Rick's Steaks Leaving RTM?

[mrbigjas]

ok it might be easier to try and list who's NOT on there.

well, easier for me. not for whoever's putting it together.

[cwdonald]

Any sense what percentage of merchants at RTM this represents? 10 Percent? 90 Percent?

[MarketStEl]

I count 82 merchants based on the current merchants' directory (after adjusting for duplicate listings and those that have closed since it was published).

52 of those are listed above, and it looks like a 53d also signed. That's a little more than 60 percent of all the merchants in the Market. In a national election, that would be called a landslide margin; in a highly publicized local controversy of this type, I'd call it a convincing but not overwhelming majority.

I'm not going to list here the names of those merchants not appearing on this list. As noted above, some were unavailable to sign, and still others are hard-working independent businesspeople whose businesses I would not want to hurt through a boycott.

And there's the rub. In boycotting individual merchants for not signing, you are punishing them for expressing their opinions, not Market management for their actions. If you disagree with that opinion and feel that strongly about it, then you have every right to do so. But I think that would not be fair to the merchants involved on the other side of the controversy either.

It may well be that the only way to register your displeasure in this fashion is to stay out of the RTM altogether. I'm not about to do that.

[monavano]

I've been reading this threat diligently, and am really impressed with the love and dedication to the tradition of RTM. I admire all of your passion.

My question is; is Rick's still operating at RTM?

Edited August 8, 2007 by monavano (log)

[wkl]

yes, he is.

[Holly Moore]

I've been reading this threat diligently, and am really impressed with the love and dedication to the tradition of RTM. I admire all of your passion.

My question is; is Rick's still operating at RTM?

←

The lines are as long as ever, if not longer. Evidently taking the Rick's Steaks location off the Reading Terminal Market website map and merchant list hasn't had all that much impact.

Edited August 8, 2007 by Holly Moore (log)

[monavano]

I've been reading this threat diligently, and am really impressed with the love and dedication to the tradition of RTM. I admire all of your passion.

My question is; is Rick's still operating at RTM?

←

The lines are as long as ever, if not longer. Evidently taking the Rick's Steaks location of the Reading Terminal Market website map and merchant list hasn't had all that much impact.

←

Wow! What does this mean? I imagine TPTB at RTM could have closed him down forcibly by now. Why has this not happend?

I'm pulling for Rick. Whether or not his cheesesteaks deserve a place in the pantheon of greatness; probably not. But booting an 25 year business, who's owner is passionate about staying, seems ridiculous.

Numbers don't lie. This place is popular and stronger than ever.

[Bluehensfan]

I've been reading this threat diligently, and am really impressed with the love and dedication to the tradition of RTM. I admire all of your passion.

My question is; is Rick's still operating at RTM?

←

The lines are as long as ever, if not longer. Evidently taking the Rick's Steaks location off the Reading Terminal Market website map and merchant list hasn't had all that much impact.

←

The lines are indeed longer as evidenced by trips in recent weeks. Presumably it's not all tourists or conventioneers either but rather people who feel for his situation.

Good for Rick. At least he's making a few extra bucks rent free...

[MarketStEl]

Good for Rick. At least he's making a few extra bucks rent free...

←

...though he might not be making all that much, as he faces penalties from the Market for operating without a valid lease.

In other news:

My subscription to Brian Tierney's other paper, the Philadelphia Daily News, began today -- and not a moment too soon, for this informative story about the standoff appears on page 11 of today's edition.

This ongoing story, BTW, is a good example of why journalism has been called "the first rough draft of history." With each passing day, details are added, elements revised, and mistakes corrected -- or added; journalists are no wiser or more omniscient than the rest of us mortals.

And speaking of mistakes added:

Dunston also thinks he's giving the merchants a fair shake. He said the contract agreed upon with the merchants association in October sets rents for lunch merchants at 10 percent of their gross sales. (They used to pay 4 percent to 6 percent.)

Dunston said the standard rent in a mall would start at 10 percent to 12 percent of gross sales.

I thought that someone said upthread that the leases still were not based on a percentage of gross revenues. So where's this come from?

This -- and other material in the article -- also leads me to conclude that the main protagonists in this drama are really Oliveri and Dunston. Here's the situation as I see it:

--Dunston is the one board member with prior experience in retail management. Unfortunately (or fortunately, depending on your perspective), it's as a shopping mall manager, and a manager of a specialized shopping mall at that.

Owners of shopping malls are far more involved in the details of operating their properties than RTM managements have traditionally been. They operate more like the music director of a symphony orchestra (edited to add: or the artistic director of a chorus ) might -- selecting players in terms of their individual contributions to the overall mix and giving them detailed guidance on how to make those contributions.

Historically, RTM management has operated more like the landlord of an apartment building might: You're willing to pay the rent and won't disturb the neighbors? Fine, go ahead with your business. This approach was carried to an extreme in the 1970s, and it was the tenants rather than the landlord who began to repair the damage caused thereby, though the landlord soon caught on and realized he had a role to play too.

--Dunston has managed to convince the board, but not all of the merchants, that the RTM needs to operate more like a traditional shopping mall to compete for the business of a shopping public that has become accustomed to highly engineered shopping experiences. While a number of factors beyond the merchants' or property owners' control have contributed to this, the fate of places like traditional downtowns and informal street markets -- sorry, 9th Street is both the exception, not the rule, and smaller than it used to be -- relative to shopping malls and big-box retailers supports Dunston's view.

--While there is a split within the merchants' ranks over this bigger matter, the majority of them (including a number of those who agree with the bigger picture as outlined by Dunston) see nothing wrong with the landlord-tenant as opposed to the symphony-orchestra approach to assigning space in the market, at least as far as handling the tenant mix is concerned. And AFAICT, the landlord-tenant model hasn't prevented Market management from making necessary changes, even changes in the shopping-mall direction. But with their handling of Rick Oliveri, the board has run into THE irreconcilable conflict between the two approaches. Holly probably has it right when he ascribes this to ego: Having staked the future of the Market on the mall approach, Dunston -- and by extension, most of the board -- can ill afford to back down when presented with a direct challenge to that decision.

I think that if that e-mail exists, sharing it with the public would go a long way towards explaining why things have come to a head in this fashion, and its continued withholding gives credence to the arguments of Dunston's critics. Perhaps its disclosure will only bolster them more by demonstrating that it was merely an excuse for a decision already made, but IMO it's a risk that perhaps the board ought to take. Of course, as long as the matter is headed to court, it probably won't be taken, for that document will be part of the evidence in any trial.

Edited August 9, 2007 by MarketStEl (log)

[Bluehensfan]

Good for Rick. At least he's making a few extra bucks rent free...

←

...though he might not be making all that much, as he faces penalties from the Market for operating without a valid lease.

In other news:

My subscription to Brian Tierney's other paper, the Philadelphia Daily News, began today -- and not a moment too soon, for this informative story about the standoff appears on page 11 of today's edition.

This ongoing story, BTW, is a good example of why journalism has been called "the first rough draft of history." With each passing day, details are added, elements revised, and mistakes corrected -- or added; journalists are no wiser or more omniscient than the rest of us mortals.

And speaking of mistakes added:

Dunston also thinks he's giving the merchants a fair shake. He said the contract agreed upon with the merchants association in October sets rents for lunch merchants at 10 percent of their gross sales. (They used to pay 4 percent to 6 percent.)

Dunston said the standard rent in a mall would start at 10 percent to 12 percent of gross sales.

I thought that someone said upthread that the leases still were not based on a percentage of gross revenues. So where's this come from?

This -- and other material in the article -- also leads me to conclude that the main protagonists in this drama are really Oliveri and Dunston. Here's the situation as I see it:

--Dunston is the one board member with prior experience in retail management. Unfortunately (or fortunately, depending on your perspective), it's as a shopping mall manager, and a manager of a specialized shopping mall at that.

Owners of shopping malls are far more involved in the details of operating their properties than RTM managements have traditionally been. They operate more like the music director of a symphony orchestra might -- selecting players in terms of their individual contributions to the overall mix and giving them detailed guidance on how to make those contributions.

Historically, RTM management has operated more like the landlord of an apartment building might: You're willing to pay the rent and won't disturb the neighbors? Fine, go ahead with your business. This approach was carried to an extreme in the 1970s, and it was the tenants rather than the landlord who began to repair the damage caused thereby, though the landlord soon caught on and realized he had a role to play too.

--Dunston has managed to convince the board, but not all of the merchants, that the RTM needs to operate more like a traditional shopping mall to compete for the business of a shopping public that has become accustomed to highly engineered shopping experiences. While a number of factors beyond the merchants' or property owners' control have contributed to this, the fate of places like traditional downtowns and informal street markets -- sorry, 9th Street is both the exception, not the rule, and smaller than it used to be -- relative to shopping malls and big-box retailers supports Dunston's view.

--While there is a split within the merchants' ranks over this bigger matter, the majority of them (including a number of those who agree with the bigger picture as outlined by Dunston) see nothing wrong with the landlord-tenant as opposed to the symphony-orchestra approach to assigning space in the market, at least as far as handling the tenant mix is concerned. And AFAICT, the landlord-tenant model hasn't prevented Market management from making necessary changes, even changes in the shopping-mall direction. But with their handling of Rick Oliveri, the board has run into THE irreconcilable conflict between the two approaches. Holly probably has it right when he ascribes this to ego: Having staked the future of the Market on the mall approach, Dunston -- and by extension, most of the board -- can ill afford to back down when presented with a direct challenge to that decision.

I think that if that e-mail exists, sharing it with the public would go a long way towards explaining why things have come to a head in this fashion, and its continued withholding gives credence to the arguments of Dunston's critics. Perhaps its disclosure will only bolster them more by demonstrating that it was merely an excuse for a decision already made, but IMO it's a risk that perhaps the board ought to take. Of course, as long as the matter is headed to court, it probably won't be taken, for that document will be part of the evidence in any trial.

←

Jeez...look at the Gallery! If he's trying to fashion RTM in it's image, I'm heading for the hills. But here's something, how does he let Chick-Fil-A get away with being closed on Sundays?

I say it's time to start over, revamp the Board at the market, and head it up with people who are not so politically connected or motivated.

[MarketStEl]

Jeez...look at the Gallery! If he's trying to fashion RTM in it's image, I'm heading for the hills. But here's something, how does he let Chick-Fil-A get away with being closed on Sundays?

1) Think King of Prussia, not The Gallery. Recall that when anyone connected to management at the RTM talks about food retailer competition, the name that usually comes up is Whole Foods, not Pathmark.

2) Chick-fil-A = the Amish. If a mall owner wants a business whose owner follows a set of personal or religious values for a tenant, the owner will usually find a way to make an exception to policy for that business. It's been clear for some time that management's push to have all merchants stay open throughout the Market's stated business hours will not apply to the Amish -- not even those Amish merchants who, like L. Halteman, choose to open on Monday and Tuesday too. (They've also been consistent in their policy of making Sunday opening optional, at least thus far.)

I say it's time to start over, revamp the Board at the market, and head it up with people who are not so politically connected or motivated.

←

To do that, we'd have to make the Pennsylvania Convention Center Authority a private 501©3 nonprofit organization.

[Holly Moore]

"I understand that we're tenants there," said Michael Holoman, who operates the Pennsylvania General Store and is the interim head of the merchants association. "But anybody who knows the Reading Terminal Market knows there are tenants who took the place from an embarrassment and an eyesore to a vibrant business.

"How can you tell those people they're tenant farmers?"

Dunston doesn't see it that way. He said he had not dealt with vendors like this at other shopping locations.

It is beyond-words ridiculous that the chairman of the board of the Reading Terminal Market does not have an iota of an idea as to why the market is different from the Gallery, the Airport Concessions, or the Shops at Liberty Place. What beyond his substantial political contributions earn him a seat on, much less chairmanship of, the board of a public trust and Philadelphia institution - the Reading Terminal Market?

It's like making Ronald McDonald the Dean at the Culinary Institute.

Edited August 9, 2007 by Holly Moore (log)

[Capaneus]

....

My subscription to Brian Tierney's other paper, the Philadelphia Daily News, began today -- and not a moment too soon, for this informative story about the standoff appears on page 11 of today's edition.

....

I thought that someone said upthread that the leases still were not based on a percentage of gross revenues.  So where's this come from?

....

I think that if that e-mail exists, sharing it with the public would go a long way towards explaining why things have come to a head in this fashion, and its continued withholding gives credence to the arguments of Dunston's critics.  Perhaps its disclosure will only bolster them more by demonstrating that it was merely an excuse for a decision already made, but IMO it's a risk that perhaps the board ought to take.  Of course, as long as the matter is headed to court, it probably won't be taken, for that document will be part of the evidence in any trial.

←

- The Daily News story is pretty informative, I'll agree. And it's remarkable that, in spite of being the ones given a voice, the Market Board comes off as poorly as they do. Someone should ask Dunston to shut up.

- The new lease structure reportedly consists of a maintenance fee based on square footage, which applies to all merchants, and an additional levy on lunch merchants based on a percentage of profits (or revenue, not clear on that). Or at least that's what I've gotten from cobbling together the various sources

- The existence of the e-mail seems to be tacitly granted by Rick's lawyer, Harvey. But it may still not be the sort of e-mail that would justify the Board's actions, so yes, releasing it would be useful. Though possibly not for the Board.

[Holly Moore]

Sandy said:

  I count 82 merchants based on the current merchants' directory (after adjusting for duplicate listings and those that have closed since it was published).

52 of those are listed above, and it looks like a 53d also signed. That's a little more than 60 percent of all the merchants in the Market. In a national election, that would be called a landslide margin; in a highly publicized local controversy of this type, I'd call it a convincing but not overwhelming majority.

My thinking is to support those merchants who supported Rich's Steaks as opposed to boycotting those who did not. As Bluehensfan pointed out, "The deal with the petition is that not everyone was in town when it was drawn up. So if a merchant is not listed on the petition it could actually be that they were out of town when it was drawn up. "

My suspicion is that even more than those who signed the petition actually support Rick's Steaks. Has a single merchant spoken out in favor of management's actions in this issue? None that I can recall. My guess is that many merchants who agree Rick's Steaks has been treated abjectly unfairly, remain quiet because they dare not risk management retribution.

I have had a couple of merchants who support Rick's Steaks tell me something like, "Reading Terminal management has always treated us fairly. What they are doing now is wrong and I can not support that."

Which gets me back to the questions that have not been answered candidly, if at all? Why? Why now? Why not even consider reconsidering?

There is absolutely no logic to the Board's original decision. Rick's Steaks is a merchant of 25 years. Rick Olivieri runs a successful and popular operation. Rick Olivieri has done nothing wrong. Rick Olivieri has taken a leadership position in the market. So why evict Rick's Steaks.

Only answers I can come up with: vengeance, political pressure, or money/ campaign contributions. I have no idea which, if any, is behind the Board's action. But I do know for certain it is not simply the board's official straw horse, "We can get Tony Luke's."

Equally lacking logic, the Board letting this fester - costing them so much good will and trust, significantly detracting from the Market's image, taking money from funds they should be spending for the benefit of the market and using it to pay pricey attorneys and top dollar PR mouths.

The Board can end this with just one phone call to Rick Olivieri, or even an email. Again, why not do so now? Why are they hanging so irrationally tough?

Along with the previously offered "vengeance, political pressure or money/campaign contributions," I can only come up with one more possibility. Olympian, out-of-control egos that are unwilling to reconsider even when it is obvious that their decision is dumb, bad and, worst of all, so damaging to the market they are charged with protecting.

Edited August 9, 2007 by Holly Moore (log)

[Holly Moore]

Sandy said

...

All this leaves me more sad than angry.  Sad mainly because a good person and a friend I respect is now caught up in an untenable position that is in all likelihood not of his own making.

BlueHensFan said

I feel sad for Paul too. He's a nice guy and presumably (hopefully) this is not his doing. Or if it is, hopefully he can distance his feelings about Rick and look at the broader picture here in terms of the market and it's relationship with tenants and the public.

I don't believe I have ever met Paul Steinke. I can not speak from personal experience.

I have mixed feelings about his performance as manager of Reading Terminal Market. From what others say, both here and merchants I have talked with, he generally seems to have the best interests of the market at heart.

But then there is the eviction eviction of Rick's Steaks. Paul Steinke is either for the eviction or against it. If he supports the board's decision, and especially if he implements it, his actions can not be separated from the board's.

If he is against the boards actions on such a major and divisive issue that is resulting in long term damage to the market, it is simple. Only one choice. Paul Steinke, self respect intact, must resign in protest. There is no other option for a manager who does not support the board's eviction of Rick's Steaks. No gray areas and no greater good that could be served by staying.

[Scoats]

But then there is the eviction eviction of Rick's Steaks. Paul Steinke is either for the eviction or against it. If he supports the board's decision, and especially if he implements it, his actions can not be separated from the board's.

If he is against the boards actions on such a major and divisive issue that is resulting in long term damage to the market, it is simple. Only one choice. Paul Steinke, self respect intact, must resign in protest. There is no other option for a manager who does not support the board's eviction of Rick's Steaks. No gray areas and no greater good that could be served by staying.

←

Quoting the Inky Article:

That e-mail - which Dunston did not provide a copy of - triggered a conversation among board members about whether to keep Rick's Steaks. Dunston said Olivieri was aware of his position, but made no overtures to the board and instead raised the same concerns to a board member in May.

Shortly after that, the board contacted Tony Luke's, Dunston said. In June the board told Olivieri that he had to be out July 31.

"The board made the decision," Dunston said. "It was a six-to-one decision to remove him. And we're carrying out the wishes of the board."

From my experience with non-profit boards, the unpaid board pretty much allows the paid manager to set the course. They do take votes to make things legal and official, but they bow to the manager because he/she is running the operation on a day to day basis. The directors attend bi-monthly meetings if the organization is lucky.

From my experience managers in these situations just use the board as the fall guys for their own decisions. That might not be the case here, but read between the lines of his quote what you will.

Also in the article was: Dunston doesn't see it that way. He said he had not dealt with vendors like this at other shopping locations. Pretty telling. Everyone knows the RTM isn't like other shopping locations, that's the point of RTM.

[Bluehensfan]

But then there is the eviction eviction of Rick's Steaks. Paul Steinke is either for the eviction or against it. If he supports the board's decision, and especially if he implements it, his actions can not be separated from the board's.

If he is against the boards actions on such a major and divisive issue that is resulting in long term damage to the market, it is simple. Only one choice. Paul Steinke, self respect intact, must resign in protest. There is no other option for a manager who does not support the board's eviction of Rick's Steaks. No gray areas and no greater good that could be served by staying.

←

Quoting the Inky Article:

That e-mail - which Dunston did not provide a copy of - triggered a conversation among board members about whether to keep Rick's Steaks. Dunston said Olivieri was aware of his position, but made no overtures to the board and instead raised the same concerns to a board member in May.

Shortly after that, the board contacted Tony Luke's, Dunston said. In June the board told Olivieri that he had to be out July 31.

"The board made the decision," Dunston said. "It was a six-to-one decision to remove him. And we're carrying out the wishes of the board."

From my experience with non-profit boards, the unpaid board pretty much allows the paid manager to set the course. They do take votes to make things legal and official, but they bow to the manager because he/she is running the operation on a day to day basis. The directors attend bi-monthly meetings if the organization is lucky.

From my experience managers in these situations just use the board as the fall guys for their own decisions. That might not be the case here, but read between the lines of his quote what you will.

Also in the article was: Dunston doesn't see it that way. He said he had not dealt with vendors like this at other shopping locations. Pretty telling. Everyone knows the RTM isn't like other shopping locations, that's the point of RTM.

←

This whole bruhaha is all about pointing fingers at Rick while being tacitly evasive as to exactly whose finger is being pointed. Is it the board making the decision or is it more the GM Steinke? And why is all of a sudden this Feeley guy the lone person making comments to the public? Sounds like a lot of guns are being pointed but nobody wants to say that they are the one doing the evicting. Kind of like a "he said, she said..." I think it's time for someone at the market with big enough cojones to step forward, explain their position, and answer questions about their actions rather than trying to evade questions about why Rick was never offered a lease to begin with, as what little credibility they had has been quickly eroding.

[Holly Moore]

Ricardo Dunston, insists he's just trying to improve the historic shopping site.

How? By changing the name on a sign from Rick's Steaks to Tony Luke's? That's your plan?

What exactly is it about the market that needs improving? Let me rephrase that. Before the board did such severe damage to the market's image and its relationship with the market's backbone, the merchants - before this latest fiasco - what exactly was it about the market that needed improving?

I know what needs improving now. The market needs a new board of directors and it needs a board that is structured to give the merchants and the shoppers better representation.

But three months ago, what was it then about Reading Terminal Market that needed improving? Image? Traffic count? Customer relations? Profitability?

Parking maybe. There is never enough parking. Rehabbing the physical plant - it is an old building. There is always something to be done. But how does evicting Rick's Steaks accomplish more parking or better plumbing and refrigeration? Rick's or Tony Luke's would be paying the same rent?

Just because you are the chairman of the board, Mr. Dunston, it does not mean that you must change the market - create your legacy. Here is a plan. If we all chip in a buy you a plaque that can be mounted on some column in the market, then will you leave Reading Terminal Market alone?

What is it about the market, Mr. Dunston, that needs improving?

Edited August 10, 2007 by Holly Moore (log)

[MarketStEl]

Since there are some issues involved here that go beyond Market Management vs. Rick Oliveri, I thought it might be useful to offer the following Reading Terminal Market Quiz to gauge how people here perceive and understand the place. Most -- but not all -- of the questions have no "right" or "wrong" answer. Unlike the trivia contest in my first foodblog, there is no prize for most correct answers.

1. The Reading Terminal Market is primarily:

a. A farmers' market with a special emphasis on local producers

b. A convenient place to grab a bite to eat at lunchtime

c. A bazaar featuring interesting and unique merchandise from books to crafts to flowers to gifts

d. Some combination of all of the above

2. Even if you did not answer d. to Question 1, what do you see as the current mix of the above three functions, in percentage terms?

3. What ought those percentages be?

4. What is the profit margin of a typical supermarket, expressed as a percentage of sales?

5. What is the profit margin of a typical restaurant, expressed as a percentage of sales?

6. A farmstand or purveyor of fresh foods has profit margins closer to that of:

a. The supermarket

b. The restaurant

c. Neither; it's better than both

d. Neither; it's worse than both

e. Neither; it's exactly halfway between the two

7. What is the Reading Terminal Market's primary competition?

a. Whole Foods Market

b. Super Fresh

c. The Gallery food courts

d. The Italian Market

e. The supermarket you shop when you get back to the 'burbs

f. The farmstand that sets up shop in your neighborhood every week

g. All of the above

h. The Reading Terminal Market has no competition; it's unique

8. It's 5 p.m. You are attending a convention at the Pennsylvania Convention Center and your plenary session has just let out. You're hungry, and you've long wanted to try one of those famous Philly cheesesteaks. Where do you go to get one?

9. It's 5:30 p.m. You have a few things you want to pick up on the way home for the dinner you want to fix tonight. You hear that the Reading Terminal Market is open until 6. You walk into the 12th and Filbert door and see that most of the merchants' stands inside the entrance are dark. Do you:

a. Press on anyway, knowing that someone has to be open because the entrance isn't locked?

b. Turn around and leave, thinking that there's nothing open?

c. Scratch your head and fire off a quizzical e-mail to the RTM when you get home?

You may append any additional comments you wish to your answers.

Edited to refine answer choices for questions 6 and 7.

Edited August 12, 2007 by MarketStEl (log)

[Holly Moore]

This looks like one of those forced choice questionnaires politicians love so much as a campaign tool. But what the hey, here it goes.

1. Reading Terminal Market is a collection of small merchants. RTM functions both as a market for meats, poultry, poultry, produce, fish and such and as a place to eat breakfast, lunch, snacks and, perhaps dinner.

It is a farmers market but not just a farmers market. Much of the food ingredients are not locally grown. Then again, even at many farmers markets along country lanes, many foods arrive by container ship rather than tractor.

For some it is a convenient lunch stop, for others it is a destination meal, For others it is a provider of good stuff to eat while doing one’s shopping.

2. Not clear whether you are talking revenues, square footage or operations. Without peeking at their web site, my guess is that in terms of square footage - the market is 65% raw ingredients/prepared foods and 35% eat there stuff. In terms of number of operations, again without peeking, maybe 50/50. No idea about revenues.

3. Whatever the customer base wants. NOT whatever some cold-hearted, board chairman’s master plan based on his extensive shopping mall management experience dictates. My feeling is that things are fine just the way they are. My fear is that the board, which was only formed because of the construction of the convention center, would like to slant the scale in favor of the touristy convention goer as in “Golly ma, there’s that Tony Luke’s place I saw on the ol' T & V.”

4. Net or gross profit? Acme or Whole Foods. I did time as a “merchandiser” (buyer/controller of shelf space) for a supermarket chain. The common wisdom was that our profit, in areas other than deli/prepared foods, was limited to the 1 or 2 percent we received back from manufacturers for paying our bills within 10 days. Otherwise, break even. But in terms of percentages, a net of maybe 2 to 5 percent.

5. Again, net or gross. Varies widely with type of operation. Maybe a net of 5 to 12 percent. But one can not compare percentages between supermarkets and restaurants. Supermarket volumes (sales) are vastly greater.

6. For a small business like a market vendor it is all about cash flow - not percentages. Cash flow is great when the market is packed, not so great when it isn’t. Percentages vary all over the board depending on the products being sold.

7. I’d say both all of the above and no competition it’s unique. I think the quality of the farm goods at the local farmers markets and especially the head house farmers market are far superior to RTM. I specifically go to RTM for all manner of meat from Harry Och’s. More often than not it is when heading to Harry Och’s for beef, lamb and such that I end up buying my produce at the market. RTM is a destination location (it’s unique) for Dinic’s pork sandwiches, Fisher’s pretzels, Harry Och’s aged beef, Jack McDavid’s rich man’s gravy, Bassetts butterscotch swirl ice cream, Dietner’s chicken wings and a lot of other stuff that either because of uniqueness or quality you can not easily find elsewhere in Philadelphia.

8. Convention going businessman that the guy is, he's on expense account. He’ll hop a cab to Pat’s or whatever the cabbie recommends. Luckily, being a business man who knows what the hell a plenary session is, he is sufficiently savvy to understand that RTM is not a food court for the Convention Center and that its merchants should have the option of whether or not they should have to stay open to feed him.

The merchants are smart businessmen. If it makes financial sense and if they can maintain the quality of their product when business is very slow, they will decide to stay open.

Edited August 11, 2007 by Holly Moore (log)

[Scoats]

4.  Net or gross profit?  Acme or Whole Foods.  I did time as a “merchandiser” (buyer/controller of shelf space) for a supermarket chain.  The common wisdom was that our profit, in areas other than deli/prepared foods, was limited to the 1 or 2 percent we received back from manufacturers for paying our bills within 10 days.  Otherwise, break even.  But in terms of percentages, a net of maybe 2 to 5 percent.

Is that 1 to 2% week in and week out, or even daily? Seems to me you can make some serious money if you sell the same things to the same people every week. Even a meager percentage can be good if you are making it non-stop.

[MarketStEl]

This looks like one of those forced choice questionnaires politicians love so much as a campaign tool.  But what the hey, here it goes.

Good answers, and I tried to frame the questions so as not to bias the answers (with the exception of the last two). I have some comments (obviously, or I wouldn't bother with this post).

1.  Reading Terminal Market is a collection of small merchants.  RTM functions both as a  market for meats, poultry, poultry, produce, fish and such and as a place to eat breakfast, lunch, snacks and, perhaps dinner. 

It is a farmers market but not just a farmers market.  Much of the food ingredients are not locally grown.  Then again, even at many farmers markets along country lanes, many foods arrive by container ship rather than tractor.

For some it is a convenient lunch stop, for others it is a destination meal, For others it is a provider of good stuff to eat while doing one’s shopping.

2.  Not clear whether you are talking revenues, square footage or operations.  Without peeking at their web site, my guess is that in terms of square footage - the market is 65% raw ingredients/prepared foods and 35% eat there stuff.  In terms of number of operations, again without peeking, maybe 50/50.  No idea about revenues.

I can't speak to the revenues either.

It isn't as clear-cut as I portrayed it to separate the restaurants from the fresh food purveyors, as several merchants (Coastal Cave Trading, Salumeria, Hatville Deli, Little Thai Market...) perform both functions. Places that serve prepared foods for on- or off-premises consumption do make up the single largest category of Market merchants -- and I'm going to go out on a limb and guess that for those who sell both prepared foods and fresh/packaged ingredients, the cash flow and (gross/net) profits from the prepared food sales help sustain the fresh food side of the business. However, they are not more than half of the total merchant count -- nor can they be unless taken together they account for no more than one-third of the Market's total leasable space. AFAICT, these places currently number about 30-35% of the total number of merchants in the Market, depending on how you want to count the dual-purpose merchants.

Taken together -- and double-counting the dual-purpose places -- fresh food vendors and prepared-food vendors are about even in their share of the Market's total merchant count.

3.  Whatever the customer base wants.  NOT whatever some cold-hearted, board chairman’s master plan based on his extensive shopping mall management experience dictates.  My feeling is that things are fine just the way they are.  My fear is that the board, which was only formed because of the construction of the convention center, would like to slant the scale in favor of the touristy convention goer as in “Golly ma, there’s that Tony Luke’s place I saw on the ol' T & V.”

I think if we went strictly by traffic--which is one way of measuring "what the customers want"--the Market would be overwhelmingly places that served prepared foods for takeout or on-premises consumption. Here I differ with your analysis for that reason. To keep the "farmers' market" function viable, the management IMO has to put a thumb on the scale in favor of the fresh-food purveyors. The Operating Policy Guidelines reflect this, and I do know that one of the main reasons the recent lease negotiations were so contentious was because the management structured the leases to favor the fresh food purveyors. However, not even the prepared-foods merchants received terms worse than they might get for retail space elsewhere. Nonetheless, if I were a restaurateur exclusively, I too would probably fight for something that better served my interests. I don't think that would be an inaccurate description of what Rick Oliveri did as head of the Merchants' Association. Which is all well and good, but see the opening sentence of this paragraph again.

4.  Net or gross profit?  Acme or Whole Foods.  I did time as a “merchandiser” (buyer/controller of shelf space) for a supermarket chain.  The common wisdom was that our profit, in areas other than deli/prepared foods, was limited to the 1 or 2 percent we received back from manufacturers for paying our bills within 10 days.  Otherwise, break even.  But in terms of percentages, a net of maybe 2 to 5 percent.

5.  Again, net or gross.  Varies widely with type of operation.  Maybe a net of 5 to 12 percent.  But one can not compare percentages between supermarkets and restaurants. Supermarket volumes (sales) are vastly greater.

6.  For a small business like a market vendor  it is all about cash flow - not percentages.  Cash flow is great when the market is packed, not so great when it isn’t.  Percentages vary all over the board depending on the products being sold. 

Your last sentence in the answer to point 5 explains why supermarkets remain in business. My understanding was that supermarket net profits in terms of sales were 1-2 percent, and that appears to be a bit on the low side based on what you say here, but the main point is that they make their money by selling huge amounts of stuff at nearly-nonexistent profit margins per unit. (BTW, finance mavens, this is the same principle that hedge funds and other esoteric forms of securities trading use to make tons of money on tiny price fluctuations.) Cash flow may matter more for a small merchant, as in broadcasting, but no business can continue to operate on a continuing net loss basis. (I think. Accounting being what it is, I may be wrong here too.)

I have neither spoken to any fresh food vendors about their business operations nor spent any time working in the business (I did do a 9-month tour of duty at a lunch counter in Cambridge in my college days, so I can claim restaurant experience on my resume), but my gut feeling is that there are factors (spoilage and damage, for instance) that make their margins (and maybe cash flow too) more precarious.

7.  I’d say both all of the above and no competition it’s unique.  I think the quality of the farm goods at the local farmers markets and especially the head house farmers market are far superior to RTM.  I specifically go to RTM for all manner of meat from Harry Och’s.  More often than not it is when heading to Harry Och’s for beef, lamb and such that I end up buying my produce at the market.  RTM is a destination location (it’s unique) for Dinic’s pork sandwiches, Fisher’s pretzels, Harry Och’s aged beef, Jack McDavid’s rich man’s gravy, Bassetts butterscotch swirl ice cream, Dietner’s chicken wings and a lot of other stuff that either because of uniqueness or quality you can not easily find elsewhere in Philadelphia.

My more limited experience with farmers' markets backs up your claim, but I probably shop the opposite from you: I go to the RTM for produce first and foremost because their produce merchants can't be beat in the value-for-money department, and often enough I end up buying meats from Giunta's or one of the other butchers too. I am, as you know, rather price-conscious, and I guarantee you that I am not alone in being so. The RTM -- like many other grocers -- tries to cater to both the price-conscious shopper and the shopper who demands top quality. Most supermarkets tend towards the former, and specialty grocers/butchers/produce merchants... are all about the latter. The RTM is unique in going for both ends of the spectrum.

8.  Convention going businessman that the guy is, he's on expense account.  He’ll hop a cab to Pat’s or whatever the cabbie recommends.  Luckily, being a business man who knows what the hell a plenary session is, he is sufficiently savvy to understand that RTM is not a food court for the Convention Center and that its merchants should have the option of whether or not they should have to stay open to feed him. 

The merchants are smart businessmen.  If it makes financial sense and if they can maintain the quality of their product when business is very slow, they will decide to stay open.

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I'm going to have to ding you on that opening sentence. Not every conventioneer is a businessperson. I wonder whether the members of the National Education Association, for instance, get generous expense accounts from their school districts to attend their national convention; I certainly saw plenty of teachers crowding the aisles of the RTM during the recent NEA convention here and even managed to strike up a conversation with a teacher from Miami who was buying produce at O.K. Lee's. We in academe do get reimbursed for our expenses attending professional conferences, but one way to handle that is to hold conferences in places that offer you a package that includes meals (as with the College and University Public Relations Association of Pennsylvania, which meets annually at the Hotel Hershey). Reimbursement, BTW, is not the same as an expense account; you have to spend your own money first before getting it back from your employer, so if you don't have all that much money, you're not going to drop money on a cab when there's something else nearby. And something tells me that the members of the black fraternities and sororities who have held national conventions here get neither expense accounts nor reimbursement to attend what are largely social/networking functions writ very large. In any event, none of these cases fit the scenario you set out in your answer -- and I suspect that these cases apply to far more conventioneers than you suspect.

And the fact of the matter is that -- pace Chick-fil-A -- most collections of merchants marketed as a single destination do require tenants to remain open during stated business hours as a condition of their leases unless some exception is specifically allowed (as with Chick-fil-A). (There may be other exceptions for places that open earlier if they can be accessed separately; some Gallery merchants on the lower level open early in the morning because the lower level is also part of the Market East Station complex and used by commuters heading to and from trains.) Requiring uniform hours of operation, IMO, neither bolsters nor threatens the character of the Market; it's purely a business decision, and one that in the rest of the retail universe is up to the owner of the physical property to make. (Edited to add: I've said earlier in this discussion that, given the nature of the restaurant business and given the Market's stated opening hours, I see no reason why the pure restaurant operations have to stay open until 6, as the Market closes too early for them to pick up any significant dinner business and lunch traffic pretty much vanishes after 3:30. I still hold this view, but I've heard arguments to the contrary that shaped the wording of question 8 in the quiz.)

Which brings us to what may be one of the other sticky points. Is the market plural or singular? That is, is it merely "a collection of merchants" or is it a single institution that is more than the sum of its parts? If the latter, then I'm afraid the individual merchants -- unless they operate in a far more collective fashion than those currently at the RTM do, again pace the existence of the Merchants' Association -- may not be the final arbiters of what that whole is and how it should function.

BTW, none of this means that RTM management gets off the hook for handling Rick Oliveri's lease. The move they should have made was to put the ball in Rick's court by offering him a lease on the same terms offered other merchants and letting him sign or decline, then pulling the trigger if he continued to behave as if he was somehow privileged still. But for reasons still beyond our ken, that can't happen now.

Edited August 12, 2007 by MarketStEl (log)

[MarketStEl]

Following up my own post to make one more point that came to me during the day:

[...]

7.  What is the Reading Terminal Market's primary competition?

a.  Whole Foods Market

b.  Super Fresh

c.  The Gallery food courts

d.  The Italian Market

e.  The supermarket you shop when you get back to the 'burbs

f.  The farmstand that sets up shop in your neighborhood every week

g.  All of the above

h.  The Reading Terminal Market has no competition; it's unique

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One of the ways in which h. is the "right" answer is that the RTM is unique in the degree to which so many Philadelphians -- including some who are probably only occasional patrons of the Market at best -- take a proprietary or near-proprietary interest in the place, as evidenced by the higher-than-usual interest in what is otherwise a pretty stock landlord-tenant dispute. Let's face it, we wouldn't be talking about this so passionately or for so long if it were Kravco booting a recalcitrant retailer out of the King of Prussia Plaza.

[Holly Moore]

1-2 percent is probably accurate for basic super markets. I was guessing more like 5% for a place like Whole Foods.

[serpentine]

Convention going businessman that the guy is, he's on expense account. He’ll hop a cab to Pat’s or whatever the cabbie recommends. Luckily, being a business man who knows what the hell a plenary session is, he is sufficiently savvy to understand that RTM is not a food court for the Convention Center and that its merchants should have the option of whether or not they should have to stay open to feed him.

Holly, with all due respect, perhaps you're not very familiar with conventions? It's really not all expense-account businesspeople. Check out this list of upcoming conventions. Needless to say, the folks attending FaerieCon are not there on expense accounts. But you may not realize that the regular attendees of something like the "Council of Supply Chain Management Professionals" are not wealthy or on generous expense accounts, either. In many professions, you're lucky if your company agrees to spring for your (sizable) registration fees and actually lets you take a few days off to attend.

And you conveniently ignored #9. People who work dayjobs and would like to make dinner using fresh ingredients.