Category Archives: Scams

Milking The Herd At T-Mobile

Cows - 600 x 456

T-Mobile is milking us dry, and that's no bull !

T-Mobile USA’s (aka Deutsche Telekom AG) catch phrase used to be “Get More”, before they dropped it (like so many dropped calls) for their “Stick Together” campaign.  Well, now it seems that their next advertising slogan might just be “Pay More”.

We know times are rough.  T-Mobile is probably hurting just as much as the rest of us.  Evidence the bad news they’ve included in customer’s bills over the last few months.  First, they made the decision to charge customers who wanted to continue to receive their call detail on each month’s bill.  I believe they are charging $3.00 a month for the privilege of seeing what they are charging you for.  Then they decided to charge an additional $1.50 a month for the privilege of getting a paper bill in the mail each month (isn’t it nice to know that T-Mobile is saving the lives of innocent trees).  After what must have been a torrent of subscriber defections to other carriers and complaints from customers who didn’t bolt, they dropped their plan to charge for paper bills (but they’re still charging customers who want to see the call detail on their bills).  Apparently, T-Mobile decided that trying to milk their customers with yet another new monthly charge was going to cost them more than they would have realized in additional income (see “T-Mobile Customers Demand Traditional Paper Bills” at dailyfinance.com).

T-Mobile’s latest bills have included a strangely vague warning to their customers that they may be paying more for minutes used beyond their calling plan’s allowance.  But they don’t tell you how much more they are charging per minute. If you are a T-Mobile subscriber, and you decide to dial 611 to ask them about the rate increase, better do it during the day.  T-Mobile used to provide customer service 24 hours a day, but now,  if you try calling T-Mobile at night, you’ll get an announcement telling you to call back during the day.  That brings to mind another possible advertising slogan T-Mobile might consider… “Pay More, Get Less”.

Why the lack of specifics regarding their rate increase ?  (they tell you to check out their website for details)  Well, it seems to us that T-Mobile, just in time for Halloween,  is trying to scare subscribers into moving to more expensive monthly plans.  Is it really necessary to raise what are already exhorbitant per-minute charges if you go over on your plan’s minute allotment.  We believe those per-minute charges were already in the range of 40 cents to 60 cents per minute, even before their recent increases.

Those folks at T-Mobile must also think their customers are a bunch of idiots.  Here’s how they broke the good news to customers, via an insert in their bills titled “An important message about your additional minutes”…

“T-Mobile is committed to providing you the coverage you need at the price you want.  Therefore, it’s important to tell you about a change to ensure you are on the plan that best meets your needs.  Starting on September 1st, the price for the minutes you use over the minutes included in your plan will increase for some rate plans.  Those rates apply to all additional minutes, including calls to voicemail and call forwarding.”


Don’t you love it how companies always begin their notices of price increases on an upbeat theme ?   How about leveling with the customer and starting off with something like “We have some bad news for our most loyal customers” ?

When we first spotted their billing insert, we thought that perhaps T-Mobile was increasing the number of minutes in their calling plans, or perhaps that they were lowering their charge for additional minutes.  Unfortunately, it was nothing or the sort, but it is certainly reassuring to know that T-Mobile is so concerned about us.  Why then all the secrecy ?  Why not just say how much they’re charging for additional minutes, right there on the billing insert ?  And the fact of the matter is that they can’t legally raise their rates without notifying their customers.  We guess that T-Mobile figures that this indirect method of notifying their customers of a rate increase fulfills their obligation to notify their customers.  How lame can you get ?

We wonder what little bit of good news T-Mobile might be planning to stuff into the envelope with your bill, next month.  How about charging a fee for speaking with a customer service rep, or charging you $1.00 every time you check how many minutes you have used up.  There’s probably dozens of ways they can come up with to squeeze more out of their customers every month.

Long time T-Mobile subscribers might remember the pre-T-Mobile days, and perhaps even the pre-Voicestream days.  The T-Mobile U.S. cellular network started it’s life as “Omnipoint”, circa 1996.  (Does anybody remember Fred, the Omnipoint parrot ?  See Fred in this Omnipoint TV Commercial on Youtube.)  One of Omnipoint’s selling points was “No Contract Required”.  As any T-Mobile customer can tell you, that is not the case with T-Mobile.  But for T-Mobile customers who have fulfilled their contract (and maybe even for those who haven’t), all of  T-Mobile’s recent attempts to nickel and dime their customers to death might signal that it is time to move your mobile number to a different network, one that is more customer-friendly, and one that gives it’s subscribers a little more credit for being able to see through a thinly veiled attempt to increase profits.  According to this article at cellphonesignal.com, T-Mobile’s decision to increase their per-minute overage charges means that subscribers who are under contract can opt to terminate their contract without incurring an early termination fee (ETF), which just may be the silver lining in this network’s cloud.

Oh, and while we’re on the subject, when is T-Mobile going to bring back Jamie Lee Curtis as it’s spokesmodel ?

– Routing By Rumor

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Good News For Costco, Bad News For Consumers !

We must be getting old, here at Routing By Rumor world headquarters, because we’re not spotting deceptive consumer practices as quickly as we used to.  If you’re a regular visitor to these parts, you’ve heard us complaining about manufacturers who downsize their products, and about manufacturer’s practices we’ve termed “deception engineering“.

Case in point…  When last month’s “Costco Connection” advertising and propaganda publication  arrived (they call it a “lifestyle magazine” –  believe that, and we have an “infomercial” we want you to watch), we found great news on page 52  (View the April edition of Costco Connection here).  Costco announced, in a two-page article, that while other brands of tuna fish were shrinking their cans from six ounces to five ounces, Costco was increasing the size of their  “Kirkland Signature” house brand of tuna fish, from six ounces to seven ounces.  You don’t read good news like that every day.  Sounds like they’re making an already good value even better.  Break out the mayonnaise and strike up the band.  Happy days are here again!

Or are they?

It turns out that it’s good news for Costco, but bad news for Costco members (and, we suspect, for those cute little tuna fishies).  While it’s true that they have increased the size of their Kirkland Signature tuna fish by 16.6%, to seven ounces, consumers are not getting more tuna for their money.  The article in their Costco Connection magazine somehow forgot to mention the fact that the price per can actually increased even more than the size of the can!  Bottom line: You get more tuna per can, but the price per ounce has increased.

Silly us.  We thought we might be getting more tuna fish for the same price.  In actuality, while the size of the cans was increased a whopping 16.6%, the price per can has increased an even more whopping 20%.  Packs of eight 6-ounce cans  had sold for $9.99 in area Costco Wholesale warehouses.  Now that they have introduced packs of eight 7-ounce cans, Costco has raised the selling price to $11.99, a 20% increase.  By the way, didja ever notice how most grocery items at Costco seem to be sized so that the average price per package is around $10 or $12 ?  Throw 9 or ten items in your cart, and you just spent at least $100.  But we guess that’s the whole idea of shopping in a “warehouse” club.   And why does the price of everything have to end in “.99”, ie: $9.99, $11.99, $14.99 ?  We realize that Costco didn’t invent that pricing strategy, but if you’re shopping in a place like Costco, which says it caps  it’s margin** (see below) at 14%, it seems like a suspicious practice to cynical little us.  Like maybe if their normal markup dictates a selling price of $12.35, it gets rounded UP to $12.99, just because someone at Costco likes the number 99, and rounding it up to an even $13.00 might seem, well, excessive.  Yes, we know that 13 is not an even number, but you get the point.  Besides, 1300 IS an even number, which is sort of odd, when you stop and think about it.  Then again, maybe we’re paranoid, and when they have an item that should sell for $12.35, they decide to give their members a break, and round the price down to $11.99.  Yeah, right.  All we know is that if you look at your receipt the next time you shop at Costco, just about everything except random-weight packages of meat, poulty, fish, etc., will end in “.99”.  But even those random-weight items will have a unit price ending in “.99”, such as $5.99 per pound.

But then, there are a lot of odd things at Costco, like the fact that they will accept any credit card in your wallet, as long as it is from American Express.  And the fact that they don’t offer grocery bags, so you end up throwing 500 loose items into your car in the parking lot.  And the fact that they won’t accept any manufacturer’s cents-off  coupons, unless they are distributed by Costco themselves.  And the fact that they have pretty limited hours of operation, especially for the lowest-cost membership holders. And the fact (according to this New York Times article), that Costco refuses to accept food stamps (now issued as debit cards) for purchases.  And the fact that you’ll find horrifically environment-unfriendly packaging of many small items (especially electronic items) at Costco, which doesn’t seem to be getting Costco members too upset.  We’re talking huge plastic blister packs (which can’t be recycled, at least where we live), or combination plastic and cardboard blister packs, so that these small items are less likely to be stolen.  In our opinion,  some of the terribly excessive packaging at Costco and other warehouse-type retailers qualifies as a crime against the planet, even if it doesn’t happen to be illegal.

Now, we’ll admit that we aren’t going to stop buying Costco tuna fish.  It’s actually excellent quality tuna.  It is quite possibly the best quality tuna we have ever found, at any price.  But those good folks in Seattle must think their customers are idiots.  To be sure, the price per ounce has increased only slightly, and it’s still a good value.  But shamelessly hyping the increased size of their cans of tuna fish, and not mentioning that it’s now more expensive and was actually a better value before they increased the size of the cans isn’t what we would consider good news or being straightforward with their customers .  In our opinion, it borders on deceptive advertising.  Of course, you can’t  expect that manufacturers will go out of their way to let you know when they raise prices, downsize a product, or substitute cheaper ingredients, either.  What we don’t like is the fact that, in our mind at least, Costco’s announcement paints a picture that it’s now a better value, when the opposite is actually true.

Since when is raising the price (per ounce, per pound, per gallon, etc.) of a product, while at the same time, forcing you to buy more of it at once, a good thing for consumers ?  What ever happened to the warehouse club concept that as package size increases, so does value ?

For us, the appeal of shopping at Costco isn’t so much about price, as it is about quality.  After all, shopping at Costco means an extra shopping trip,  an annual membership fee, not getting your groceries bagged, often waiting in long lines at the checkout, limited shopping hours and very limited product selection.  Indeed,we can buy many identical items for less at the local supermarket, especially when they’re on sale or if we use manufacturer’s coupons.  What we like most about Costco is that the quality of their private-labeled items, such as their tuna fish, is generally superior to not only the national brands, but any brand at any price.  Even Jimmy Kimmel shops at Costco.  Watch Jimmy shopping at Costco on youtube.  We never knew a trip to Costco could be so much fun.

An article entitled “Costco’s Artful Discounts” (Business Week, October 9, 2008), says this of Costco CEO James D. Sinegal… “he’s constantly pushing his buyers to find creative ways to lower prices and add value while getting his managers to crank up their efficiency efforts”.  It seems to us that Costco’s new 7-ounce cans of tuna have failed to deliver the lower prices or added value which Mr. Sinegal is so fond of.  What they do seem to have provided is a lot of hype for Costco’s marketing efforts, and very likely a higher profit margin because a product’s shipping and packaging costs (especially for canned items) decrease (on a percentage basis), as container size increases.  There is very little difference in the cost of manufacturing a 7-ounce tin can, compared to a 6-ounce tin can.  In fact, in the case of Costco tuna fish, the old and new cans use exactly the same size lid; but the walls of the can are slightly taller.  Costco is also very good at finding ways to minimize shipping costs, for instance, by having their vendors redesign packages so that more of them can fit onto a standard shipping pallet.  We wouldn’t be surprised if Costco’s next “improvement” to their Kirkland signature tuna will be to offer it in new and improved square cans.  Think of all the space that will save in the pantry, and the fact that you won’t have to worry about your can of tuna fish rolling away, should you drop it.  That’s always been a big problem for households that live in hilly areas.  Now, if the United States mint would only start issuing square pennies !

1919 Australian Kooka Square Penny

1919 Australian Kooka Square Penny

So, what have we learned today, class?  We’ve learned that you get less for your money when manufacturers shrink the size of their products,  and sometimes, you get less for your money when manufacturers increase the size of their products.  Heads, you lose.  Tails, you lose.

Dear Costco… May we please have our old 6-ounce cans of Kirkland Signature tuna fish back again?  They were a better value.

Then again, maybe we should just pay our money, eat our tuna fish (mercury content and torpedoes be damned), and keep our mouth shut.  Mother always said you shouldn’t speak with your mouth full, and now it’s 16.6% more full.

– Routing By Rumor

**  “Margin” is not the same as “markup”.  For instance, if you buy an item for $1.00, and sell it for $2.00,  your markup is 100%, but your margin (the percentage of the selling price that represents your profit) is only 50%.   We’ve always felt that putting things in terms of profit margin instead of markup, especially as markups become greater, has the effect of making a seller’s prices seem more reasonable.

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Not All Half-Gallons of Ice Cream Are Shrinking !

A Costco Wholesale location (image from schaperco.com)

A Costco Wholesale location (image from schaperco.com)

Amid the pandemic of shrinking products that is sweeping the nation, its nearly impossible to find a half-gallon container of ice cream that is still a full half-gallon, or 64 ounces.

First, manufacturers, including one of the downsizing leaders, Breyers (Unilever), shrunk their half-gallon ice cream containers to 56 ounces. More recently, almost all brands have downsized yet again, to 48 ounces (1.5 quarts). See our previous article about Breyer’s shrinking their ice cream containers. These days, the freezer at Routing By Rumor headquarters usually does without ice cream. Funny, but when we walk down the frozen food aisle in the supermarket and see the miniaturized containers of ice cream, we loose our taste for the product.

By the way, we realize that we may be jumping to conclusions by blaming the ice cream manufacturers for cheating us out of our hard-earned ice cream. It is entirely possible that this is what is actually going on.

But ice cream lovers (and lovers of value) rejoice ! If you shop at Costco Wholesale, you will still find full half-gallons of “Kirkland” ice cream. Sixty-four creamy, delicious, luxurious, decadent, fat-laden ounces. At about $4.50 per half-gallon, it’s less expensive than the anorexic-looking downsized containers of name-brand ice cream at the supermarket, which contain 25% less product. And Costco’s house brand of ice cream is available in any flavor you like, as long as it’s vanilla. That reminds us of what Henry Ford said about his Model T back in 1909. Poor Henry. He never knew the joy of shopping at Costco.

Henry Ford with his Model T Ford

Henry Ford with his Model T Ford

One of the tenents of shopping at Costco is that you sacrifice variety for value. You also have to buy a carton of two half-gallons at a time, but how many people are going to complain that they are forced to fill up their freezer with ice cream ?

One thing you won’t have to sacrifice is quality. Costco branded products have never disappointed us. We have found them to always be superior to the national brands in quality and/or value. Here’s a particularly stark example. Gallon containers of milk are $2.25 at Costco. Many local stores charge more for a half-gallon of milk than Costco charges for a gallon ! There are many items at Costco that are priced at less than half of what you’d pay at your local supermarket.

Lest you think that we are little more than shills for Costco, you’ll want to know that we aren’t crazy about everything at Costco. While many items at Costco might be slightly less expensive than your supermarket’s everyday prices, you’ll pay less, sometimes a lot less, at your local supermarket when it’s on sale. Meat and poultry are perfect examples of this. And when you consider that many items at Costco are sold in huge packages, it won’t be a bargain if you have to throw away half of it because you couldn’t finish it before it went bad. For instance, a 25 pound sack of flour, a gallon of mayonnaise, or a five gallon jug of vegetable oil are just a bit more than we need. An interesting thing about these institutional-sized packages is that in many cases, the price per pound/quart or whatever unit of measure is used, is not significantly different from your normal supermarket-sized packages. With some items, such as Del Monte or Libby ‘s canned vegetables, you sometimes end up paying more per can at Costco, despite having to buy a case of a dozen or so cans of peas or string beans, than you would if buying a single can at the supermarket. Same thing goes for cans of soda (“pop”, for our Southern readers). We think that in some cases (pun intended), Costco hopes you think you’re getting a bargain simply because you’re forced to buy such large quantities at a single time. Call it “warehouse club buying momentum”, if you will. When you get home and start calculating whether that two-gallon jug of mustard that will last you for the next twelve years was really a good buy, you start to have some regrets, even though it was only nine cents an ounce. The bottom line is that you have to keep your guard up at all times when shopping at a warehouse club. For us, we’re better off purchasing many items at a local supermarket.

When you factor in the obligatory ID check at the entrance to Costco, which is guarded by Cerberus himself (good doggie !), and the veritable strip search before they’ll let you leave, a trip to Costco isn’t a bowl of cherries (but it is arguably a bowl of vanilla ice cream). At least Costco doesn’t conduct a cavity search. We get enough of those when we visit our dentist.

Even if you don’t have a Costco membership, you can still do better when you shop at your local supermarket. While most supermarket half-gallon house brands of ice cream have shrunk to 56 ounces, they are still a better value than the 48 ounce containers that have become the new standard among the name brands, and the house brands are usually very good quality.

Now, if Costco can manage to keep their half-gallon containers of Kirkland ice cream a full half-gallon, why can’t all the the other brands manage to do the same ? That has to qualify as one of the great mysteries of the Universe.

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The Banking Meltdown Is Just A Symptom Of A Much Larger Problem

They’re comparing this week’s financial events in the United States with those that led to the start of the Great Depression. But make no mistake, the United States’ economy has been headed for disaster for years now. The loss of decent-paying jobs, the record number of home foreclosures and the depressed real estate market are all symptoms of a far greater problem. The near-collapse of the American banking system may be linked to the mortgage crisis, but look for a root cause elsewhere.

The looming failures of financial giants including Lehman Brothers and Merrill Lynch, and insurance companies such as AIG, have created shock waves felt from Wall Street to Main Street. For the first time in memory, people were concerned that the money in their bank accounts, money market accounts and retirement plans was at risk. A 1929-style run on the banks appeared to be imminent. Indeed, people started pulling their money out of money market accounts at an unprecedented rate. Even investment professionals are running scared. Putnam Investments was so rattled by recent events, that they suddenly decided to close and liquidate their $12.3 billion institutional Putnam Prime Money Market Fund, which had experienced a run of redemptions last Wednesday. (Read about money market funds “breaking the buck” in this cnn.com article, or in this blogger’s posting.) In the seven days ending this past Thursday, Americans collectively pulled a quarter of a trillion dollars out of their money market accounts, an indication that people are frightened. This has led to the government announcing that money market mutual funds will now be insured in much the same way that FDIC insurance protects bank deposits, although the insurance coverage is currently planned for only the next year (we think you can bet your bottom dollar (pun intended) that this insurance will become permanent).

Within the space of just a few days, the government’s $75 billion bailout of AIG grew into a proposed $700 billion bailout of the entire mortgage mess. (Didn’t something like that happen in the movie “The Blob That Ate Pittsburgh”?) The government certainly has the ability to print as much money as it needs to put out these brushfires, but it’s foolish to believe that the federal government throwing money at the problem will make it go away for any length of time.

The economists here at Routing By Rumor point to two very basic problems that the country’s economic woes can be directly attributed to. The first problem is that America is sending about half of it’s cash to the Middle East to buy oil. The second problem is that the rest of America’s cash is being sent to the Far East, mainly to China, to pay for just about everything else we consume. Unless this situation changes, the U.S. economy will never recover, and the current round of federal bailouts are just the beginning.

America has made little progress towards energy independence, despite 35 years having elapsed since the oil crisis of the early 1970’s gripped the nation. A second oil crisis in the late 70’s, as well as dramatic increases in the price of oil in the recent past have done nothing to break our dependence on foreign oil.

America has become dependent on China for almost all consumer goods. This is not only foolish from an economic perspective, it also presents a grave risk to America’s national security. We manufacture almost nothing domestically any more. We’ve said this before, and we’ll repeat it again… God help America if we ever go to war with China, because if that should ever happen, you might as well just go ahead and hang a picture of Chairman Mao in your living room. Now take a look at Walmart, the largest retailer in the United States. According to wakeupwalmart.com, more than 70% of the goods on Walmart’s shelves are made in China. To be fair, that’s probably no different than any other American retailer, but in our mind, Walmart is little more than a sales agent for China, Inc.

Just how bad have things gotten ? According to this CNN article, the United States Department of Agriculture says that 50 percent of the apple juice imported into the United States comes from China (an estimated 161,000 tons of apple juice compared to the 110,000 tons produced in the United States). If we’re reading those numbers correctly, that means the United States only produces 25% of all the apple juice it consumes.

Apple juice !!! What the hell is happening to our country ?

People, there’s something very, very wrong with the U.S. economy, if we can’t even grow our own apples in this country anymore. We’re in deep, deep trouble if we’ve even become dependent on China for apple juice.

They better come up with a new saying, because “As American as apple pie” doesn’t hold true any more.

When the presidential candidates show up for their next press conference or debate, in addition to the standard questions about abortion, the death penalty, Iraq and tax reform, perhaps someone can ask them to take off their shoes and tell us where they were made, and whether they see that as a problem. Or, ask them to remove all of their clothing that was NOT made in the U.S.A. That should be quite revealing.

Then there’s the U.S. banking industry, which to us, resembles nothing so much as legalized loan sharking. Banks are, on the one hand, paying minuscule interest rates to depositors, with regular savings accounts and interest-bearing checking accounts paying perhaps 1% or so, and in many cases, just a fraction of one percent APR or APY (the switch from quoting interest rates paid as APY, instead of APR is a scam onto itself, but we’re digressing). On the other hand, banks are charging 15% or 20% interest on credit card balances, and in some cases, as much as 35% or 40% APR for their less credit worthy customers. Did you know that federal law places no limit on the interest rate a bank can charge ? And while some states do so, there are states which do not cap interest rates. That’s why it’s likely that when you mail your monthly credit card payment, the address on the envelope is usually in South Dakota or Delaware, where, as far as credit card interest rates are concerned, the sky’s the limit.

Take a look at the off-the-wall late fees and other penalty charges that banks are getting away with, since a 1996 Supreme Court ruling removed limits on such fees. Today, typical credit card late fees are as high as $40, and continuing to go up. In fact, if there’s one thing that amazes us, it’s the way that banks continually come up with new ways of putting the squeeze on credit card holders. That’s why you continually get notices from card issuers, announcing changes in your account terms. It’s surprising to us that none of those notices have yet advised us that a late payment will result in a guy named Guido paying us a visit around midnight, to negotiate a repayment schedule using his Louisville Slugger.

We think most American’s have lost any trust they might have had in that cesspool called Wall Street, where, it seems to us, the average investor doesn’t stand a chance. Maybe Eliot Spitzer was on the right track after all, with his aggressive investigations. The well publicized scandals, insider trading and other illegal activities involving Wall Street firms and the companies that trade their stock there have eroded investor confidence. And while we don’t think it’s fair to single out any one individual, just take a look at the Dick Grasso case. How do you think the average American who is struggling to pay their mortgage or feed their family, feels about a situation like that one ? And yet, despite the current financial crisis in the United States, don’t expect CEO compensation to decrease much, even at companies that have to be bailed out with federal money.

So while the billions of dollars that Washington is throwing at the financial crisis will probably stabilize things in the short term, don’t start singing “Happy Days Are Here Again” just yet. They are not.

If you want to hear what it will sound like if happy days ever do get here again, check this out.

– Routing By Rumor

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Another One Bites The Dust – Bennigan’s Restaurants

We’ve been playing a lot of Queen lately, here at Routing By Rumor world headquarters. Especially this tribute to all of the victims of the U.S. economy. It’s too bad that Washington still can’t bring itself to accepting what most Americans already know.

The latest victims are the restaurants owned by S&A Restaurant Corp., which is part of Texas-based Metromedia Restaurant Group, which is part of the privately held Metromedia Company, owned by the 93-year-old billionaire philanthropist John Werner Kluge.

About John Kluge…

Columbia University in New York City announced last year that Mr. Kluge had pledged $400 million to the University, the largest gift in it’s history. With a little less than $10 billion to his name, poor Mr. Kluge is all the way down at #31 on Forbes magazine’s list of the 400 richest Americans, just below Nike’s Philip Knight, but ahead of eBay’s Pierre Omidyar.

Apparently, all of their company owned locations in the United States have closed, and they have filed for Chapter 7 bankruptcy. This past June, Metromedia disputed the accuracy of this report in the Wall Street Journal, that claimed they had already prepared a bankruptcy filing. There were about 150 company owned Bennigan’s restaurants, and 58 Steak and Ale restaurants. Apparently, a smaller number of franchised Bennigan’s locations in the United States and elsewhere are remaining open for now. Restaurants operating under the Ponderosa Steakhouse and Bonanza Steakhouse brands, also owned by Metromedia Restaurant Group, appear to be staying open for now.

columbia.edu)

John Werner Kluge (photo credit: columbia.edu)

As has been the case at many other companies that have crashed and burned, many Bennigan’s employees were unaware of the closings until they showed up for work last Tuesday, and were greeted by a sign on the locked front door giving them the good news (If you look closely at the photos in this article from the Fort Worth Star-Telegram about the closings, we believe you’ll see a locksmith changing the lock on the front door at a Fort Worth, Texas Bennigan’s …yup, good call, since this article identifies the locksmith!). What ever happened to the good old two weeks notice when your job is about to self-destruct ? OK, maybe two weeks is asking too much… how about 24 hours notice. Maybe it’s just us, but we don’t think that any employer worth working for would treat their employees that way. We think it shows a complete lack of class. We understand that S&A Restaurant Corp. was probably in dire financial straits, but couldn’t they have done better by their employees ?

These days, it is standard procedure for employers to state right there on the job application that it is “employment at will”, and they can terminate you at any time, for any reason, or for no reason at all. For certain, this is driven by the fear of lawsuits, but how the hell can they expect to hire employees who will be committed to the company, if the company won’t make any commitment to their employees ? To us, this is a prime example of the sorry state of American business in the 21st century. And employers wonder why they can’t find loyal, dedicated employees. They wonder why people quit without giving them fair notice. How much notice did Metromedia give their employees about the fact that they would be closing their doors? None. Yet there were published reports a month or two earlier that Metromedia had already prepared a bankruptcy filing.  Shame on you, Mr. Kluge. Those were some of your hardest working and lowest paid employees, who helped you get to #31 on the Forbes list. Welcome to the era of the disposable employee.

In our mind, employees of other Metromedia businesses have every right to simply pick up the phone one day, and tell their boss they won’t be coming to work any more.  If management at any company has a problem with loyalty like that, just remind them that it was their decision to classify you as an “at will” employee, and that you are simply exercising the freedom that being “at will” gives you.

The asymptotically decreasing tenures of the last few CEO’s at Metromedia Restaurant Group (MRG) may shed some light on the troubles at the company. Clay Dover resigned as CEO in late May after holding that position for about six months. Mr. Dover had previously held other positions at MRG, and had replaced Vince Runco, who had been MRG’s CEO for less than a year. Mr. Runco replaced Jeff Moody, who was CEO for about 18 months. Mr. Moody had replaced John Todd, who held the CEO title at MRG for just shy of two years.

Published reports have questioned whether the affected employees will be receiving their paychecks for hours worked up until the restaurant closures, and whether consumers who hold gift cards from the two chains will receive refunds. Our advice… don’t hold your breath. Of course, if Metromedia Restaurant Group wanted to show it’s loyal customers some goodwill, they could announce that gift cards from their Bennigan’s and Steak and Ale restaurants will be honored at their Ponderosa and Bonanza Steakhouse locations. But again, don’t hold your breath.

The minimally carnivorous, quasi-vegetarian staff at Routing by Rumor has never set foot in either a Bennigan’s or a Steak and Ale, so we don’t know if we missed much, but for thousands of their employees now out of work, it’s a disaster. Restaurant workers are among the lowest paid workers, and in the very tough economic times we are experiencing now, they will have a difficult time finding employment.

This brings up another hardship that restaurant workers in the United States are subject to. Many employees allege that they are forced to share their tips with managers and other employees. By law, employers can’t require employees to share their tips with management. To make matters worse, restaurant workers are not subject to the same minimum wage standards that other workers are protected by. As long as their salary plus their tips equal the mandated minimum wage, their employers are within the law. This means that in many cases, they are paid virtually nothing by their employers. Here’s an article from Nation’s Restaurant News, that describes many of the abuses that restaurant employees allege, and some of the litigation that has resulted, involving some of the largest and best known restaurant chains in the country, including names like Applebee’s, which is owned by IHOP.

As of this morning, it appeared that the websites for Bennigan’s (www.bennigans.com), Steak and Ale (www.steakandale.com), and Metromedia Restaurant Group (www.metromediarestaurants.com) had all been taken down. And the vultures are already starting to swoop down and pick through Bennigan’s remains. Check out this article about a locksmith that was hired to change the locks at a Florida Bennigan’s location, and decided to load up his van with liquor and food that remained in the restaurant. He got caught.

– Routing By Rumor

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What’s Wrong With This Picture ?

credit: The New York Times / Sandy Huffaker

As just about everyone whose body temperature is above room temperature knows by now, gasoline prices have gone through the roof. You pretty much expect to see even higher prices each time you pass a gas station.

Most of us wonder who it is that is profiting from these spiraling prices. Many of us expect to see gas shortages, long gas lines, and gas rationing pretty soon. At the same time, station owners are crying poverty, claiming they make only pennies on each gallon of gas sold.

Then would someone please explain the prices in the above photo, from this New York Times article published May 24, 2008 ? We are hesitant to use the term “price gouging”, but there doesn’t seem to be any plausible explanation for the price differential between the “credit” and “full serve” pricing at this Union 76 station in La Jolla, California (The Union 76 brand is owned by ConocoPhillips). While not clear from the photo, we believe that the “credit price” implies self-service. In fact, why in the world would the credit card price be lower than paying cash, in the first place, self-service or not ? And why would gas at the full service pump be up to $1.20 a gallon more expensive ? Something stinks in La Jolla, and we don’t think it’s the MTBE in the gas. Do supermarkets that have self-service checkout lanes charge $1.00 more per item if you pay at a register with a real live honest-to-goodness cashier ?

Here in the Northeast U.S., gas stations generally set a single price for gasoline, regardless of whether you pay with cash or credit card. If a station differentiates between self-service and full-service (which is a misnomer anyway), it is generally a few cents a gallon.

While we’re on the subject of “full service”, when was the last time a gas station offered to check your tire pressure, oil level, coolant level, etc., or wash your windshield ? Full service my foot. We doubt most of the gas jockeys working at these stations would know how to open your hood, much less find your dipstick. Most of the time, you’re lucky if they can find where to insert the gas nozzle, and if they speak English. We wouldn’t pay one cent more for their supposed “full service”.

ExxonMobil just announced that they will be selling all of their company-owned gas stations to their distributors or to other buyers, because there’s no money in the retailing end of the business. Well, when you can make record-setting obscene profit by refining the product, we suppose you might loose interest in the lower profit parts of the business. (It’s sort of like why bank robbers never demand coins, preferring the paper money instead.) Maybe ExxonMobil should use the price model that Union 76 is using at the above station. If they could add up to $1.20 profit per gallon to their sales, we suspect that owning the stations suddenly becomes very profitable indeed !

Getting back to our original question of “What’s wrong with this picture?” we think there are many things wrong on many levels. Why is gasoline $4.00 or $5.00 a gallon, and climbing? Why hasn’t the United States done more to lessen our dependence on foreign oil? Why is this country in love with gas-guzzling vehicles? (although that is starting to change). Why are the big oil companies allowed to rake in record profits, while much of America is hurting from the spiraling cost of energy? Why aren’t we seeing more government mandates or inducements to effect energy conservation, such as carpooling, discounts on mass transit fares, tax breaks to employers who encourage telecommuting, restrictions on the use of non-essential lighting, etc? (When there’s a water shortage, restrictions are put in place on non-essential water use. We think the same should be done regarding non-essential energy use, especially by commercial users.) How about giving free bicycles or scooters (or tax breaks) to city-dwellers (or anyone) who pledge to go car-free at least one day a week?

Oh, and does anybody actually opt for the “full serve” pumps at this, or any other Union 76 station ?

– Routing By Rumor

P.S. – Another suspicious thing about the prices displayed in the above photo is that all the prices are in the form $ xx9.9 ! While it is customary for gas retailers to always tack on that 9/10 of a cent, it looks like some retailers, this station included, have adopted the practice of tacking on 9.9 cents to everything. We guess the next logical step is to go to the $ x99.9 pricing model, where all grades of gas will sell for $4.99, $5.99, $6.99 a gallon, etc. Why bother raising the price by 10 cents or 20 cents every couple of days. Just start raising it in one-dollar-a-gallon increments.

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CVS / Pharmacy Stores Win First Prize In The Shrinking Toilet Paper Contest !

Quite honestly, it shouldn’t surprise anyone.

The CVS / Pharmacy chain of drug / variety stores (a division of CVS Caremark Corporation) was never on our list of places that provide “fair dinkum” value to consumers. That’s too bad, because they have about 6,200 stores in the United States. That makes them almost as ubiquitous as McDonald’s. Many towns have more than one CVS location.

We’re digressing, but come to think about it, McDonald’s doesn’t exactly offer great value for your money either. That’s one of the reasons we don’t eat at McDonald’s. Of course, most of the stuff they sell is so unhealthy that they’re probably doing you a favor by selling (in our opinion) barely edible food. I think we’ve set foot in a McDonald’s one time in the last five years. There must be a correlation between a chain of stores getting very large and offering poor value to consumers. And don’t get us wrong… Burger King, Wendy’s and the others aren’t any better values or (again, in our opinion) any healthier or more palatable.

The high prices at CVS are in line with the prices in convenience stores such as 7-Eleven, albeit with a much larger selection of merchandise. We only rarely walk into a CVS store, to pick up something on sale, and only if we happen to be passing by anyway. But frankly, we’re not careless enough with money to shop there otherwise. If you have a Target, Wal-Mart, K-Mart or other discount store nearby, you’d have to be insane to do much shopping at CVS. Nobody we know ever confused CVS with a discount chain. To make matters even worse, they are often out of stock on the sale items we try to find there. Like many other retailers, they go through the trouble of printing and distributing a weekly sale circular, but don’t seem to be able to have much of what they are advertising in stock. Keep your stinkin’ rainchecks. To us, they seem like a poorly managed company that takes their customers to be a bunch of idiots. We’re amazed they’ve grown as large as they are and manage to stay in business. Then again, there are many horrible retailers (here’s a prime example) that seem to defy the laws of physics by being able to stay in business. Go figure.

We will often find the HIGHEST prices for many different items at CVS. Toilet paper, a favorite topic of this blogger, is no exception. On my last visit to a CVS, they were up to $1.15 for a single role of Scott Tissue’s 1000-sheet roll, which is by far, the highest retail price we’ve seen for Scott toilet paper.

CVS’s store brand of 1000 sheet, single ply toilet paper is now the smallest roll we’ve ever seen in any brand of toilet paper. It boasts a sheet size of 4.3″ x 3.66″. That makes the miniature rolls of Scott Tissue’s 4.5″ x 3.7″ sheets seem huge by comparison.

The reduction in width from 4.5″ to 4.3″ means you’re getting about 5% less paper per roll. But then they added insult to injury, by chiseling 0.04″ off the length of each sheet, compared to what most brands currently measure (after a number of product downsizings).

Really now. 3.66″ instead of 3.7″ ?

How desperate are they getting ?

Now what about the price of CVS brand toilet paper ? Did CVS shrink the price too ?

No such luck. I believe it was selling for 89 cents a roll, which by concidence, is probably the highest price I’ve ever seen for a store-brand roll of toilet paper. But then again, it’s CVS, and I’ve never heard anyone say that the “V” in CVS stands for “value”.

– Routing By Rumor

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