Perch "The Thoughtful Pause Podcast"
Welcome to the Perch Podcast Channel: The Thoughtful Pause Podcast
Perch stands for Pause, Evaluate, Responses to Circumvent Harm, a philosophy inspiring meaningful conversations. Hosted by Tricia Porter and Toby Malbec, seasoned business professionals and life partners, this podcast blends decades of expertise with a mission to foster understanding. Guided by the belief that where you sit determines what you see, and what you see determines what you do, they explore how experiences shape perspectives and how expanding our worldview fosters empathy.
From different races, worlds, and viewpoints, Tricia and Toby tackle complex topics with curiosity and a commitment to positive change. Unafraid of controversy, they challenge listeners to embrace a higher perspective and see differences as opportunities for connection. Whether seeking personal growth or a fresh lens on life, Perch is more than a podcast—it’s a mission. Join us to pause, reflect, and rise to higher ground.
Perch "The Thoughtful Pause Podcast"
Why Are Food Prices So High? Unpacking the Hidden Costs and Solutions
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.
Good day Purge people. Thanks for joining us in a Merry Christmas. Feliz Navidad. This really isn't a Christmas episode, but it's a necessary conversation. Merry Christmas, let's bring you down.
Speaker 1:No, no, no, no, we are going to lift you up, so let me start with introducing myself. Hi, you guys, is viewing for the first time. I'm Tree and this is Toby, and this time, for the people who have visited before, I need to give you a little context about the subject. So today, our subject is what's eating you? Rising food costs in America, so this is Christmas, you can't afford your turkey.
Speaker 1:Yeah, why is my turkey so expensive? For those of you? It's really important that you listen to this through the end, because I'm going to give you a little background of why I'm having this conversation about myself and then I'll give it to Toby and he can give you a little background about himself and how we know a little background of why I'm having this conversation about myself and then I'll give it to Toby and he can give you a little background about himself and how we know a little more than an average person not saying we're a subject matter expert, but we know a little more about these complex, the complex topic we're talking about today. So my background is I've been in food distribution and logistics for 30 years, from warehousing to transportation to distribution. I work for one of the largest food distributors and one of the largest the world's largest cold storage company in the food area, so I know a little bit more.
Speaker 2:She knows to which she speaks.
Speaker 1:And I was a restaurant owner and a dinner theater owner. So when I say I've been around food in every facet and in every aspect I have.
Speaker 2:So, my background is mostly in the hospitality industry, which is hotels, retail, but mostly restaurant over the last 40 years, and so I tend to pick it up a little bit later in the chain of custody, if you will. That Tree does so, obviously being involved with distribution. The distribution folks are the ones who get it to the restaurants and then typically what the restaurant does with it and how they manage it and how well they control. That is kind of the world that I've lived in.
Speaker 1:Well, thank you.
Speaker 2:Oh, you're welcome.
Speaker 1:So I really want to talk about this subject because full transparency and disclosure I have been fuming. I have been fuming for the last year and a half, so much so I actually wrote a television treatment about this very, very subject because, excessively, we've heard the outcry of the collective and this is the one area in America I think we can all agree that most people are on the same page when they're saying it's too high and we need to bring it down. The reason I've been fuming is I'm fuming because of the conversation we're having about pricing, and I know the answer. The solution to everyone is like I don't care how we got here, just bring it down. And I know the recent.
Speaker 1:I know Trump ran on a platform that he was going to bring grocery prices down and then, immediately after he won, it was like well, I really don't have the power to do that and there's some truth in that, and so that's part of what this episode about. It's part of where we're going to get into. I want to just say something that not everyone might be aware of. So I want to talk about this. Food doesn't just travel from farm to table, and I know we hear that saying a lot. Farm to table is the best way to eat. It is from a health perspective, economic perspective. That's a different conversation. It passes through multiple levels of the cold chain, and so, for those of you who have never heard that term, I'm really going to try to have a really simple conversation with you and explain the American food supply chain system. It's an ecosystem and we're going to do the best we can to spell it out.
Speaker 2:In happy meal terms.
Speaker 1:Keep it simple, but give you like everyone should have some insight on the way we eat. So in the cold chain it includes warehouses, transportation networks, storage facility, all in which add costs to every stage. So let's keep this simple. So let's take one product, for example. Let's take what would you like to take A bottle of. Let's take some frozen dinners. That frozen dinner goes through a processing, so it has to go through a process. Then it has to go in a warehouse, and then that in a process and is packaging labeling. Then it goes to a warehouse, then it typically goes into, you know, some cold storage and from there it could go to multiple distributors and then from there it goes to normally one of the grocery warehouses which have their own multiple distributors, and then from there it goes to normally one of the grocery warehouses which have their own local distributors.
Speaker 2:Then until your fridge isn't it even more complicated, though, if you're dealing with something like produce, because produce has even more steps, because you're talking about a packaged product put on the shelf that has a well? I mean, let's face it, we could have world war three and we could probably still eat a tv dinner because there's so much preservatives in it. But if you've got a banana or strawberries or something perishable like that, isn't it more complicated?
Speaker 1:It is much more complicated and I was just trying to give the simplified end, stating that if I literally tell you, on average, the way Americans consume food, goes through, on average, five steps. Now, when I say step, look at a step 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 transportation component to each time it's moved. So there's a freight charge and there's a freight charge and there's a freight charge.
Speaker 2:So bananas, for instance. Where do bananas come from most commonly?
Speaker 1:uh, well then that now you'd complicate them, because that's what I'm trying to get at what?
Speaker 2:so? Yeah, they come from another country, 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 at some point is that bananas travel halfway around the world, go through four or five different steps and get to the grocers, get to our, our grocery store, and they're bright and yellow and happy right, what the? Hell. Or I'd like to say you're down here, what the hell? So how's that? Was it good?
Speaker 1:yeah, we're jumping into it and because you bought it up I think a little context needs to be given to that. As of 2021, imports account for approximately 60%. So imports people that's things that are coming in as far as what's going out. So we are bringing in 60% of our fresh fruits and 38% of our vegetables. In 2020, mexico gave 51 percent and 69 percent A lot of the bananas we eat come in containers.
Speaker 1:That means it's ocean free, that's shipping. It's sitting out in waters and you explain to me how you put a banana on your counter and two or three days later it's brown when it can sit out in the ocean that's kind of where I was going with that.
Speaker 2:That's what we call a leading question, right? How did how does that happen?
Speaker 1:it's just this is a lot to give you guys, but the the bottom line is I ask that you consider the financial components. You can't understand that. This is not your world, but I need to make the case. Our food ecosystem just the way eat has so many layers of complexity, have so many different pricing components, and so when you look at prices, when you can say I used to pay $0.39 a pound for a banana, well you know the other thing too, is.
Speaker 2:Growing up, I remember where my parents would say oh, this isn't banana season now, you can't get corn. Now it's not corn season. Oh, strawberries are from this time to this time and there was an expectation that when you had that 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 local that. And now we've seen and I'm not an expert on this, but it seems like you can have corn any time now, you can have strawberries any time now, so we know they don't grow any time. So there's some stuff going on here that is either unnatural preservatives or we're doing something. It certainly is a long way from farm to table and, as we talked about a couple weeks ago, when we were in France, you were going crazy over what Candelope and watermelon. Was it watermelon? No, it was candelope, and the melons and said, oh, my God, this has flavor to it.
Speaker 2:And so obviously all of those and I'm not bringing it up because I know we're not talking about preservatives and stuff like that but all of those steps take time and cost money, right?
Speaker 1:So every time somebody takes custody of something, there's a cost associated, absolutely, and it's funny I was looking for it because I pulled the data on it. And let's just keep it simple. Think about this Less than 30 years ago, the average American didn't even know what an avocado is If you weren't born in California and you lived in the Midwest. I remember the first time, true story, I made guacamole like 25 years ago. They were like Tricia, what is that green star with an S? That they said, and I was like. But I lived in California and now everywhere you go, you have avocado toast. Why am I bringing up avocados?
Speaker 2:I hate avocado. That's what you're bringing up bringing up avocados.
Speaker 1:I hate avocado. That's what she's bringing up. No, because of the. This is all about our consumption. When our consumption and it ties into your point about fruit and vegetables being seasonal when our consumption is up, let's be honest. America and I really want us to have an honest conversation about our level of consumption here. An honest conversation about our level of consumption here. When that level of consumption up and the crops are low, majority of, like 80% of our avocados come from other countries, so they have to be imported in, and just like bananas. When you have to travel, that's another process. We have to gas. We gas majority of these things to preserve them, so they can have the ability to travel, so they can arrive to you, and then they are processed once they get here, so they come right and then we put them in a gas chamber and we can read about it. Don't want to make it too complicated, but I I have to leave a lot of these components. We as consumers have a hand in what. What's the word? We may be unwilling participants.
Speaker 2: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 such lofty expectations. I mean, again, I'm going to, I'm going to get in the way back machine. I remember, you know, when I was young, you would order something and it would say allow four to six weeks for delivery. Right, it was like that was the expectation. It took that long, and now we complain and grouse if we can't get it from Amazon the next day. So we are, we are complicit in creating this. I expect it now, I expect it overnight, 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, the distribution network has created the ability to do this, but not without cost.
Speaker 1:Absolutely, and I want to because this is a lot.
Speaker 1:This is only one podcast and I know we're packing a lot in, so we're trying to give you clear information and a little detail in a short period of time. But I do want to talk about the fact that I understand it's kind of a natural proclivity for us to go. You know, let's agree in corporations and I'm not saying that there is not corporate greed, we know there is and there is shareholders and stakeholders but I want to bring us as consumers into the conversation and say to us we do have a hand in this, meaning knowingly and unknowingly, knowing that our excessive need for wanting what we want when we want it has created this ecosystem, the way that food moves and has a lot to do with pricing and why, and some of the reasons, how we got here. Like you said, we knew growing up, you know we had to wait for the melon season to start. When you go in a grocery store now, melons are in there year round all, there is really almost no fruit that we eat in america.
Speaker 1:That isn't there. Sad green tomatoes that's a southern thing, another conversation. But normally every fruit and vegetable is in a year round. That is not natural, because american crops just don't grow like that. There is a seasonality to everything, so there's a reason to when you eat things if just don't grow like that. There is a seasonality to everything, so there's a reason too. When you eat things. If you don't understand seasonality, you are going to pay more, because that is pretty much saying there is no way that food was grown here in America.
Speaker 2: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 from all around the world and they're like I'm used to eating this, I expect to have that I. So one of the natural maybe negative byproducts is that you know when, when you grow up and you you were born in the U S you're used to your meat and potatoes and your corn and your you know that kind of staple. And now you look at the types of things you can buy in a grocery store and you know I've been in a grocery store twice in my life because I like go into palpitations, I need my EpiPen and all that kind of stuff.
Speaker 2:So a little dramatic, you know, curl up like a squirrel in the corner, anyway. But I digress Half the vegetables now and fruits I don't even recognize. I Half the vegetables now and fruits I don't even recognize, I don't even know what the world they are. So clearly they're not from the US. In most cases they are imported and it's because we've now become very much a melting pot, very much a culturally diverse world, and everybody's like I live here, but I still want my maca maca fruit. And you're like, what the hell is a maca maca fruit? Oh, it comes from Maca Macaville and then it's got to be stored 11 times before it gets to you. And you wonder why a maca maca fruit costs you $11 a piece.
Speaker 1:Okay, so I do want to add this data. It said the hidden cost of variety and convenience. That's what we were just talking about Maca maca fruit for a variety of convenience instantly available creates a system that prioritizes speed and flexibility, which comes with a significant financial and environmental cost. A report from McKinsey highlights that 85% of the food consumed, 85% of food consumers prioritize convenience over cost, and so for anyone who says that they want cheaper, it's a thing saying, well, we want prices to go down, but then if you prioritize convenience, what's that?
Speaker 2:expression when, like, a contractor comes to you, you can have it either faster or cheaper, or I don't know the expression. And it's like you can't have all three of them, you know. And so if you want it fast, you can't have it cheap. If you want it cheap, you can't have it. Well done, it's like it's a compromise, and if people are valuing what did you say? Convenience?
Speaker 1:over Convenience, over cost. So let me explain.
Speaker 2:You reap what you sow.
Speaker 1:Yeah. So let me explain why. Convenience over cost what creates the cost? So pushing companies to maintain expensive. It's called, like just-in-time, Supply chain models. The US imports 15% of its food and including nearly 50 of the vegetables. So what? What is just in time? You may say, uh, what? Is just in time just in time was developed actually in the 19th.
Speaker 2:So I said well because I know people.
Speaker 1:I have no idea what just in time is, but that creates the, the. I want, what I want when I want it model.
Speaker 2:Who was Justin Time?
Speaker 1:Oh my Jesus.
Speaker 2:No, he wasn't there. He was there. Oh, he was, he's always there.
Speaker 1:You just weren't listening.
Speaker 2:He's like Elvis.
Speaker 1:Oh my God. So Justin Time was developed in the 50s and 60 by a Toyota motor company. It's a supply chain strategy designed to reduce inventory costs by receiving goods only when they're needed.
Speaker 1:So, you know how back in the day you just had like a surplus or whatever. That's why, when think about it, when you go to the grocery store, now, with technology, the minute they scan your food or scan that item and I'll explain to you SKUs too, those are those item codes. When they scan that item, it is sending a signal back to saying to check on inventory and they replenish it because the technology they don't have to just buy in bulk and and so when you need it, when you have it, it's there.
Speaker 2:so that's, that's the simplified well, I have a question about that, because during covid and maybe it's the same way now we heard that we don't have a food shortage, we have a distribution problem, and we heard that all the warehouses and all these warehouses were stock chugged full of product and we couldn't get it out to the restaurants, and the restaurants or the grocery stores were like we don't want it. So that's kind of the opposite of just in time, isn't it? I mean, it's all sitting somewhere waiting and somebody's paid for it to sit there and a lot of it gets thrown out and goes to waste. So how's that just in time?
Speaker 1:So you know how I feel about this subject. That's a loaded question. And it's loaded because, to be honest, fact, honest, factually people. When we went to the, the grocery stores and the shelves were empty. The food was produced factually in america. Most of our warehouses were at brink. They were running over.
Speaker 2:We're all panicky because there's one one thing of sugar left and, oh my god, we're good.
Speaker 1:You know we're all gonna die because I can't have my non-dairy creamer yeah, and there's a report and I and I and I don't wanna I don't like misquoting things but saying it's so much food in america and our warehouse is just in america alone we can feed multiple nations continent factually. We have tons of food here and if you think I'm lying, I'll give you the data on how much we waste every year. Just waste.
Speaker 1:So, when you say there's no food. There is food here in America, but the problem is there is a connectivity issue and the connectivity sometimes, let's be honest says who's going to pay for it, meaning when gas prices are up. Think about it so and let's keep it simple. We watched, as a nation during a pandemic, when people stop driving and they stay home. Do you remember when the fuel industry started dumping fuel Because they said, before they put it out and have prices fly, they will get rid of it before? Consider I'm not saying this has happened considering the fact that when companies were closed, their labor was at an all-time high because, for excuse me, except for essential workers, they were paying heavy labor costs. And why should I pay absorbent freight charges? Or why should I pay all of these things? Because free prices were down, because fuel was down and all of these prices were down.
Speaker 2:Such a short-sighted society I mean people joke all the time about culturally the west is far behind strategically the east, because the east you know in j and in China and all that they're making investments for the next century already and we're worried about, like, next quarter's profits. And I mean all you have to do is I'll use an analogy not even in the food industry. When COVID hit and it started to shut down our economy, the rental car agencies sold off all their cars. They didn't say, hey, you know, this is going to end at some point in time, probably six months, 12 months. Either the world's going to end or it's going to end in the next six or 12 months. But they sold off their cars.
Speaker 2:So then COVID, as we expected, ended and we had a shortage. We had no freaking rental cars and it's like I think every industry that thinks that way, including the food industry, gets caught with their pants down. I mean we heard stories about ships sitting out in ports for months at a time, right, Because we shut down and then we open up and we think everything is going to return to normal. So shame on us.
Speaker 1:Yeah, remember, we're short-sighted and honestly and I'm going to put Amazon in that example Remember, because we're at home, everyone was so heavily dependent on Amazon because we couldn't come out and so it was a necessity and I'm not judging, I was one of them. So Amazon just saturated the market. They built tons of warehouses. And then, when we started coming out, they started closing warehouses, which is so short-sighted.
Speaker 2:It's like accounting period to accounting period. Nobody says, okay, what's going to happen a year from now or a year and a half from now. But you know, should we put the cars on the side? No, no, no, let's sell them all off. And then, all of a sudden, what happened to used car prices, you know, after COVID. I mean, it's just, we just don't, we're not very proactive in terms of looking at this stuff, and I would argue that a lot of this is still a COVID hangover.
Speaker 1:So let me go back to the pricing and our structure for people and the consumers possible hand in this or hand in a solution. So now let's talk about facts. What we need the increased adoption of private labels, eric's. So for those of you don't know who private labels, what private labels are? You see them all the time. So when you go to the grocery store, you, and if you go to Walmart, walmart it says great value, so that's that their Walmart's private label.
Speaker 1:When you go to Target, there's this market can't think of the name of it, and so what does that mean me, tricia, and why do I care? Well, the reason that should mean something to you on why you care is because most of these vendors and producers of food have a generic version, and that's a private label, meaning you're getting hung up because you like your name brands. You like your Heinz, you like your Kraft macaroni and cheese, you like whatever that brand you're accustomed to, but that same company makes a private label, meaning it's the exact same product, is it really, though? Is the quality the same? I'm getting into that, all right.
Speaker 2:Jump the gun.
Speaker 1:Calm down. All right, calm down, I'm about the chicken and Heinz.
Speaker 2:That's why I'm here.
Speaker 1: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 in packaging. So it's the reason why when you get a bottle of water now, it pretty much collapses in your hand. When you squeeze it, it's like ah, it's like what.
Speaker 1:It fumbles and it spills all over you because they downgrade the packaging. And so, when you look, think about it, now that I bought up to you, think about the great value label on Walmart. It's blue, it's simple. There's no glitter, there's no heavy 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 slight ingredients modification. So what they do is and I'm not, and this is just me being dramatic it's 57 ingredients and high they go. You're going to get 56 in a private label. So, factually, I worked on one of the accounts I had I won't say the name was a company that produced nuts.
Speaker 2:Ah, nuts.
Speaker 1:So hear me out, this is how it works. So I just want you to consider cost saving. So when it comes out, it comes down the same conveyor, it's the same notes, it's their brand name, which comes in a really nice shiny can and it's expensive and that's the top. So the nuts come down a conveyor belt and they shake it. The bigger nuts go in the the shiny can. Toby toddler oh my god, seriously, it's you don't get a bigger nut than this it's like a little the three-pronged shell, a whole system.
Speaker 1:And the larger nuts go in the the the highest level, the medium-sized nut nuts go in their, their secondary level, and the smaller nuts go in their private label and they and and a lot of times it's barely and so, but then from a recipe standpoint, then what they'll do, like if you have dry roasted nuts, they'll put one coat of roasting on the dry, on the cheaper one, and two coats on it. That's the difference.
Speaker 2:But it's more than that, isn't it like marketing too? I mean, if we were talking about I don't know, I'm trying to think who does nuts? I'm just saying from a product standpoint, planters does tons of commercials, they do tons of marketing. Planters does tons of commercials, they do tons of marketing and you don't find Kmart nuts or Kmart Kmart is so old Kmart nuts Sears nuts If you eat nuts from Kmart, you got bigger issues.
Speaker 2:Exactly, you got bigger issues Right. All right, so I'm having my Sears nuts over here, but I mean, you know what I'm saying. It's more than just that. The brand is trying to create an identity. So they're out there marketing and they're out there advertising. I mean on a much simpler basis, I look at every weekend on sports, the cell phone guys are just hammering you Verizon and T-Mobile and all that but there's a whole bunch of other carriers that you never see advertised.
Speaker 1:And they're so much cheaper. That is a profound connection, because those same cheaper people are using some of the same cell phone towers.
Speaker 2:There you go. And pinging in so that's a great Good job, thank you.
Speaker 1:Great Circle gets a square. Go back to food.
Speaker 2:All right.
Speaker 1:Going back to food Nuts oh my Jesus, the reason I even bought up there. There is an increase in adoption of private labels and generics, a shift to store brands. Consumers are increasingly choosing store brands or generic products over national brands to save money. In early 2023, 22 percent of shoppers stated that they're switching, stated that they're switching. I have to say it's concerning to me when we're all saying you know, it's so high. I even found myself the honest truth. In some brands I've switched detergents, some of them.
Speaker 1:you can't tell the difference right, Right, Like my dish, detergent for the dishwasher and things like that. I looked at the prices. I'm like why am I paying $18 for 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 models like Aldi's. And so for people who've never been to Aldi's before, the reason why Aldi's has historically existed Aldi's business model centers on offering a curated selection of private labels Goes back to what I just told you generic labels, private labels, call it what you want to call and has resonated strongly with cost conscious people increasing shopping, increasing shoppers switching to Aldi. So now our prices are so high, people are going back to Aldi, and Aldi again it goes back to what you just said it's capitalizing on it. So they have an expansion by 2028.
Speaker 1:Aldi's plans are opening 800 stores, but it's the same dilemma so if people prices, just then people only go into all these because they're like well, I'm stretched and I really don't prefer all these, but for my staples, my bread, milk and eggs but one of the things you just said was that packaging is also very expensive.
Speaker 2:So you may have seen in the news, I think as recently as last week, Costco is expanding. And I don't mean expanding, I mean expanding, and part of it is, I think, exactly what you're saying there, which is so much of the cost of a product is in its packaging. So you know why go buy one Kleenex when you can buy 6,332,412? So now, if I can have a box that's this big of Kleenex as opposed to having to package every single one of them, that should take some cost away as well, right?
Speaker 1:So let me explain. So I'm glad because you bought up Costco's. Let me explain their model, the reason why and I feel like somebody's going to have an aha moment when I say that for those of you who shop at Costco, I think we've all experienced this frustration where you start liking a particular product and you go back and you'll never see it again.
Speaker 2:Cinnamon rolls.
Speaker 1:Yes, let the cinnamon rolls go no, and let me explain you the reason why. Behind it, it's the way we buy and it goes down to cost savings. So Costco doesn't have like major, major warehouses like other people. So they really have a just in time model. So when their product comes into Costco, typically it doesn't go through a lot of those steps, saving costs. It goes directly from whatever that distributor is to Costco warehouse, out to that store. So they have taken a lot of costs out there store. So they have taken a lot of costs out there. But here's why you get frustrated, because you'll go in and Costco will commit to. If you notice, pay attention, when you go, it's two or three options they're going to give you for one item. So if there's a soup you're going to get you know, your cream of broccoli or this or you're that. And then you'll say, well, I like Panera, cream cheese, broccoli or whatever. And now it's Joe Schmoe's in there.
Speaker 2:There's nothing wrong with Joe Schmoe's, by the way.
Speaker 1:Because that's what Costco does. They keep costs down. They find vendors who can keep their just-in-time model to stay in this process and once that vendor can't meet the model that's created and they can't supply, it's on to the next one. Now we know we have to find another vendor for that broccoli cheese. So that's how the systems and structures are created and how it's created either drive cost up or drive cost down.
Speaker 2:So are they buying on a contract, or are they buying surplus from somebody else? What?
Speaker 1:do you mean they have contracts with their vendors?
Speaker 2:yes, and once that contract is up they go into surplus.
Speaker 1:But their contracts. They're different from other competitors in that area because they don't have all of the extra steps in the supply chain. So when they give you the product, they need to know. Perfect example Popeyes. Remember when people were losing their mind over Popeyes and they created this product and did not realize the demand would be so high. Here's the problem. The vendor that they went with that could create that particular chicken sandwich could not produce at the levels there, so it created all of this angst, all this uproar. And when they switched to a vendor they couldn't their product changed. So it's not like and some people, because you don't understand, you know how it goes it's like well, they start making money and they just cheapen their product. That's not necessarily true. They just found a different vendor 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 they could to recreating that Gotcha.
Speaker 1:So it's all just insight of how we and why we pay the things we pay. Did you want to get more into the restaurant side?
Speaker 2:Well, on the restaurant side. I think it's just an extension of customer demands. Again, it comes back to people expect anything anytime, all the time, and there's a certain level of consistency that people expect with menus, right, so that inherently a restaurant has to have a consistent. Well, they don't have to, but most restaurants have consistent menus and that creates challenges unto itself, right, if it's something that's seasonal or only available during a period of time. Now, many restaurants will do what are called limited time offers. You'll see this at a lot of the larger restaurants, or what we call quick service or QSR restaurants, where they do what's called an LTO. So they'll do a buffalo chicken sandwich and, to your point, they've already contracted with somebody to make a finite amount of that product to go for a period of time. Now here's the challenge that restaurants have is it's kind of a best guess those that have better understanding of history and tracking patterns and things like this are better at it.
Speaker 2:But this comes down to the whole question around food waste. If I'm a large brand and I say we're going to have this buffalo chicken sandwich and it's available till March 31st, well, it would be wonderful if on March 31st, my last restaurant sold its last buffalo chicken sandwich Never happens, okay. So ideally perhaps they sell out before that, right A week before that, the day before. That depends on how well we plan, but that's not what happens. And what happens is they're left with product and this product sits there and sits there and sits there and eventually it gets thrown away in many cases. And it's a tragedy because it's a food it's a waste of, of perfectly good food that could have somehow been either perhaps repurposed or donated to charity or some other way of getting rid of it.
Speaker 2:But as we look at as as restaurateurs, we look at this sometimes and I'm not going to get down on the marketing people too much, but marketing people say, look, how successful this campaign was, we sold this much money and we sold this many buffalo chicken sandwiches.
Speaker 2:And you say, yeah, but you also got left up with all this product that you finished up throwing away. Did you take that into account? So it's not unlike what Tree was just talking about in terms of this distribution, but in these cases we are left sometimes with food sitting in restaurants, and I don't know if we're going to get a chance to talk about it today, but historically, restaurants have been very hesitant to donate food to shelters or other places, even when they're done with it, because of food safety issues or fear of litigation. Some of that's changing. I think restaurants need to relook at that. There are some protections under the law if they can get into it, but sometimes it's a matter of how to get it to these places and so on, because we again do not have a food shortage. We have a distribution challenge.
Speaker 1:And I'm frustrated because I did print out the data and I don't see it on here because I know it's over. Every year in America we waste over nine tons, a million tons of food. You know it's a lot of waste and I hate that that didn't print out and I apologize that. But I do want you to address something because we see it now, we hear it about the restaurant wars and the $5 menus and before we get to that, I want to give these numbers and then you talk about it.
Speaker 1:And they said just the model for closing in 2024. This is just 2024 people. And then I have data going back the last five years. We won't get into all of that. Wendy's closed 140 locations. Rare lobster 99. Tgi. Friday's 50s subway approximately 571 locations closed in 2022. Pizza Hut up to 300 locations closed in 2020.
Speaker 2:What's happening?
Speaker 1:Again when people say it's these corporations and I'm like people really pay attention. We got grocery stores that closed a couple chains the first time in America. Oh. And then when we say we want to save money and we want to get prices down, so also family dollar. A lot of people buy food and goods from there. Family dollar closed 620 locations. Dollar Tree closed 1,000 locations. The 99 cent store closed 371 locations. The 99 cent store closed 371 locations. Big Lots all totaled between those four 2,291 locations closed.
Speaker 2:Some of it is just natural, I guess, reestablishment, you know, it's kind of like the thinning of the herd. So there's always a percentage of businesses that will fail. So let's put that aside for a second. There's always a certain percentage, but there's a couple of things If we look at the restaurant industry specifically, and that is a couple of factors.
Speaker 2:One is that a lot of people get into the restaurant industry more on the we'll call it the independent side for many of the wrong reasons. They love food, they love people, they love to provide service, they think they're great chefs, not because they want to make money oh God forbid, that's considered a bad word or that they believe that they can run a good restaurant with strong fundamentals. So they get into the business for the wrong reason and that's why you see so many independent restaurants fail in a very short period of time. The bigger question and the numbers that you were just talking about are more of because there's a very fractional relationship between a franchisor so a Wendy's or a Subway or one of those brands and the people that actually have the business or who are called the franchisee.
Speaker 1:So can we? Yeah, so I was going to say so. A franchisee is can we?
Speaker 2:yeah, so I was gonna say so. A franchisee is somebody who actually negotiates and puts the name of that brand on their business. They're not actually Wendy's, they're not actually Chick-fil-a, they're not actually Burger King. They are actually a franchisee and so they're born to have to follow whatever the brand says to many cases. So this is where the disconnect happens. Is the franchisor?
Speaker 2:Wendy's or Chick-fil-A or Arby's makes money when the franchisee sells food. So if the franchisee sells a $10 meal, they get a percentage of that. Now notice what I said they get a percentage of the sale, not of the profit. So what happens is it's in the best interest of the franchisor, namely a Wendy's or Chick-fil-A to sell as much as possible, because the more they sell, the more royalties they make. However, that's not true with the franchisee. The franchisee has to be profitable.
Speaker 2:So when you see these $5 footlongs or $5 meal deals and all that, these are killing the franchisees because they're not making money. The franchisor is. So part of what we talk about as consultants all the time is why don't we all look at success through the same lens and say I make money when you make money and the franchisees of the future and the franchisors of the future are the ones that get together and are going to agree with what success looks like, because right now these businesses are going out of business, because they're being imposed these programs that they can't afford, and no bigger one than the all-you-can-e eat shrimp at red lobster that broke the bank killed them, yeah, so that that's fair and and that that's a valid point.
Speaker 1:And, in simple layman terms, what he's saying is you know if you have a five dollar meal and when you get through with your labor, your overhead, your your um, your your taxes, paying your employees.
Speaker 1:And that meal you know, literally cost you almost 550. And then I get paid. The head gets paid off volume and not off your profit. That means I still have to pay you and I'm at a 50 cent deficit. Ie explains the closing and how that goes, and my concern is so when I looked into the numbers, which I found interesting, I was like I didn't understand why so many with the world now, but specifically we're focused on America and this podcast is seeing prices are too high. We want to save, we want to save. Why are all the saving and cheaper options closing? And so I find it fascinating when I looked at the data and it kind of goes back to yes, the competition created and you know, when you create competition, they eat each other.
Speaker 1:So, with the different brands, so that did happen, but what happened was the timing. The timing was we went through a pandemic, people weren't going out, and so this model was based on the people that actually came to the door. It's too smart of a price point to literally deliver to you, and that's a different fray cost. So that's why they crumble and they crumble so hard, because in the end, even before that, in all fairness, people start turning to. You know the model of convenience and going to amazon, like you know what, it's not that big difference of the price. I don't have to go in a store.
Speaker 2:So a lot of it is consumer spending and the way the other challenge is the hospitality industry, namely the restaurant industry although we could make a similar argument for hotels are very labor intensive. They're very labor intensive markets. So a retail store, for instance you go shop for all your stuff, you come back and you put it and you have a single touch point of a person who brings stuff up or more often than not. Now we have kiosks or self-service, so you can do a retail experience without ever having a human being having to do anything. So we've removed the labor cost at 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 that serves you, you've got somebody that clears your table, you've got somebody that you pay the check with. It's a very labor-intensive business and restaurants specifically have been reticent about removing that because they go.
Speaker 2:We're in the hospitality business, it's about providing service, but with labor costs going up and we can argue whether that's right or wrong I believe that you have to pay somebody a fair wage but at some point you price yourself out of the market. So if I walk into a fast food restaurant and I talk to somebody about ordering my burger, and there's somebody clearing the table and there's somebody who has to cook. Excuse me, there's a lot of labor there. So we've got to find smarter ways of doing this, whether that's through mobile apps or whether that's through kiosks or some way to reduce those costs moving forward, because we have to get there. In fact, just today, I think, starbucks over the weekend is on strike in many of the cities now I think Seattle, los Angeles, I think Boston and New York because of wages. So the baristas are saying we're not being paid enough and I mean, my God, what is a Starbucks cup of coffee $12? I mean, it's like it's ridiculous. And if they can't make it work with labor, how could some of these others?
Speaker 1:So that's two points before we close. One of them is my last, final data point. According to the US Department of Agriculture, usda, as of March 2024, the estimated monthly grocery cost for a family of four just, I was gonna say, take a while, guess what? I think I told you already 12 million. So the way they put this in, they put it in two um categories. They call it the average family of four, a thrifty plan, and that that would be like your, all these walmart value shapes, oh my jesus.
Speaker 2:And and then you're asking, not toby, okay sorry and yeah, oh my god, it is christmas time. What?
Speaker 1:you got, oh, focus, get me for christmas I give you high grocery bills. I actually got you a discounted ribeye we. We got a cookie today. It goes in the garbage. That's the only reason you got it.
Speaker 1:So and there's a thrifty plan people sorry for the interruption and there's a liberal plan. So one is the family that saves and discounts and coupons and clips and the other one is the one who, just you know, bought the average consumer, just you know, the average consumer. So approximately, on the Thrifty plan, the average family of four spends $976 a month. So the total of your annual earnings is $11,719. Now that's when you're conscious about your purchase and coupon. But the average American family of four spends approximately $1,585.20, totally $19,022 of your annual income on groceries and food.
Speaker 1:There you go. So Merry Christmas. No, I'm just kidding. Yeah, really.
Speaker 2:There you go. So Merry Christmas. No, I'm just kidding. Yeah, really Enjoy that turkey.
Speaker 1:That turkey better go in a salad when it's done, that's right you got to eat amory. Take the bone, make a soup.
Speaker 2:Maximize. Let's hope it's not foul Sorry.
Speaker 1:You and your dad jokes.
Speaker 2:Sorry, we're going to do a whole episode on dad jokes.
Speaker 1:Now I did have one final point and you made me lose it. Oh, one thing I do want to bring up too, and we're going to close on this note, about the restaurant industry, and I'm curious to see if your point differs from my data. So, when it shows all the restaurants that were closing, your Wendy's, your, your um, the difference between, like the, but the quick service restaurants, those QSRs, and then like your other sit-down models are faring better, and the explanation for that, well, I'll let you that's your territory.
Speaker 2:I know what I read, but it's interesting because we're starting to see people come back out of their caves. The statistics seem to show that people are starting to go back to restaurants, which I think bodes really well for the sit-down restaurants. Not only that, but if you can go to a, I'm trying to think of the one that has unlimited fries.
Speaker 1:Red Robin, red Robin, you go to Red Robin.
Speaker 2:You go to Red Robin, you can get a full meal for the same prices you can now have at a quick service restaurant. So I think we're going to see a renaissance of casual dining.
Speaker 1:Well, here's the dilemma. So this is what I read and I don't want to debate you because, that's your territory, not mine.
Speaker 1: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 a value meal when I could go sit down and eat for 20 $20 and actually be served well, the argument, the reason why that's so high is because minimum wage has, you know, gone up and, like California, when it's $20, that cost has to be passed back on because those people have to be paid, where a lot of that is still the tip industry. Now, we just did a podcast For those. I'll link it and find it. But tipping is at an all-time high and we're complaining about that. So you still are paying, so you're not paying.
Speaker 2:There are things that are changing and even in that, there are some restaurant brands that are just increasing the wage of their staff and taking tipping out. Or there are also ways that you can go, sit in a restaurant and order through what's called a QR code and even avoid the server experience and just have someone bring your food, but your point is not lost. We need to understand and get tipping back under control, and operators, I think to a great extent need to understand that tipping is not a way around paying a decent wage for your people.
Speaker 1: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 because tipping is not the solution to the issues we have. But I thank you.
Speaker 1:And on that happy note and again, like seriously, I mean, we don't know, you can't change what you don't acknowledge, so it's not always going to feel good, but some things we do. When we have such strong stance and we immediately want to attack someone or we want to blame someone, all I'm saying is just find out as much as you can and get an understanding If I have a way to contribute to this and look at your bottom line.
Speaker 2:And all joking and levity aside, I like to try to keep these things light. We try to take on some pretty heavy topics, right? I mean, I think in 2025 I don't think we try.
Speaker 2:I don't think we set out to take on, but no, we just I don't think we we dodged some big topics, so we've talked about you know religion and we've talked about you know all kinds of commitments to your job. I think next year we're going to talk about things like DEI. We're going to talk about equality and what that quality really means.
Speaker 1:So we don't dodge these things, Let me just jump in. So the very next podcast is I've been wanting to talk about this. I am taking on woke and people issue with it because I have an issue with weaponizing woke. So that's like we said, we're not dodging these things, so but I think it's a difference and I don't look for and and I'm gonna put it on me because I pick all the topics I never know, say it all stop.
Speaker 1:I'd never take on a topic because I for one minute I think it's controversial. For one minute I think it's controversial. For one minute I think it's problematic. But I do take on topics when people in our society have very strong opinions on topics and that's how I pick the topics. I am only here, I don't debate, I perch, and I'm only here to say consider other ways to look at it. And that's the entire definition of purge, Before you get upset and taking out CEOs and all of that. That's a whole different conversation. Just consider the complexity and how complicated. We just explained to you in the most simplified term, a very complicated and complex system which most of you guys had no idea.
Speaker 1:This is how I eat. None so, and less than a percentage of us in America eat 90., I think it's 99.5. We eat in this system and then the other is through farm to table. That that tells you we got a lot of work to do. So thank you again and I'll let you do the close not, I'll let you oh sorry, I did that. Did sound like oh all right.
Speaker 2:Well, let me bring it home. The american food ecosystem is one of the most complex in the world. Food travels through a vast network of cold storage facilities, transportation hubs, warehouses and restaurant kitchens. Each step adds layers to its journey, making the path to your plate anything but simple. The restaurant industry adds to this complexity, with owners and suppliers navigating rising fuel costs, higher wages, global challenges and a changing customer habit.
Speaker 2:It's no wonder food prices are hard to bring down, especially when we often choose convenience and variety over simplicity and savings. Does that let corporations off the hook? Absolutely not. Corporate greed does play a big role, but so do our habits. If we want to change, we need to understand how the system works and what choices we could make to support better solutions. But let me ask you this If you think for a moment, what do these systems, processes and layers have to do with you?
Speaker 2:Maybe you're thinking I don't care, I just want prices to go down. Are we, as consumers, making a wish upon a star, hoping for magic? Or is there something we can do to drive change? Because here's the truth, Even though it may not seem like it, we do have a hand in this. By wanting variety, convenience and instant gratification. We've created a demand for a system that delivers what we want when we want it, but it comes at a cost. The question is, are we willing to acknowledge the price of those choices and, more importantly, can we, as consumers, make changes that support a more sustainable and equitable food ecosystem? Before we can demand change, we must challenge ourselves to understand the journey, the systems and the hidden costs behind every bite. Remember your perch it isn't just a place to sit, it's a place to seek higher perspectives. Thank you.
