Business
‘Too much loss from the rain.’ Restaurants, carwash workers struggle. Others benefit
Southern California’s seemingly countless parade of storms has been disastrous for some companies: most infamously, the Royal Paper Field Co. in Montebello, which misplaced its roof final week throughout a uncommon twister.
With extra rain forecast for Wednesday, companies that function outside or depend on in-person clients are bracing for an additional monetary dry spell. That features many eating places and carwashes, the place employees are fighting sharply decrease earnings.
For others, the storms can imply an operational enhance. In case you’ve tried to get a roofer to name you again currently, what we’re speaking about. However delaying out of doors work for sunny days can eat into earnings.
“Our small companies live climate-related dangers acutely for the previous 4 months,” mentioned Kristen Jaconi, government director of USC’s Peter Arkley Institute for Danger Administration, which just lately carried out a research with Deloitte that discovered massive public corporations are more and more taking climate-related threat elements under consideration. “Particularly in Southern California, we’re so unused to this important quantity of rain.”
Though local weather specialists are nonetheless finding out whether or not current storms are tied to international warming, such discussions appear distant to individuals who can’t work due to rain.
Your entire eating space at Heritage Barbecue in San Juan Capistrano is outside — a boon through the pandemic that this winter become an obstacle. Gross sales are down 50% this yr from the identical interval in 2022, co-owner and pitmaster Daniel Castillo mentioned.
“When it rains, individuals aren’t coming,” he mentioned. “We cook dinner in a single day, whereas the rain is coming down, exterior cooking by way of among the worst rain we’ve ever had. Then the day comes, it’s nonetheless raining and we’ve got to take a seat with all this meals.”
The relentless storm cycle was brutal for a lot of the restaurant trade, resulting in flooding, the closure of outside patios, last-minute cancellations, building delays and repair disruptions.
A number of eating places on Abbot Kinney Boulevard, together with Felix and the Butcher’s Daughter, had been pressured to shut March 21 when the facility went out in Venice.
Mexican restaurant Loreto held its grand opening in Frogtown on Friday after its deliberate debut needed to be pushed again by 5 months because of weather-related building delays.
Sister restaurant LA Cha Cha Cha, sometimes considered one of downtown Los Angeles’ most coveted reservations for open-air eating, noticed enterprise plummet each time it rained, leaving its homeowners scrambling to make staffing changes and shortly transfer diners indoors.
The restaurant estimated a $500,000 loss in income this winter as a direct results of poor climate.
Harry’s Berries, a preferred vendor at Southern California farmers markets, canceled its plans to promote on the Helen Albert Licensed Farmers’ Market in West Hollywood on Monday as a result of it didn’t have sufficient strawberries to reap.
“An excessive amount of loss from the rain,” the Oxnard farm mentioned on Instagram. “We’re terribly sorry.”
It was the newest setback in a difficult winter for Harry’s Berries, which mentioned in January that storms that month had destroyed strawberry beds and irrigation canals, and that extraordinarily muddy situations had been making it tough to enter the fields to do restore work.
Work has turn into so scarce at Southern California-area carwashes that an emergency aid fund initially set as much as help laid-off employees firstly of the pandemic has been repurposed to assist employees who haven’t gotten paid due to rain-related closures.
Already, 30 households have tapped the fund, mentioned Andrea Gonzalez, organizing director of the Clear Carwash Employee Middle in Los Angeles, which administers the fund.
“The rain has actually put a monetary burden on the carwash employees in L.A. County,” Gonzalez mentioned. “They’ve been experiencing a very laborious time with the ability to pay hire, present meals and help for his or her households.”
The middle estimates that there are about 10,000 carwash employees in L.A. County, and carwash employees make simply $18,000 to $20,000 a yr, she mentioned.
Since December, carwash employees have misplaced, on common, half of their standard pay because of the rains, Gonzalez mentioned.
Many employees have needed to discover odd jobs, reminiscent of building or day laborer work, to attempt to make up for the earnings they misplaced on wet days. Some carwashes gained’t open for enterprise even when the climate is simply gloomy, Gonzalez mentioned.
“If the enterprise doesn’t open for the day, they don’t receives a commission,” she mentioned.
That takes an emotional toll on employees, who’ve come into the middle’s workplaces in misery. And employees worry that with local weather change, this type of unpredictable climate will proceed.
“Though carwash employees typically arrange their very own wet day funds, it isn’t sufficient to assist them get by, even within the standard wet season,” Gonzalez mentioned.
At West Coast Arborists, “nonstop” emergency service calls — together with greater than 300 on the worst day — throughout the tree upkeep firm’s service territory in California and Arizona means extra enterprise however not essentially extra revenue.
“The quantity of call-outs we’ve had over a three-month time period is certainly sort of historic for us,” mentioned Vice President Andrew Trotter, who has been with the corporate for 40 years. The Anaheim firm has eliminated 2,000 timber since January, with 60% to 70% of its contracts in Southern California.
“You’ll see simply tons and tons of uprooted timber, not simply damaged timber. That’s been uncommon.”
Nevertheless, the sheer quantity of emergency service calls hasn’t essentially translated into an financial growth for the almost 1,200-employee firm. Emergency calls generally crowd out routine service work, or the rains have often made it unsafe for crews to function, Trotter mentioned.
“Economically, for our firm, it’s a combined bag,” he mentioned. “On the finish of the day, our day by day earnings is nearly the identical as earlier than the storms. It’s a give-and-take sort of factor.”
Wet and windy climate has additionally saved the garden upkeep and tree elimination crew busy at Rose Hills Memorial Park in Whittier.
About 10 timber got here down a month in the past, and at the moment, the lawns had been so saturated that the cemetery closed for a day, mentioned Antoinette Lou, a Rose Hills spokesperson. Since then, the cemetery preemptively eliminated 10 extra timber that had been greater than 50 years previous, she mentioned.
Will the cemetery be ready for this week’s rains?
“Eradicating among the timber we’ve recognized as potential hazards actually has helped,” Lou mentioned. “I feel we’re OK there, so far as the timber go.”
When rain storms begin, Leigh Jerrard’s firm, Greywater Corps, begins getting calls about its rainwater assortment programs.
“This yr has positively been greater than in earlier years,” he mentioned.
Based mostly in Glassell Park, Greywater Corps designs and installs programs for capturing rainwater — typically from roofs — and reusing it in gardens. A 1,000-square-foot roof will catch about 600 gallons of water from an inch of rain, Jerrard mentioned.
The corporate’s programs typically vary from 500-gallon tanks to five,000-gallon tanks and at the same time as a lot as 10,000 gallons.
“All of those tanks are full proper now and overflowing,” he mentioned. “It’s been such an onslaught.”
Rainwater storage tanks sometimes run about $2 per gallon, however cheaper choices reminiscent of reused delivery cubes referred to as intermediate bulk containers might be discovered on Craigslist for about $150 and maintain 275 gallons of water, Jerrard mentioned. His firm additionally holds workshops to show individuals easy methods to go the DIY route.
Though plastic tanks are cheaper, the sky is the restrict on pricier choices. A 5,000-gallon galvanized-steel tank would price about $30,000, together with components and labor, Jerrard mentioned. Underground storage tanks can price about $10 per gallon and simply surpass $200,000 with the price of excavation.
However the easiest and least expensive rainwater seize programs don’t even want a dear storage tank, he mentioned. A easy drainage pit will do.
“We attempt to preserve rain out of the streets,” Jerrard mentioned. “In case you can preserve it into the panorama and permit it to percolate again into the land, it’s an actual win.”
Business
Fast food chains launch 'value menu' war after cost complaints. Will it last?
Millions of American families are hitting the road to start summer vacation, and ordering food on the run tends to be par for the course. It couldn’t come at a better time. Fast food joints are in the midst of a budget-meal war, offering promotions to lure customers back to their restaurants despite inflation woes and a minimum-wage increase in California and other states.
Starting June 25, McDonald’s will offer a month-long deal featuring a combo meal —either a McChicken, a McDouble or four-piece chicken nuggets, small fries and a small drink — for $5.
After McDonald’s announcement last month, other fast food restaurants followed suit. Wendy’s announced its $3 limited-time breakfast combo meal and Burger King trumpeted that it planned to bring back its $5 Your Way Meal.
In addition, fast food mobile apps continue to offer deep discounts.
App relief
Earlier this week, a Big Mac with medium fries and medium drink cost $11.79 before tax at a McDonald’s in Santa Ana. That same meal ordered via a mobile app for pickup at the same location cost $6.50 before tax, a savings of $5.29.
But the prices and deals tend to vary depending on the user.
Diners have taken to complaining on Reddit about the McDonald’s mobile app. Some say the deals decrease with use. Others say their friends or partners were getting a better deal on the app than they were getting. A few mentioned that they could find better deals by just walking in and ordering at their local McDonald’s.
The plethora of promotional deals come after diners blasted fast food companies on social media earlier this year for rising prices.
In response, Joe Erlinger, president of McDonald’s USA, said in an open letter last month that the average price of McDonald’s menu items is up an estimated 40% since 2019.
“Recently, we have seen viral social posts and poorly sourced reports that McDonald’s has raised prices significantly beyond inflationary rates. This is inaccurate,” Erlinger wrote.
“The average price of a Big Mac in the U.S. was $4.39 in 2019,” he said. “Despite a global pandemic and historic rises in supply chain costs, wages and other inflationary pressures in the years that followed, the average cost is now $5.29. That’s an increase of 21% (not 100%),” as unsubstantiated claims allege on social media.
Quick-service restaurants said the increases were in response to rising inflation and labor costs — partly due to hikes in minimum wage not just in California but throughout the country.
It’s true that quick-service restaurants such as McDonalds have had to contend with increased costs, but they are by no means hurting, said Shubhranshu Singh, an associate professor at Johns Hopkins University who specializes in quick-service marketing.
“They are not struggling,” Singh said. “Inflation is going up. Wage rates are going up. But profit for McDonald’s is also going up.”
Global comparable sales for McDonald’s grew nearly 2% in the first quarter of the year, according to the latest statistics made available by the company. The fast-food giant described this profit increase as having “benefited from average check growth driven by strategic menu price increases.”
Price-weary diners have taken notice and become fed up with the price hikes, choosing to eat less fast food and protesting on social media that their go-to budget meals were no longer wallet-friendly, Singh said.
Several diners took aim at McDonald’s, griping on TikTok about the company charging more for food that’s supposed to be affordable.
“This is $3 worth of food,” said a customer who held up a hash brown. “Something doesn’t seem right here.”
“McDonald’s has gotten too cocky,” said another customer. “Y’all not supposed to be expensive.”
One diner called it “absurd” that she’d paid $4.59 for a medium order of french fries.
And then there was the uproar over a McDonald’s location in Connecticut charging $18 for a Big Mac combo meal. The photo sparked a nationwide debate on soaring fast-food prices.
Making choices
Most McDonald’s in the United States are independently franchised, so prices vary depending on where one visits.
Increased fast food prices ultimately led to slower-than-expected sales at various quick-service restaurants, such as McDonald’s, Starbucks and Pizza Hut.
“Consumers are always making choices,” said restaurant analyst Sara Senatore at Bank of America. “When the value proposition starts to diminish, consumers will make other choices.”
Up until fairly recently, consumers were willing to pay more for quick-service food. When fast food prices started to soar in 2022, consumers just went along because prices everywhere had surged due to inflation, Senatore said.
But now inflation has lessened. Grocery prices have fallen and budget-conscious consumers may no longer see fast food as the clear-cut affordable choice, she said.
Enter the value meals.
Budget meals aren’t new. In the 1980s, McDonald’s, Wendy’s and Burger King engaged in a series of advertising campaigns known as the Burger Wars competing for customers in the then-flourishing fast food market.
“The hope is that the consumer will go there and maybe buy something additional to the value meal and then want to return even when there is no deal,” Singh said.
But the promotions, analysts warned, can’t last forever.
“It’s not sustainable,” Singh said. “I don’t expect any of these deals to stay.”
Business
Dominic Ng: Philanthropist banker, inclusion practitioner
The year 2023 was especially cruel to regional banks in California. Repeated interest rate hikes by the Federal Reserve exposed the poor bets and hubris of regional highfliers like Silicon Valley Bank and First Republic. Those banks capsized, which sparked bank runs, which wiped shareholders out.
One regional bank, however, smoothly sailed on: East West Bank, helmed for more than 30 years by Dominic Ng, who champions the durable power of steady growth. “We’re prudent and cautious, but very entrepreneurial,” he said from his office at East West headquarters in Pasadena. “The way you win in banking is not through shortcuts. It’s a long game.”
‘His leadership has transformed the bank, transformed philanthropy and what business leadership looks like in L.A.’
— Elise Buik, United Way of Greater Los Angeles’ chief executive
The result has been accolades: No. 1 best-performing bank in its size category last year from S&P Global Market Intelligence and No. 1 performing bank in 2023 by trade publication Bank Director. The diversity of its board of directors — Latino, Asian, Black, female and LGBTQ+ all represented — has also won acclaim.
Steady profits enabled East West to become one of Los Angeles’ top civic benefactors. Ng has been especially active with the United Way of Greater Los Angeles for more than 25 years and is credited with championing a strategic change in direction to more effectively serve the city’s desperately poor, while persuading more of the city’s richest residents to pitch in.
Discover the changemakers who are shaping every cultural corner of Los Angeles. This week we bring you The Money, a collection of bankers, political bundlers, philanthropists and others whose deep pockets give them their juice. Come back each Sunday for another installment.
“His leadership has transformed the bank, transformed philanthropy and what business leadership looks like in L.A.,” said Elise Buik, the United Way chapter’s chief executive.
Born to Chinese parents in Hong Kong in 1959, the youngest of six children, Ng has been chief executive of East West Bank since 1992 and expanded on the bank’s original mission of financing Chinese immigrants who in the 1970s found it difficult to qualify for loans through the usual channels. It’s now the largest publicly traded independent bank based in Southern California, serving an economically and ethnically diverse clientele. On the world stage, Ng serves as co-chair of the Asia-Pacific Economic Cooperation Business Advisory Council.
Ng, 65, worries about the future of philanthropy in Los Angeles. He longs for the “good old days” when business chiefs didn’t think twice about pitching in to help the city’s less fortunate.
“Today, the pressure is on for [immediate] return to shareholders,” and people running companies have to respond to shareholders who seem to “care less every year” about civic responsibility.
More young, monied tech and finance hotshots would do well to take some cues from business leaders like Ng.
More from L.A. Influential
Business
Mark Suster: The face of L.A. venture capital
Cancer-fighting robots. AI-powered baby monitors. The future of American shipbuilding.
These are the kinds of startup ideas that get Mark Suster out of bed in the morning, into his Tesla, and down to the Santa Monica offices of Upfront, the venture capital firm he joined 16 years ago.
“There’s that old saying — the future is already here, it’s just unevenly distributed,” Suster said. “My job lets me see where the world’s going five years before the general population.”
Discover the changemakers who are shaping every cultural corner of Los Angeles. This week we bring you The Money, a collection of bankers, political bundlers, philanthropists and others whose deep pockets give them their juice. Come back each Sunday for another installment.
But Suster, 56, didn’t become the face of the L.A. venture capital scene thanks to his day-to-day investing. He got there by throwing a party called the Upfront Summit.
Every year, Suster’s splashy tech conference takes over an iconic L.A. location. One year, it’s at the Rose Bowl. Another year, it’s at a retreat center high in the Santa Monica Mountains. There are zip lines, hot air balloons, and, among the talks with tech founders about software and product development, fireside chats with celebrities, politicians and authors (Lady Gaga, Katy Perry and Novak Djokovic graced the stage this year).
The razzle-dazzle is part of the draw, and Suster clearly relishes his role as emcee (“I was a theater kid — I still love going to the theater,” he said.)
‘My job lets me see where the world’s going five years before the general population.’
— Mark Suster
But the real appeal comes down to cash. Suster’s strategic move was to invite not just venture capital investors, but the people who invest in venture capital investors. Called limited partners, these are the managers of pensions, sovereign wealth funds and other giant pools of money that want to tap into the tech market. By making sure they’re on the guest list, Suster has made the summit one of the easiest places in America for fellow venture capitalists to raise a new fund.
The summit loses Upfront money. When Suster started it in 2012, it cost around $300,000. In 2022, costs hit $2.3 million, Suster said, with a handful of sponsors chipping in to cut the losses. But throwing the premiere professional party in California comes with intangible benefits, like bringing in deals that would otherwise leave out Upfront and other L.A. funds and founders.
The 2024 party was a little scaled back, now that higher interest rates have throttled the fire hose of money that went into venture capital during the last decade. But Suster says that he welcomes the less frothy environment. “I’m having a lot more fun now,” he said, investing in founders “looking to build real businesses.”
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