July 7, 2021
NOT WORTH IT
Even without Jeff, Amazon still wants to own everything. And that includes a piece of their vendors’ company. Per WSJ, in 80+ vendor deals, Amazon added fine print that allowed them to walk away with shares in the company at below market price.
If the partner refused to hand over equity, there would be no deal. This left prospective vendors feeling like they couldn’t afford to say “no.” And in some cases, the pay-off has been worth it.
For example, in their contract with food distributor SpartanNash, Amazon demanded the option to buy around 15% of the company at an 8% discount. In exchange, SpartanNash will become the main distributor in Amazon’s grocery operations.
Before Amazon can exercise its options, they will need to buy and sell $8B in SpartanNash goods. Meaning, the vendor will get a big bump in sales before they lose equity - making both partners (ideally) more money.
Before the deal, in 2016, SpartanNash brought in $7.5B in revenue (less than what their Amazon contract would be worth). SpartanNash saw a 26% increase in their stock prices the day the news broke with the new deal. And they expect to see the $8B come in from Amazon in the next 7 years.
But not all Amazon vendor deals are this beneficial to both parties. For example, in a separate agreement with cargo company Atlas Air Worldwide, Amazon acquired 9% of the company’s shares at slightly below market value.
Within a few years of the deal, Amazon sold their Atlas shares, leaving Amazon more profitable and Atlas with little to show from the partnership. Atlas has not entertained this kind of a deal with any company since.
Several former Amazon execs agreed that most of the upside went to Amazon in these deals. And while these deals might mean bigger business for vendors, it could also mean giving up way more than you’re getting. There's no guarantee.
👉 Get the full scoop on Amazon’s deals.
WAKE UP CALL
You know something is wrong with the way you train your team. But you can’t seem to pinpoint exactly what it is. It just feels like how you’re going about it isn’t sustainable.
And while we don’t like to point fingers, there is a usual suspect for these training troubles: Google Docs. But since they’re such a staple in the business world, it can be hard to admit that they’re the problem.
So, if you’re unsure if you actually need to #DitchTheDocs (at least when it comes to training your team), here are the sure signs you do:
👉 See all 10 signs. Plus, meet the best tool to use instead.
After the pandemic, there aren’t enough cooks (or hosts or servers) in the kitchen. Between February and April 2020, the restaurant sector laid off a gut-wrenching 2.5M people in the US.
Now, with restrictions lifting, they're putting the "help wanted" sign back up. But even in this hot job market, restaurants and bars struggle to fill the 1.6M job openings.
North Carolina-based 5th Street Group, which operates a handful of restaurants in the Southeast, used to get 15 back-of-house applications a week. In the first third of 2021, they got 15 total.
Industry-wide, roughly 1 in 10 restaurant jobs remain unfilled. But here's the head-scratcher: as of March, food-service unemployment rates remained double the US average.
Some blame higher and extended unemployment benefits. But the problem reflects a much deeper systemic issue.
UC Berkeley Food Labor Research Center found that restaurant employees have 3 main reasons for not wanting to go back:
Most of these problems have nothing to do with the pandemic and long pre-date the first covid case. And when the industry collapsed, they became amplified.
"This is not a worker shortage; this is a wage shortage," said Saru Jayaraman, director of the Food Labor Research Center.
Meaning, if restaurants want their employees back, they've got to cook up a real solution. Such as providing better pay and a safer, more welcoming workplace.
Last month, 5th Street Group guaranteed a minimum wage of $15 per hour. Plus, they established a "Tip the Kitchen Initiative," which adds a second tip line to each receipt so customers can toss some extra cash to the back-of-house team.
In less than 3 weeks, the second tip line raised nearly $40k for 5th Street's kitchen staff. And these initiatives are helping the restaurant group recover faster. Today, they are one of the few restaurants nationwide with no open positions.
"One of my big regrets in life is that we didn't think of this way, way sooner," said Patrick Whalen, CEO at the 5th Street Group.