Gilmer Free Press

Business and Financial News

The Free Press WV

►  Starbucks wants to sell you a sushi burrito with your Frappuccino

Starbucks has tried it all: First came cake pops, then truffle mac and cheese, and earlier this year, avocado toast.

Now the coffee giant is banking on another food fad to drum up lunch and dinner business: The sushi burrito.

The chicken maki roll - which the company says, is “a classic California burrito with a twist” - comes with cooked chicken, pickled cabbage and avocado, and is rolled in sushi rice and wrapped with seaweed. It is currently part of the Mercato lunch menu at a handful of stores in Chicago and Seattle, where Starbucks is based.

But first it has to overcome a substantial hurdle: Convincing customers its food is worth eating.

Despite repeated - and often novel - efforts, analysts say Starbucks has yet to find much success hawking meals alongside its coffee. The challenges are logistical - Starbucks stores don’t have kitchens, for example - as well as behavioral. Over the past four decades, Starbucks has trained its customers to run in, grab coffee and run out. Getting them to think beyond beverages, or linger for a meal, has proven more difficult, particularly as modern customers demand locally sourced, freshly made food.

“It’s been decades, but Starbucks is still trying to figure out food,“ said Stephen Dutton, an analyst for market research firm Euromonitor International. “The short answer is, Starbucks food is never going to be better than the hot, made-to-order meals you’re going to get at a place like McDonald’s or Dunkin Donuts.“

The company’s new Mercato menu includes grilled cheese sandwiches with burrata, and chicken and quinoa soup.

“It’s all about providing higher-quality, fresh food at lunch,“ Scott Maw, the company’s chief financial officer, told CNBC in June.

But analysts say the offerings raise a number of questions: Selling croissants with coffee is one thing, but how do you premade customers to pair their afternoon lattes with pre-made sushi? And how willing are customers to shell out $10 for lunch when they could just as easily go elsewhere?

“Nobody goes to Starbucks to buy food,“ Dutton said. “When they do buy something, it’s usually because they’re like, ‘I’m starving and I have to get to work, so I’m going to pick up this yogurt.‘“

But that’s not to say customers aren’t shelling out, especially for breakfast. Roughly 20 percent of Starbucks’s revenue - which last year was $21.32 billion - comes from food sales, up from 16 percent five years ago. In recent years, the company has been successful in beefing up sales of breakfast foods, thanks in part to its purchase of La Boulange bakery for $100 million in 2012. But analysts say growth has plateaued as the company struggles to break into fiercely competitive lunch and dinner markets.

“There is a perception that Starbucks is selling an inferior product,“ said Nick Seytan, an analyst for Wedbush Securities. “Customers are saying, ‘How good can that salad or sandwich be if you’re not making it in front of me?‘“

Earlier this year, the company said it would stop selling beer and wine, as well as small plates like truffle mac and cheese and bacon-wrapped figs at its stores. Those additions, rolled out with much fanfare a few years ago, had failed to resonate with customers.

Will sushi burritos help change that? Dutton says he remains unconvinced.

“This is one more way of outsourcing the problem instead of solving it,“ he said.


►  Commerce secretary: CEOs were wrong to quit Trump’s councils after Charlottesville

U.S. Commerce Secretary Wilbur Ross came to Donald Trump’s defense Friday, arguing that CEOs were wrong to quit the White House business advisory councils in the wake of Trump’s controversial remarks about Charlottesville, Virginia.

“I think what’s sad is for business leaders to give up an opportunity to influence policy over a singular issue with which they disagree,“ Ross said “ in an interview with the author of The Washington Post’s James Hohmann. “I don’t think that is very well considered.“

Trump received widespread condemnation after he blamed “both sides” in Charlottesville, appearing to drew an equivalence between white supremacists and counterprotesters. A number of high-profile business leaders resigned from Trump’s CEO advisory groups in the days that followed, and he disbanded the councils as more CEOs planned to resign en masse.

Ross has not said anything publicly about Charlottesville. On Friday, his only remarks on the topic were that he thought CEOs were out of line to resign from the Strategy and Policy Forum and the Manufacturing Council.

Most of the CEOs who left “didn’t vote for the president to begin with,“ Ross said, indicating he thought it was a political move. “Elon Musk is not exactly a right-wing person.“

Musk, head of car company Tesla, was one of the first to quit Trump’s councils, before the Charlottesville comments. He and Disney CEO Bob Iger left in June after Trump pulled the United States out of the Paris Climate Agreement. Most CEOs remained on the councils this summer, arguing that it was better to be have a voice at the table than not, but they changed their minds after Charlottesville, triggering an exodus from the advisory groups.

Ross’ comments Friday defending Trump are in sharp contrast to those of Gary Cohn, head of the National Economic Council. After initially facing criticism for staying quiet, Cohn told the Financial Times the administration “can and must do better in consistently and unequivocally condemning these groups.“ Cohn reportedly drafted a letter of resignation, but chose to stay to work on policies like an overhaul of the tax code that he believes are critical to America’s success.

Trump places a high value on loyalty, and he is reportedly so angry with Cohn that he might fire him. At the tax reform rally in Missouri, Trump took time to point out Ross and Treasury Secretary Steven Mnuchin to the crowd, but he did not mention Cohn, even though he was also in attendance and is one of the top White House negotiators on the tax code.

The dissolution of Trump’s advisory councils was the latest example of tension between the White House and CEOs after Charlottesville, but Ross dismissed that tension as media fodder.

“In general, business community morale is really good. The regulatory reliefs that have been granted by this administration have been extremely well received,“ Ross said. Tax reform is the next priority and Ross says he hears overwhelming support for that among business leaders.

“We would be far better off as a country to have a lower base rate and far fewer complications,“ Ross said. He decline to elaborate on how low the rate should go because the details are now “largely in the hands of Congress.“

Ross is a close adviser to the president and was early to back Trump during the campaign. Trump tapped Ross to be one of his economic advisers during the campaign. Ross co-authored a paper with Peter Narvarro, now the head of the White House National Trade Council, arguing that trade was hurting the U.S. and calling for much tighter restrictions on imports.

Before joining the Trump administration, Ross was a billionaire investor who often bought distressed companies on the cheap and tried to resuscitate them for a profit. At Commerce, a sprawling agency that he compared to a “conglomerate,“ Ross oversees everything from trade policy to the team that monitors hurricanes.

One of Ross’ biggest upcoming tasks is overseeing the 2020 census. He says he is “actively searching” for a new director and that he would likely chose a businessman for the job since the census is “huge management challenge.“


►  What you need to know about the Equifax data breach

Equifax, one of the three main credit reporting companies, said this week that a major data breach exposed Social Security numbers and other important information of millions of people.

The breach affected about 143 million in the United States, as well as some people in Canada and the United Kingdom, but Equifax didn’t provide a number. Hackers had access to the data between May and July, Equifax said. The company discovered the hack on July 29 and publicly announced it more than a month later on Thursday.

Here’s what else you need to know about the breach:

___

WHAT INFORMATION WAS TAKEN?

Hackers had access to Social Security numbers, birth dates, addresses, driver’s license numbers, credit card numbers and other information. Those are all crucial pieces of personal data that criminals could use to commit identity theft. Those are what John Ulzheimer, an independent credit consultant who previously worked at Equifax, called “the crown jewels of personal information.”

Equifax’s security lapse could be the largest theft involving Social Security numbers, one of the most common methods used to confirm a person’s identity in the U.S. The data breach is especially damaging to Equifax, since its entire business revolves around being a secure storehouse and providing a clear financial profile of consumers that lenders and other businesses can trust. The credit profiles it holds contain personal information, like how much people owe on their houses and whether they have court judgments against them.

___

AM I AFFECTED?

Equifax set up a site, equifaxsecurity2017.com , where you can type in your last name and six digits of your Social Security number to find out if your data may have been compromised. Consumers can also call 866-447-7559 for information. The company says it will send mail to all who had personally identifiable information stolen.

Equifax is also offering free credit monitoring for a year. The company says the service will search suspicious sites for your Social Security number, give you access to your Equifax report and other offerings. You can sign up at the same site listed above, and the deadline to do so is November 21.

Initially, though, there was a catch — signing up would also commit you to binding arbitration with the credit monitor, which would mean giving up your right to sue. Several politicians and consumer groups have criticized this provision. Democrats in the House and Senate called on the company to pull back that requirement. Late Friday, Equifax said the arbitration language that appears on its website “will not apply to this cybersecurity incident.”

___

WHAT SHOULD I DO?

You can view your credit reports for free at AnnualCreditReport.com. You’re entitled to get a free copy of your credit report from each of the three big agencies once every 12 months. Review it closely for unauthorized accounts or any mistakes.

You can consider freezing your credit reports, but it comes with some downsides. A freeze stops thieves from opening new credit cards or loans in your name, but it also prevents you from opening new accounts. So each time you apply for a credit card, mortgage or loan, you need to lift the freeze a few days beforehand.

Freezes can be done online at the websites of the three credit reporting agencies—Equifax , Experian and TransUnion . You’ll need to freeze all three reports for the best protection. Each company will give you a code that you’ll need again in order to lift the freeze, so keep it in a safe place. When you plan to apply for a credit card, mortgage, or other loan you’ll need to go back to each site and lift the freeze.

The credit reporting agencies may charge a fee, usually under $10, depending on which state you live in. But it’s free for residents of some states, including Maine, New Jersey and South Carolina.

A freeze doesn’t protect you from everything: thieves can still file a fraudulent tax return in your name or charge things to your already opened credit card accounts. A freeze won’t affect your credit score or report. The report stays open and is updated to keep track of your debts, payments and other information.

___

HOW DID THIS HAPPEN?

Equifax is blaming an unspecified “website application vulnerability.” Security experts say it’s hard to say for sure without more information, but such vulnerabilities typically don’t require a lot of sophistication to exploit.

Rich Mogull, who runs the security research firm Securosis, says the web app breach suggests “things are broken down in a couple of different areas.” He says someone likely made a programming or configuration mistake.

Corporate culture could also be a factor. Often, Mogull says, corporate security is underfunded or isn’t given the authority it needs to make sure application developers do what’s right.

Ryan Kalember of the security company Proofpoint says that even if the vulnerability was known and fixable, “coordination between app developers and security teams in a lot of organizations are not on the best of terms.”

Another security expert said the website Equifax created to help customers find out if they were affected raises its own security questions. The site looks like the kind set up by attackers to trick people into disclosing information, says Georgia Weidman, founder and chief technology officer for security firm Shevirah.

“It’s teaching people entirely the wrong things about using the internet securely,” Weidman said. She said says she’s also troubled by Equifax’s approach to security generally, including reports that it didn’t respond to basic scripting bugs it was warned about last year.

___

WHO’S INVESTIGATING THIS?

Potentially, a lot of people. Credit bureaus like Equifax are lightly regulated compared to other parts of the financial system.

U.S. Representative Jeb Hensarling, chairman of the House Financial Services Committee, said he will call for Congressional hearings. And Representative Greg Walden, the chairman of the House Energy and Commerce Committee, says he’ll hold a hearing examining what wrong and how to better protect against future hackings.

Several state attorneys general have also said they would investigate, including those from New York, Massachusetts and Pennsylvania. New York’s attorney general, Eric Schneiderman, said his office aims to “get to the bottom” of how the breach occurred.

Company executives are also under scrutiny, after it was found that three Equifax executives sold shares worth a combined $1.8 million just a few days after the company discovered the breach, according to documents filed with securities regulators. Equifax said the three executives “had no knowledge that an intrusion had occurred at the time they sold their shares.”


►  U.S. International Trade in Goods and Services, July 2017

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced the goods and services deficit was $43.7 billion in July, up $0.1 billion from $43.5 billion in June, revised. July exports were $194.4 billion, $0.6 billion less than June exports. July imports were $238.1 billion, $0.4 billion less than June imports.

--> Monday, September 11, 2017
Readers' Comments:


Copyright MMVIII-MMXVII Gilmer Free Press. All Rights Reserved