorsteps of homes throughout the Northeast. At the peak of home delivery along with bread, bottled milk and dairy items there were companies providing everything from Fuller Brushes to tubs of Charles Potato Chips, from White Rock soda pop to cases of Narragansett beer.
“Same-day delivery not just for city clickers: grocery shopping goes 24/7: Online grocery shopping and delivery has become a crowded space, with a host of services competing for consumer attention. This trend allows everyone who sells food and beverages to be in the same-day delivery business without having to add additional operational infrastructure. Look for Uber and Google Shopping Express to put every supermarket in the same day delivery business and change consumer behavior to shop daily for prepared foods and recipe driven meal kits that contain all the ingredients and be delivered to homes and offices.”
– Phil Lempert, The Supermarket Guru , Nov. 2014
A Switch to Cash & Carry and the End of Home Delivery
To compete with both the independent shopkeeper and the delivery man in New England, especially in Eastern Massachusetts, new choices were being offered to the rapidly industrializing marketplace. In 1918 the Rabb family created the Economy Grocery Stores Company (which has evolved into today’s Stop & Shop corporation) a chain of stores which introduced the first self-service market to New England families. It was based on the A & P Economy Stores, first opened in Jersey City, NJ in 1912. Designed to offer a “Cash & Carry” no delivery and low price system, shoppers for the first time were given the opportunity to wander the aisles and truly “shop.” Presented with a widening selection of newly introduced brand name packaged foodstuffs, groceries and dry goods shoppers could choose for themselves which brand, size or quantity they desired. The companies were able to use cost savings from labor and quantity purchasing to offer lower prices to a growing consumer base.
In the mid-1920’s the Independent Grocers Alliance (I.G.A.) and Red & White Stores spread throughout the region, both were created to counter the spread of the conglomerates and their new buying power. Soon the chaining of markets became the competitive model, many with thousands of stores under these and other branded corporate names. Competition was fierce among these enterprises, each contesting by stocking new national consumer products as well as their own private label offerings. By the end of the 1930’s a new larger store, the “supermarket,” was introduced with an increase in national branded grocery products on the shelves and bringing the previously independent specialty shops (butchers, bakery, green grocer) all under one roof.
At the close of WWII and as the suburbs grew across the country, hundreds of supermarkets were built to serve the expanding needs of families and their changing lifestyles. Convenience for the home cook evolved into finding a broad product choice at a store near home usually with free parking. It was convenient to have complete control over the entire purchase process, including the total time it took to complete the shopping experience. As the pace of daily life quickened and homemakers found themselves increasingly busy during the day, timing of store-provided delivery became inconvenient. In the mid-1960’s supermarket companies continuously sought to drive costs down and become the low-price leader. In comparison the value proposition offered by a single product delivery man on a route truck selling commodities such as bread or milk became a high priced relic of a time gone by. The convenience of home delivery couldn’t overcome the search for lower prices or the need to save time.
Declining Dominance of the Food Dollar Expenditure By Grocers
As they had for decades grocers still rarely envisioned themselves as in head-to-head competition with new restaurant offerings. Even so restaurateurs and grocers have always been vying for the dominant share of the total food dollar. The grocers captured more than $7 out of every $10 consumers spent on food purchases well past the Second World War and into the 1960’s (see chart below).
In New England as the evolution from full-serve to self-service was happening to the grocery channel, a similar process was also beginning to emerge in the food away from home channel. When dining out there were established restaurants in hotels, traditional taverns in country inns throughout the region, and historic restaurants such as the Union Oyster House or Jacob Wirth in cities like Boston. There was also ice cream.
In 1914 the Durand family opened an ice cream stand in Post Office Square, which became the original unit of the Brigham’s chain of stores by the mid-1920’s. Nearby the Bickford family also got their start in the early 1920’s. Both became iconic New England family restaurant businesses. At this time the true innovator was the iconoclastic Howard D. Johnson of Quincy, Ma. In 1925 he created an eponymous chain of restaurants, which had been built on his efforts to create a more flavorful ice cream out of the necessity to save his family’s business from bankruptcy. Surviving both the Great Depression and World War Two, by the middle of the 1960’s Howard Johnson’s was to become the world’s largest foodservice company.
The Early Days of Chain Restaurants: A Choice of Eat-In or Take-Out
What is important for the nature of food service competition with the grocery industry is that each of these restaurant chains, as the very definition of food away from home, were built in large part on a “take away” model. Howard Johnson’s in particular was created to cater to the traveling public, with the majority of his restaurants opened along highways and on busy traffic circles. The early roadside menu featured proprietary flavors of ice cream, with additional items such as “frankforts” and fried clam rolls. All were intended to be eaten on the move, in fact handheld, and not specifically consumed inside the restaurant using utensils. Eventually diner-style counter seats for quick short-order meals became standard and then dining room tables and booths were added, but all HoJo restaurants maintained the take-out option at the front entrance. Most also included a small retail area of food novelties (salt water taffy, chocolate lollypops, and gift items). For the family, the truck driver or the traveling businessman these roadside “orange roof” eateries were the definition of on-the-go convenience.
In the same way that the move to the suburbs after WWII drove the growth of the supermarket, it also set in motion the growth of the fast food chain restaurant explosion. Beginning in the early 1950’s companies such as McDonald’s, Burger King, Kentucky Fried Chicken and Chick-fil-A created a new fast food model as the definition and use of food away from home changed. In the fifty years between 1950 and 2000 the American public doubled their dollar purchases for restaurant food compared to food prepared for meals at home (see chart).
The remarkable thing about all of the fast food companies is that the overwhelming consumption of the products they sell has always occurred away from the restaurants themselves: either as take-away or ordered at the drive-thru and most likely eaten in a car. Convenience for the fast food consumer is about speed of service and ease of ordering, with low prices close behind.
Over this period there were notable exceptions to the dine-in or take-out service model. As early as 1952 a fried chicken franchise company, Chicken Delight, was established which was built on the service concept of home delivery. By the end of the 1960’s it had grown to more than 1,000 units across the country. Using the advertising phrase “Don’t cook tonite, call Chicken Delight” it featured a unique dedicated system of free delivery. The company all but collapsed after losing a precedent setting anti-trust law suit over the requirement that franchisees pay premiums for purchasing franchiser approved restaurant supplies. The home delivery model seemed to disappear with the brand and its main competitor, Kentucky Fried Chicken, grew on a service model of family take-out.
The Emergence of Pizza Delivery as Catalyst for On-Line Ordering
The modern era of restaurant delivery of food to the front door was started when Tom Monahan, the founder of Domino’s Pizza, instituted the “30 Minutes Or Free” campaign in 1973, initially with free delivery. No chain of any kind has done more to change the acceptance of a stranger bringing food to people’s front doors in the middle of the night than Domino’s. It did this while introducing such novel ideas as the corrugated pizza box, heated insulated delivery bags, and the lighted “3-D” car top sign.
Today the company is the dominant restaurant delivery provider, especially for customers using on-line as a convenience. More than 40% of Domino’s U.S. sales were generated by online orders in 2014, and Domino’s alone delivers more than 1.3 million pizzas every day in the U.S. Over the past forty years, this delivery-focused innovation has ignited the entire corporate pizza industry to shift from a dine-in service system to one based on delivery. In just over seven years (since 2007) Domino’s Pizza has positioned itself to become a leader in the use of on-line ordering technology while capturing a greater share of the prepared food delivery business.
Due to the success of chain pizza delivery and the explosion of internet access through smartphone technology, many third party companies have become very important players in delivering restaurant meals in most major U.S. cities. The convenience of being able to order on-line, using service companies such as GrubHub.com, foodler.com, eHungry.com, menufy.com, or delivery.com has significantly changed the delivery model for all restaurants, but especially for the local independent operator. With little fanfare the restaurant industry, the very definition of food away from home, has become a major factor in the meals people consume in their homes. Third party delivery has been called the “great equalizer” for an independent restaurant’s ability to reach its customers.
Home Grocery Delivery Returns Thanks to the Internet
The competitive battleground for home delivery has been joined by many national and regional supermarket chains over the past few years. Stop & Shop, with headquarters in Quincy, MA is a U.S. division of the Dutch conglomerate Royal Ahold and is currently the 8th largest supermarket chain in the U.S. The company took an early position in the home delivery market channel with the 2001 purchase of the first mover in e-commerce and on-line grocery delivery, Peapod. The company has established itself as a leader in the area of technology in on-line ordering, and is the first in the U.S. to create “virtual” grocery stores in commuter rail stations throughout the Northeast and Chicago.
Since the Peapod purchase by Stop & Shop, more than a third of the top 75 U.S. grocery retailers have chosen to become involved in the “e-grocery” space, spending hundreds of millions of dollars in the push for competing in the category. More than half of these entrants have created a hybrid e-grocery business model known as “Click and Collect” (a system where customers shop on-line and then drive to a pick-up point for groceries assembled by in-store staff) instead of a full-service home grocery delivery option. Peapod is also expanding into this pick-up option currently with over 3 dozen stores in Massachusetts and another 3 dozen in Connecticut and Rhode Island converted to the system. Only one Stop & Shop/Peapod location shows same-day pick-up service availability, but the website does advertise a curbside service, “Pick-up is available at the convenient locations below. No need to get out of your car!” In a trade-off of convenience over price, for less than an hour at minimum wage consumers can avoid the time spent inside the store on a traditional shopping trip. A flat home delivery fee of $6.95 applies for orders over $100.00, $9.95 for less than $100.00, or $2.95 for store pick-up on minimum orders of $60.00.
In contrast, Kroger, the no. 2 largest U.S. grocery company in 2014 purchased an established on-line health food and vitamin provider, Vitacost.com. Kroger paid $280 million in the hopes of being able to enter the direct-to-consumer market using an Internet platform of more than 1 million subscribers. The Vitacost website offers ground delivery of non-perishable and mostly organic health foods in “1 to 4 days!” Currently delivery is offered free for purchases made over $45.00.
The small, family company, Wellesley, MA based Roche Bros. Supermarkets offers home delivery from 9 of their 18 store locations and on-line pick-up or “Click and Collect” in five others, this latter a service which they are expecting to expand. Roche Bros. offers a wide variety of prepared meals and individual dinners, which are delivered cold and require re-thermalization, at prices ranging as low as $2.99 for a single cheese quesadilla. It charges a flat fee of $9.95 for all delivery orders with a strict no tipping policy. There is a flat $6.99 fee for pick-up orders at the stores.
According to The Food Institute and the research firm Brick Meets Click for the full year of 2014 online e-grocery sales are estimated to be about $27 billion, or roughly 4% of the total U.S. grocery market revenue.
The Third Party Challenge For Grocery Delivery
While the traditional “bricks and mortar” grocery industry is making these steady but small steps towards e-grocery acceptance, there is a major change coming that reflects the disruption felt by all other retail segments by the emerging e-commerce market. To paraphrase a line from Sondheim’s Into the Woods: ‘there are giants in the cloud (sic).’
Amazon.com has been testing grocery delivery in Seattle since 2007 when it created AmazonFresh. This rapidly expanding fresh home delivery option includes both perishable and prepared meals. In parts of New York City delivery is guaranteed within one hour, with an annual subscription cost of $299.00. Just at the end of 2014 Amazon added a new smartphone App to its e-grocery mix, Amazon Prime Now, which offers free two-hour delivery service to Amazon Prime members. It is expected to be in 15 major cities by the end of 2015.
Not to be outdone by arch-rival Amazon, Google.com is also entering the competition for home delivery of retail items, called Google Shopping Express. In the grocery segment, Google Express has built a partnership with Whole Foods Markets. Initial delivery service is free on minimum orders of $15.00.
In addition, the world’s largest retailer, Walmart, is also the country’s largest grocery chain. Walmart.com has been heavily invested in the home delivery and “Click and Collect” e-commerce environment for a number of years and is promising to expand. While it offers thousands of dry goods and packaged grocery items, it has not yet committed to delivery of perishable grocery products but does have them available for in-store pickup. Shipping is free on orders over $50.00, but only comes with delivery guaranteed for 6 to 8 days. In-store pickup is free, as well.
The Personal Shopper Returns
The real competitive battleground in 2015 for both grocers and restaurants, though, will be a rapidly growing e-commerce start-up called Instacart.com. The company has already established a major presence in the Boston market, along with its original home of San Francisco, Chicago and a dozen other cities. The founder and CEO, Apoorva Mehta, was an executive at Amazon before creating the company in 2012. The service uses skilled individuals who personally shop at area stores including Whole Foods, Trader Joe’s, Shaw’s and Costco, delivering to homes and businesses in Boston, Brookline, Cambridge, Somerville, Medford and Chestnut Hill.
What makes Instacart different is that is works on the disruptive decentralized model which has made Uber a threat to traditional taxis, or Airbnb a threat to lodging. Created on the principles of the shared economy, a network of trained independent personal shoppers is contacted through a proprietary smartphone app. These individual contractors are assigned a single customer order which they confirm with the app. They then head to the desired stores and work to pick items that are better than the customer might even choose themselves. When necessary or desirable shoppers will call the customer to make suggestions for in-store substitutions. Delivery is generally within an hour, with costs ranging from $3.99 to $9.99 depending on minimum purchase and speed of service, but also carries a premium charge for Instacart of up to 20% on each item.
A test is being conducted in some Boston Whole Foods Markets to have Instacart personal shoppers assigned to individual locations to accelerate speed of service. Unlike Peapod or AmazonFresh, Instacart has no need for warehouses, drivers or delivery trucks. The infrastructure is the technology of a smartphone.
Back to the Future
The emerging battle, appears to be a return to a fight first defined a century ago. Simply, who will control the ephemeral space between the consumer’s need for convenience and how, or where, they will prepare and eat dinner tonight.
This gets us to a convergence point for restaurants and supermarkets. It starts with the primary question, “what is the difference between a meal prepared at home and a meal prepared away from home if both are delivered to the front door and eaten at the same kitchen table?”
Maybe the convergence discussion continues with a question that has been asked for more than one hundred years, “how do I define convenience and personal service when it comes time to eat?”
If a personal shopper from Instacart.com selects a fully cooked rotisserie chicken at Costco and combines it with a fresh bag of Spring green salad mix and a bottle of Pinot Grigio, then delivers it to the front door of an on-line customer within an hour, is that substantively different than a GrubHub delivery driver arriving with a Nigiri Sushi platter and Tonkatsu from a local Japanese restaurant nearby?
Or if a Domino’s driver delivers a custom made Artisan Chicken & Bacon Carbonara Pizza with a Chocolate Lava Crunch Cake and a 2 liter bottle of Diet Coke is that different than a Peapod driver showing up with a California Pizza Kitchen BBQ Chicken Crispy Thin Crust Pizza, a Bertolli Triple Chocolate Strata Cake and a 2 liter bottle of Diet Coke?
Technology, especially when it comes to the easy access everyone has to on-line, e-grocery, e-commerce applications through smartphones and laptops, forces us to rethink what convenience and personal service actually mean when it comes time to eat. Is it more inconvenient to order on-line and have to drive to “Click and Collect” our groceries at the Stop & Shop, or is it more inconvenient to use the new “Order Ahead” on-line feature at a Panera Bread and simply walk around the corner to grab the bag with my name on it at lunch?
After dinner as the dishes are being cleared, does it matter to the consumer who brought the food to the door or if it was classified as FAH or FAFH?
Remember the “good old days” when we all knew the difference?
Christopher C. Muller is Professor of the Practice of Hospitality Administration and former Dean of the School of Hospitality Administration at Boston University. Each year, he moderates the European Food Service Summit, a major conference for restaurant and supply executives. He holds a bachelor’s degree in political science from Hobart College and two graduate degrees from Cornell University, including a Ph.D. in hospitality administration. Email firstname.lastname@example.org
By: Andrea Foster & Jenna Finkelstein
Business is back for hotels across the United States with occupancy levels surpassing long-run averages and hotels raising room rates more aggressively. According to PKF Hospitality Research (PKF-HR)’s forecast, occupancy is estimated to be above the long-run average in 49 of the 55 U.S. markets they track, 14 of which are achieving their highest occupancy levels in the past 25 years. By 2015, the U.S. lodging industry will experience six consecutive years of increasing occupancy, the most since 1988. The hotel industry has finally climbed out of the recovery period following the Great Recession as people are traveling more than ever before, and at higher prices.
According to the 2014 edition of PKF’s Trends® in the Hotel Industry, in 2013, total hotel revenue increased 5.4 percent from 2012 (the most current year-end data available). Driving this increase was 5.9 percent growth in rooms revenue, while all other revenue sources averaged 4.4 percent growth. On a per occupied room basis, all other revenue increased by 2.7 percent. Hotels have struggled in recent years to encourage spending from hotel guests on services and amenities other than rooms. After increasing occupancy and rate, hotel managers are now seeing the return of guest spending in other areas of operation, a healthy sign of growth.
Spa is one hotel department in particular that is seeing great gains in both revenues and profits. Fueling the growth of hotel spas is a combination of a nationally improved economy, increases in hotel occupancies, and a shift in the perception of spa from an exclusive, luxury experience to a wellness-oriented experience valued by the average consumer to help facilitate a healthier, more vibrant life. As spa and wellness are becoming more prevalent in today’s society, hotels are ensuring they adopt these lasting trends and offer consumers an experience aligned with society’s increasing desire for a healthier lifestyle.
At its root, spa is about health and well-being, and there are indications that health and wellness trends are here to stay. As such, hotels are incorporating spa and wellness not only in spa department, but into other aspects of the hotel, such as rooms, meetings, and food and beverage. For example, some hotels are offering aromatherapy and sleep-aiding amenities in rooms, trendy juices and spa menus at their restaurants, and outfitting meeting rooms with healthy snacks and beverages and premium air quality control. In addition, hotels are creating new ways for guests to be active and social, such as initiating a bike-share program or leading group hikes/runs. Thus, spa and wellness is growing outside the spa, and in facilitating healthier lifestyles for their guests, hotels are seeing a positive impact of the integration of spa and wellness into their entire operation.
PKF Consulting USA (PKFC) and PKF-HR, both CBRE Companies , together are the only consulting firm with a proprietary annual database of approximately 7,000 individual hotel income statements, which includes detailed hotel spa revenue and expense data. Using this database, our Trends® in the Hotel Spa Industry report is the only publication of its kind reporting hotel spa performance and profitability, providing hotel spa operators and owners with sound benchmarking information. The performance overview to follow is excerpted from our extensive 2014 Trends® in the Hotel Spa Industry report.
Hotel spas benefited greatly from hotels capturing more demand and society’s trending healthier lifestyles. In 2013, the most current detailed data available, all hotel spas averaged a 4.6 percent increase in revenues, greater than the average increase experienced by all hotel revenue sources other than rooms. Specifically, both urban and resort hotel spas saw revenues increase, by 7.7 and 3.6 percent, respectively. On a per occupied room basis, urban hotel spas saw a greater increase in total spa department revenue, driven by a combination of an increase in customers, revenue per treatment, and revenue per customer.
Revenue per treatment increased 3.2 percent for urban hotels, while resort hotels experienced a decrease of 1.2 percent. Revenue per customer for urban hotels increased 1.3 percent, compared to a 1.3 percent decrease for resort hotels. For urban hotels, we attribute a portion of these increases to effective revenue management and selling techniques. To calculate hotel guest capture rates, the number of occupied hotel rooms is divided by the number of spa treatments from hotel guests. Combined, hotel spas averaged a 7.8 percent capture rate in 2013, comprised of resort spa capture rate of 11.0 percent and urban spa capture rate of 4.6 percent. This reflects a slight increase over 2012 for resort spas, while urban hotel spa capture was flat.
Hotels continue to reach out to locals to boost spa revenues. By sourcing local patrons, hotels can decrease the volatility of spa revenues relative to occupancy patterns, and bolster demand in off-peak periods. Daily facility use, fitness and personal training, health and wellness, and membership fees, typically associated with locals and non-hotel guests, grew by 4.5 percent combined. This is slightly greater than the increase in total treatment revenue, which grew 4.2 percent.
Retail revenue increased for both urban and resort hotel spas, by 10.4 and 3.3 percent, respectively. We are finally seeing a return to spending on retail and product merchandise in addition to spa treatments, which is a healthy sign for hotel spas.
Increase in hotel spa revenues is great news for hotel spa operators, and even greater news is the fact that much of these additional revenues passed through to the bottom line. Both urban and resort hotels managed to achieve a greater increase in revenues compared to their change in operating expenses, showing that hotel spas are becoming more efficient in their operations.
As it is a “high touch” experience, labor remains as the spa department’s highest expense. As revenues increase at hotel spas, it is no surprise that labor costs increased compared to the prior year, as well. Labor expenses at all hotel spas increased 2.6 percent overall from 2012 to 2013, however the percentage of total labor expenses to total spa department revenue decreased from 60.8 percent in 2012 to 59.6 percent in 2013. As demand increases for hotel spas, higher staffing levels are needed to create the same personal, high-quality experience. One notable change we saw in 2013 was a decrease in payroll related expenses for spas with less than $1M in revenue. It seems reasonable that this would be driven by a shift from full-time employees to part-time, on-call, and/or contract labor for which benefits are not offered. For spas with lower volume, this can be an effective cost-saving strategy.
Due to an increase in revenues and the controlling of expenses, hotel spas were able to see high percent increases in total spa departmental income. Combined, all hotel spas averaged a 13.9 percent growth in profits. Leading the way were urban hotel spas, which grew their bottom line by a greater percentage than resort hotels. Despite a lower overall growth in spa departmental profit, resort hotel spas saw higher profit margins than urban hotel spas, at 23.1 percent compared to 17.7 percent.
New England Hotel Spa Market
New England is home to many hotels and resorts that have spa operations, including destination spas, resort, and urban hotel spas. These spa operations are known for their innovative treatments, high quality services, and excellent guest service.
As society is increasingly making healthy changes to their lifestyles, hotel spas are seeing a benefit and an opportunity. Whether travel decisions are made on behalf of individuals or companies, many are being made with these healthier lifestyles in mind. Additionally, both de-stressing and spirituality have become top-of-mind for hotel and resort guests, and hotel and resort spas are responding in kind.
Mirbeau Inn & Spa at The Pinehills, located in Plymouth, Massachusetts, finds that a strong spa and fitness component is an important factor when companies select a hotel to host a corporate retreat, which they find puts them at an advantage. And Stoweflake Mountain Resort, located in Stowe, Vermont, sees that, in general, guests are looking to reduce their daily stress. As such, their Ayurvedic services are extremely popular, and they offer diet and lifestyle consultations, treatments, therapies, and workshops that are customized for guests. Additionally, destination spas such as Canyon Ranch, located in Lenox, Massachusetts, offer numerous spirituality programs focusing on the body, mind, and spirit for the purposes of grounding, finding purpose, and stress reduction.
As noted, many hotels are integrating wellness into other aspects of the hotel, beyond just the spa. At the Mandarin Oriental Hotel in Boston, Massachusetts’s only 5-star hotel spa, the Spa Director sits on the hotel’s executive committee to ensure the health and wellness of guests are addressed throughout their stay. Committee initiatives include placing yoga mats in each room and offering personal training and nutritional services. Stoweflake Mountain Resort incorporates yoga, meditation, and wellness workshops into meetings for business travelers. Food and beverage is a popular hotel department in which wellness can be incorporated. Hotels such as the Stowe Mountain Lodge are offering healthy menus to their guests as an option, along with its regular menu selections. Mirbeau Inn & Spa at The Pinehills also provides its guests with such options, including organic meals, healthy snacks, and smoothies.
Hotel spas are also using technology and social media as a way to reach and engage with consumers. For example, Mandarin Oriental hosts wellness chats on Twitter, and Stoweflake Mountain Resort welcomes spa writers and bloggers to their online platforms. Technology and social media are instrumental tools for hotel spas as they allow them to reach a broad consumer base to offer promotional offers, educational resources, and other spa-related content.
Hotel spas are finding that personalized, unique, and interactive experiences are what guests are seeking, and what will keep them coming back. Stowe Mountain Lodge looks to ”bring the outside in” by providing maps of hiking/running trails to guests upon check-in and offering outside yoga classes, both in the woods and at the base of the mountain. Also, two of Stoweflake’s most popular treatments are the Vermont Maple Sugar Body Polish and the Green Mountain Coffee Body Treatment, each of which uses unique local ingredients. Additionally, hotels are noticing that guests are taking greater advantage of interactive programming, such as Canyon Ranch’s creative arts programming where guests can learn basket weaving, jewelry making, knitting, and collage art.
Consumers are ever-more driven toward unique and active experiences that are “share-worthy”, and spas have a continued opportunity to deliver just this in a way that can generate posts, shares, and create online trending. Technology continues to transform the way the hotel industry conducts business, and thanks to social media, hotels and spas are able to engage with their customers more than ever before. Hotels are realizing the profound influence of technology and social media on guest purchase decisions, behavior, and awareness. A presence on social media is no longer a competitive advantage, but a competitive necessity; all hotels and spas must engage with their customers online to remain competitive. For hotels to rise above the competition and differentiate themselves, they need to provide consumers with unique and personalized experiences. Not only are hotels regularly engaging with their guests through social media, guests are also in constant communication with other potential customers. Therefore, it is important that hotel spas efficiently provide innovative and meaningful experiences that are Facebook- and Instagram-worthy, which will help increase the awareness of these offerings, organically.
A Healthy Present, A Healthy Future
2013 was a healthy year for hotel spas as they were able to increase revenues and control expenses, resulting in an increase of departmental profits, and we estimate similar improvements in 2014 as we gather year-end financial statements. As occupancies continue to reflect record demand levels, hotel spas have more opportunities to generate spa guest patronage, and the healthy living trends allow spa and wellness experiences to appeal to a broader guest base. It is reasonable to expect that spas providing innovative and unique services, that maintain approachability and the essence of wellness, while managing their expenses, will prove to be most successful in the future. For hotel spas to have sustainable success, they will need to maintain a balance between controlling costs, sourcing new customers, and offering high quality, unique experiences in both spa and broader wellness.
The full 2014 Trends® in the Hotel Spa Industry report can be purchased and immediately downloaded here.
Andrea Foster is Senior Vice President and National Director of Spa & Wellness Consulting, for PKF Consulting USA, a CBRE Company. She is also the publisher of PKF’s Trends® in the Hotel Spa Industry report. he now heads up the Boston office of PKFC.She can be reached at email@example.com, or (617)488-7290. Jenna Finkelstein is a Consultant with the firm. They are both located in the firm’s Boston office.
By: Nicco Muratore
Tastes, purchasing and consuming habits, cooking methods, and customer expectations; they’re all changing. The farm-to-table trend is a growing trend and for some, it’s a demand when cooking at home or eating out. Dan Barber’s book, The Third Plate, Field Notes on the Future of Food, reflects on the history of thriving agriculture and the necessity of sustainable farming. As an aspiring chef in Boston, Nicco Muratore depicts his reflections on the book and thought-provoking stance on the future of farming and cooking.
Driving through the middle of the United States lush fields of green extend for miles in every direction. The corn sways in the wind; it’s easy to assume that this beautiful, rural scene is booming with thriving agriculture. Not so much…
From a distance this might look like a proper farming operation, growing sweet delicious corn for those late summer cookouts. But the truth of the matter is this food will never be served on a plate. This is agricultural misfortune, the death of the farm, and the epitome of the food systems of the United States today. This is feed corn, which is destined for an animal feedlot somewhere else in the country. This corn is inedible for humans.
Corn is a difficult plant to grow. It requires a significant amount of nutrients from the soil, including heaps of nitrogen. Chef Dan Barber compares it to “the biological equivalent of a McMansion.” Each year, the farmers in the grain belt grow the same corn in the same fields every year. It is easy to think that the grain belt has very fertile soil to be able to grown corn year after year. In reality these farmers are using chemicals and fertilizers to “return” nutrients to the soil. They are taking from the land year after year. All the while they give it nothing in return. The terrifying fact about modern agriculture is that we no longer “farm” according to any natural rules. This is no longer afield of corn, or a farm. It is a monoculture, and the death of agriculture and soil completely devoid of fertility and life.
A staggering 80% of crops grown in this country are grains. The grain belt is causing more harm than just taking up space in U.S. fields; its effects are ending up in our oceans. Barber explains, “The fertilizers and pesticides that feed our monocultures end up in the ocean… and has lead to the appearance of more than four hundred dead zones worldwide.”
The worst of these is an eight-thousand-square-mile dead zone in the Gulf of Mexico. This is a direct result of the chemicals and fertilizers used by the monocultures in the grain belt running off into the Mississippi river, which eventually leads to the Gulf of Mexico. Barber conveys the severity of the situation, “Most fish and shrimp, sensing the change in oxygen levels, swim to safer waters, leaving the area virtually deserted and paralyzing the local fishing industry.”
British scientist and “father of organic agriculture”, Sir Albert Howard, said that farming requires that we follow the “law of return”. If we take nutrients from the soil in the form of our crops, we must return what we have taken. Plants consume great amounts of nitrogen, phosphorous, and potassium, which are instrumental to their growth. Farmers must rotate their crops and grow plants that will restore each of these nutrients to the soil, and can be supplemented by natural fertilizers such as manure. However, many of these plants that “fix” and restore the nutrients for the soil are quite undesirable to the consumer (beans, peas, clover, barley, oats, rye, ect). While these crops do not make the farmer money, and seemingly are just taking up space, in reality these plants are the reason farming is possible.
As the United States became more populated, the need for greater amounts of food at a faster pace became apparent. In the late 1800s, German scientist Justus von Liebig came up with a “solution” for farmers. Liebig believed that farmers could bypass the nutrient restoration that crop rotation provides, and that farmers could add specific chemicals to make their soil fertile. This was seemingly very promising for farmers. David Montgomery, author of Dirt: The Erosion of Civilizations writes that,
“Now a farmer just had to mix the right chemicals into the dirt, add seeds, stand back and watch the crops grow. Faith in the power of chemicals to catalyze plant growth replaced agricultural husbandry and made both crop rotations and the idea of adapting agricultural methods to the land seem quaint… large-scale agro-chemistry became conventional farming.”
Liebig’s scientific approach seems ideal in the infant stage, but what really began was the start of man’s manipulation of nature, and a blueprint for how to do it. This way of thinking and manipulation unraveled thousands of years of farming work and stopped the conversation of “healthy soil”. Liebig opened the door for farmers to forget about what was happening under the soil, and let a few simple compounds “do the work” for them. Barber comments that, “If there is such thing as a smoking gun in the murder of soil, this was probably it”. When you strip away the life and vigor from the soil, there is a direct refection above ground in the plants that are grown.
In 1900, farms in the United States were more like the romantic image we have in our minds; fields filled with every crop imaginable, cows grazing in the fields happily, pigs roaming the farm foraging for their food, chickens making a ruckus at 5am, and maybe a farmer with overalls and a pitchfork. In 1900, farms were diversified. Ninety-eight percent of farms had chickens, 82% grew corn (for human consumption), 80% raised milk cows and pigs. Fast forward 100 years and only 4% of farms have chickens, 25% grow corn (for human consumption), 8% have milk cows, and 10% raise pigs. In addition to this, between 1950 and 1975, the number of farms in the country declined by half, and so did the number of people on the farms. The average size of the farms also significantly increased from 216 acres in 1950 to 416 in 1974. We have embarked on a long road to ruin any semblance of a sustainable agricultural system.
Conventional agriculture and big agri-business runs our country’s food system today. Large farming corporations have overtaken the industry and can produce food far cheaper than a small farm in northern Massachusetts. Aside from being unsustainable (getting peppers shipped from 3,000 miles away to a local grocery store chain), conventional farming has destroyed the true flavor of vegetables and livestock. This is a sad, undeniable fact, especially when a summer farm-grown heirloom tomato sits next the mediocre grocery store equivalent—let alone comparing the size and flavor of a free range, antibiotic-free chicken to a factory farmed broiler. However, there is an opportunity to rediscover our regional American farming cultures and a sustainable food system.
Farm-to-table is a term that we hear a lot these days at restaurants. Chefs and restaurateurs alike have latched on to the farm-to-table concept that has become increasingly popular in the last 15 years. True farm-to-table dining and whole farm cooking is an idyllic goal when executed properly. However, this term has become incredibly overused, and allows chefs to pick and choose what they want from the farms. Barber explains this paradox, “The larger problem, as I came to see it, is that farm-to-table allows, even celebrates, a king of cherry-picking of ingredients that are often ecologically demanding and expensive to grow.” This is not to downplay the positive effects the movement has had. The farm-to-table movement introduced local farms to the spotlight.
Today, farmers markets are everywhere, and organic vegetables are readily available (although at a higher price). However, large agri-business has been unaffected and the way this country grows and eats food has not changed. American’s eat with a “heavy hand”, with meat-centric meals complimented by a starch and a vegetable; this is what is expected of a typical dinner. We have lost sight of the culture that used to be involved in food, farming, and eating. Barber explains that, “In the rush to industrialize farming, we’ve lost the understanding, implicit since the beginning of agriculture, that food is a process, a web of relationships, not an individual ingredient or commodity.”
This is reflective in restaurants as well. Barber asks the question, is a restaurant menu really sustainable? Most of the time, the answer is no. Farms are not dictating what chefs serve. Chefs are dictating what farmers grow, and the farmers are servicing the chef. In business with such small margins, small farms are forced to grow what every chef wants—in the summer, think corn, tomatoes, zucchini, all of which are incredibly taxing on the land and expensive to grow. Barber writes, “We forget that for most of human history, it happened the other way around. We foraged, and then out of sheer necessity, transformed what we found into something else—something more digestible and store-able, with better nutrition and flavor.”
Stone Barns Center for Food and Agriculture, located in Pocantico Hills, New York, “aims to change the way America eats and farms”. The farm and center are also the home of Dan Barber’s farm location of Blue Hill Restaurant (the other in Manhattan). The farm grows more than 500 varieties of plants and raise livestock including pigs, chickens, geese, and sheep. During the summer months, the animals roam free on the property and forage for grasses and roots in the fields. Stone Barns also has a 23,000 square foot greenhouse that allows the farm to continue growing throughout the winter. The farm and agricultural center’s goal is to spread the message of sustainable food and educate as many people as possible—and it’s working, as they had more than 100,000 visitors last year. At Stone Barns, Barber and his teams have the opportunity study, research, and teach about a sustainable future for food.
Barber aims to create a true farm-to-table system and a sustainable way of farming, cooking, and serving at Stone Barns. But even he admits that this can be difficult. Barber tells the story of an incident with guests from Gourmet Magazine.) Barber wanted the meal to be farm-centric, and showcase the lost varieties of plants that the farm had rediscovered. The meal started with a summer gazpacho and a salad with a very old variety of iceberg lettuce with considerable flavor (very different from the typical water-filled, tasteless iceberg) The third course was a piece of Bluefin tuna that had been caught the day before off the coast of Long Island with a stew of early summer vegetables; this turned out to be a huge mistake. Bluefin tuna, with incredible fat marbling, is a prized item to both serve and eat, however, is one of the most over-fished and unsustainable species in the ocean.
The plates of tuna left the kitchen. A few moments later, the server came back to the kitchen confused and reported that, “they were deep in conversation”. The plates came back to the kitchen; the vegetables had been picked at, but not one guest had even tasted the tuna. Barber knew he had made a fatal error and explains that, “You don’t wear the high ideals of sustainability on your sleeve—you don’t gloat about saving old, forgotten seeds of lettuce—and then serve a plate of Bluefin.” The diners were horrified by this paradox, and Barber knows that it ruined the meal.
In the United States, one third of seafood is eaten in restaurants. And what kind of fish are we eating and serving? Tropic fish that lives on the top of the food chain: salmon, cod, swordfish, tuna, and halibut. When removed from their environments, their ecosystems are destroyed. We are serving the wrong kind of fish. The problem with this is that chefs have popularized these trophic fish. Barber laments on this sad truth, “You might say that chefs helped create their own positive feedback loop: by cooking with these fish, we advertise their virtues and make them more popular, which increases demand and drives up prices. It’s little wonder that most of these species—salmon, halibut, swordfish, cod, grouper, skate, founder, and of course tuna—have declined by 90 percent in just the past few decades.”
Barber, adamant on learning more about sustainable seafood and the future of fish, traveled to Spain to visit a restaurant and a fish farm. There are many arguments against aquaculture, namely that it is inefficient. A farmed fish must be fed twice its weight in wild fish to get it to market weight, meaning additional fish are taken from the ocean just to feed fish kept in captivity. Barber refers to this as, “borrowing from Peter to pay Paul.”
In Spain, there is an exception to the rule; Veta la Palma, a fish farm with series of canals and connecting ponds thriving as its own ecosystem, where the land meets the sea. Veta la Palma is known for producing some of the worlds best tasting sea bass and mullet—and sustainably. The water flows in to the canals and ponds from the ocean, and with it comes the phytoplankton that is essential to marine life. Small shrimp eat the phytoplankton and the bass eat the shrimp. For the majority of the year they do not need to use fish feed as the natural productivity of the system is so incredibly high. Although it takes twice as long as traditional aquaculture for a fish to reach market weight (30 months as opposed to 15), the system is working at a natural pace and nature is not rushed nor manipulated. The lead biologist, Miguel, explains that in order to have a true vibrant ecosystem, you must have all life present. This means that Veta la Palma is home to many thousands of birds that contribute to the natural ecosystem. Barber is very confused by this; Miguel admits that the farm loses 20% of their fish eggs to birds each year, “We’re farming extensively, not intensively. This is the ecological network. The flamingos eat the shrimp, the shrimp eat the plankton, so the pinker the bellies [of the flamingos], the better the system. The quality of the relationships matter more than the quantity of the catch.”
This knowledge directly transfers to the natural ecosystems that need to exist for proper farming (crop rotations, and returning nutrients to the soil Barber simplifies this, “ The bottom line is, you must embrace life, which is to say all life, not just what you’re trying to grow [or catch].”
An hour from Veta la Palma, Barber heads to Aponiente, led by chef Angel Leon, or more commonly refered to as “the chef of the sea”. Leon believes that it is his responsibility to serve fish that might otherwise be thrown away or discarded during commercial fishing. .“Can you guess out of every ton of fish caught, how much is kept on board? Six hundred kilos! The rest, either dead or damaged, are dumped right back in,” said Leon on why he dedicated his career to “being the caretaker” for the other 400 kilos of daily discarded catch.
Back at Stone Barns, not long after a transformative meal with Leon, Barber was checking a fish delivery from their main supplier. He saw a large tub of cod heads in the back of the truck. “Heading to Chinatown?” he asks Howard, the driver. “Sell the heads?” he responds with a laugh, “Hell no, I throw them away myself.”. Barber took the whole bin of heads, and continues to serve them on the Blue Hill menu ever since.
A Visit to the Stone Barns Agricultural Center: January 2015
It was cold and snowy as I approached the gates of Stone Barns. A brisk 20-degree day is not the most ideal for visiting a farm, but for me this was the most exciting part of my week. I had been looking forward to coming here for a long time. Every aspiring chef and cook knows of Dan Barber and the impressive farm-restaurant relationship that exists between Blue Hill and Stone Barns.
The farm was relatively empty as I stopped at the visitor’s center. I found my way to the very small Blue Hill Café, and convinced myself that 10:45 am was a perfect time for a house-made bologna sandwich on fresh-baked rye bread. The sandwich was out of this world, full of flavor and life with bologna made in-house, freshly-picked greens, and bread made that morning. I remind you, this is just the café.
Once I finished my sandwich-and-coffee break, I was off to tour the farm. The fields were empty, as the ground was quite frozen and devoid of plant life at this point in the season. Upon entering the greenhouse, I was blown away. I had never seen a greenhouse so full of life, let alone in the middle of January! Row after row of French breakfast radishes, Hakurei turnips, Bejo kale, oak leaf lettuce, Swiss chard, English peas, Mokum carrots, red malabar spinach, mustard greens, Sora radish, fenugreek, and more.
The farm plants some roots vegetables that are incubated in the greenhouse, before they are transferred to the fields in the spring. Even in the dead of winter in the Hudson Valley, Stone Barns is still growing and planning for the seasons ahead.
As I stood there, I realized I was looking at one of the truest expressions of a sustainable farm-to-table system.
The Local Players
Meet Chive, a sustainable catering company based in Beverly, Mass. that is dedicated to serving local food and educating their clients. Jennifer Freedson, co-owner and event designer for Chive says they strongly believe in buying local and building partnerships with nearby farms.
Strictly sourcing from local farms, it is difficult for Chive to give their guests an exact menu; they let the farms dictate the menu, a rare practice. “Grow what you grow best—and we will put it on our menus, ” said Jennifer who is ahead of the curve when it comes to locality and sustainability.
Chive sees their events as opportunities to start the conversation and reeducate the public on the future of food and surrounding resources. Proponents of the sustainable food movement have a responsibility to raise community awareness, and Chive is doing this at each and every event.
Ana Sortun, James Beard Award-Winning Chef of Oleana, Sofra, and Sarma restaurants in Cambridge, Mass., has been buying locally for 23 years ever since she started driving past a produce farm in Concord on her way to work.
Once Ana moved into Cambridge and opened Oleana, she still wanted local products from Concord but the farm was too small to have a daily truck delivery. Determined to bring farm produce to the city, she acted as liason between fellow local-produce seeking chefs and the farms.
Fourteen years later, Ana is still connecting Boston-area chefs to nearby farms. In 2002, Ana met and married Chris Kurth, organic farmer of the 90-acre Siena Farms in Sudbury. Siena Farm supplies Ana’s restaurants with 95% of its produce during the summer growing season.
Ana explained that chefs must write their menus around what the farm has to offer, and added that, “whatever the farm is doing, you are doing”. Chris knows what grows best, and it is Ana’s job to be able to use and serve everything that grows during the season.
In today’s Boston community, people care about food more than ever. This year is a pivotal moment in this conversation; where the opportunity to bring sustainability and locality is in the spotlight, ready to be harvested.
Nicco Muratore, a senior at Boston University in the School of Hospitality Administration, began his culinary career at the EMC Club and State Street Pavilion restaurants in Fenway Park when he was 16 years old. He went on to work in the kitchens of Chef Ana Sortun at Sofra and Oleana in Cambridge. After stints in London and New York City’s Union Square Café, Nicco returned to Boston to finish his degree at B.U. and is currently working at Commonwealth Market and Restaurant.
As we enter the third year of the Boston Hospitality Review and our second year as Editor and Publisher, we continue to be inspired by the focus of this publication. To quote our colleagues and predecessors, Brad Hudson and Chris Muller, “The Boston Hospitality Review is an interdisciplinary publication devoted to scholarship and reflection about the theory and practice of hospitality as a business activity and cultural phenomenon. It has a special connection to our Boston home, and to the surrounding New England region, but the topics discussed will usually transcend geographic boundaries. In the current vernacular, our editorial policy is to act locally and think globally.”
This past year the BHR has traveled far away (Budapest, Hong Kong and Zurich) and close to home (New England, New York and Boston). Authors have covered operational and managerial topics including housekeeping, technology, marketing, food and beverage, branding, human resources and leadership. Trends and practices addressed have ranged from historical perspective – dating back to early Roman times to current use of technology on iPads to maximize restaurant profitability.
The first issue of year three continues the practice of appealing to a range of readers – academics, industry practitioners and those just interested in the hospitality field. It covers six diverse topics from the healthy (spas in New England and farm-to-table sustainability), to the historic (a 60 year old Boston-based, family-run doughnut shop, and Cunard’s 175th anniversary and its longstanding ties to Boston), to the innovative (a new perspective on the product life cycle and the blurring lines between restaurants and grocery stores).
We hope you can use these articles in the classroom, with a colleague or simply in dialogue with a friend. We invite you to offer us feedback or suggestions about topics you would like covered – or better yet – we welcome your contributions to future issues.
Arun Upneja Michael Oshins