Bad News from Hershey Chocolate

photo by duncan via Flickr

If you remember nickel candy bars as big as two hands, you're as old as dirt like me. Well, I got some bad news for you. They are getting even smaller and more expensive.

Rumor has it (Wall Street Journal) that chocolate manufacturers are choosing between making their current product smaller or changing the ingredients, both so that they are less expensive to make. Hershey's is exchanging some vegetable oil for some cocoa butter in order to cut costs. Bummer. But, they say, all candy manufacturers will be doing the same thing, cutting the size, changing ingredients, or increasing the price because their costs have risen dramatically, some say 45%, in just one year.

I can handle higher gasoline prices, but vegetable oil for cocoa butter, now you're talking revolution.

Cupcake.

The word makes me smile, why is the subject for another post.

The subject of this post: the long-ignored cupcake is now fashionable. I saw a Food Network cupcake contest a few weeks ago, I see them in the grocery stores a lot these days, and yesterday my sister gave me a magazine article discussing a popular cupcake weblog: Cupcakes Take the Cake.

If you think it's the whim of some overly enthusiastic cake lovers, think again, PC Magazine listed this blog as one of their favorite 100. The NY Times did a Food Section article on them, as did USA Today and Food and Wine Magazine. Who would have thought you could make it big being . . . a cupcake?

I'm not a big sugar-icing person so cupcakes have never been my favorite treat, I do like the TastyKake chocolate-covered cupcakes sold everywhere in Philadelphia and Delaware, but I have to admit some of the cupcakes on this website look really good.

http://cupcakestakethecake.blogspot.com/

(Where is Cupcake these days?)

Speaking of Food Memories . . .

Yesterday, the Wall Street Journal ran a story on the end of the HyDrox cookie production and on their loyal but disappointed customers. In 2003, Kellogg's, today's owner of the product, pulled from the production lines this American cookie classic. Loyal followers have done everything possible including petitions and websites to convince the company to re-introduce the line, but to no avail. It seems that Oreo's, a top-ten snack seller and HyDrox' competitor, could not be challenged profitably and Kellogg's decided to stop trying.

Honestly, I was more of an Oreo fan but HyDrox, created by Sunshine Cookies in the early 1900's, was the original.

In the same issue, and on a more serious note, the Journal reported the death of Richard Knerr, co-founder of Wham-o Toys. Folks my age remember the Hula Hoop. Everyone knows the Frisbee, but they also invented Silly String, the Super Ball and the Slip & Slide. Few products of such simplicity become a part of a culture, the Hula-hoop was one of the first, the Frisbee maybe one of the biggest. I seem to remember a hula-hoop champion on the Ed Sullivan Show gyrating his body with a dozen rotating hula-hoops. I am not sure why we were fascinated by that but we were. Almost spellbound, actually.

There was an American quality to Wham-o's inventive products. They required a user's physical involvement, they could be easily mass produced and distributed -- and mass marketed, and of course, they were made of plastic, something new at the time of the hula-hoop. Besides Monopoly, Barbie, and a few other games and toys, it's hard to think of other products as widely known and loved.

Make That a Big Mac . . .chiato.

You have probably read by now that McDonald's is store-testing the sale of espresso and cappuccino, and as a part of that test, how well they can train their own "baristas" to make said drinks.

They are after a bigger swig of the retail, brewed-coffee sales especially after the success of their new, premium coffee. The question remains whether cappuccino sippers will be interested in imbibing while surrounded by kids, kids meals, and construction workers in a hurry -- even if it is cheaper. And there is the obvious problem of store quality and consistency, it's one thing to teach someone to make coffee, another to make a good caramel macchiato -- training that Starbucks does amazingly well. I happen to like Starbucks coffee (sorry Jeromey) but I also know they are selling more than coffee. They are also selling escape and image, something McDonald's can't do, at least in the present store configuration.

The other side of this venture is old-fashioned, corporate warfare. McDonald's sees a chastened, and now vulnerable, Starbucks whose stock value has halved in the last year and who has dramatically slowed domestic store growth, which at its peak was 2,500 new stores a year (over 6 stores a day, a mind-numbing figure).

Personally, I think McDonald's could pull off the espresso move and not hurt Starbucks. It's not necessarily a crossover market.

The reality is as I have said, Starbucks to date has had no nation-wide competition. Dunkin Donuts is trying, 7-11 has their steady share of quick-coffee buyers, and McDonald's at present is low-fat competition. Starbucks created the U.S. coffee as a meeting/reading/relaxation concept and is king of the hill. Their current setbacks notwithstanding, they are here for a long while and are very, very profitable. Krispy-Kreme they ain't.

I like the McDonald's move, but my research uncovered one final question: Will we soon refer to them as Mickey D . . . caf ? Sorry.

Supersize That Stoli, Please.

Before I talk about what McDonald's is doing in Russia, I should say that I am a fan of the company, here's a few reasons why:
1. They are and always have been profitable and have had only one quarter with a net operating loss. Not too many restaurant chains can make that claim. Probably none. The sooner Burger King is put out of its misery the better. In Texas, the only hamburger chain that shows more promise is good old Whataburger. In the northeast places like 5 Guys are doing well at copying the McDonald's methods (and they do make a good burger).
2. Until the last 5 or so years, they have always been at the front of the trends. Recently, they have been blindsided by the boomers' health trend, the low carb diet, and by the Starbucks juggernaut. That's their fault, but they have responded.
3. The food is not bad. Their new coffee is good. I actually like the Quarterpounder, and their fries are the industry standard.
4. My grandkids love the play area. In the morning for $3.00 we get pancakes, a drink and 30 minutes of fun for them. That's not too bad. Bring earplugs.
5. The stores are almost always clean and stylistically up-to-date.

But what they are doing in Russia is business remarkable. A few numbers from yesterday's WSJournal:
1. Opening a single McDonalds store in 1988 required 200 official signatures.
2. The first store in Moscow had 27,000 job applicants who had replied to an ad that ran one day in the Moscow newspaper. There were openings for 630 crew jobs.
3. On the first day of business 5,000 people stood in a line -- before they opened.
4. McD's had to build a $43 million plant in order to supply buns and burgers. The country had no existing infrastructure to supply them.
5. The average store serves 850,000 people a year. Twice the American average.
6. The largest store is 24,000 square feet. Over 5 times the American average. The Pushkin square location in Moscow has 900 seats.

Like it or not America has exported efficiency and value when it comes to food and dining. McDonald's did to food service what Holiday Inn and Howard Johnson did to the travel hotel. Americans in the 50's and 60's loved it and for good reason, and the Russians and Chinese love it now. My generation decries the loss of the personal in these massive institutions but what we forget is that the USSR in 1980, except for their military, was not much more than a 3rd world country. They were broke and failed. They could advance by conquest or start over which in a sense is what they did. I'm going to be blasted here for sounding like a Randian, suggesting that market forces turned the evil empire into a prosperous, benevolent state. I am not saying that. I simply find it ironic that places like McDonalds, Coca-Cola and Starbucks, symbol and reality of American Corporation, are so successful in countries that had what they thought was a better way.

If you get a chance read how the Canadian businessman got started in Russia. Great story. Yesterdays (10/16/2007) Wall Street Journal.

Food in the News: Fresh Food is Good Business

The sale of foods fresh, whole, organic and of high quality are booming. It has been a trend that took a while to get its feet but now it's just considered a matter of fact. So reports, TheStreet.com, http://www.thestreet.com/_email/smallbiz/entrepreneur/10295310.html.
Consider the new food and beverage franchises which have grown disproportionately in the last 10 years : Starbucks, Chipotle, Qdoba, Central Market, Whole Foods, etc. There are no hamburger and fries places there, and that doesn't include the change in menu at McDonald's, Wendy's and the like. Bad fats are out.
Whether the reason is a maturity of palette or a health conscious boomer eating habits, the facts are that healthy and better quality foods are selling.
Morning coffee, when I was young, was made from a jar of Fulgers or Taster's Choice freeze-dried crystal, with boiling water added you get something that tasted like coffee. Not today, the growth in the food and beverage industry is fresh, organic and quality over convenience.

Food in the News

If you look for a Japanese face behind the Sushi counter before entering a Sushi bar, you might want to reconsider. USA Today reports that many new Sushi chefs are, not surprisingly, of hispanic descent. Like any business, some hard-working folks start at the bottom and work their way to the top and such is the case of Santos Villanueva top chef at Tako Grill in Bethesda, Maryland. Six of the seven Tako Grill chefs are from Central America and one from Japan. The number of Sushi restaurants in the US has doubled in the last decade and the demand for chefs is growing. Another benefit to the non-Japanese chefs. Americans like the experimental combinations like jalapeno, mango with hamachi. Our best traditional sushi in Fort Worth is Hui Chuan Sushi on Camp Bowie.
http://www.usatoday.com/life/lifestyle/2007-08-30-sushi-chefs_N.htm?csp=34.