Archive for September, 2009
The Direction of The Personal Finance Playbook
Posted by: Todd Metheny in Uncategorized on September 30th, 2009
If you’re a frequent visitor to the blog (thank you!), then you may have noticed that the frequency of my posts has wavered lately. This is mainly a result of two things, (1) a social life that has been a bit more active than I’m used to (ever since we moved to St. Louis), and (2) I’m at a lull in my life as a blogger.
The social life thing has actually been a nice thing to have to balance. My life in Kansas City, at times, was too inactive. More often than not, my wife Rachel and I did our own thing. I loved that time of our lives, but because I have some introverted tendencies, I decided to make a concerted effort to make sure we did more fun stuff when we moved to St. Louis. It’s also a place where we have lots of friends and family, so that was easy to do. Now, at times, it feels like our life is a whirlwind of working and attending the social engagement du jour. I think the ideal situation lies somewhere in the middle. The key to life is balance, right?
The blogger lull is something I’ve heard about since I started blogging. Everyone who starts blogging considers quitting at some point. You start to ask yourself whether it’s worth the enormous amount of time that it takes, and ask if you’re giving more than you’re getting back (hint: you probably are). Needless to say, I’ve been a little less than inspired lately. I still love blogging. I love writing about personal finance and investing. I love building something online. I’m not quitting, but it’s been easy to lower on my priority list. When you aren’t inspired to write, it makes it tough to produce content that you’re proud of from a quality perspective.
To combat the lull (I have every intention of pushing through it), I have vision for where I’d like the blog to go and what I’d like it to be going forward. I have some goals. Here they are:
Interviews. Last month I did two. I enjoyed doing them. I think there was a lot of great information in them. They were interesting. They were informative. They broadened the perspective of the blog. It gave the blog a careers/entrepreneurship slant. People who read blogs tend to be people that like to know a lot about a lot of stuff. Interviews perpetuate that.
Book Reviews. I’d like to do at least one a month. Reading keeps you thinking about ideas and coming up with your own. It keeps you creative. I think it’s also helpful when deciding what to read. I honestly search blogger reviews, specifically, before deciding what to read next.
Re-Design. I’m interested in re-designing the blog in Thesis theme. I’d like to give it a more customized look. I love the theme I’m using right now. It’s a very clean, nice look, but I’d like to have something that’s a little more custom. Something you won’t see anywhere else (at least not exactly). I’m excited about doing this, and might recruit my friend Jessie, a graphic designer, to help make it better. I don’t necessarily have a time frame for this, but hopefully I can make the change over sometime before December.
Reinforcements. This is the thing I am absolutely the most excited about about the blog. I have three people that have agreed to write a monthly spot on this blog. Each of them brings a unique perspective and life situation. All three of them are smarter than I am. All three of them are amongst the smartest people I know. They are all talented, interesting people, and I think adding their perspectives is going to make this one of the best blogs on the web (Obviously a bold statement, but one that I truly believe).
They are each going to write once a month. At some point in the future, I might roll out more in depth bios – or maybe I’ll just let you learn about them as we go, but in any case here’s a short resume for each of them.
Katie Fink is brand new to the blog. She’s the only contributor to the site that works in corporate America. She recently got a new job for her publicly traded company. She is a CPA, and is finishing up her MBA from one of the top B-Schools in the country. She’s also one of the smartest, wittiest, funniest and most charming people that I know. I personally can’t wait to read her stuff. Our tentative date for her first post is October 22nd.
Josh (hasn’t given me the okay to use his last name yet) wrote a post for the blog before. I’m not sure I know anyone that is more resourceful or better with their resources than Josh is. Josh lives in New York and is a professional actor. When the industry is slow, he supplements his income by running his own personal training business, teaching acting, and doing a little of this and that. Josh is one of the smartest people I know. He also happens to have an undergraduate business degree that he applies on a regular basis as an experienced New York haggler and informed consumer. He’s currently in a play in NYC, so we’re not exactly sure when we’re going to schedule his post. But it will be either in late October or early November.
RJ Scaringe is my brother-in-law, and, like Katie and Josh, is one of the smartest people I know. RJ is going to bring a very unique perspective on several fronts. He recently graduated with his PhD in Mechanical Engineering from MIT. He’s currently working as a start-up entrepreneur. He’s a business visionary, entrepreneur and expert in all things green living. He’s going to be our resident green expert and hopefully share some of his entrepreneurship experiences. He can routinely be found rubbing elbows with the dregs of society, including lobbyist, politicians, and other engineers that believe in his cause.
All three of these people are going to be writing about pretty much whatever they want, hopefully on a regular monthly basis (I’ll let them write as much or as little as they want, but I’m trying to at least get one post a month from each of them). Hopefully, this will do the same thing that interviews do. It will allow the reader to benefit from more perspectives. I don’t know anything about working in corporate America, or living frugally in NYC, or technology start-ups. All of these perspectives are going to enrich the blog and make it better. It will keep me learning, too. I have no doubt that their posts will raise the bar and improve my writing and research as well. I’m looking forward to it. I hope you are, too. Any other suggestions any of you have are more than welcome as well. Thanks for reading.
Status and Lipstick
Posted by: Todd Metheny in Frugal Living on September 28th, 2009
What's that bright hue worth to you?
What are we living for? I recently came across an interesting interview, full of great research, including this gem: “The lifestyle of the top 20% of the income distribution has come to be an important aspirational goal for people throughout society, many of whom earn far less than the roughly $100,000-a-year incomes that are represented by that group.”
I can’t tell you how many times (read: lots) someone has told me how rich someone is. ”Such and such is soooo rich. They have a Mercedes, and a big cookie cutter house in the suburbs, and a rolex!” Or they ask me, “Do you know how rich such and such is?” The answer is, no, I don’t, and neither do you.
You can’t tell how rich someone is by their consumption. There’s a very weak correlation between wealth and consumption. Many of the people you have with those things, have less money than you think.
Juliet Schor, a Harvard prof (at the time the article was published – I have no idea whether she’s still there), conducted what the article refers to as “the lipstick study.” The question they set out to answer was how much people care about status when it comes to products. I would say you really don’t have to look any further than bags like Coach, which have indicators that it belongs to that particular brand all over it. The lipstick study looked at how much women paid for lipstick. The department store brands ran about $25, and, according to the study, had little difference in terms of quality to the $2 lipstick.
She found that the same women that buy generic facial cleanser will spend $25 on lipstick. The women couldn’t tell a difference between the lipsticks without the containers. For whatever reason, people believe that the more expensive lipstick is better. The author believed that status was the motivating factor behind these purchases. They didn’t want anyone to see them buying or wearing inferior lipstick.
I’m going to tell you what you already know. Spending money isn’t going to elevate your status in any way that matters. Spending all your money on cars and clothes won’t make you smarter, or better looking, or more interesting. On the other hand, spending less than you earn and living beneath your means will make you feel safe and secure. It will make you feel in control of your life in a way that insecure spending won’t. Thanks for reading.
Follow up to Ken Fisher discussion
Posted by: Todd Metheny in Economics on September 24th, 2009
In response to the recent post about Ken Fisher’s view on US borrowing, a couple of readers offered interesting takes. Chessiq, a friend of the blog who works in accounting, and a CPA candidate (I think he’s on his 4th test?) offered the following:
“My understanding of Fisher’s argument is that as long ROA>i [return on assets is greater than cost of debt] you should keep borrowing, because you will be able to pay off the debt, the interest, and have some left over for yourself. First off, what are these assets (for the USA or USA govt). My hope is that these assets are not 1) used up plugging the deficit, and 2) are not the borrowed money i.e. you borrow cash, so you have cash as your asset. The follow in the combination of 1) and 2) is that at the end of the day, you need a long time to pay off the debt. a simple example. deficit 100, interest 1, ROA 2, you would need 100 years to make enough profit to pay off the debt without using dipping into the principal/asset 100. If the debt needs to be paid in 20 years, then at that time, you will only have to get about 80 from the original borrowed money. My other issue is that it appears the debt we are getting is “consumer debt”. The government is needing this debt for operational purposes, not for investment, and the last time I checked, ROA or ROI on consumer debt was 0 or -ve. Am I missing something?”
I don’t think he’s missing something. That’s a better explanation than I could have given, which is why I’m moving it to the front page. I had the same thought about Fisher’s “return on assets” hypothesis. What assets? If they really are investing in “assets” then that’s one thing. If they’re borrowing the money to pay their debt or to spend more money on things that have little chance of benefitting the country, then the return is minimal. To the extent that the money creates jobs or raises salaries, then the US will experience some return by an increase in taxes paid in, as well as an increase on sales taxes (when people have more money, they buy more stuff). I’d like to see exactly how and what Fisher is classifying as “assets.” What are the assets, and how will they benefit the country? Thanks for reading.
The Tipping Point
Posted by: Todd Metheny in Reviews on September 22nd, 2009
I just finished reading The Tipping Point by Malcolm Gladwell. It’s a good book. I recommend it. It’s sort of in that genre of books that are both informative, entertaining and easy to read, sort of along the same lines as Steven Levitt’s Freakonomics.
The title presents us with the books stickiest idea – that small things can cause an epidemic. When enough little things add up, they build and build until at some point, they reach the “tipping point.” Gladwell does a phenomenal job of making his point with lots of interesting examples. His examples are the strength of his writing.
If you find time to read the book, you’ll learn about the culture behind Goretex, crime fighting theories, what made Hush Puppies and Airwalk so popular, why people smoke, whether Sesame Street and Blue’s Clues serve a purpose (and why they work). You’ll learn about suicide, Paul Revere’s midnight ride, and how to promote your restaurant. More than anything, The Tipping Point is about people. It’s about how people think. How they work together to accomplish their goals, and how different types of people create a synergy that makes some things tip instead of others.
After reading the book, I was convinced of Gladwell’s thesis – little things matter. People matter. He does a good job of making a compelling case. He builds his story around lots of vibrant and fascinating examples. That being said, I do have a few criticisms.
1. I didn’t read this book in a day. I didn’t even read it in a week. I don’t know exactly how long it took me to read this book, but I sort of read it over the course of time. In telling his story, Gladwell attempts to present the reader with very sticky concepts (and he does this well). One of his approaches was branding (naming) different things. For example, people are Connectors, Mavens, Salespeople, etc. He also names a slew of other things. There’s the Rule of a Few, The Power of Context, The Stickiness Factor, The Rule of 150, etc.
All those names were difficult for me to keep track of, and I have a pretty decent memory. Perhaps I’m splitting hairs with that complaint. I don’t have a suggestion as to how to make it better. He would throw the rules in much later, saying something like – remember, it all comes back to the Rule of a Few – and I would scratch my head and start flipping back to see what the Rule of a Few was. Maybe you’re smarter than I am, and this won’t be a problem;)
2. My main criticism is that I think Gladwell manipulated the data in some places in order to align them with his goals. There are several example of this in the book. One that stood out to me, in particular, is his use of the Broken Windows theory to explain why the crime rate fell in the 90s. The Broken Windows theory basically is the theory that keeping things in order leads to less crime. If I’m a criminal and I see that a neighborhood is very run down, I might assume that no one is in charge, and that it’s alright to commit crimes because no one cares about this particular neighborhood. The theory is compelling because we like it. It makes sense to us. We think about how clean places feel safer and often are safer. The problem is, by most in depth accounts on the subject, the theory has a minimal impact.
If you’ve read Freakonomics (or Levitt’s paper the chapter on crime was based on), you’re familiar with not only the Broken Windows Theory, but with a slew of other theories that he puts forth. Any or all of them likely contributed to the fall in crime. To me, Levitt puts forth more data and presents it in a more compelling and believable way. The Broken Windows theory, of course, goes straight to the theme Gladwell is attempting to perpetuate – that small things matter. I don’t think the presentation is wrong. He tells you what the theory is, what they did, and then how much the crime rate dropped. His book isn’t about crime. I think it’s wrong not to at least mention the other theories. This isn’t the only place this happens in the book. I’m not going to spend a lot of time picking apart a book I enjoyed, though. I’m simply saying that you should be on guard. Be a filter.
The main idea remains excellent. It’s an interesting topic, isn’t it. How things spread by word of mouth and how it affects what we buy, wear, eat and do. Like Outliers and Freakonomics, reading this book will make you feel like you’re one of the people that gets it. (Interestingly enough, bloggers help things tip all the time nowadays – if this book weren’t already a bestseller, I’d be giving it a little help) Thanks for reading.
Ken Fisher Speaks
Posted by: Todd Metheny in Uncategorized on September 21st, 2009
Should we pile on?
I saw an interesting article/interview on Yahoo Finance in which Ken Fisher argues that the United States doesn’t have too much debt. In fact, he continues, the United States doesn’t have enough debt. We’re under-leveraged. The entire world is under-leveraged, according to Mr. Fisher.
Fisher is the son of legendary investor (and author) Philip Fisher. He runs Fisher Investments, his own investment management company. He probably knows more about finance than I do. It is, after all, what he does for a living.
I understand the basic position of where he’s coming from. The United States cost of borrowing is low now. Theoretically, when money is cheap and the economy is weak, that’s when you should borrow. Conversely, when the economy is strong, that’s when you should be balancing the budget.
If you did balance the budget, you could theoretically make a dent in the deficit just based on inflation. Inflation would erode some of what we owe. If you expect inflation to occur at 3% or so in the future, then borrowing money at 1.8% is a good idea. If you continue to print money, inflation is likely to occur at an even higher rate than that. So theoretically, I understand where Fisher and others taking this position are coming from. That being said, I can’t agree.
I believe that saving the financial system from falling apart was necessary. I believe that lending financial institutions money made sense at the time. It was a scary time in US history. Action needed to be taken to stabilize the US financial system. Once that system has been stabilized, I believe our focus should be reducing our indebtedness in order to create a sustainable environment is necessary. Leverage can help you produce out-sized returns, but it can also bankrupt you. It’s essential that the focus be balancing the budget going forward. The budget needs to be balanced in all but the most dire circumstances. In extreme situations, it might be necessary to run a budget deficit. If the government continues to borrow indiscriminately, it creates a potential situation in which our credit rating deteriorates to the point that no one will want to invest in our debt. That situation would take away the safety net we have in the most dire of situations. What do you think? Thanks for reading.
Strategy for Investing in Micro-Loans
Posted by: Todd Metheny in Value Investing on September 17th, 2009
Eggs. Baskets. You get it.
Many bold, value-oriented money managers prescribe to a theory of focused investing. Focused investing involves investing your money in just a few baskets, instead of over-diversifying. Joel Greenblatt, manager of Gotham Capital, tells us in his excellent book, You Can Be a Stock Market Genius, “After purchasing six or eight stocks in different industries, the benefit of adding even more stocks to your portfolio in an effort to decrease risk is small, and overall market risk will not be eliminated simply by adding more stocks to your portfolio.”
This is an approach used by some of the best investment managers. The theory is simple, why put 1% of your money into your 100th best invest idea, when you could put 10% of your money into one of your best ideas?
With stocks, I think this is a great theory, idea. If you’re truly convinced, after doing the research, that a particular idea is one that will make you money, and you believe that you’re a person who has the knowledge to make that sort of call…then I think you’re fully justified in investing this way.
When it comes to micro-consumer loans, though, focused investing really doesn’t have a place. This approach works with stocks because they have almost unlimited upside. You can focus your ideas, and one great idea can dwarf your mistakes. The value of the stock can’t go below zero, so the downside is limited to whatever you pay for it – and the upside could be 1000%. When investing with the micro-loan companies, like Lending Club or Prosper (or whatever – those are the two I’m familiar with), it’s important to stay diversified as possible. If you have $1000 to invest, for instance, the maximum diversity you can have at $25 per loan is 40 loans. That’s really not very many. In fact, only being able to diversify into 40 loans is actually extremely risky. Banks make money by being able to spread their risk amongst thousands of loans. They try to make every decision as accurately as possible – they wouldn’t lend to anyone that they thought would default. You won’t either – but I suggest, if possible, that you spread your money out over two or three hundred loans. Good luck and thanks for reading.
The One About Prognosticators
Posted by: Todd Metheny in Business Profiles, Economics, Value Investing on September 15th, 2009
I'd the chance of rain tomorrow is 1000%. You can quote me on that.
There’s a great story in the intro of Common Stocks and Uncommon Profits by Philip Fisher. The intro is written by the author’s son, Kenneth Fisher, another famous investment manager and author. Ken was at conference with his father, and a contest was announced at dinner the first night they were there. Each person was asked to write down what the market would do the next day. The winner would receive a color television, and would be announced the next day at lunch, just after the market closed (CA time). Both men acknowledged that this was a silly exercise. In Ken’s own words:
“Most folks, it turned out, did what I did – wrote down some small number, like down or up 5.57 points. I did that assuming that the market was unlikely to do anything particularly spectacular because most days it doesn’t. Now in those days, the Dow was at about 900, so 5 points was neither huge nor tiny. That night, back at the hotel room, I asked Father what he put down; and he said, “Up 30 points,” which would be more than 3%. I asked why. He said he had no idea what the market would do; and if you knew him, you knew that he never had a view of what the market would do on a given day. But he said that if he put down a number like I did and won, people would think he was just lucky – that winning at 5.57 meant beating out the guy that put down 5.5 or the other guy at 6.0. It would all be transparently seen as sheer luck. But if he won saying “Up 30 points,” people would think he knew something and was not just lucky. If he lost, which was probable and he expected to, no one would know what number he had written down and it would cost him nothing. Sure enough, the next day, the Dow was up 26 points, and father won by 10 points.
When it was announced at lunch that Phil Fisher had won and how high his number was, there were discernable “Ooh” and “Ahhh” sounds all over the few hundred person crowd. There was, of course, the news of the day, which attempted to explain the move; and for the rest of the conference, Father readily explained to people a rationale for why he had figured out all that news in advance, which was pure fiction, and why the market had done what it did, again pure fiction and nothing but false showmanship. But I listened pretty carefully, and everyone he told all that to swallowed it hook, line and sinker.”
I think of that story when I see all the headlines touting that doomsday is near, or predictions that the Dow is going to hit 50,000 by such and such date. There’s clearly an incentive to make such predictions. No one puts your name in the news or publishes a quote that says something to the effect of, things are so-so now and will continue to be so-so in the future, though they might improve or deteriorate just a little bit. If you predict that the world will end in 8 days – that’s an exciting news story.
Plus, if your predictions turn out to be wrong, there’s no penalty. You already had your 15 minutes of fame. They aren’t going to write many articles proclaiming, “Todd Metheny was wrong 5 months ago,” for a couple reasons – I could turn out to be right sometime in the future, and because that’s not news. It’s the next prediction that makes the news. People don’t care who was wrong. People like Peter Schiff and Nouriel Roubini have gained notoriety for their doomsday predictions. Both of those fellows know a lot more about economics than I do, but give me the tempered view. In my experience, the worst case scenarios have often been wrong – from Thomas Malthus‘ prediction that we’d run out of food before 1900 to Chicken Little’s insistence that the sky was falling. There are too many variables involved to be right for any reason other than luck. Malthus was wrong because he ignored the possibility of technological advances and overlooked man’s ability to innovate and survive. Do yourself and a favor and be an optimist. If the worst is coming, it’s not going to matter. People that listened to people predicting the worst for the longest term took their money out of the stock markets, only to see a historic rise. Lately, many of those same people have plowed their money back in at much higher prices, because markets have “stabilized.” If you want to watch someone, watch Warren Buffett. Watch Seth Klarman. Compare Peter Schiff’s returns in his fund to Seth Klarman’s over the last 5 or 10 years (hint: Klarman is killing him). You can have all the PhDs in the world, and it doesn’t mean you’re going to be better at assessing market risk than Buffett or Klarman. Remember that when you hear the prognosticators prognosticating;) Thanks for reading.
September 11, 2001
Posted by: Todd Metheny in Uncategorized on September 14th, 2009
Anyone alive when John F. Kennedy was assassinated can tell you exactly what they were doing when they heard the news. It’s one of those events that was so incredibly shocking and powerful that the news floored you. The fact that the President of the United States could be killed, right before our eyes, was the sort of thing that shook Americans at their core. The fact that he was a young, charismatic person from a famous family made the whole experience even more difficult to fathom.
For my generation, September 11th, 2001 was that type of event. It meant things could happen to us, in our own backyard, at the hands of people that hate us for reasons that most of us don’t understand (I do and I don’t). It meant that we aren’t impenetrable. We bleed. We’re mortal. America isn’t surrounded by a giant forcefield, and we aren’t so strong that no one would dare to stand against us.
I can tell you exactly where I was and what I was doing that day when I found out. I was living in a fraternity house but had stayed elsewhere that night. I stopped by the house before my 8 am class. The tv was on in the lounge, on CNN, and they were showing footage of a plane hitting the World Trade Center. I’m not sure I knew what the World Trade Center was, to be perfectly honest. I was nineteen years old. I didn’t go to class that morning. I didn’t go to any classes that day. I went to my room and watched the footage with my then-roomate, Mike, for most of the rest of the day. Gas prices had been increased to something like $5 per gallon, and I waited in line for gas with the other frightened people.
I don’t know what to say I felt except to say that I didn’t know what to feel. I felt the bizarre numb shock that goes with an experience like this. I’ll never know what it was like to be in New York when it happened, or to lose a family member that day, or anything else that cause the happening to touch my life in a more direct way. I’m sorry for those of you that do. I do know that I’ll never forget it.
Some very sobering stats from that fateful day:
2,993 people died that day, including all 246 of the people on the planes (19 hijackers) and 2,605 people in the Towers and on the ground in New York. Some 200 people jumped from the burning towers to their deaths. A total of 411 rescue workers died that day, including firefighters, police officers and paramedics.
The people killed probably had very little to do with the things that the hijackers were upset about. They had likely never met any of those people. They hated them because they were from a place that they associated their problems with. They killed them in the name of their cause.
I don’t purport to know or understand how the world works. I know a little about several things. I know a little about the law, personal finance and investing. I know a little about love and life. I know a little about people. I don’t know why things like this happen, but they do. I’m not sure why I’m writing this, besides the fact that we’re just a few days past September 11th, and it’s on my mind. Do you remember what you were doing that day? Thanks for reading.
How to Buy Happiness
Posted by: Todd Metheny in Uncategorized on September 10th, 2009
Money can't buy you a three bird smiley face.
John D. Rockefeller once said, “I have made millions, but they have brought me no happiness.” Henry Ford has been quoted as saying, “I was happier when doing a mechanic’s job.” John Jacob Astor once referred to himself as “the most miserable man on earth.”
The fact of the matter is, if you’re constantly worried about money, you probably aren’t happy. I recently read an excellent article (you should read it!) from the Boston Globe about the correlation between money and happiness. The fact of the matter is, all the people who tell you that money can’t buy happiness are right. There is, however, an important correlation. Some money is required to be happy. The amount of money required to meet your basic human needs. It’s also extremely difficult to be happy when you’re in debt.
Studies have correlated money and happiness in several ways. One way that money makes people happy is in the ability to use it to benefit other people. People with strong social networks report higher than average happiness. Being able to buy dinner for a friend is the type of activity that people use money for that they report makes them happy. Thank about how selfish your friends are being when they buy you dinner or drinks;) Charitable giving is another example of a way to use money that makes the giver pretty happy according to the study.
Experiences tend to be a happiness efficient way to use your money as well. You might love your new car for the first few months you own it, but the thrill of having the new car wears off after awhile. When you think back on your rafting trip through the Grand Canyon, though, you’re not going to think about how uncomfortable you were because your sleeping bag got wet. You’re going to look back and remember how much fun it was to spend time with people and do something adventurous.
The end of the article says something interesting as well. Money might not be able to buy you love, but having money can put you in a position to meet people and to afford to go out and date.
The fundamental point is that money can make you happier. Money is not the root of all evil. The pursuit of money won’t make you happy, but having some and putting it to good use sure can. Be happy and thanks for reading.
Lessons from the Service Industry
Posted by: Todd Metheny in Reviews on September 8th, 2009
My wife, Rachel, and I went out to dinner on Labor Day. We went to a little place in Clayton, Missouri, called Oceano’s during happy hour. We knew it was happy hour because we observed a sign telling us so on our way in. The sign let us know what happy hour entailed. Among the things discounted during the designated time period were appetizers (half price). The hostess sat us at a nice little booth, and a waiter came by to take our order. We asked about the happy hour, which was still in effect, and our waiter informed us that we couldn’t have half price appetizer’s where we were sitting. I asked why. The waiter informed us that happy hour specials were only for people sitting in the bar area. I asked where that area was, and the waiter pointed to a table that was about 15-20 feet away. I looked around at a mostly empty restaurant (5 of approximately 25 indoor tables were occupied).
I smiled and asked the waiter, “So, you mean to tell me that if we sit at this table, appetizer’s cost $12, but if we sit at that table, appetizers cost $6?”
“Yes, sir, that is correct.”
“But that’s ridiculous.”
“Yes, sir.” I asked the server to go ask his manager if he would make an exception and allow us to remain at our table, just a few tables from the magic section.
“I’ll see what I can do, sir.” He left and was gone for several minutes. He returned and informed me that the manager had said no. I couldn’t believe it, but I shrugged and asked to move to one of the tables at which appetizers were $6. We were moved. We enjoyed the appetizers;)
I don’t know about you, but if I were running that restaurant, I wouldn’t have made a patron move tables to get a deal in my empty restaurant. I don’t care enough to follow up on this, but I don’t think it would be hard to get in touch with the owner of this restaurant and inform him that his restaurant is being run this way.
I got my first restaurant job while I was in college, waiting tables at a local restaurant. It was the best run restaurant I ever worked in, though I didn’t appreciate that until working in several others while I was in college. The owner personally trained the wait staff back then (she doesn’t anymore), and on my first day she told me this:
“Whatever people ask for, you want to say yes if you can. Try to get them whatever they want. If they want to order something that isn’t on the menu, and we can do it, we’ll do it. If they want scramble eggs, and we have eggs, we’ll make scrambled eggs.”
Unsurprisingly, this restaurant has had a lot of success. They now own two restaurants, and business is still going strong as far as I can tell. I think about the above quote every time something utterly ridiculous happens at a restaurant.
What’s the competitive advantage in the restaurant business? Is it good food? Maybe. But it had better be so good that it blows your mind if that’s going to be your competitive advantage. I would say that there isn’t a competitive advantage in the restaurant industry. Restaurants, even good ones, are a dime a dozen. I’ll probably never go back to Oceano’s in Clayton. The food wasn’t bad. It wasn’t incredible, either. I really didn’t have a legitimate reason to go back. The bartender that served us was a very nice person. The fact of the matter is, I have so many options to try in life that I’ll never be able to try them all – and this particular restaurant gave me no reason to come back. Plus, irrational situations (playing musical tables) bother me. Thanks for reading.
