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    The Economics of Hot Food

    September 24th, 2010

    Cook a steak to 130 degrees and it will be a perfect medium rare.  Mhmm, that’s the good stuff.  On the side is a nice helping of mashed potatoes with a nice dose of cheese and garlic.  Perhaps some mixed vegetables on the side or a few asparagus spears laid across the top of the steak.  Unfortunately, that is not the meal that this post is about.  This post is about the economics of hot food, or rather it is about me wondering about the economics of hot food.  Let’s get to it.

    I read that if you put something on your tongue that is 150 degrees and leave it there for 2 seconds you will burn yourself.  If the temperature is 155 degrees or more it is one second or less.  So now we know that it is unwise to attempt to consume something that is at or around 150 degrees.  That means I can dive right into my medium rare steak, but a well done steak will come it at 160 degrees so watch out.  So a steak may or may not be fine to eat right off the grill but a fresh brewed cup of coffee typically clocks in at 200 degrees!  It takes more than a second or two for that to cool down to a drinkable temp, doesn’t it.  And that brings me to the point of this post.  Does a company figure out what is the ideal temperature to serve food at that maximizes customer satisfaction while minimizing additional food and/or beverage they will need to serve?

    Take, for example, the Red Lobster special of Endless Shrimp.  While not excessively expensive themselves, the shrimp do cost more than, say, beans.  Additionally, it takes prep time to prepare them (no matter how fast your people are it takes time).  It is also true that a person will feel full after they stop eating because it takes the body a while to realize that it is full.  Surprisingly, it may be as long as 20 minutes after you stop eating!  Therefore, if Red Lobster keeps the shrimp coming as fast as they can, not only will you overeat but they will erode their profit margin (and make it back on that beer you had).

    Interestingly then, it makes the most sense for everybody to have you consume the shrimp  at a slower pace.  One way to do this is to serve you slowly.  While that is effective, you might tell your friends about how you felt ripped off at Endless Shrimp at Red Lobster due to their slow service.  But if Red Lobster just serves you food that is simply too hot for you to eat you don’t really have a story (so long as it is not excessively hot).  This same concept can be applied to many places.  I remember first having this thought years ago in college when I ate at a Red Robin because of the “endless steak fries” but the things came out so hot that I only got one serving.  I didn’t want to have to wait around for the next serving to cool off so I didn’t get one.  Not only did they not spend money on the food, but the server can serve more tables because they are not dealing with refills.

    On a one-off basis the concept may seem silly, but when multiplied by thousands or millions of people being served, there could be a huge cost savings here.  And then of course there is the flip side.  If you serve something, like a coffee at a coffee shop, and it is a cool enough temperature that the individual can consume it quickly (but not so cool as to make it cold), perhaps people would finish their drink more quickly and it would increase coffee sales.  Again, on a large scale this could be big money.

    I wonder if food companies take any of this into consideration when making and serving food.

    What do you think?

    This has been a Thought From The Cake Scraps.



    Why Google SSL Search Is Good For Google

    May 28th, 2010

    Recently within the #measure community there has been much talk about Google launching https://www.google.com which is an SSL version of Google search.  The big issue is that when a user clicks through a search result the referring site is stripped off and there is no way for the destination site to tell what keyword was used.  What will happen next depends on who you talk to.

    Perhaps this means that businesses don’t know what is driving traffic to their site (via natural/organic search) so they will not want to spend ad dollars on keywords that may or may not be used frequently by their visitors.  Maybe businesses switch spending to a different service, such as Bing, where they can feel more comfortable knowing what they are spending on.  For the web analysts, like myself, there is the issue about where the traffic shows up in marketing channel reporting.  We will no longer know how much traffic Google is driving to our sites.  Since Google is such a major player in the search game this could be a huge issue.

    But there is one problem with all of this.  While I -  as a web analyst – care about this,   I -  as a customer, as a searcher – don’t give a crap what a company does or doesn’t get.  That’s their problem to work out.  In fact, with all the talk about privacy from all the Facebook changes, as a searcher I would be happy with any new security Google can provide for me.  So this means that the users of search are not going to drive Google away from defaulting to SSL searches and perhaps do the opposite and attract more pepole.  That only leaves the businesses paying for advertising, but they hardly have any strength at all.  Really, it just means businesses will not spend money as efficiently as they could be so they would have to buy more keywords or risk lost revenue from lack of paid traffic.

    That inefficiency is one of the smaller ways Google could make some money.  There is an even bigger opportunity that is revealed in Google’s own statement about the service:

    Searching over SSL doesn’t reduce the data sent to Google — it only hides that data from third parties who seek it.

    You see where I’m going with this?  Google could start charging for access to the natural search.  This is sold to senior leadership at businesses by stressing that without the data the company 1) won’t know what is driving search traffic to the site and 2) won’t be able to spend their search advertising dollars efficiently.  It is a grand slam for Google.  Furthermore, before you get up in arms about the thought of paying for this data, have you ever used Acxiom data to gather targeting information on customers you otherwise know nothing about?  If you’re not in the direct mail space, then what about Hitwise or Comscore?  All of that is the same thing. Nielsen Ratings? Same thing.  Just a company collecting (or buying) massive amounts of data and packaging and selling that data to clients.

    At the end of the day businesses simply cannot afford to say “screw Google, we’ll buy ads elsewhere”.  They will pay for this data, and probably line up to do it (after the mandatory complaining about how they used to get it free).  We all know that Rupert Murdoch is changing the face of news on the internet by charging for it.  There were even talks about making Google pay to index it.  Google needs to keep looking for new ways to generate revenue; charging for search data may be it.  At the very least it could come free with Google Analytics, giving you one more reason to switch.  I bet that wouldn’t make Omniture / Adobe very happy.

    I think things could get interesting.  What do you think?

    This has been a Thought From The Cake Scraps.


    Airlines Can Charge, People Will Pay

    April 15th, 2010

    All sorts of talking heads have been in the news recently discussing what the impact will be of the decision that Spirit Airlines to charge people up to $45 per carry on.  They talk about how other airlines will watch them to see how the program is received by the public.  Then of course there are the Southwest commercials that only talk about how they don’t have bag fees.  But all of these people, in particular Southwest, are missing the boat.

    People  get upset when new fees are implemented.  Some fees, like for checked baggage, are just frustrating while others, like charging for bathroom use, are silly, and still others are illegal (like charging for handicap assistance).  But these fees only make people upset for the moment and then they pay.  I would argue it is in danger of becoming a confusopoly.

    What makes it worse is that the pointless TSA rules force you to discard items (like beverages) and yet provide no oversight on the cost of the beverage on the other side of the gates.  Meanwhile they are spending $1 Billion on scanners that, by all accounts, don’t work, are able to transmit ‘nude’ photos (as specified in the requirements document in the original proposal), and could damage your DNA.  And of course this is tax dollars and additional security fees at work.

    Whatever, the point is there are lots and lots of fees which brings me to the point of this post: all of the power is in the hands of Kayak and Priceline.

    Think about it for a second.  Airlines are imposing these fees so that they can get the lowest far shown, which should drive business.  This clearly is based on the assumption that price is the most important thing to customers that are traveling.  And yet nothing is being done on these comparison sites to expose this.

    Which brings me to my secondary point: Southwest is getting screwed.  If I ran Southwest starting tomorrow, the first thing I would do would be call up Priceline and Kayak.  I would get an estimate of what it would take to add “how many checked bags”, “how many carry-ons”, “how many in flight meals/snacks”, “how many in-flight bathroom uses”? and similar things to the site and I would pay to develop that functionality.  The prices people see now are simply no longer valid.  There are too many additional add on costs to just keep ignoring them.  And for an airline like Southwest, to not expose that more in a pricing engine is a HUGE miss.

    While I like the lower costs, and I like the idea of only being charged what I use, I also think I like to feel like I got a deal, or at least am not being taken for every cent I have.  It is a very delicate balance, and probably depends on the point of the trip (business or fun).  This could get interesting.

    What do  you think about the more a la carte structure (besides that cable companies should offer it)?

    This has been a Thought From The Cake Scraps.


    Conversion At Carnival Cruises

    March 2nd, 2010

    Well, their advertising got me in the door.  I decided to check out what this whole cruise thing was all about.  It looks like a great time, but I can’t help but think that their User Experience could be significantly improved (and therefore their conversion rate). Carnival is making some HUGE mistakes.

    Making sure you have a usable website, one that is intuitive and easy to navigate, is a key element of converting your visitor into a sale.  Lets take the first page after I entered in some information about where and when I wanted to take a cruise:

    The first thing I notice is that I am left to assume that these are per person rates.  Maybe it says that somewhere on the rest of the page, but this section is clearly the focus.   Making sure your user knows that this is a per person rate will save on hard feelings down then line.  After all, I am booking a room and rooms (at hotels) usually don’t care if you have 1 person or 2.  If I have never been on a cruise (and I have not) I could easily assume these are rates per room.  Update: It does not say that on the page, only when you hover over the lowest price (not shown in picture); does not show up when hovering over any of the other prices.

    Next I see that the base room would cost me $729 while the Suites will cost $1,399.  That’s quite a difference.  I wonder what I get for $1,399.  Let me click on the “Suites” link with the camera icon.  This is what will sell me on getting the expensive room.  A nice overlay pops up on top of the current page looking like this:

    Hmm…the first thing I notice is that I clicked on the Suite and the picture that pops up looks pretty unremarkable for the price.  Oh wait, the Interior room is selected.  Huh?  That seems like a pretty big miss.  But okay, I figure that out and click the suite.  I give them another chance to sell me on the room.  And…it is just an enlarged picture of the little thumbnail.  Thus far I am not convinced that I will double the price of my cruise.  But what could they do differently?

    First, they could give me more pictures.  It is basically free for them and would do tons to help convert me.  Some pictures that I would love to see:

    • What does the view out the balcony look like?
    • How big is the balcony?  What does it look like?
    • Is there a TV (like in the other rooms)?  Where is it?
    • How big are the closets?  Where are they located?
    • What does the bathroom look like?
    • It says it has a large vanity/dressing table…where’s that?
    • A whirlpool tub is listed.  Again, what does it look like?
    • How big is the desk in the corner of the room?

    All of these things are items that people want to know.  They want to know what they are getting for their dollar.  Instead there is one generic shot that does almost no good.

    The next things is the text below the single picture: “Includes stateroom category: JS, OS and VS.”  Ohh, right.  Category JS.  I’m not sure what JS means to them but to me it means Jack Squat.  Why would these letters have any meaning to me?  And, to make matters worse, I cannot click them to figure out what the heck they are talking about.  It is just meaningless text unless I’m some sort of cruise expert in which case I wouldn’t be on this page to begin with!

    Sorry Carnival, I’m not even all that interested in what your big green details button would give me.

    What do you guys think?

    This has been a Thought From The Cake Scraps.