After reading today on the drf that California passed the takeout hike portion of Bill 2414, raising the prices on their customers by up to 15%, and then killing the exchange portion of the bill which gave players lower takeout, this story came to mind.
I walked into the boardroom on a Monday, and boy Ray was mad. Sales were down, we were having serious trouble, and we thought heads were going to roll. Everyone was assembled and we were ready for trouble.
With sales down, he wanted ideas. Kurger Bing was selling their product at a lower price and winning. Bendy's was offering a brand new type of shake. Our customers were heading for the door. I was fresh out of a job in racing, and this was a new gig. If he asked me for advice, I would have to fall back on my vast knowledge that I learned there. I took a gulp and away we went. I hope he liked my ideas.
"Things are bad. Give me some ideas!" bellowed our CEO
He called on Bill first.
"I think we should offer a new product at a low price, and change our packaging, Ray. We need a hook, and when we have added a product we add customers. Studies tell us that if we change packaging, it gets us some buzz and helps sales."
"Not bad" said Ray. "Susan, how about you?"
"Well we are getting killed on price. These other stores are undercutting us, and our margins are fine if we increase volume. Studies tell us that burger buyers are price sensitive and elastic, so if we lower it to one penny below Bendy's we can get them back. We can advertise and bring people to the stores and hopefully grow"
"Thanks Susan," said Ray.
"What about you Patty?"
"The world has changed Ray and people are not buying Burgers like they used to. We need a new way to sell them, and we need to improve our distribution channel. I suggest we partner with the french fry maker, who has already signed deals with hundreds of businesses and offer a new product combining the two. Our demographic studies tell us that kids are buying these fries and we can attack that demo. This seems like a no-brainer."
"Nice Patty, I like that"
"Now to our newest board member, formerly from the business of racing. What do you think Peter"
It was my turn. I was ready to wow them. I had a way to grow business that I used at my last track. This idea got me a promotion and a company car. I was pumped to bring it to DcMonald's.
"Thanks Ray. Well first, let me confirm a few things. We are selling 100,000 burgers right, and that number has been falling."
"And we charge $2 right, so we have $200,000 revenue right"
"Yes" they said
"Well here it is - we raise our price to $3 a burger, we still sell 100,000 burgers, so we immediately make $100,000 more. Problem solved, I made everyone more money. Our business can grow again using this new revenue"
I was met with blank stares, almost like they thought I was from another planet. This made me quake - in racing I had only gotten praise for this idea. I did not know what was going on in this strange business..........
And that is how I lost my job at DcMonald's.