December 26, 2024 • 53 mins
Why are food prices so high right now, and what’s causing it? From supply chain issues and rising fuel costs to the choices we make at the grocery store, this episode breaks down the hidden reasons behind skyrocketing food prices. We’ll explore how the food journey—from farms to warehouses to your table—is more complicated and costly than it seems.
Learn why seasonal produce, imported goods, and food waste play a more significant price role than you might think. Discover how private labels can save you money and how restaurants face unique challenges with pricing and waste. Most importantly, we’ll discuss how your eating habits can make a difference. By the end, you’ll see how understanding the food system can help us make more intelligent choices.
Please tune in to connect the dots between what you eat, how it gets to you, and what it costs!
Remember, your Perch isn’t just a place to sit; it’s a place to seek a higher perspective.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
Good day Purge people .
Thanks for joining us in aMerry Christmas.
Feliz Navidad.
This really isn't a Christmasepisode, but it's a necessary
conversation.
Merry Christmas, let's bringyou down.
No, no, no, no, we are going tolift you up, so let me start
with introducing myself.
Hi, you guys, is viewing forthe first time.
(00:31):
I'm Tree and this is Toby, andthis time, for the people who
have visited before, I need togive you a little context about
the subject.
So today, our subject is what'seating you?
Rising food costs in America,so this is Christmas, you can't
afford your turkey.
Yeah, why is my turkey soexpensive?
(00:53):
For those of you?
It's really important that youlisten to this through the end,
because I'm going to give you alittle background of why I'm
having this conversation aboutmyself and then I'll give it to
Toby and he can give you alittle background about himself
and how we know a littlebackground of why I'm having
this conversation about myselfand then I'll give it to Toby
and he can give you a littlebackground about himself and how
we know a little more than anaverage person not saying we're
a subject matter expert, but weknow a little more about these
(01:16):
complex, the complex topic we'retalking about today.
So my background is I've beenin food distribution and
logistics for 30 years, fromwarehousing to transportation to
distribution.
I work for one of the largestfood distributors and one of the
largest the world's largestcold storage company in the food
(01:39):
area, so I know a little bitmore.
Speaker 2 (01:42):
She knows to which she speaks.
Speaker 1 (01:44):
And I was a restaurant owner and a dinner
theater owner.
So when I say I've been aroundfood in every facet and in every
aspect I have.
Speaker 2 (01:53):
So, my background is mostly in the hospitality
industry, which is hotels,retail, but mostly restaurant
over the last 40 years, and so Itend to pick it up a little bit
later in the chain of custody,if you will.
That Tree does so, obviouslybeing involved with distribution
.
The distribution folks are theones who get it to the
(02:14):
restaurants and then typicallywhat the restaurant does with it
and how they manage it and howwell they control.
That is kind of the world thatI've lived in.
Speaker 1 (02:23):
Well, thank you.
Speaker 2 (02:24):
Oh, you're welcome.
Speaker 1 (02:26):
So I really want to talk about this subject because
full transparency and disclosureI have been fuming.
I have been fuming for the lastyear and a half, so much so I
actually wrote a televisiontreatment about this very, very
subject because, excessively,we've heard the outcry of the
(02:48):
collective and this is the onearea in America I think we can
all agree that most people areon the same page when they're
saying it's too high and we needto bring it down.
The reason I've been fuming isI'm fuming because of the
conversation we're having aboutpricing, and I know the answer.
The solution to everyone islike I don't care how we got
(03:11):
here, just bring it down.
And I know the recent.
I know Trump ran on a platformthat he was going to bring
grocery prices down and then,immediately after he won, it was
like well, I really don't havethe power to do that and there's
some truth in that, and sothat's part of what this episode
about.
It's part of where we're goingto get into.
(03:32):
I want to just say somethingthat not everyone might be aware
of.
So I want to talk about this.
Food doesn't just travel fromfarm to table, and I know we
hear that saying a lot.
Farm to table is the best wayto eat.
It is from a health perspective, economic perspective.
That's a different conversation.
It passes through multiplelevels of the cold chain, and so
(03:56):
, for those of you who havenever heard that term, I'm
really going to try to have areally simple conversation with
you and explain the Americanfood supply chain system.
It's an ecosystem and we'regoing to do the best we can to
spell it out.
Speaker 2 (04:12):
In happy meal terms.
Speaker 1 (04:13):
Keep it simple, but give you like everyone should
have some insight on the way weeat.
So in the cold chain itincludes warehouses,
transportation networks, storagefacility, all in which add
costs to every stage.
So let's keep this simple.
So let's take one product, forexample.
(04:34):
Let's take what would you liketo take A bottle of.
Let's take some frozen dinners.
That frozen dinner goes througha processing, so it has to go
through a process.
Then it has to go in awarehouse, and then that in a
process and is packaginglabeling.
Then it goes to a warehouse,then it typically goes into, you
(04:57):
know, some cold storage andfrom there it could go to
multiple distributors and thenfrom there it goes to normally
one of the grocery warehouseswhich have their own multiple
distributors, and then fromthere it goes to normally one of
the grocery warehouses whichhave their own local
distributors.
Speaker 2 (05:09):
Then until your fridge isn't it even more
complicated, though, if you'redealing with something like
produce, because produce haseven more steps, because you're
talking about a packaged productput on the shelf that has a
well?
I mean, let's face it, we couldhave world war three and we
could probably still eat a tvdinner because there's so much
preservatives in it.
But if you've got a banana orstrawberries or something
perishable like that, isn't itmore complicated?
Speaker 1 (05:31):
It is much more complicated and I was just
trying to give the simplifiedend, stating that if I literally
tell you, on average, the wayAmericans consume food, goes
through, on average, five steps.
Now, when I say step, look at astep as a process and in that
process there's a charge.
So, every time you store it,it's a charge, and there's a
(05:54):
transportation component to eachtime it's moved.
So there's a freight charge andthere's a freight charge and
there's a freight charge.
Speaker 2 (06:02):
So bananas, for instance.
Where do bananas come from mostcommonly?
Speaker 1 (06:06):
uh, well then that now you'd complicate them,
because that's what I'm tryingto get at what?
Speaker 2 (06:10):
so?
Yeah, they come from anothercountry, right in many cases a
lot of our bananas and I do have, and I'll I'll switch to that
part all I'm trying to get to atsome point is that bananas
travel halfway around the world,go through four or five
different steps and get to thegrocers, get to our, our grocery
store, and they're bright andyellow and happy right, what the
(06:32):
?
Hell.
Or I'd like to say you're downhere, what the hell?
So how's that?
Was it good?
Speaker 1 (06:37):
yeah, we're jumping into it and because you bought
it up I think a little contextneeds to be given to that.
As of 2021, imports account forapproximately 60%.
So imports people that's thingsthat are coming in as far as
what's going out.
So we are bringing in 60% ofour fresh fruits and 38% of our
(07:03):
vegetables.
In 2020, mexico gave 51 percentand 69 percent A lot of the
bananas we eat come incontainers.
That means it's ocean free,that's shipping.
It's sitting out in waters andyou explain to me how you put a
banana on your counter and twoor three days later it's brown
when it can sit out in the oceanthat's kind of where I was
(07:25):
going with that.
Speaker 2 (07:25):
That's what we call a leading question, right?
How did how does that happen?
Speaker 1 (07:29):
it's just this is a lot to give you guys, but the
the bottom line is I ask thatyou consider the financial
components.
You can't understand that.
This is not your world, but Ineed to make the case.
Our food ecosystem just the wayeat has so many layers of
complexity, have so manydifferent pricing components,
(07:51):
and so when you look at prices,when you can say I used to pay
$0.39 a pound for a banana, wellyou know the other thing too,
is.
Speaker 2 (08:00):
Growing up, I remember where my parents would
say oh, this isn't banana seasonnow, you can't get corn.
Now it's not corn season.
Oh, strawberries are from thistime to this time and there was
an expectation that when you hadthat particular produce or
vegetable, it was pretty much,as you were saying before, farm
to table, because it was fresh,it was from the local this, the
(08:21):
local that.
And now we've seen and I'm notan expert on this, but it seems
like you can have corn any timenow, you can have strawberries
any time now, so we know theydon't grow any time.
So there's some stuff going onhere that is either unnatural
preservatives or we're doingsomething.
It certainly is a long way fromfarm to table and, as we talked
(08:41):
about a couple weeks ago, whenwe were in France, you were
going crazy over what Candelopeand watermelon.
Was it watermelon?
No, it was candelope, and themelons and said, oh, my God,
this has flavor to it.
And so obviously all of thoseand I'm not bringing it up
because I know we're not talkingabout preservatives and stuff
like that but all of those stepstake time and cost money, right
(09:02):
?
Speaker 1 (09:02):
So every time somebody takes custody of
something, there's a costassociated, absolutely, and it's
funny I was looking for itbecause I pulled the data on it.
And let's just keep it simple.
Think about this Less than 30years ago, the average American
didn't even know what an avocadois If you weren't born in
California and you lived in theMidwest.
(09:23):
I remember the first time, truestory, I made guacamole like 25
years ago.
They were like Tricia, what isthat green star with an S?
That they said, and I was like.
But I lived in California andnow everywhere you go, you have
avocado toast.
Why am I bringing up avocados?
Speaker 2 (09:41):
I hate avocado.
That's what you're bringing upbringing up avocados.
Speaker 1 (09:45):
I hate avocado.
That's what she's bringing up.
No, because of the.
This is all about ourconsumption.
When our consumption and itties into your point about fruit
and vegetables being seasonalwhen our consumption is up,
let's be honest.
America and I really want us tohave an honest conversation
about our level of consumptionhere.
An honest conversation aboutour level of consumption here.
(10:06):
When that level of consumptionup and the crops are low,
majority of, like 80% of ouravocados come from other
countries, so they have to beimported in, and just like
bananas.
When you have to travel, that'sanother process.
We have to gas.
We gas majority of these thingsto preserve them, so they can
(10:27):
have the ability to travel, sothey can arrive to you, and then
they are processed once theyget here, so they come right and
then we put them in a gaschamber and we can read about it
.
Don't want to make it toocomplicated, but I I have to
leave a lot of these components.
We as consumers have a hand inwhat.
(10:48):
What's the word?
We may be unwillingparticipants.
Speaker 2 (10:51):
Well, we've become an Amazon culture, right, it's
like what do you mean?
I've got to wait a day for this?
This is ridiculous.
And we've we've created suchlofty expectations.
I mean, again, I'm going to,I'm going to get in the way back
machine.
I remember, you know, when Iwas young, you would order
something and it would say allowfour to six weeks for delivery.
Right, it was like that was theexpectation.
(11:12):
It took that long, and now wecomplain and grouse if we can't
get it from Amazon the next day.
So we are, we are complicit increating this.
I expect it now, I expect itovernight, I expect it in a
second.
What do you mean?
It's not strawberry season.
What do you mean?
I can't get avocado.
And, to your point, thedistribution network has created
(11:32):
the ability to do this, but notwithout cost.
Speaker 1 (11:35):
Absolutely, and I want to because this is a lot.
This is only one podcast and Iknow we're packing a lot in, so
we're trying to give you clearinformation and a little detail
in a short period of time.
But I do want to talk about thefact that I understand it's
kind of a natural proclivity forus to go.
(11:57):
You know, let's agree incorporations and I'm not saying
that there is not corporategreed, we know there is and
there is shareholders andstakeholders but I want to bring
us as consumers into theconversation and say to us we do
have a hand in this, meaningknowingly and unknowingly,
(12:21):
knowing that our excessive needfor wanting what we want when we
want it has created thisecosystem, the way that food
moves and has a lot to do withpricing and why, and some of the
reasons, how we got here.
Like you said, we knew growingup, you know we had to wait for
the melon season to start.
(12:42):
When you go in a grocery storenow, melons are in there year
round all, there is reallyalmost no fruit that we eat in
america.
That isn't there.
Sad green tomatoes that's asouthern thing, another
conversation.
But normally every fruit andvegetable is in a year round.
That is not natural, becauseamerican crops just don't grow
(13:02):
like that.
There is a seasonality toeverything, so there's a reason
to when you eat things if justdon't grow like that.
There is a seasonality toeverything, so there's a reason
too.
When you eat things.
If you don't understandseasonality, you are going to
pay more, because that is prettymuch saying there is no way
that food was grown here inAmerica.
Speaker 2 (13:17):
So you are consuming imported product and import
comes at a cost and part of that, too, is the fact that we are
this melting pot right.
So we've got people come fromall around the world and they're
like I'm used to eating this, Iexpect to have that I.
So one of the natural maybenegative byproducts is that you
know when, when you grow up andyou you were born in the U S
(13:39):
you're used to your meat andpotatoes and your corn and your
you know that kind of staple.
And now you look at the typesof things you can buy in a
grocery store and you know I'vebeen in a grocery store twice in
my life because I like go intopalpitations, I need my EpiPen
and all that kind of stuff.
So a little dramatic, you know,curl up like a squirrel in the
corner, anyway.
But I digress Half thevegetables now and fruits I
(14:01):
don't even recognize.
I Half the vegetables now andfruits I don't even recognize, I
don't even know what the worldthey are.
So clearly they're not from theUS.
In most cases they are importedand it's because we've now
become very much a melting pot,very much a culturally diverse
world, and everybody's like Ilive here, but I still want my
maca maca fruit.
And you're like, what the hellis a maca maca fruit?
Oh, it comes from MacaMacaville and then it's got to
(14:23):
be stored 11 times before itgets to you.
And you wonder why a maca macafruit costs you $11 a piece.
Speaker 1 (14:30):
Okay, so I do want to add this data.
It said the hidden cost ofvariety and convenience.
That's what we were justtalking about Maca maca fruit
(14:50):
for a variety of convenienceinstantly available creates a
system that prioritizes speedand flexibility, which comes
with a significant financial andenvironmental cost.
A report from McKinseyhighlights that 85% of the food
consumed, 85% of food consumersprioritize convenience over cost
, and so for anyone who saysthat they want cheaper, it's a
(15:17):
thing saying, well, we wantprices to go down, but then if
you prioritize convenience,what's that?
Speaker 2 (15:23):
expression when, like , a contractor comes to you, you
can have it either faster orcheaper, or I don't know the
expression.
And it's like you can't haveall three of them, you know.
And so if you want it fast, youcan't have it cheap.
If you want it cheap, you can'thave it.
Well done, it's like it's acompromise, and if people are
valuing what did you say?
Convenience?
Speaker 1 (15:43):
over Convenience, over cost.
So let me explain.
Speaker 2 (15:46):
You reap what you sow .
Speaker 1 (15:47):
Yeah.
So let me explain why.
Convenience over cost whatcreates the cost?
So pushing companies tomaintain expensive.
It's called, like just-in-time,Supply chain models.
The US imports 15% of its foodand including nearly 50 of the
vegetables.
So what?
What is just in time?
(16:08):
You may say, uh, what?
Is just in time just in timewas developed actually in the
19th.
Speaker 2 (16:13):
So I said well because I know people.
Speaker 1 (16:16):
I have no idea what just in time is, but that
creates the, the.
I want, what I want when I wantit model.
Speaker 2 (16:22):
Who was Justin Time?
Speaker 1 (16:23):
Oh my Jesus.
Speaker 2 (16:25):
No, he wasn't there.
He was there.
Oh, he was, he's always there.
Speaker 1 (16:29):
You just weren't listening.
Speaker 2 (16:29):
He's like Elvis.
Speaker 1 (16:30):
Oh my God.
So Justin Time was developed inthe 50s and 60 by a Toyota
motor company.
It's a supply chain strategydesigned to reduce inventory
costs by receiving goods onlywhen they're needed.
So, you know how back in the dayyou just had like a surplus or
whatever.
That's why, when think about it, when you go to the grocery
store, now, with technology, theminute they scan your food or
(16:55):
scan that item and I'll explainto you SKUs too, those are those
item codes.
When they scan that item, it issending a signal back to saying
to check on inventory and theyreplenish it because the
technology they don't have tojust buy in bulk and and so when
you need it, when you have it,it's there.
Speaker 2 (17:16):
so that's, that's the simplified well, I have a
question about that, becauseduring covid and maybe it's the
same way now we heard that wedon't have a food shortage, we
have a distribution problem, andwe heard that all the
warehouses and all thesewarehouses were stock chugged
full of product and we couldn'tget it out to the restaurants,
(17:38):
and the restaurants or thegrocery stores were like we
don't want it.
So that's kind of the oppositeof just in time, isn't it?
I mean, it's all sittingsomewhere waiting and somebody's
paid for it to sit there and alot of it gets thrown out and
goes to waste.
So how's that just in time?
Speaker 1 (17:56):
So you know how I feel about this subject.
That's a loaded question.
And it's loaded because, to behonest, fact, honest, factually
people.
When we went to the, thegrocery stores and the shelves
were empty.
The food was produced factuallyin america.
Most of our warehouses were atbrink.
(18:18):
They were running over.
Speaker 2 (18:19):
We're all panicky because there's one one thing of
sugar left and, oh my god,we're good.
Speaker 1 (18:24):
You know we're all gonna die because I can't have
my non-dairy creamer yeah, andthere's a report and I and I and
I don't wanna I don't likemisquoting things but saying
it's so much food in america andour warehouse is just in
america alone we can feedmultiple nations continent
factually.
We have tons of food here andif you think I'm lying, I'll
(18:48):
give you the data on how much wewaste every year.
Just waste.
So, when you say there's no food.
There is food here in America,but the problem is there is a
connectivity issue and theconnectivity sometimes, let's be
honest says who's going to payfor it, meaning when gas prices
are up.
Think about it so and let'skeep it simple.
(19:11):
We watched, as a nation duringa pandemic, when people stop
driving and they stay home.
Do you remember when the fuelindustry started dumping fuel
Because they said, before theyput it out and have prices fly,
they will get rid of it before?
Consider I'm not saying thishas happened considering the
fact that when companies wereclosed, their labor was at an
(19:35):
all-time high because, forexcuse me, except for essential
workers, they were paying heavylabor costs.
And why should I pay absorbentfreight charges?
Or why should I pay all ofthese things?
Because free prices were down,because fuel was down and all of
these prices were down.
Speaker 2 (19:55):
Such a short-sighted society I mean people joke all
the time about culturally thewest is far behind strategically
the east, because the east youknow in j and in China and all
that they're making investmentsfor the next century already and
we're worried about, like, nextquarter's profits.
And I mean all you have to dois I'll use an analogy not even
in the food industry.
When COVID hit and it startedto shut down our economy, the
(20:19):
rental car agencies sold off alltheir cars.
They didn't say, hey, you know,this is going to end at some
point in time, probably sixmonths, 12 months.
Either the world's going to endor it's going to end in the
next six or 12 months.
But they sold off their cars.
So then COVID, as we expected,ended and we had a shortage.
We had no freaking rental carsand it's like I think every
(20:40):
industry that thinks that way,including the food industry,
gets caught with their pantsdown.
I mean we heard stories aboutships sitting out in ports for
months at a time, right, Becausewe shut down and then we open
up and we think everything isgoing to return to normal.
So shame on us.
Speaker 1 (20:56):
Yeah, remember, we're short-sighted and honestly and
I'm going to put Amazon in thatexample Remember, because we're
at home, everyone was so heavilydependent on Amazon because we
couldn't come out and so it wasa necessity and I'm not judging,
I was one of them.
So Amazon just saturated themarket.
They built tons of warehouses.
And then, when we startedcoming out, they started closing
(21:19):
warehouses, which is soshort-sighted.
Speaker 2 (21:21):
It's like accounting period to accounting period.
Nobody says, okay, what's goingto happen a year from now or a
year and a half from now.
But you know, should we put thecars on the side?
No, no, no, let's sell them alloff.
And then, all of a sudden, whathappened to used car prices,
you know, after COVID.
I mean, it's just, we justdon't, we're not very proactive
in terms of looking at thisstuff, and I would argue that a
(21:43):
lot of this is still a COVIDhangover.
Speaker 1 (21:53):
So let me go back to the pricing and our structure
for people and the consumerspossible hand in this or hand in
a solution.
So now let's talk about facts.
What we need the increasedadoption of private labels,
eric's.
So for those of you don't knowwho private labels, what private
labels are?
You see them all the time.
So when you go to the grocerystore, you, and if you go to
(22:15):
Walmart, walmart it says greatvalue, so that's that their
Walmart's private label.
When you go to Target, there'sthis market can't think of the
name of it, and so what doesthat mean me, tricia, and why do
I care?
Well, the reason that shouldmean something to you on why you
care is because most of thesevendors and producers of food
(22:38):
have a generic version, andthat's a private label, meaning
you're getting hung up becauseyou like your name brands.
You like your Heinz, you likeyour Kraft macaroni and cheese,
you like whatever that brandyou're accustomed to, but that
same company makes a privatelabel, meaning it's the exact
same product, is it really,though?
(22:58):
Is the quality the same?
I'm getting into that, allright.
Speaker 2 (23:01):
Jump the gun.
Speaker 1 (23:02):
Calm down.
All right, calm down, I'm aboutthe chicken and Heinz.
Speaker 2 (23:05):
That's why I'm here.
Speaker 1 (23:06):
It's produced on the exact same assembly lines.
It's the exact same product,but what they do to save costs.
There's a lot of costs inpackaging.
So it's the reason why when youget a bottle of water now, it
pretty much collapses in yourhand.
When you squeeze it, it's likeah, it's like what.
It fumbles and it spills allover you because they downgrade
(23:30):
the packaging.
And so, when you look, thinkabout it, now that I bought up
to you, think about the greatvalue label on Walmart.
It's blue, it's simple.
There's no glitter, there's noheavy plastic, there's no shine.
So that's a cost savings.
So that's one.
That's how they save you money.
That's a cost savings.
So that's one.
That's how they save you money.
Factually, it's a slightingredients modification.
(23:51):
So what they do is and I'm not,and this is just me being
dramatic it's 57 ingredients andhigh they go.
You're going to get 56 in aprivate label.
So, factually, I worked on oneof the accounts I had I won't
say the name was a company thatproduced nuts.
Speaker 2 (24:09):
Ah, nuts.
Speaker 1 (24:10):
So hear me out, this is how it works.
So I just want you to considercost saving.
So when it comes out, it comesdown the same conveyor, it's the
same notes, it's their brandname, which comes in a really
nice shiny can and it'sexpensive and that's the top.
So the nuts come down aconveyor belt and they shake it.
(24:30):
The bigger nuts go in the theshiny can.
Toby toddler oh my god,seriously, it's you don't get a
bigger nut than this it's like alittle the three-pronged shell,
a whole system.
And the larger nuts go in thethe the highest level, the
(24:51):
medium-sized nut nuts go intheir, their secondary level,
and the smaller nuts go in theirprivate label and they and and
a lot of times it's barely andso, but then from a recipe
standpoint, then what they'll do, like if you have dry roasted
nuts, they'll put one coat ofroasting on the dry, on the
(25:15):
cheaper one, and two coats on it.
That's the difference.
Speaker 2 (25:18):
But it's more than that, isn't it like marketing
too?
I mean, if we were talkingabout I don't know, I'm trying
to think who does nuts?
I'm just saying from a productstandpoint, planters does tons
of commercials, they do tons ofmarketing.
Planters does tons ofcommercials, they do tons of
marketing and you don't findKmart nuts or Kmart Kmart is so
old Kmart nuts Sears nuts If youeat nuts from Kmart, you got
(25:38):
bigger issues.
Exactly, you got bigger issuesRight.
All right, so I'm having mySears nuts over here, but I mean
, you know what I'm saying.
It's more than just that.
The brand is trying to createan identity.
So they're out there marketingand they're out there
advertising.
I mean on a much simpler basis,I look at every weekend on
sports, the cell phone guys arejust hammering you Verizon and
(25:59):
T-Mobile and all that butthere's a whole bunch of other
carriers that you never seeadvertised.
Speaker 1 (26:04):
And they're so much cheaper.
That is a profound connection,because those same cheaper
people are using some of thesame cell phone towers.
Speaker 2 (26:12):
There you go.
And pinging in so that's agreat Good job, thank you.
Speaker 1 (26:16):
Great Circle gets a square.
Go back to food.
Speaker 2 (26:18):
All right.
Speaker 1 (26:18):
Going back to food Nuts oh my Jesus, the reason I
even bought up there.
There is an increase inadoption of private labels and
generics, a shift to storebrands.
Consumers are increasinglychoosing store brands or generic
products over national brandsto save money.
(26:39):
In early 2023, 22 percent ofshoppers stated that they're
switching, stated that they'reswitching.
I have to say it's concerningto me when we're all saying you
know, it's so high.
I even found myself the honesttruth.
In some brands I've switcheddetergents, some of them.
(27:01):
you can't tell the differenceright, Right, Like my dish,
detergent for the dishwasher andthings like that.
I looked at the prices.
I'm like why am I paying $18for this when this other store
brand is $12?
So when we say it's changing,it's literally only changing in
those aspects.
And so there has been modelslike Aldi's.
(27:24):
And so for people who've neverbeen to Aldi's before, the
reason why Aldi's hashistorically existed Aldi's
business model centers onoffering a curated selection of
private labels Goes back to whatI just told you generic labels,
private labels, call it whatyou want to call and has
resonated strongly with costconscious people increasing
(27:48):
shopping, increasing shoppersswitching to Aldi.
So now our prices are so high,people are going back to Aldi,
and Aldi again it goes back towhat you just said it's
capitalizing on it.
So they have an expansion by2028.
Aldi's plans are opening 800stores, but it's the same
(28:10):
dilemma so if people prices,just then people only go into
all these because they're likewell, I'm stretched and I really
don't prefer all these, but formy staples, my bread, milk and
eggs but one of the things youjust said was that packaging is
also very expensive.
Speaker 2 (28:24):
So you may have seen in the news, I think as recently
as last week, Costco isexpanding.
And I don't mean expanding, Imean expanding, and part of it
is, I think, exactly what you'resaying there, which is so much
of the cost of a product is inits packaging.
So you know why go buy oneKleenex when you can buy
6,332,412?
(28:45):
So now, if I can have a boxthat's this big of Kleenex as
opposed to having to packageevery single one of them, that
should take some cost away aswell, right?
Speaker 1 (28:53):
So let me explain.
So I'm glad because you boughtup Costco's.
Let me explain their model, thereason why and I feel like
somebody's going to have an ahamoment when I say that for those
of you who shop at Costco, Ithink we've all experienced this
frustration where you startliking a particular product and
you go back and you'll never seeit again.
Speaker 2 (29:12):
Cinnamon rolls.
Speaker 1 (29:13):
Yes, let the cinnamon rolls go no, and let me explain
you the reason why.
Behind it, it's the way we buyand it goes down to cost savings
.
So Costco doesn't have likemajor, major warehouses like
other people.
So they really have a just intime model.
(29:33):
So when their product comesinto Costco, typically it
doesn't go through a lot ofthose steps, saving costs.
It goes directly from whateverthat distributor is to Costco
warehouse, out to that store.
So they have taken a lot ofcosts out there store.
So they have taken a lot ofcosts out there.
But here's why you getfrustrated, because you'll go in
(29:55):
and Costco will commit to.
If you notice, pay attention,when you go, it's two or three
options they're going to giveyou for one item.
So if there's a soup you'regoing to get you know, your
cream of broccoli or this oryou're that.
And then you'll say, well, Ilike Panera, cream cheese,
broccoli or whatever.
And now it's Joe Schmoe's inthere.
Speaker 2 (30:15):
There's nothing wrong with Joe Schmoe's, by the way.
Speaker 1 (30:16):
Because that's what Costco does.
They keep costs down.
They find vendors who can keeptheir just-in-time model to stay
in this process and once thatvendor can't meet the model
that's created and they can'tsupply, it's on to the next one.
Now we know we have to findanother vendor for that broccoli
cheese.
So that's how the systems andstructures are created and how
(30:42):
it's created either drive costup or drive cost down.
Speaker 2 (30:44):
So are they buying on a contract, or are they buying
surplus from somebody else?
What?
Speaker 1 (30:48):
do you mean they have contracts with their vendors?
Speaker 2 (30:50):
yes, and once that contract is up they go into
surplus.
Speaker 1 (30:52):
But their contracts.
They're different from othercompetitors in that area because
they don't have all of theextra steps in the supply chain.
So when they give you theproduct, they need to know.
Perfect example Popeyes.
Remember when people werelosing their mind over Popeyes
and they created this productand did not realize the demand
(31:15):
would be so high.
Here's the problem.
The vendor that they went withthat could create that
particular chicken sandwichcould not produce at the levels
there, so it created all of thisangst, all this uproar.
And when they switched to avendor they couldn't their
product changed.
So it's not like and somepeople, because you don't
(31:38):
understand, you know how it goesit's like well, they start
making money and they justcheapen their product.
That's not necessarily true.
They just found a differentvendor and that vendor didn't
have the other vendor's recipe,so they got as close as they
could to recreating that Gotcha.
So they got as close as theycould to recreating that Gotcha.
So it's all just insight of howwe and why we pay the things we
(32:02):
pay.
Did you want to get more intothe restaurant side?
Speaker 2 (32:05):
Well, on the restaurant side.
I think it's just an extensionof customer demands.
Again, it comes back to peopleexpect anything anytime, all the
time, and there's a certainlevel of consistency that people
expect with menus, right, sothat inherently a restaurant has
to have a consistent.
Well, they don't have to, butmost restaurants have consistent
(32:26):
menus and that createschallenges unto itself, right,
if it's something that'sseasonal or only available
during a period of time.
Now, many restaurants will dowhat are called limited time
offers.
You'll see this at a lot of thelarger restaurants, or what we
call quick service or QSRrestaurants, where they do
what's called an LTO.
So they'll do a buffalo chickensandwich and, to your point,
(32:48):
they've already contracted withsomebody to make a finite amount
of that product to go for aperiod of time.
Now here's the challenge thatrestaurants have is it's kind of
a best guess those that havebetter understanding of history
and tracking patterns and thingslike this are better at it.
But this comes down to the wholequestion around food waste.
If I'm a large brand and I saywe're going to have this buffalo
(33:11):
chicken sandwich and it'savailable till March 31st, well,
it would be wonderful if onMarch 31st, my last restaurant
sold its last buffalo chickensandwich Never happens, okay.
So ideally perhaps they sellout before that, right A week
before that, the day before.
That depends on how well weplan, but that's not what
(33:33):
happens.
And what happens is they'releft with product and this
product sits there and sitsthere and sits there and
eventually it gets thrown awayin many cases.
And it's a tragedy because it'sa food it's a waste of, of
perfectly good food that couldhave somehow been either perhaps
repurposed or donated tocharity or some other way of
(33:53):
getting rid of it.
But as we look at as asrestaurateurs, we look at this
sometimes and I'm not going toget down on the marketing people
too much, but marketing peoplesay, look, how successful this
campaign was, we sold this muchmoney and we sold this many
buffalo chicken sandwiches.
And you say, yeah, but you alsogot left up with all this
product that you finished upthrowing away.
Did you take that into account?
(34:14):
So it's not unlike what Treewas just talking about in terms
of this distribution, but inthese cases we are left
sometimes with food sitting inrestaurants, and I don't know if
we're going to get a chance totalk about it today, but
historically, restaurants havebeen very hesitant to donate
food to shelters or other places, even when they're done with it
(34:36):
, because of food safety issuesor fear of litigation.
Some of that's changing.
I think restaurants need torelook at that.
There are some protectionsunder the law if they can get
into it, but sometimes it's amatter of how to get it to these
places and so on, because weagain do not have a food
shortage.
We have a distributionchallenge.
Speaker 1 (34:55):
And I'm frustrated because I did print out the data
and I don't see it on herebecause I know it's over.
Every year in America we wasteover nine tons, a million tons
of food.
You know it's a lot of wasteand I hate that that didn't
(35:16):
print out and I apologize that.
But I do want you to addresssomething because we see it now,
we hear it about the restaurantwars and the $5 menus and
before we get to that, I want togive these numbers and then you
talk about it.
And they said just the model forclosing in 2024.
(35:37):
This is just 2024 people.
And then I have data going backthe last five years.
We won't get into all of that.
Wendy's closed 140 locations.
Rare lobster 99.
Tgi.
Friday's 50s subwayapproximately 571 locations
closed in 2022.
Pizza Hut up to 300 locationsclosed in 2020.
Speaker 2 (36:01):
What's happening?
Speaker 1 (36:04):
Again when people say it's these corporations and I'm
like people really payattention.
We got grocery stores thatclosed a couple chains the first
time in America.
Oh.
And then when we say we want tosave money and we want to get
prices down, so also familydollar.
A lot of people buy food andgoods from there.
(36:26):
Family dollar closed 620locations.
Dollar Tree closed 1,000locations.
The 99 cent store closed 371locations.
The 99 cent store closed 371locations.
Big Lots all totaled betweenthose four 2,291 locations
closed.
Speaker 2 (36:45):
Some of it is just natural, I guess,
reestablishment, you know, it'skind of like the thinning of the
herd.
So there's always a percentageof businesses that will fail.
So let's put that aside for asecond.
There's always a certainpercentage, but there's a couple
of things If we look at therestaurant industry specifically
, and that is a couple offactors.
(37:06):
One is that a lot of people getinto the restaurant industry
more on the we'll call it theindependent side for many of the
wrong reasons.
They love food, they lovepeople, they love to provide
service, they think they'regreat chefs, not because they
want to make money oh God forbid, that's considered a bad word
or that they believe that theycan run a good restaurant with
strong fundamentals.
(37:27):
So they get into the businessfor the wrong reason and that's
why you see so many independentrestaurants fail in a very short
period of time.
The bigger question and thenumbers that you were just
talking about are more ofbecause there's a very
fractional relationship betweena franchisor so a Wendy's or a
Subway or one of those brandsand the people that actually
(37:48):
have the business or who arecalled the franchisee.
Speaker 1 (37:51):
So can we?
Yeah, so I was going to say so.
A franchisee is can we?
Speaker 2 (37:59):
yeah, so I was gonna say so.
A franchisee is somebody whoactually negotiates and puts the
name of that brand on theirbusiness.
They're not actually Wendy's,they're not actually Chick-fil-a
, they're not actually BurgerKing.
They are actually a franchiseeand so they're born to have to
follow whatever the brand saysto many cases.
So this is where the disconnecthappens.
Is the franchisor?
Wendy's or Chick-fil-A or Arby'smakes money when the franchisee
(38:24):
sells food.
So if the franchisee sells a$10 meal, they get a percentage
of that.
Now notice what I said they geta percentage of the sale, not
of the profit.
So what happens is it's in thebest interest of the franchisor,
namely a Wendy's or Chick-fil-Ato sell as much as possible,
because the more they sell, themore royalties they make.
(38:46):
However, that's not true withthe franchisee.
The franchisee has to beprofitable.
So when you see these $5footlongs or $5 meal deals and
all that, these are killing thefranchisees because they're not
making money.
The franchisor is.
So part of what we talk aboutas consultants all the time is
(39:09):
why don't we all look at successthrough the same lens and say I
make money when you make moneyand the franchisees of the
future and the franchisors ofthe future are the ones that get
together and are going to agreewith what success looks like,
because right now thesebusinesses are going out of
business, because they're beingimposed these programs that they
(39:31):
can't afford, and no bigger onethan the all-you-can-e eat
shrimp at red lobster that brokethe bank killed them, yeah, so
that that's fair and and thatthat's a valid point.
Speaker 1 (39:45):
And, in simple layman terms, what he's saying is you
know if you have a five dollarmeal and when you get through
with your labor, your overhead,your your um, your your taxes,
paying your employees.
And that meal you know,literally cost you almost 550.
And then I get paid.
(40:06):
The head gets paid off volumeand not off your profit.
That means I still have to payyou and I'm at a 50 cent deficit
.
Ie explains the closing and howthat goes, and my concern is so
when I looked into the numbers,which I found interesting, I
was like I didn't understand whyso many with the world now, but
(40:31):
specifically we're focused onAmerica and this podcast is
seeing prices are too high.
We want to save, we want tosave.
Why are all the saving andcheaper options closing?
And so I find it fascinatingwhen I looked at the data and it
kind of goes back to yes, thecompetition created and you know
(40:52):
, when you create competition,they eat each other.
So, with the different brands,so that did happen, but what
happened was the timing.
The timing was we went througha pandemic, people weren't going
out, and so this model wasbased on the people that
actually came to the door.
It's too smart of a price pointto literally deliver to you,
(41:14):
and that's a different fray cost.
So that's why they crumble andthey crumble so hard, because in
the end, even before that, inall fairness, people start
turning to.
You know the model ofconvenience and going to amazon,
like you know what, it's notthat big difference of the price
.
I don't have to go in a store.
Speaker 2 (41:34):
So a lot of it is consumer spending and the way
the other challenge is thehospitality industry, namely the
restaurant industry although wecould make a similar argument
for hotels are very laborintensive.
They're very labor intensivemarkets.
So a retail store, for instanceyou go shop for all your stuff,
you come back and you put itand you have a single touch
(41:54):
point of a person who bringsstuff up or more often than not.
Now we have kiosks orself-service, so you can do a
retail experience without everhaving a human being having to
do anything.
So we've removed the labor costat least at that aspect from
retail.
You look at food service.
You walk into a restaurant,you've got somebody that greets
you, you've got somebody thatserves you, you've got somebody
(42:15):
that clears your table, you'vegot somebody that you pay the
check with.
It's a very labor-intensivebusiness and restaurants
specifically have been reticentabout removing that because they
go.
We're in the hospitalitybusiness, it's about providing
service, but with labor costsgoing up and we can argue
whether that's right or wrong Ibelieve that you have to pay
(42:36):
somebody a fair wage but at somepoint you price yourself out of
the market.
So if I walk into a fast foodrestaurant and I talk to
somebody about ordering myburger, and there's somebody
clearing the table and there'ssomebody who has to cook.
Excuse me, there's a lot oflabor there.
So we've got to find smarterways of doing this, whether
that's through mobile apps orwhether that's through kiosks or
(42:59):
some way to reduce those costsmoving forward, because we have
to get there.
In fact, just today, I think,starbucks over the weekend is on
strike in many of the citiesnow I think Seattle, los Angeles
, I think Boston and New Yorkbecause of wages.
So the baristas are sayingwe're not being paid enough and
I mean, my God, what is aStarbucks cup of coffee $12?
(43:19):
I mean, it's like it'sridiculous.
And if they can't make it workwith labor, how could some of
these others?
Speaker 1 (43:30):
So that's two points before we close.
One of them is my last, finaldata point.
According to the US Departmentof Agriculture, usda, as of
March 2024, the estimatedmonthly grocery cost for a
family of four just, I was gonnasay, take a while, guess what?
I think I told you already 12million.
So the way they put this in,they put it in two um categories
(43:50):
.
They call it the average familyof four, a thrifty plan, and
that that would be like your,all these walmart value shapes,
oh my jesus.
Speaker 2 (44:00):
And and then you're asking, not toby, okay sorry and
yeah, oh my god, it ischristmas time.
What?
Speaker 1 (44:06):
you got, oh, focus, get me for christmas I give you
high grocery bills.
I actually got you a discountedribeye we.
We got a cookie today.
It goes in the garbage.
That's the only reason you gotit.
So and there's a thrifty planpeople sorry for the
interruption and there's aliberal plan.
So one is the family that savesand discounts and coupons and
(44:29):
clips and the other one is theone who, just you know, bought
the average consumer, just youknow, the average consumer.
So approximately, on theThrifty plan, the average family
of four spends $976 a month.
So the total of your annualearnings is $11,719.
Now that's when you'reconscious about your purchase
(44:51):
and coupon.
But the average American familyof four spends approximately
$1,585.20, totally $19,022 ofyour annual income on groceries
(45:13):
and food.
There you go.
So Merry Christmas.
No, I'm just kidding.
Yeah, really.
Speaker 2 (45:18):
There you go.
So Merry Christmas.
No, I'm just kidding.
Yeah, really Enjoy that turkey.
Speaker 1 (45:22):
That turkey better go in a salad when it's done,
that's right you got to eatamory.
Take the bone, make a soup.
Speaker 2 (45:29):
Maximize.
Let's hope it's not foul Sorry.
Speaker 1 (45:32):
You and your dad jokes.
Speaker 2 (45:33):
Sorry, we're going to do a whole episode on dad jokes
.
Speaker 1 (45:37):
Now I did have one final point and you made me lose
it.
Oh, one thing I do want tobring up too, and we're going to
close on this note, about therestaurant industry, and I'm
curious to see if your pointdiffers from my data.
So, when it shows all therestaurants that were closing,
your Wendy's, your, your um, thedifference between, like the,
(45:58):
but the quick servicerestaurants, those QSRs, and
then like your other sit-downmodels are faring better, and
the explanation for that, well,I'll let you that's your
territory.
Speaker 2 (46:11):
I know what I read, but it's interesting because
we're starting to see peoplecome back out of their caves.
The statistics seem to showthat people are starting to go
back to restaurants, which Ithink bodes really well for the
sit-down restaurants.
Not only that, but if you cango to a, I'm trying to think of
the one that has unlimited fries.
Speaker 1 (46:35):
Red Robin, red Robin, you go to Red Robin.
Speaker 2 (46:37):
You go to Red Robin, you can get a full meal for the
same prices you can now have ata quick service restaurant.
So I think we're going to see arenaissance of casual dining.
Speaker 1 (46:45):
Well, here's the dilemma.
So this is what I read and Idon't want to debate you because
, that's your territory, notmine.
But here's the dilemma.
The dilemma is saying well,that's the way people are
looking at.
It was like McDonald's.
Why would I give you $19 for avalue meal when I could go sit
down and eat for 20 $20 andactually be served well, the
(47:08):
argument, the reason why that'sso high is because minimum wage
has, you know, gone up and, likeCalifornia, when it's $20, that
cost has to be passed back onbecause those people have to be
paid, where a lot of that isstill the tip industry.
Now, we just did a podcast Forthose.
I'll link it and find it.
But tipping is at an all-timehigh and we're complaining about
(47:34):
that.
So you still are paying, soyou're not paying.
Speaker 2 (47:38):
There are things that are changing and even in that,
there are some restaurant brandsthat are just increasing the
wage of their staff and takingtipping out.
Or there are also ways that youcan go, sit in a restaurant and
order through what's called aQR code and even avoid the
server experience and just havesomeone bring your food, but
your point is not lost.
We need to understand and gettipping back under control, and
(48:03):
operators, I think to a greatextent need to understand that
tipping is not a way aroundpaying a decent wage for your
people.
Speaker 1 (48:11):
It's not an excuse.
I wrote a documentary for that,saying we can't tip our way out
of it.
But we just can't becausetipping is not the solution to
the issues we have.
But I thank you.
And on that happy note and again, like seriously, I mean, we
don't know, you can't changewhat you don't acknowledge, so
(48:32):
it's not always going to feelgood, but some things we do.
When we have such strong stanceand we immediately want to
attack someone or we want toblame someone, all I'm saying is
just find out as much as youcan and get an understanding If
I have a way to contribute tothis and look at your bottom
line.
Speaker 2 (48:53):
And all joking and levity aside, I like to try to
keep these things light.
We try to take on some prettyheavy topics, right?
I mean, I think in 2025 I don'tthink we try.
I don't think we set out to takeon, but no, we just I don't
think we we dodged some bigtopics, so we've talked about
you know religion and we'vetalked about you know all kinds
of commitments to your job.
(49:13):
I think next year we're goingto talk about things like DEI.
We're going to talk aboutequality and what that quality
really means.
Speaker 1 (49:22):
So we don't dodge these things, Let me just jump
in.
So the very next podcast isI've been wanting to talk about
this.
I am taking on woke and peopleissue with it because I have an
issue with weaponizing woke.
So that's like we said, we'renot dodging these things, so but
I think it's a difference and Idon't look for and and I'm
(49:42):
gonna put it on me because Ipick all the topics I never know
, say it all stop.
I'd never take on a topicbecause I for one minute I think
it's controversial.
For one minute I think it'scontroversial.
For one minute I think it'sproblematic.
But I do take on topics whenpeople in our society have very
strong opinions on topics andthat's how I pick the topics.
(50:06):
I am only here, I don't debate,I perch, and I'm only here to
say consider other ways to lookat it.
And that's the entiredefinition of purge, Before you
get upset and taking out CEOsand all of that.
That's a whole differentconversation.
Just consider the complexityand how complicated.
(50:28):
We just explained to you in themost simplified term, a very
complicated and complex systemwhich most of you guys had no
idea.
This is how I eat.
None so, and less than apercentage of us in America eat
(50:49):
90.
, I think it's 99.5.
We eat in this system and thenthe other is through farm to
table.
That that tells you we got alot of work to do.
So thank you again and I'll letyou do the close not, I'll let
you oh sorry, I did that.
Did sound like oh all right.
Speaker 2 (51:10):
Well, let me bring it home.
The american food ecosystem isone of the most complex in the
world.
Food travels through a vastnetwork of cold storage
facilities, transportation hubs,warehouses and restaurant
kitchens.
Each step adds layers to itsjourney, making the path to your
plate anything but simple.
The restaurant industry adds tothis complexity, with owners
(51:31):
and suppliers navigating risingfuel costs, higher wages, global
challenges and a changingcustomer habit.
It's no wonder food prices arehard to bring down, especially
when we often choose convenienceand variety over simplicity and
savings.
Does that let corporations offthe hook?
Absolutely not.
(51:52):
Corporate greed does play a bigrole, but so do our habits.
If we want to change, we needto understand how the system
works and what choices we couldmake to support better solutions
.
But let me ask you this If youthink for a moment, what do
these systems, processes andlayers have to do with you?
Maybe you're thinking I don'tcare, I just want prices to go
(52:13):
down.
Are we, as consumers, making awish upon a star, hoping for
magic?
Or is there something we can doto drive change?
Because here's the truth, Eventhough it may not seem like it,
we do have a hand in this.
By wanting variety, convenienceand instant gratification.
We've created a demand for asystem that delivers what we
(52:34):
want when we want it, but itcomes at a cost.
The question is, are we willingto acknowledge the price of
those choices and, moreimportantly, can we, as
consumers, make changes thatsupport a more sustainable and
equitable food ecosystem?
Before we can demand change, wemust challenge ourselves to
understand the journey, thesystems and the hidden costs
(52:56):
behind every bite.
Remember your perch it isn'tjust a place to sit, it's a
place to seek higherperspectives.
Thank you.
Good day Purge people .
Thanks for joining us in aMerry Christmas.
Feliz Navidad.
This really isn't a Christmasepisode, but it's a necessary
conversation.
Merry Christmas, let's bringyou down.
No, no, no, no, we are going tolift you up, so let me start
with introducing myself.
Hi, you guys, is viewing forthe first time.
(00:31):
I'm Tree and this is Toby, andthis time, for the people who
have visited before, I need togive you a little context about
the subject.
So today, our subject is what'seating you?
Rising food costs in America,so this is Christmas, you can't
afford your turkey.
Yeah, why is my turkey soexpensive?
(00:53):
For those of you?
It's really important that youlisten to this through the end,
because I'm going to give you alittle background of why I'm
having this conversation aboutmyself and then I'll give it to
Toby and he can give you alittle background about himself
and how we know a littlebackground of why I'm having
this conversation about myselfand then I'll give it to Toby
and he can give you a littlebackground about himself and how
we know a little more than anaverage person not saying we're
a subject matter expert, but weknow a little more about these
(01:16):
complex, the complex topic we'retalking about today.
So my background is I've beenin food distribution and
logistics for 30 years, fromwarehousing to transportation to
distribution.
I work for one of the largestfood distributors and one of the
largest the world's largestcold storage company in the food
(01:39):
area, so I know a little bitmore.
Speaker 2 (01:42):
She knows to which she speaks.
Speaker 1 (01:44):
And I was a restaurant owner and a dinner
theater owner.
So when I say I've been aroundfood in every facet and in every
aspect I have.
Speaker 2 (01:53):
So, my background is mostly in the hospitality
industry, which is hotels,retail, but mostly restaurant
over the last 40 years, and so Itend to pick it up a little bit
later in the chain of custody,if you will.
That Tree does so, obviouslybeing involved with distribution
.
The distribution folks are theones who get it to the
(02:14):
restaurants and then typicallywhat the restaurant does with it
and how they manage it and howwell they control.
That is kind of the world thatI've lived in.
Speaker 1 (02:23):
Well, thank you.
Speaker 2 (02:24):
Oh, you're welcome.
Speaker 1 (02:26):
So I really want to talk about this subject because
full transparency and disclosureI have been fuming.
I have been fuming for the lastyear and a half, so much so I
actually wrote a televisiontreatment about this very, very
subject because, excessively,we've heard the outcry of the
(02:48):
collective and this is the onearea in America I think we can
all agree that most people areon the same page when they're
saying it's too high and we needto bring it down.
The reason I've been fuming isI'm fuming because of the
conversation we're having aboutpricing, and I know the answer.
The solution to everyone islike I don't care how we got
(03:11):
here, just bring it down.
And I know the recent.
I know Trump ran on a platformthat he was going to bring
grocery prices down and then,immediately after he won, it was
like well, I really don't havethe power to do that and there's
some truth in that, and sothat's part of what this episode
about.
It's part of where we're goingto get into.
(03:32):
I want to just say somethingthat not everyone might be aware
of.
So I want to talk about this.
Food doesn't just travel fromfarm to table, and I know we
hear that saying a lot.
Farm to table is the best wayto eat.
It is from a health perspective, economic perspective.
That's a different conversation.
It passes through multiplelevels of the cold chain, and so
(03:56):
, for those of you who havenever heard that term, I'm
really going to try to have areally simple conversation with
you and explain the Americanfood supply chain system.
It's an ecosystem and we'regoing to do the best we can to
spell it out.
Speaker 2 (04:12):
In happy meal terms.
Speaker 1 (04:13):
Keep it simple, but give you like everyone should
have some insight on the way weeat.
So in the cold chain itincludes warehouses,
transportation networks, storagefacility, all in which add
costs to every stage.
So let's keep this simple.
So let's take one product, forexample.
(04:34):
Let's take what would you liketo take A bottle of.
Let's take some frozen dinners.
That frozen dinner goes througha processing, so it has to go
through a process.
Then it has to go in awarehouse, and then that in a
process and is packaginglabeling.
Then it goes to a warehouse,then it typically goes into, you
(04:57):
know, some cold storage andfrom there it could go to
multiple distributors and thenfrom there it goes to normally
one of the grocery warehouseswhich have their own multiple
distributors, and then fromthere it goes to normally one of
the grocery warehouses whichhave their own local
distributors.
Speaker 2 (05:09):
Then until your fridge isn't it even more
complicated, though, if you'redealing with something like
produce, because produce haseven more steps, because you're
talking about a packaged productput on the shelf that has a
well?
I mean, let's face it, we couldhave world war three and we
could probably still eat a tvdinner because there's so much
preservatives in it.
But if you've got a banana orstrawberries or something
perishable like that, isn't itmore complicated?
Speaker 1 (05:31):
It is much more complicated and I was just
trying to give the simplifiedend, stating that if I literally
tell you, on average, the wayAmericans consume food, goes
through, on average, five steps.
Now, when I say step, look at astep as a process and in that
process there's a charge.
So, every time you store it,it's a charge, and there's a
(05:54):
transportation component to eachtime it's moved.
So there's a freight charge andthere's a freight charge and
there's a freight charge.
Speaker 2 (06:02):
So bananas, for instance.
Where do bananas come from mostcommonly?
Speaker 1 (06:06):
uh, well then that now you'd complicate them,
because that's what I'm tryingto get at what?
Speaker 2 (06:10):
so?
Yeah, they come from anothercountry, right in many cases a
lot of our bananas and I do have, and I'll I'll switch to that
part all I'm trying to get to atsome point is that bananas
travel halfway around the world,go through four or five
different steps and get to thegrocers, get to our, our grocery
store, and they're bright andyellow and happy right, what the
(06:32):
?
Hell.
Or I'd like to say you're downhere, what the hell?
So how's that?
Was it good?
Speaker 1 (06:37):
yeah, we're jumping into it and because you bought
it up I think a little contextneeds to be given to that.
As of 2021, imports account forapproximately 60%.
So imports people that's thingsthat are coming in as far as
what's going out.
So we are bringing in 60% ofour fresh fruits and 38% of our
(07:03):
vegetables.
In 2020, mexico gave 51 percentand 69 percent A lot of the
bananas we eat come incontainers.
That means it's ocean free,that's shipping.
It's sitting out in waters andyou explain to me how you put a
banana on your counter and twoor three days later it's brown
when it can sit out in the oceanthat's kind of where I was
(07:25):
going with that.
Speaker 2 (07:25):
That's what we call a leading question, right?
How did how does that happen?
Speaker 1 (07:29):
it's just this is a lot to give you guys, but the
the bottom line is I ask thatyou consider the financial
components.
You can't understand that.
This is not your world, but Ineed to make the case.
Our food ecosystem just the wayeat has so many layers of
complexity, have so manydifferent pricing components,
(07:51):
and so when you look at prices,when you can say I used to pay
$0.39 a pound for a banana, wellyou know the other thing too,
is.
Speaker 2 (08:00):
Growing up, I remember where my parents would
say oh, this isn't banana seasonnow, you can't get corn.
Now it's not corn season.
Oh, strawberries are from thistime to this time and there was
an expectation that when you hadthat particular produce or
vegetable, it was pretty much,as you were saying before, farm
to table, because it was fresh,it was from the local this, the
(08:21):
local that.
And now we've seen and I'm notan expert on this, but it seems
like you can have corn any timenow, you can have strawberries
any time now, so we know theydon't grow any time.
So there's some stuff going onhere that is either unnatural
preservatives or we're doingsomething.
It certainly is a long way fromfarm to table and, as we talked
(08:41):
about a couple weeks ago, whenwe were in France, you were
going crazy over what Candelopeand watermelon.
Was it watermelon?
No, it was candelope, and themelons and said, oh, my God,
this has flavor to it.
And so obviously all of thoseand I'm not bringing it up
because I know we're not talkingabout preservatives and stuff
like that but all of those stepstake time and cost money, right
(09:02):
?
Speaker 1 (09:02):
So every time somebody takes custody of
something, there's a costassociated, absolutely, and it's
funny I was looking for itbecause I pulled the data on it.
And let's just keep it simple.
Think about this Less than 30years ago, the average American
didn't even know what an avocadois If you weren't born in
California and you lived in theMidwest.
(09:23):
I remember the first time, truestory, I made guacamole like 25
years ago.
They were like Tricia, what isthat green star with an S?
That they said, and I was like.
But I lived in California andnow everywhere you go, you have
avocado toast.
Why am I bringing up avocados?
Speaker 2 (09:41):
I hate avocado.
That's what you're bringing upbringing up avocados.
Speaker 1 (09:45):
I hate avocado.
That's what she's bringing up.
No, because of the.
This is all about ourconsumption.
When our consumption and itties into your point about fruit
and vegetables being seasonalwhen our consumption is up,
let's be honest.
America and I really want us tohave an honest conversation
about our level of consumptionhere.
An honest conversation aboutour level of consumption here.
(10:06):
When that level of consumptionup and the crops are low,
majority of, like 80% of ouravocados come from other
countries, so they have to beimported in, and just like
bananas.
When you have to travel, that'sanother process.
We have to gas.
We gas majority of these thingsto preserve them, so they can
(10:27):
have the ability to travel, sothey can arrive to you, and then
they are processed once theyget here, so they come right and
then we put them in a gaschamber and we can read about it
.
Don't want to make it toocomplicated, but I I have to
leave a lot of these components.
We as consumers have a hand inwhat.
(10:48):
What's the word?
We may be unwillingparticipants.
Speaker 2 (10:51):
Well, we've become an Amazon culture, right, it's
like what do you mean?
I've got to wait a day for this?
This is ridiculous.
And we've we've created suchlofty expectations.
I mean, again, I'm going to,I'm going to get in the way back
machine.
I remember, you know, when Iwas young, you would order
something and it would say allowfour to six weeks for delivery.
Right, it was like that was theexpectation.
(11:12):
It took that long, and now wecomplain and grouse if we can't
get it from Amazon the next day.
So we are, we are complicit increating this.
I expect it now, I expect itovernight, I expect it in a
second.
What do you mean?
It's not strawberry season.
What do you mean?
I can't get avocado.
And, to your point, thedistribution network has created
(11:32):
the ability to do this, but notwithout cost.
Speaker 1 (11:35):
Absolutely, and I want to because this is a lot.
This is only one podcast and Iknow we're packing a lot in, so
we're trying to give you clearinformation and a little detail
in a short period of time.
But I do want to talk about thefact that I understand it's
kind of a natural proclivity forus to go.
(11:57):
You know, let's agree incorporations and I'm not saying
that there is not corporategreed, we know there is and
there is shareholders andstakeholders but I want to bring
us as consumers into theconversation and say to us we do
have a hand in this, meaningknowingly and unknowingly,
(12:21):
knowing that our excessive needfor wanting what we want when we
want it has created thisecosystem, the way that food
moves and has a lot to do withpricing and why, and some of the
reasons, how we got here.
Like you said, we knew growingup, you know we had to wait for
the melon season to start.
(12:42):
When you go in a grocery storenow, melons are in there year
round all, there is reallyalmost no fruit that we eat in
america.
That isn't there.
Sad green tomatoes that's asouthern thing, another
conversation.
But normally every fruit andvegetable is in a year round.
That is not natural, becauseamerican crops just don't grow
(13:02):
like that.
There is a seasonality toeverything, so there's a reason
to when you eat things if justdon't grow like that.
There is a seasonality toeverything, so there's a reason
too.
When you eat things.
If you don't understandseasonality, you are going to
pay more, because that is prettymuch saying there is no way
that food was grown here inAmerica.
Speaker 2 (13:17):
So you are consuming imported product and import
comes at a cost and part of that, too, is the fact that we are
this melting pot right.
So we've got people come fromall around the world and they're
like I'm used to eating this, Iexpect to have that I.
So one of the natural maybenegative byproducts is that you
know when, when you grow up andyou you were born in the U S
(13:39):
you're used to your meat andpotatoes and your corn and your
you know that kind of staple.
And now you look at the typesof things you can buy in a
grocery store and you know I'vebeen in a grocery store twice in
my life because I like go intopalpitations, I need my EpiPen
and all that kind of stuff.
So a little dramatic, you know,curl up like a squirrel in the
corner, anyway.
But I digress Half thevegetables now and fruits I
(14:01):
don't even recognize.
I Half the vegetables now andfruits I don't even recognize, I
don't even know what the worldthey are.
So clearly they're not from theUS.
In most cases they are importedand it's because we've now
become very much a melting pot,very much a culturally diverse
world, and everybody's like Ilive here, but I still want my
maca maca fruit.
And you're like, what the hellis a maca maca fruit?
Oh, it comes from MacaMacaville and then it's got to
(14:23):
be stored 11 times before itgets to you.
And you wonder why a maca macafruit costs you $11 a piece.
Speaker 1 (14:30):
Okay, so I do want to add this data.
It said the hidden cost ofvariety and convenience.
That's what we were justtalking about Maca maca fruit
(14:50):
for a variety of convenienceinstantly available creates a
system that prioritizes speedand flexibility, which comes
with a significant financial andenvironmental cost.
A report from McKinseyhighlights that 85% of the food
consumed, 85% of food consumersprioritize convenience over cost
, and so for anyone who saysthat they want cheaper, it's a
(15:17):
thing saying, well, we wantprices to go down, but then if
you prioritize convenience,what's that?
Speaker 2 (15:23):
expression when, like , a contractor comes to you, you
can have it either faster orcheaper, or I don't know the
expression.
And it's like you can't haveall three of them, you know.
And so if you want it fast, youcan't have it cheap.
If you want it cheap, you can'thave it.
Well done, it's like it's acompromise, and if people are
valuing what did you say?
Convenience?
Speaker 1 (15:43):
over Convenience, over cost.
So let me explain.
Speaker 2 (15:46):
You reap what you sow .
Speaker 1 (15:47):
Yeah.
So let me explain why.
Convenience over cost whatcreates the cost?
So pushing companies tomaintain expensive.
It's called, like just-in-time,Supply chain models.
The US imports 15% of its foodand including nearly 50 of the
vegetables.
So what?
What is just in time?
(16:08):
You may say, uh, what?
Is just in time just in timewas developed actually in the
19th.
Speaker 2 (16:13):
So I said well because I know people.
Speaker 1 (16:16):
I have no idea what just in time is, but that
creates the, the.
I want, what I want when I wantit model.
Speaker 2 (16:22):
Who was Justin Time?
Speaker 1 (16:23):
Oh my Jesus.
Speaker 2 (16:25):
No, he wasn't there.
He was there.
Oh, he was, he's always there.
Speaker 1 (16:29):
You just weren't listening.
Speaker 2 (16:29):
He's like Elvis.
Speaker 1 (16:30):
Oh my God.
So Justin Time was developed inthe 50s and 60 by a Toyota
motor company.
It's a supply chain strategydesigned to reduce inventory
costs by receiving goods onlywhen they're needed.
So, you know how back in the dayyou just had like a surplus or
whatever.
That's why, when think about it, when you go to the grocery
store, now, with technology, theminute they scan your food or
(16:55):
scan that item and I'll explainto you SKUs too, those are those
item codes.
When they scan that item, it issending a signal back to saying
to check on inventory and theyreplenish it because the
technology they don't have tojust buy in bulk and and so when
you need it, when you have it,it's there.
Speaker 2 (17:16):
so that's, that's the simplified well, I have a
question about that, becauseduring covid and maybe it's the
same way now we heard that wedon't have a food shortage, we
have a distribution problem, andwe heard that all the
warehouses and all thesewarehouses were stock chugged
full of product and we couldn'tget it out to the restaurants,
(17:38):
and the restaurants or thegrocery stores were like we
don't want it.
So that's kind of the oppositeof just in time, isn't it?
I mean, it's all sittingsomewhere waiting and somebody's
paid for it to sit there and alot of it gets thrown out and
goes to waste.
So how's that just in time?
Speaker 1 (17:56):
So you know how I feel about this subject.
That's a loaded question.
And it's loaded because, to behonest, fact, honest, factually
people.
When we went to the, thegrocery stores and the shelves
were empty.
The food was produced factuallyin america.
Most of our warehouses were atbrink.
(18:18):
They were running over.
Speaker 2 (18:19):
We're all panicky because there's one one thing of
sugar left and, oh my god,we're good.
Speaker 1 (18:24):
You know we're all gonna die because I can't have
my non-dairy creamer yeah, andthere's a report and I and I and
I don't wanna I don't likemisquoting things but saying
it's so much food in america andour warehouse is just in
america alone we can feedmultiple nations continent
factually.
We have tons of food here andif you think I'm lying, I'll
(18:48):
give you the data on how much wewaste every year.
Just waste.
So, when you say there's no food.
There is food here in America,but the problem is there is a
connectivity issue and theconnectivity sometimes, let's be
honest says who's going to payfor it, meaning when gas prices
are up.
Think about it so and let'skeep it simple.
(19:11):
We watched, as a nation duringa pandemic, when people stop
driving and they stay home.
Do you remember when the fuelindustry started dumping fuel
Because they said, before theyput it out and have prices fly,
they will get rid of it before?
Consider I'm not saying thishas happened considering the
fact that when companies wereclosed, their labor was at an
(19:35):
all-time high because, forexcuse me, except for essential
workers, they were paying heavylabor costs.
And why should I pay absorbentfreight charges?
Or why should I pay all ofthese things?
Because free prices were down,because fuel was down and all of
these prices were down.
Speaker 2 (19:55):
Such a short-sighted society I mean people joke all
the time about culturally thewest is far behind strategically
the east, because the east youknow in j and in China and all
that they're making investmentsfor the next century already and
we're worried about, like, nextquarter's profits.
And I mean all you have to dois I'll use an analogy not even
in the food industry.
When COVID hit and it startedto shut down our economy, the
(20:19):
rental car agencies sold off alltheir cars.
They didn't say, hey, you know,this is going to end at some
point in time, probably sixmonths, 12 months.
Either the world's going to endor it's going to end in the
next six or 12 months.
But they sold off their cars.
So then COVID, as we expected,ended and we had a shortage.
We had no freaking rental carsand it's like I think every
(20:40):
industry that thinks that way,including the food industry,
gets caught with their pantsdown.
I mean we heard stories aboutships sitting out in ports for
months at a time, right, Becausewe shut down and then we open
up and we think everything isgoing to return to normal.
So shame on us.
Speaker 1 (20:56):
Yeah, remember, we're short-sighted and honestly and
I'm going to put Amazon in thatexample Remember, because we're
at home, everyone was so heavilydependent on Amazon because we
couldn't come out and so it wasa necessity and I'm not judging,
I was one of them.
So Amazon just saturated themarket.
They built tons of warehouses.
And then, when we startedcoming out, they started closing
(21:19):
warehouses, which is soshort-sighted.
Speaker 2 (21:21):
It's like accounting period to accounting period.
Nobody says, okay, what's goingto happen a year from now or a
year and a half from now.
But you know, should we put thecars on the side?
No, no, no, let's sell them alloff.
And then, all of a sudden, whathappened to used car prices,
you know, after COVID.
I mean, it's just, we justdon't, we're not very proactive
in terms of looking at thisstuff, and I would argue that a
(21:43):
lot of this is still a COVIDhangover.
Speaker 1 (21:53):
So let me go back to the pricing and our structure
for people and the consumerspossible hand in this or hand in
a solution.
So now let's talk about facts.
What we need the increasedadoption of private labels,
eric's.
So for those of you don't knowwho private labels, what private
labels are?
You see them all the time.
So when you go to the grocerystore, you, and if you go to
(22:15):
Walmart, walmart it says greatvalue, so that's that their
Walmart's private label.
When you go to Target, there'sthis market can't think of the
name of it, and so what doesthat mean me, tricia, and why do
I care?
Well, the reason that shouldmean something to you on why you
care is because most of thesevendors and producers of food
(22:38):
have a generic version, andthat's a private label, meaning
you're getting hung up becauseyou like your name brands.
You like your Heinz, you likeyour Kraft macaroni and cheese,
you like whatever that brandyou're accustomed to, but that
same company makes a privatelabel, meaning it's the exact
same product, is it really,though?
(22:58):
Is the quality the same?
I'm getting into that, allright.
Speaker 2 (23:01):
Jump the gun.
Speaker 1 (23:02):
Calm down.
All right, calm down, I'm aboutthe chicken and Heinz.
Speaker 2 (23:05):
That's why I'm here.
Speaker 1 (23:06):
It's produced on the exact same assembly lines.
It's the exact same product,but what they do to save costs.
There's a lot of costs inpackaging.
So it's the reason why when youget a bottle of water now, it
pretty much collapses in yourhand.
When you squeeze it, it's likeah, it's like what.
It fumbles and it spills allover you because they downgrade
(23:30):
the packaging.
And so, when you look, thinkabout it, now that I bought up
to you, think about the greatvalue label on Walmart.
It's blue, it's simple.
There's no glitter, there's noheavy plastic, there's no shine.
So that's a cost savings.
So that's one.
That's how they save you money.
That's a cost savings.
So that's one.
That's how they save you money.
Factually, it's a slightingredients modification.
(23:51):
So what they do is and I'm not,and this is just me being
dramatic it's 57 ingredients andhigh they go.
You're going to get 56 in aprivate label.
So, factually, I worked on oneof the accounts I had I won't
say the name was a company thatproduced nuts.
Speaker 2 (24:09):
Ah, nuts.
Speaker 1 (24:10):
So hear me out, this is how it works.
So I just want you to considercost saving.
So when it comes out, it comesdown the same conveyor, it's the
same notes, it's their brandname, which comes in a really
nice shiny can and it'sexpensive and that's the top.
So the nuts come down aconveyor belt and they shake it.
(24:30):
The bigger nuts go in the theshiny can.
Toby toddler oh my god,seriously, it's you don't get a
bigger nut than this it's like alittle the three-pronged shell,
a whole system.
And the larger nuts go in thethe the highest level, the
(24:51):
medium-sized nut nuts go intheir, their secondary level,
and the smaller nuts go in theirprivate label and they and and
a lot of times it's barely andso, but then from a recipe
standpoint, then what they'll do, like if you have dry roasted
nuts, they'll put one coat ofroasting on the dry, on the
(25:15):
cheaper one, and two coats on it.
That's the difference.
Speaker 2 (25:18):
But it's more than that, isn't it like marketing
too?
I mean, if we were talkingabout I don't know, I'm trying
to think who does nuts?
I'm just saying from a productstandpoint, planters does tons
of commercials, they do tons ofmarketing.
Planters does tons ofcommercials, they do tons of
marketing and you don't findKmart nuts or Kmart Kmart is so
old Kmart nuts Sears nuts If youeat nuts from Kmart, you got
(25:38):
bigger issues.
Exactly, you got bigger issuesRight.
All right, so I'm having mySears nuts over here, but I mean
, you know what I'm saying.
It's more than just that.
The brand is trying to createan identity.
So they're out there marketingand they're out there
advertising.
I mean on a much simpler basis,I look at every weekend on
sports, the cell phone guys arejust hammering you Verizon and
(25:59):
T-Mobile and all that butthere's a whole bunch of other
carriers that you never seeadvertised.
Speaker 1 (26:04):
And they're so much cheaper.
That is a profound connection,because those same cheaper
people are using some of thesame cell phone towers.
Speaker 2 (26:12):
There you go.
And pinging in so that's agreat Good job, thank you.
Speaker 1 (26:16):
Great Circle gets a square.
Go back to food.
Speaker 2 (26:18):
All right.
Speaker 1 (26:18):
Going back to food Nuts oh my Jesus, the reason I
even bought up there.
There is an increase inadoption of private labels and
generics, a shift to storebrands.
Consumers are increasinglychoosing store brands or generic
products over national brandsto save money.
(26:39):
In early 2023, 22 percent ofshoppers stated that they're
switching, stated that they'reswitching.
I have to say it's concerningto me when we're all saying you
know, it's so high.
I even found myself the honesttruth.
In some brands I've switcheddetergents, some of them.
(27:01):
you can't tell the differenceright, Right, Like my dish,
detergent for the dishwasher andthings like that.
I looked at the prices.
I'm like why am I paying $18for this when this other store
brand is $12?
So when we say it's changing,it's literally only changing in
those aspects.
And so there has been modelslike Aldi's.
(27:24):
And so for people who've neverbeen to Aldi's before, the
reason why Aldi's hashistorically existed Aldi's
business model centers onoffering a curated selection of
private labels Goes back to whatI just told you generic labels,
private labels, call it whatyou want to call and has
resonated strongly with costconscious people increasing
(27:48):
shopping, increasing shoppersswitching to Aldi.
So now our prices are so high,people are going back to Aldi,
and Aldi again it goes back towhat you just said it's
capitalizing on it.
So they have an expansion by2028.
Aldi's plans are opening 800stores, but it's the same
(28:10):
dilemma so if people prices,just then people only go into
all these because they're likewell, I'm stretched and I really
don't prefer all these, but formy staples, my bread, milk and
eggs but one of the things youjust said was that packaging is
also very expensive.
Speaker 2 (28:24):
So you may have seen in the news, I think as recently
as last week, Costco isexpanding.
And I don't mean expanding, Imean expanding, and part of it
is, I think, exactly what you'resaying there, which is so much
of the cost of a product is inits packaging.
So you know why go buy oneKleenex when you can buy
6,332,412?
(28:45):
So now, if I can have a boxthat's this big of Kleenex as
opposed to having to packageevery single one of them, that
should take some cost away aswell, right?
Speaker 1 (28:53):
So let me explain.
So I'm glad because you boughtup Costco's.
Let me explain their model, thereason why and I feel like
somebody's going to have an ahamoment when I say that for those
of you who shop at Costco, Ithink we've all experienced this
frustration where you startliking a particular product and
you go back and you'll never seeit again.
Speaker 2 (29:12):
Cinnamon rolls.
Speaker 1 (29:13):
Yes, let the cinnamon rolls go no, and let me explain
you the reason why.
Behind it, it's the way we buyand it goes down to cost savings
.
So Costco doesn't have likemajor, major warehouses like
other people.
So they really have a just intime model.
(29:33):
So when their product comesinto Costco, typically it
doesn't go through a lot ofthose steps, saving costs.
It goes directly from whateverthat distributor is to Costco
warehouse, out to that store.
So they have taken a lot ofcosts out there store.
So they have taken a lot ofcosts out there.
But here's why you getfrustrated, because you'll go in
(29:55):
and Costco will commit to.
If you notice, pay attention,when you go, it's two or three
options they're going to giveyou for one item.
So if there's a soup you'regoing to get you know, your
cream of broccoli or this oryou're that.
And then you'll say, well, Ilike Panera, cream cheese,
broccoli or whatever.
And now it's Joe Schmoe's inthere.
Speaker 2 (30:15):
There's nothing wrong with Joe Schmoe's, by the way.
Speaker 1 (30:16):
Because that's what Costco does.
They keep costs down.
They find vendors who can keeptheir just-in-time model to stay
in this process and once thatvendor can't meet the model
that's created and they can'tsupply, it's on to the next one.
Now we know we have to findanother vendor for that broccoli
cheese.
So that's how the systems andstructures are created and how
(30:42):
it's created either drive costup or drive cost down.
Speaker 2 (30:44):
So are they buying on a contract, or are they buying
surplus from somebody else?
What?
Speaker 1 (30:48):
do you mean they have contracts with their vendors?
Speaker 2 (30:50):
yes, and once that contract is up they go into
surplus.
Speaker 1 (30:52):
But their contracts.
They're different from othercompetitors in that area because
they don't have all of theextra steps in the supply chain.
So when they give you theproduct, they need to know.
Perfect example Popeyes.
Remember when people werelosing their mind over Popeyes
and they created this productand did not realize the demand
(31:15):
would be so high.
Here's the problem.
The vendor that they went withthat could create that
particular chicken sandwichcould not produce at the levels
there, so it created all of thisangst, all this uproar.
And when they switched to avendor they couldn't their
product changed.
So it's not like and somepeople, because you don't
(31:38):
understand, you know how it goesit's like well, they start
making money and they justcheapen their product.
That's not necessarily true.
They just found a differentvendor and that vendor didn't
have the other vendor's recipe,so they got as close as they
could to recreating that Gotcha.
So they got as close as theycould to recreating that Gotcha.
So it's all just insight of howwe and why we pay the things we
(32:02):
pay.
Did you want to get more intothe restaurant side?
Speaker 2 (32:05):
Well, on the restaurant side.
I think it's just an extensionof customer demands.
Again, it comes back to peopleexpect anything anytime, all the
time, and there's a certainlevel of consistency that people
expect with menus, right, sothat inherently a restaurant has
to have a consistent.
Well, they don't have to, butmost restaurants have consistent
(32:26):
menus and that createschallenges unto itself, right,
if it's something that'sseasonal or only available
during a period of time.
Now, many restaurants will dowhat are called limited time
offers.
You'll see this at a lot of thelarger restaurants, or what we
call quick service or QSRrestaurants, where they do
what's called an LTO.
So they'll do a buffalo chickensandwich and, to your point,
(32:48):
they've already contracted withsomebody to make a finite amount
of that product to go for aperiod of time.
Now here's the challenge thatrestaurants have is it's kind of
a best guess those that havebetter understanding of history
and tracking patterns and thingslike this are better at it.
But this comes down to the wholequestion around food waste.
If I'm a large brand and I saywe're going to have this buffalo
(33:11):
chicken sandwich and it'savailable till March 31st, well,
it would be wonderful if onMarch 31st, my last restaurant
sold its last buffalo chickensandwich Never happens, okay.
So ideally perhaps they sellout before that, right A week
before that, the day before.
That depends on how well weplan, but that's not what
(33:33):
happens.
And what happens is they'releft with product and this
product sits there and sitsthere and sits there and
eventually it gets thrown awayin many cases.
And it's a tragedy because it'sa food it's a waste of, of
perfectly good food that couldhave somehow been either perhaps
repurposed or donated tocharity or some other way of
(33:53):
getting rid of it.
But as we look at as asrestaurateurs, we look at this
sometimes and I'm not going toget down on the marketing people
too much, but marketing peoplesay, look, how successful this
campaign was, we sold this muchmoney and we sold this many
buffalo chicken sandwiches.
And you say, yeah, but you alsogot left up with all this
product that you finished upthrowing away.
Did you take that into account?
(34:14):
So it's not unlike what Treewas just talking about in terms
of this distribution, but inthese cases we are left
sometimes with food sitting inrestaurants, and I don't know if
we're going to get a chance totalk about it today, but
historically, restaurants havebeen very hesitant to donate
food to shelters or other places, even when they're done with it
(34:36):
, because of food safety issuesor fear of litigation.
Some of that's changing.
I think restaurants need torelook at that.
There are some protectionsunder the law if they can get
into it, but sometimes it's amatter of how to get it to these
places and so on, because weagain do not have a food
shortage.
We have a distributionchallenge.
Speaker 1 (34:55):
And I'm frustrated because I did print out the data
and I don't see it on herebecause I know it's over.
Every year in America we wasteover nine tons, a million tons
of food.
You know it's a lot of wasteand I hate that that didn't
(35:16):
print out and I apologize that.
But I do want you to addresssomething because we see it now,
we hear it about the restaurantwars and the $5 menus and
before we get to that, I want togive these numbers and then you
talk about it.
And they said just the model forclosing in 2024.
(35:37):
This is just 2024 people.
And then I have data going backthe last five years.
We won't get into all of that.
Wendy's closed 140 locations.
Rare lobster 99.
Tgi.
Friday's 50s subwayapproximately 571 locations
closed in 2022.
Pizza Hut up to 300 locationsclosed in 2020.
Speaker 2 (36:01):
What's happening?
Speaker 1 (36:04):
Again when people say it's these corporations and I'm
like people really payattention.
We got grocery stores thatclosed a couple chains the first
time in America.
Oh.
And then when we say we want tosave money and we want to get
prices down, so also familydollar.
A lot of people buy food andgoods from there.
(36:26):
Family dollar closed 620locations.
Dollar Tree closed 1,000locations.
The 99 cent store closed 371locations.
The 99 cent store closed 371locations.
Big Lots all totaled betweenthose four 2,291 locations
closed.
Speaker 2 (36:45):
Some of it is just natural, I guess,
reestablishment, you know, it'skind of like the thinning of the
herd.
So there's always a percentageof businesses that will fail.
So let's put that aside for asecond.
There's always a certainpercentage, but there's a couple
of things If we look at therestaurant industry specifically
, and that is a couple offactors.
(37:06):
One is that a lot of people getinto the restaurant industry
more on the we'll call it theindependent side for many of the
wrong reasons.
They love food, they lovepeople, they love to provide
service, they think they'regreat chefs, not because they
want to make money oh God forbid, that's considered a bad word
or that they believe that theycan run a good restaurant with
strong fundamentals.
(37:27):
So they get into the businessfor the wrong reason and that's
why you see so many independentrestaurants fail in a very short
period of time.
The bigger question and thenumbers that you were just
talking about are more ofbecause there's a very
fractional relationship betweena franchisor so a Wendy's or a
Subway or one of those brandsand the people that actually
(37:48):
have the business or who arecalled the franchisee.
Speaker 1 (37:51):
So can we?
Yeah, so I was going to say so.
A franchisee is can we?
Speaker 2 (37:59):
yeah, so I was gonna say so.
A franchisee is somebody whoactually negotiates and puts the
name of that brand on theirbusiness.
They're not actually Wendy's,they're not actually Chick-fil-a
, they're not actually BurgerKing.
They are actually a franchiseeand so they're born to have to
follow whatever the brand saysto many cases.
So this is where the disconnecthappens.
Is the franchisor?
Wendy's or Chick-fil-A or Arby'smakes money when the franchisee
(38:24):
sells food.
So if the franchisee sells a$10 meal, they get a percentage
of that.
Now notice what I said they geta percentage of the sale, not
of the profit.
So what happens is it's in thebest interest of the franchisor,
namely a Wendy's or Chick-fil-Ato sell as much as possible,
because the more they sell, themore royalties they make.
(38:46):
However, that's not true withthe franchisee.
The franchisee has to beprofitable.
So when you see these $5footlongs or $5 meal deals and
all that, these are killing thefranchisees because they're not
making money.
The franchisor is.
So part of what we talk aboutas consultants all the time is
(39:09):
why don't we all look at successthrough the same lens and say I
make money when you make moneyand the franchisees of the
future and the franchisors ofthe future are the ones that get
together and are going to agreewith what success looks like,
because right now thesebusinesses are going out of
business, because they're beingimposed these programs that they
(39:31):
can't afford, and no bigger onethan the all-you-can-e eat
shrimp at red lobster that brokethe bank killed them, yeah, so
that that's fair and and thatthat's a valid point.
Speaker 1 (39:45):
And, in simple layman terms, what he's saying is you
know if you have a five dollarmeal and when you get through
with your labor, your overhead,your your um, your your taxes,
paying your employees.
And that meal you know,literally cost you almost 550.
And then I get paid.
(40:06):
The head gets paid off volumeand not off your profit.
That means I still have to payyou and I'm at a 50 cent deficit
.
Ie explains the closing and howthat goes, and my concern is so
when I looked into the numbers,which I found interesting, I
was like I didn't understand whyso many with the world now, but
(40:31):
specifically we're focused onAmerica and this podcast is
seeing prices are too high.
We want to save, we want tosave.
Why are all the saving andcheaper options closing?
And so I find it fascinatingwhen I looked at the data and it
kind of goes back to yes, thecompetition created and you know
(40:52):
, when you create competition,they eat each other.
So, with the different brands,so that did happen, but what
happened was the timing.
The timing was we went througha pandemic, people weren't going
out, and so this model wasbased on the people that
actually came to the door.
It's too smart of a price pointto literally deliver to you,
(41:14):
and that's a different fray cost.
So that's why they crumble andthey crumble so hard, because in
the end, even before that, inall fairness, people start
turning to.
You know the model ofconvenience and going to amazon,
like you know what, it's notthat big difference of the price
.
I don't have to go in a store.
Speaker 2 (41:34):
So a lot of it is consumer spending and the way
the other challenge is thehospitality industry, namely the
restaurant industry although wecould make a similar argument
for hotels are very laborintensive.
They're very labor intensivemarkets.
So a retail store, for instanceyou go shop for all your stuff,
you come back and you put itand you have a single touch
(41:54):
point of a person who bringsstuff up or more often than not.
Now we have kiosks orself-service, so you can do a
retail experience without everhaving a human being having to
do anything.
So we've removed the labor costat least at that aspect from
retail.
You look at food service.
You walk into a restaurant,you've got somebody that greets
you, you've got somebody thatserves you, you've got somebody
(42:15):
that clears your table, you'vegot somebody that you pay the
check with.
It's a very labor-intensivebusiness and restaurants
specifically have been reticentabout removing that because they
go.
We're in the hospitalitybusiness, it's about providing
service, but with labor costsgoing up and we can argue
whether that's right or wrong Ibelieve that you have to pay
(42:36):
somebody a fair wage but at somepoint you price yourself out of
the market.
So if I walk into a fast foodrestaurant and I talk to
somebody about ordering myburger, and there's somebody
clearing the table and there'ssomebody who has to cook.
Excuse me, there's a lot oflabor there.
So we've got to find smarterways of doing this, whether
that's through mobile apps orwhether that's through kiosks or
(42:59):
some way to reduce those costsmoving forward, because we have
to get there.
In fact, just today, I think,starbucks over the weekend is on
strike in many of the citiesnow I think Seattle, los Angeles
, I think Boston and New Yorkbecause of wages.
So the baristas are sayingwe're not being paid enough and
I mean, my God, what is aStarbucks cup of coffee $12?
(43:19):
I mean, it's like it'sridiculous.
And if they can't make it workwith labor, how could some of
these others?
Speaker 1 (43:30):
So that's two points before we close.
One of them is my last, finaldata point.
According to the US Departmentof Agriculture, usda, as of
March 2024, the estimatedmonthly grocery cost for a
family of four just, I was gonnasay, take a while, guess what?
I think I told you already 12million.
So the way they put this in,they put it in two um categories
(43:50):
.
They call it the average familyof four, a thrifty plan, and
that that would be like your,all these walmart value shapes,
oh my jesus.
Speaker 2 (44:00):
And and then you're asking, not toby, okay sorry and
yeah, oh my god, it ischristmas time.
What?
Speaker 1 (44:06):
you got, oh, focus, get me for christmas I give you
high grocery bills.
I actually got you a discountedribeye we.
We got a cookie today.
It goes in the garbage.
That's the only reason you gotit.
So and there's a thrifty planpeople sorry for the
interruption and there's aliberal plan.
So one is the family that savesand discounts and coupons and
(44:29):
clips and the other one is theone who, just you know, bought
the average consumer, just youknow, the average consumer.
So approximately, on theThrifty plan, the average family
of four spends $976 a month.
So the total of your annualearnings is $11,719.
Now that's when you'reconscious about your purchase
(44:51):
and coupon.
But the average American familyof four spends approximately
$1,585.20, totally $19,022 ofyour annual income on groceries
(45:13):
and food.
There you go.
So Merry Christmas.
No, I'm just kidding.
Yeah, really.
Speaker 2 (45:18):
There you go.
So Merry Christmas.
No, I'm just kidding.
Yeah, really Enjoy that turkey.
Speaker 1 (45:22):
That turkey better go in a salad when it's done,
that's right you got to eatamory.
Take the bone, make a soup.
Speaker 2 (45:29):
Maximize.
Let's hope it's not foul Sorry.
Speaker 1 (45:32):
You and your dad jokes.
Speaker 2 (45:33):
Sorry, we're going to do a whole episode on dad jokes
.
Speaker 1 (45:37):
Now I did have one final point and you made me lose
it.
Oh, one thing I do want tobring up too, and we're going to
close on this note, about therestaurant industry, and I'm
curious to see if your pointdiffers from my data.
So, when it shows all therestaurants that were closing,
your Wendy's, your, your um, thedifference between, like the,
(45:58):
but the quick servicerestaurants, those QSRs, and
then like your other sit-downmodels are faring better, and
the explanation for that, well,I'll let you that's your
territory.
Speaker 2 (46:11):
I know what I read, but it's interesting because
we're starting to see peoplecome back out of their caves.
The statistics seem to showthat people are starting to go
back to restaurants, which Ithink bodes really well for the
sit-down restaurants.
Not only that, but if you cango to a, I'm trying to think of
the one that has unlimited fries.
Speaker 1 (46:35):
Red Robin, red Robin, you go to Red Robin.
Speaker 2 (46:37):
You go to Red Robin, you can get a full meal for the
same prices you can now have ata quick service restaurant.
So I think we're going to see arenaissance of casual dining.
Speaker 1 (46:45):
Well, here's the dilemma.
So this is what I read and Idon't want to debate you because
, that's your territory, notmine.
But here's the dilemma.
The dilemma is saying well,that's the way people are
looking at.
It was like McDonald's.
Why would I give you $19 for avalue meal when I could go sit
down and eat for 20 $20 andactually be served well, the
(47:08):
argument, the reason why that'sso high is because minimum wage
has, you know, gone up and, likeCalifornia, when it's $20, that
cost has to be passed back onbecause those people have to be
paid, where a lot of that isstill the tip industry.
Now, we just did a podcast Forthose.
I'll link it and find it.
But tipping is at an all-timehigh and we're complaining about
(47:34):
that.
So you still are paying, soyou're not paying.
Speaker 2 (47:38):
There are things that are changing and even in that,
there are some restaurant brandsthat are just increasing the
wage of their staff and takingtipping out.
Or there are also ways that youcan go, sit in a restaurant and
order through what's called aQR code and even avoid the
server experience and just havesomeone bring your food, but
your point is not lost.
We need to understand and gettipping back under control, and
(48:03):
operators, I think to a greatextent need to understand that
tipping is not a way aroundpaying a decent wage for your
people.
Speaker 1 (48:11):
It's not an excuse.
I wrote a documentary for that,saying we can't tip our way out
of it.
But we just can't becausetipping is not the solution to
the issues we have.
But I thank you.
And on that happy note and again, like seriously, I mean, we
don't know, you can't changewhat you don't acknowledge, so
(48:32):
it's not always going to feelgood, but some things we do.
When we have such strong stanceand we immediately want to
attack someone or we want toblame someone, all I'm saying is
just find out as much as youcan and get an understanding If
I have a way to contribute tothis and look at your bottom
line.
Speaker 2 (48:53):
And all joking and levity aside, I like to try to
keep these things light.
We try to take on some prettyheavy topics, right?
I mean, I think in 2025 I don'tthink we try.
I don't think we set out to takeon, but no, we just I don't
think we we dodged some bigtopics, so we've talked about
you know religion and we'vetalked about you know all kinds
of commitments to your job.
(49:13):
I think next year we're goingto talk about things like DEI.
We're going to talk aboutequality and what that quality
really means.
Speaker 1 (49:22):
So we don't dodge these things, Let me just jump
in.
So the very next podcast isI've been wanting to talk about
this.
I am taking on woke and peopleissue with it because I have an
issue with weaponizing woke.
So that's like we said, we'renot dodging these things, so but
I think it's a difference and Idon't look for and and I'm
(49:42):
gonna put it on me because Ipick all the topics I never know
, say it all stop.
I'd never take on a topicbecause I for one minute I think
it's controversial.
For one minute I think it'scontroversial.
For one minute I think it'sproblematic.
But I do take on topics whenpeople in our society have very
strong opinions on topics andthat's how I pick the topics.
(50:06):
I am only here, I don't debate,I perch, and I'm only here to
say consider other ways to lookat it.
And that's the entiredefinition of purge, Before you
get upset and taking out CEOsand all of that.
That's a whole differentconversation.
Just consider the complexityand how complicated.
(50:28):
We just explained to you in themost simplified term, a very
complicated and complex systemwhich most of you guys had no
idea.
This is how I eat.
None so, and less than apercentage of us in America eat
(50:49):
90.
, I think it's 99.5.
We eat in this system and thenthe other is through farm to
table.
That that tells you we got alot of work to do.
So thank you again and I'll letyou do the close not, I'll let
you oh sorry, I did that.
Did sound like oh all right.
Speaker 2 (51:10):
Well, let me bring it home.
The american food ecosystem isone of the most complex in the
world.
Food travels through a vastnetwork of cold storage
facilities, transportation hubs,warehouses and restaurant
kitchens.
Each step adds layers to itsjourney, making the path to your
plate anything but simple.
The restaurant industry adds tothis complexity, with owners
(51:31):
and suppliers navigating risingfuel costs, higher wages, global
challenges and a changingcustomer habit.
It's no wonder food prices arehard to bring down, especially
when we often choose convenienceand variety over simplicity and
savings.
Does that let corporations offthe hook?
Absolutely not.
(51:52):
Corporate greed does play a bigrole, but so do our habits.
If we want to change, we needto understand how the system
works and what choices we couldmake to support better solutions
.
But let me ask you this If youthink for a moment, what do
these systems, processes andlayers have to do with you?
Maybe you're thinking I don'tcare, I just want prices to go
(52:13):
down.
Are we, as consumers, making awish upon a star, hoping for
magic?
Or is there something we can doto drive change?
Because here's the truth, Eventhough it may not seem like it,
we do have a hand in this.
By wanting variety, convenienceand instant gratification.
We've created a demand for asystem that delivers what we
(52:34):
want when we want it, but itcomes at a cost.
The question is, are we willingto acknowledge the price of
those choices and, moreimportantly, can we, as
consumers, make changes thatsupport a more sustainable and
equitable food ecosystem?
Before we can demand change, wemust challenge ourselves to
understand the journey, thesystems and the hidden costs
(52:56):
behind every bite.
Remember your perch it isn'tjust a place to sit, it's a
place to seek higherperspectives.
Thank you.
Popular Podcasts
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Therapy Gecko
An unlicensed lizard psychologist travels the universe talking to strangers about absolutely nothing. TO CALL THE GECKO: follow me on https://www.twitch.tv/lyleforever to get a notification for when I am taking calls. I am usually live Mondays, Wednesdays, and Fridays but lately a lot of other times too. I am a gecko.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.