Category Archives: Business and Economy

One version of Pizza Hut as “classic” and “a civic institution”

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Pizza Hut has made sure an unknown number of locations look and feel like older Pizza Huts – and some people really like this:

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Over the last several years, Pizza Hut corporate leadership has slowly restored a handful of its restaurants in the style of the company’s analog-era golden age. Collectively, these locations are branded as “Pizza Hut Classic.” The Tunkhannock restaurant is one of them, making it an accessory to an advertising campaign. Nobody seems to know how many Pizza Hut Classics exist, how long this strategy has been employed, or if the company plans on adding more in the future. (Pizza Hut didn’t respond to my request for comment, nor have they spoken to anyone else who has covered the initiative.) But Bender provided some insight. He mentioned that his franchise has always been a sit-down affair, retaining its diner bones throughout innumerable rebrands and pivots. About 10 years ago, his bosses fully converted the restaurant into an official, bona fide Classic. The corporate office shipped over a bevy of 1990s accoutrements, including cups, lamps, and a plaque emblazoned with a quote from Dan Carney, Pizza Hut’s co-founder, that was to be pinned up in the beige foyer.

“This Pizza Hut Classic celebrates our heritage,” the inscription reads. “It reminds us of the Pizza Hut where generations first fell in love with pizza. We’re so happy to have you here; we hope you fall in love all over again.”

The national Pizza Hut apparatus has refused to tabulate an official directory of Pizza Hut Classics. There is not a shred of information about these vintage establishments on the company website. Instead, the locations are uncovered by dedicated Pizza Hut wayfarers and fetishists as a kind of scavenger hunt. The Classics all appear to be located in small towns—Tunkhannock has a population of only 1,727—with the lion’s share situated in the boondocks of Texas, the state where the restaurant is headquartered. Rolando Pujol, a New York–based journalist who takes a special interest in throwback American kitsch, has curated the only definitive list of Pizza Hut Classics on his Substack, The Retrologist. It is, by leagues, the highest-traffic piece of writing he’s ever published on the internet.

What exactly about these locations drives interest?

I pondered the thousands—millions?—of couples just like them, whose love story began in a Pizza Hut, because Pizza Hut used to be a place where you could go on a first date. I am not claiming that the restaurant is a civic institution. But once upon a time, Pizza Hut was filled with other people, and being around other people does the soul good.

Nostalgia seems to be a powerful consumer force in today’s world. What people remember as a kid or decades ago can drive behavior today. Or perhaps what looks like a simpler past is attractive compared to the unpredictability and change of today.

But this second piece is also interesting. Restaurants can be places to be around others and have positive social interactions. Everyone has to eat and eating together can bring people together. Having regular social interactions in a restaurant or continuing relationships that exist outside the restaurant can be rewarding.

Two things still strike me: this is all happening within locations of an international brand with thousands of locations and it is might be happening more in smaller communities where these classic locations are. On the first, Pizza Hut is out to make money. It is part of a private company. The classic experience sells. It might be a gathering place or a local institution but it is a commodified global product. Americans may need third places but they are likely to find them at places like Pizza Hut or McDonald’s.

On the second, are small towns or smaller communities more prone to look fondly on the past? Or do they have fewer dining options? On the flip side, are cities less excited about nostalgia, partly because there are always more new options? The classic model may work in some places but it is a product that may not work on the broad scale. Pizza Hut is an institution in certain places and not others and there is money to be made with both options.

Traveling abroad to see the Costcos of the world

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There are at least a few people who want to see what Costco is like in countries around the world:

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As the retailer planted its flag in 13 foreign markets, its devoted American members have followed. Search online for Costco in Sweden or Taiwan, and you’ll find videos narrated in breathless wonder. Travelers hunt for regional souvenirs, soothe their homesickness and investigate a burning question: Is the hot dog different?…

Some may ask why Costco fans fly halfway across the planet to visit the same temple to excess they have back home. Their response: What better way to understand a culture than by seeing what locals buy in bulk?

“I’ll take the extra time and transportation to get to a Costco over standing in line for two hours to get into the Louvre,” said Tommy Breaux, a 66-year-old retiree in Houston who counts a suburban Paris location among his foreign conquests…

Tourists immediately notice that these international outlets are mostly carbon copies of home. The Iceland location might sell fish jerky, but the concrete floors, rotisserie chickens and stacks of Kirkland jeans scream Americana…

The setting also acts as a controlled environment for cultural anthropology. Back home in Elk Grove, Calif., Yip steels herself in the parking lot before braving the chaos. But in Japan and South Korea, she witnessed the impossible: orderly lines for food samples.

This story goes in a direction that is interesting to consider: what are the similarities and differences in Costco experiences in different countries? From what is described here, there are some differences – different products and brands, different ways that customers behave – but Costco is also about predictability: limited selection, bulk products, and some cheaper prices. This predictability is key to numerous American brands. Is Costco the embodiment of McDonaldization among big box stores?

I am more interested in why people are so devoted to Costco or similar brands. Is this much different than wanting to visit McDonald’s or Disney or other American brands/experiences around the globe? How do these brand attachments develop and how are they sustained? The article hints it is about prices but Costco is not just about prices; it provides a particular experience and aesthetic and status. It is is not just a store or a brand; could it be a lifestyle or an identity?

Perhaps this is just life in the twenty-first century. In a world of consumerism, brands, and tourism, visiting the Costco locations around the world is possible.

“So goes Amazon/social media discourse/better schools/job growth/affordable housing, so goes the United States”

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In 1953, the CEO of General Motors was in a congressional nomination hearing as he had been appointed by President Eisenhower to be Secretary of Defense. Did he see think that holding the government job would be a conflict of interest given his large holdings of GM stock?

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I cannot conceive of one because for years I thought what was good for our country was good for General Motors, and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country. Our contribution to the Nation is quite considerable.

This quote ties the fate of one company to the fate of the country. Since 1953, this might fit numerous large corporations that employed many people and generated large revenues. Today, this might be Amazon or Walmart or Nvidia or other influential corporations.

At the same time, people in the United States focus on particular social issues that they think require attention. Address conversation and participation on social media and life would get better. Improve schools and education and future generations have a brighter future. Add more jobs in exciting industries and people will be excited. Provide decent or good housing at affordable prices and this can lead to other opportunities. The issue of the moment might have been different years ago and it could change in the future but there are always conversations about what should be done.

Both sets of statements are reductionistic. No single company determines the fate of the United States. One social issue could affect many yet other issues might have a broader reach or have larger effects.

Companies and social problems do evolve and change over time. A number of the companies that led the way in the United States decades ago are no more. Certain social issues vexed the country years ago but may have receded from view today or the effects were ameliorated.

In other words, the conversations of today may not be the most helpful if they limit focus to just one company or social problem and even broader conversations will change in the future. This does not mean that the conversations of now are not valuable; rather, we should seek to have a broad field of vision and a sense of the current scene even as we discuss specific firms and social concerns.

Starbucks tried to be a third place

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A look at Starbucks’ rise and fall includes some commentary on its wish to become a “third place” in the United States:

This was the vision that former CEO Howard Schultz had long chased: bringing Italian-style coffeehouses to the U.S. and transforming them into a ubiquitous “third place” for Americans. The concept of a third place is simple: If the home is the first place, and work is the second place, a third place would serve as an anchor of community life and social interaction, a spot where anyone could see familiar faces and meet new people in a comfortable, unpretentious setting…

But as the company grew, marketing its locations as a tableau in which to “stay awhile” ultimately meant there was a finite number of people they could sell coffee to per day. As it became clear people were willing to pop in for a $9 handcrafted drink and leave, Starbucks turned away from the original vision, instead hoping to bump profits by enticing a larger number of customers who wanted their coffees to go. The store rolled out mobile ordering, pickup-only store formats with no seating, and an ever-growing rewards program that offered a disappearing carousel of coupons and freebies, all in an effort to expand the number of sales that it could theoretically make in a day…

Starbucks is largely credited with pioneering the world of mobile ordering and building an ecosystem of rewards that keeps the consumer loyal to the brand. “That definitely took off, and then the third place dwindled away during the pandemic,” said Ari Felhandler, a financial analyst who specializes in the food and beverage industry at the firm Morningstar…

And now, Starbucks is staring down the barrel of an increasingly crowded market. Longtime competitors like Dunkin’ Donuts, Peet’s Coffee, and Panera Bread all started their rewards programs after Starbucks launched its app, creating more camps for customers to pledge their loyalty to. There are also the rising coffee newcomers, like San Francisco’s Blue Bottle Coffee and private equity–backed Blank Street Coffee, which also offer a large menu of specialty espresso drinks at their locations alongside their own membership programs and sleek storefronts. Other major corporations including Capital One have also made a bid to become the preferred third place; they boast arching windows at their locations, which combine your local bank with a coffee shop, and have half-off deals on all food and drink for cardholders. (The company has even partnered with California’s Verve Coffee Roasters for its espresso beans.)

Starbucks is all over the place. Its locations offer predictability and standardization. It is McDonaldized coffee and a McDonaldized experience for the early 21st century.

Starbucks’ best claim to being a third place might be that alternatives are lacking for Americans. Should they gather in fast food restaurants? Bars? A range of coffee drinks and food items appeals to a broad set of people. There are many locations. The brand still has some cachet.

What if Americans don’t really want third places? A third place is intended to be a setting for people to talk and interact outside of work and home. People want what Starbucks sells but they often want it for their car trip or to consume elsewhere. Who has time to sit and drink a coffee and talk to another person? Who wants to do this?

Perhaps we should instead hope for places where people want to spend time with their phones. They can take an interesting selfie. They can catch up with social media activity. The seating and the lighting is good for looking at a screen. Their interactions with others are mediated through screens. As people do this, they can drink a coffee. Our smartphones can be our companions on the go.

Schwinn once an important Chicago company but the industry and the world changed

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A look at a new documentary on the bicycle company Schwinn tells of how it was once a Chicago company and then it was not:

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The story starts in 1895, when German immigrants Ignaz Schwinn and Adolph Arnold founded Arnold, Schwinn & Co. in Chicago. Schwinn would subsequently buy out his partner and build an enduring family business that would reign over the bicycle industry for generations, surviving the rise of the automobile, the Depression and two world wars.

In fact, the original six-story Schwinn factory at Lake and Peoria streets in Fulton Market still stands as a monument to Chicago’s erstwhile bike company, with plans to redevelop the now-vacant building into office space…

As market share dwindled, Schwinn began outsourcing production. By 1983, Schwinn ceased its Chicago manufacturing, laying off 1,800 employees and moving most of its production overseas to Taiwan.

In 1992, struggling with debt, the storied Chicago company filed for Chapter 11 bankruptcy under fourth-generation owner Ed Schwinn…

The bike company has rolled on under a succession of new owners and is now part of Dutch conglomerate Pon, with Schwinn based in Madison, Wisconsin. But the movie focuses on the Chicago glory years, when the Schwinn brand ruled the sidewalks, schoolyards and bike lanes.

This might be the story of a number of companies over the years. They had success with lots of work and new ideas. They rose to become a known and popular brand. But then industries and places changed. People no longer wanted the product in the same way. They moved manufacturing overseas. They hit hard financial times and even though the brand name lives on, it has done so under the ownership of different companies and the company is now based in another city.

And this could also be the story of places. Chicago, like a number of American cities, particularly in the Northeast and Midwest, were centers for manufacturing. American companies produced a lot for decades. And much of that went elsewhere by the end of the twentieth century. Sociologist William Julius Wilson describes these shifts and their effects on neighborhoods in When Work Disappears. The loss of tens of thousands of manufacturing jobs was a hard blow to many cities who struggled to pursue or grow other businesses or industries in subsequent years.

In the big picture, both companies and places go through cycles and lifespans. They do not necessarily continue as they have been, even when they are successful. We tend to like the stories of their rise and it can be harder to wrestle with their falls. But both are part of the human experience.

A railroad merger that would stop Chicago area practice of freight handoffs between railroads

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A proposed merger between Union Pacific and Norfolk Southern railroads would end a long practice of railroads meeting in Chicago and then moving their freight from one provider to another:

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Starting in 1848, railroads raced to make Chicago the preeminent commercial and financial crossroads between booming factories on the East Coast and voracious markets and vast natural resources in the West.

But they always found it easier and cheaper to hand their freight off to each other in and around the city than to build transcontinental railroads that actually passed through Chicago. In some yards, including near McKinley Park 4 miles southwest of downtown, Union Pacific and Norfolk Southern exchange groups of railcars. Elsewhere, they hand off individual shipping containers to each other and to different railroads.

By running a single transcontinental railroad, Union Pacific says it can shave one or two days off the full week that 40-foot shipping containers now spend traveling from Los Angeles to Chicago and then on to, say, the western suburbs of New York City…

With a unified rail network, Union Pacific hopes to eliminate hundreds of rubber-tire container moves each day in and around Chicago, and hundreds more between Chicago and surrounding Midwest cities like Detroit; Columbus, Ohio; and Louisville, Kentucky.

There must be more to this story. How much of this has to do with the history of when railroads were founded and which areas they serviced? How much of this is about the railroad industry and companies working together and/or competing? How much of this is due to policies about railroad mergers?

In many industries, the trend over time does seem to be consolidation among the more powerful actors. This might appear to occur for good reasons, such as being able to ship goods through Chicago from coast to coast on one railroad system. But, as the article notes, this then affects markets, prices, and consumers with fewer companies.

At this point, the railroad industry in the United States is nearing 200 years old (1826 might be the first year of commercial operation). This is a long history compared to numerous other commercial or industrial sectors in the United States. What would it take to truly transform the railroad industry at this point as it operates in a much different context than it did when the first companies were founded? Railroads are an important part of the infrastructure of the United States and making it 200 more years might require foresight and adaptation.

An airport as an economic engine, Pittsburgh edition

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Reflecting on the opening of a new terminal at Pittsburgh International Airport, one writer looks back at what the city and region expected the airport to be:

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The airport was to be a driver and symbol of the whole region’s evolution. “Planners hope the terminal, with its vaulted ceilings and driverless underground trains, will complete an image transformation begun decades ago,” the Times story said. “Once known as a gritty old steel town of blue-collar workers, Pittsburgh has become a commercial center of office towers and high-technology industries.” That reinvention has continued apace in the 33 years since the terminal opened. But even as a tech, robotics, and health care hub, the area has three-fourths the population that it did in 1970. And no place was a worse reminder of what Pittsburgh had lost than this airport 20 minutes west of downtown…

As a major airline’s biggest hub, Pittsburgh would be taking a piece out of millions of travelers who weren’t even staying in Pittsburgh, and it would also get a tourist boom from people who suddenly had an ultra-easy way of visiting. Before Sept. 11, 2001, the Pittsburgh Post-Gazette reported, USAir was running 542 daily flights in or out of Pittsburgh. As airline-airport relationships go, this was a huge one. (Today, for example, Delta peaks with about 330 daily flights leaving Minneapolis, its No. 2 city.)…

But the oversized airport was a bleak metaphor for a city that was once more bustling and then got let down—first by the shriveling of the steel business, then by USAir itself. The cavernous, quiet terminal created a bad feeling upon landing at home, like you had just entered a place that wasn’t what it used to be. It wasn’t a good way to be welcomed to a city, whether you lived there or not.

It can’t be overstated how much the point of the new airport is to simply move Pittsburgh past this corporate pantsing by US Airways. Yeah, there are practical logistics reasons for an update. As the airport authority chairman said in announcing the project back in 2017, airlines would face lower costs, and the facility would be “very efficient and modern.” But then he got to the point: “And, finally, this is most important for me, the people of Pittsburgh finally get an airport that is built for them, and not USAir.”…

A major city needs a decent airport. It offers travel opportunities to residents and businesses. It connects a place to other places. It is what people see when they arrive in or leave a city.

Can an airport be an economic engine on its own? Pittsburgh is a smaller big city. According to Wikipedia, it is the 67th largest city in the United States with over 307,000 residents and it is the 28th largest metropolitan area. How much air traffic can be expected to go through an airport in such a city?

The story of this airport seems tied up with the fate of the city. It once thought it could be an airline hub. It has a proud history of industry. But the world changed: industry jobs went elsewhere, the airline industry changed, and the large airport did not live up to its potential.

Having effective and inspiring infrastructure is helpful in many ways. It enables other important activity. Pittsburgh may not have a large airline hub or a standalone economic powerhouse but perhaps it now has an airport that serves the region well for decades.

Many don’t seem to like a 50 year mortgage; some lenders already offer a 40 year mortgage

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As people reacted – mostly negatively, from what I saw – to the possibilities of 50 year mortgages in the United States, one article noted that 40 year mortgages has a history and can be obtained now:

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I remember a time when a 40-year mortgage — and a 50-year adjustable rate mortgage — built some buzz back around 2006 and 2007 for people who were struggling to buy a home. It didn’t work out well if you had to sell when home prices collapsed.

The 40-year mortgage has a history going back to the early 1980s, according to an earlier report in the Detroit Free Press, part of the USA TODAY Network, when 18% fixed-interest rates were squeezing consumers out of buying homes. It never proved to be the most popular product…

If you shop around, some lenders are offering 40-year mortgages now.

Rocket Mortgage notes online that the Detroit-based giant offers a 40-year mortgage with the first 10 years being interest-only payments. These mortgages can be available for loan amounts between $125,000 to $2 million.

I wonder how many people apply for and receive 40 year mortgages.

Reading the reactions to the idea of a 50 year mortgage, I was struck by how much of the conversation was dominated by financial details. How much equity would a homeowner have after 20 years? When would the interest parts of the payment taper off compared to paying down principal? How would interest rates be different for a 50 year loan? I should not be surprised given how much homeownership is now seen in the United States as a financial investment. It is a tool to build wealth, perhaps the biggest tool most people will have.

But homes are about more than that. Americans have ideas about the virtues of owning a home compared to being a renter. A homeowner might feel differently and act differently regarding their property if they have a mortgage. Numerous neighborhoods and communities are structured around homeownership (such as many suburbs). Having a stable and affordable residence can help contribute to numerous positive outcomes.

Are we at a stage when public discussions about housing then are exclusively or are primarily about the finances of owning a home – which are certainly important – and not any influential factors that might encourage or discourage people from owning homes in the United States?

The amount of building going on in the US to support AI

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Perhaps contrary to those who argue the United States struggles to build, an AI construction boom is underway:

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Many people believe that growth will only continue. “We’re gonna need stadiums full of electricians, heavy equipment operators, ironworkers, HVAC technicians,” Dwarkesh Patel and Romeo Dean, AI-industry analysts, wrote recently. Large-scale data-center build-outs may already be reshaping America’s energy systems. OpenAI has announced that it intends to build at least 30 gigawatts’ worth of data centers—more power than all of New England requires on even the hottest day—and CEO Sam Altman has said he’d eventually like to build a gigawatt of AI infrastructure every week. Other major tech firms have similar ambitions.

Listen to the AI crowd talk enough, and you’ll get a sense that we may be on the cusp of an infrastructure boom.

Throughout American history, growth is good. Construction is a sign of growth and provides jobs. A new industry is underway. Society is progressing. Data centers are all over the place (and will end up somewhere even if some communities do not all them). Americans are used to booming construction as this happened across housing and numerous industries throughout the country’s history.

What that growth might lead to is another matter. How do these data centers contribute to communities and landscapes? Do all the data centers in suburbs transform suburban life? When the growth slows, what happens then? Will the data centers still be there in 50 or 100 years or will they be vacant properties?

All this is a reminder that while many Americans will encounter AI through devices and data going through the air, it has a significant physical footprint. To power real-time AI responses to whatever we as users need requires buildings, land, resources.

Starbucks as a symbol of neighborhood or community success, closing locations edition

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Starbucks recently announced they will close some locations:

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While Starbucks has yet to disclose the total number of closings or the specific locations, Niccol said in his open letter that the company would end the fiscal year with nearly 18,300 stores in North America, which is down from 18,734 at the end of the third quarter, according to financial filings.

This is national news but it also has local ramifications. For several decades, having a Starbucks in a neighborhood or community signals some level of local success. Starbucks does not locate just anywhere – even with over 18,000 locations in North America – and each location hints at the potential local customers who purchase coffee and other goods. And closing locations also involves local jobs.

Workers rallied Thursday at the Starbuck’s store at Clark Street and Ridge Avenue in Chicago’s Edgewater neighborhood, one of the locations targeted for closure, according to the union. The store is set to work its coffee grinders and espresso machines for the last time Saturday…

On a crisp and sunny fall Saturday morning, a few customers filtered into the Glencoe Starbucks to get their last coffee at their local shop, and to say their goodbyes to the baristas. The store was set to close for good that evening. The store employees will find out Sunday if they’ve been transferred to another store or laid off, a barista said while whipping up a coffee.

Even as the number of store closings appears to be relatively small – perhaps several hundred out of more than 18,000 – it will be interesting to see how local communities are affected. If a Starbucks closes in a city neighborhood or in a suburb, does this then mean a loss of status or hint at decline? Some of this might depend on what goes into where the Starbucks was located. Will another national chain move in? Could a local business fill the gap? Will whatever ends up there provide the same status and tax revenue?

On the other hand, some people have concerns about Starbucks. It is a national brand and some prefer to see local businesses do well. Starbucks can be viewed as part of gentrification, changes to communities that displace long-term residents in favor of new residents with more resources and new expectations. A closed Starbucks presents a new opportunity.

Five or ten years from now, following up on these closed locations could provide a look at the brand and communities. Where are they expanding, where are they leaving? If they continue to move to drive-thru locations, how does this affect places?