Restaurant Industry Posts

Hello, Dubai! The Story Behind Brad’s Dubai Adventures

Dubai UAE Downtown Artwork

As I sit here on the balcony in Dubai overlooking the world’s tallest building, the Burj Khalifa, I think to myself, how in the world did I get here?  The magnificent city, the friendships, the partnerships, the growth, the opportunities, and the limitless optimism towards a lifetime of dreams coming true.  The story of my Dubai adventures took years to make happen, but I’ll re-cap my journey as concisely as possible here.  Sit back, relax, and get ready to read about the wild adventure that’s taken me half way around the world time and time again.  The journey hasn’t been without challenges or obstacles, but I’ve loved every minute of the ride.

Several years ago, my primary business, Restaurant Equipment World, received a visitor from a Google search for the term “restaurant equipment”.  That visitor subsequently did an online chat with one of my young sales associates, simply asking a short series of general questions.  Next came the e-mail and order inquiry which was immediately brought to my attention.  The request?  Could we fill up two 747’s in 8 days with heavy restaurant equipment to be sent to the Middle East?  Surely this was fraudulent?  Surely this was a joke?  Surely we couldn’t have ever gotten this “lucky”.  As it turns out, luck is a matter of being at the right place at the right time and being well prepared to embrace the opportunity.  The total order was around $2 million US dollars, huge dollars at the time, but a huge risk as well.  I asked for a million dollar deposit to proceed.  This would undoubtedly separate the men from the boys to determine if this inquiry was legitimate.

A day passed and still no money, but there was regular communication from the customer which was a good sign.  The next day arrived and I was off to an industry meeting with several of my vendor partners.  I was excited about the prospect of this deal being legitimate, but too hesitant to share the good news with others for fear I’d be viewed as someone who was chasing a pipe dream.  Then it happened.  I’ll never forget the picture text message from my assistant – $1 million US dollars had just arrived in my account.  Wow, it’s real.  We’re really doing this.  I was quickly asked what to do now, my response was simple, “Ask for the next million dollars!”

The days that followed were wild and intense.  Our industry works on lead times of weeks and months, not days.  If we were going to pull off the impossible, I’d need to call in every favor from every manufacturer in our industry.  Turns out growing up in this industry and having friendships with President’s and CEO’s pays off in spades when the chips are down.  As luck would have it, I was already at a major industry buying conference at the time so much of the communications could take place face-to-face with our vendors.  This was a huge plus and ultimately would help to make for a successful outcome.  My sister (our VP) and I divided up responsibilities and engaged our vendors requesting immediate action.  One vendor in particular blew my mind with their handling of the situation.  Unfortunately, they couldn’t fulfill the order by my deadline.  Instead of accepting failure, the President of the factory personally called his competitors to determine industry capacity to meet my requirements.  I was amazed, appreciative, and honestly will send every bit of business I can to that company in the future.  A situation like this really shows you whom your true friends are in the industry.

Upon receiving firm deadline commitments, factories started churning out products.  We were providing our customer with a play-by-play of the progress of each item numerous times each day.  But wait, there was a holiday.  We’d gained an extra day to pull off this feat, or so I thought at the time.  We contacted our customer and asked if a day delay was acceptable due to the holiday.  I’ll never forget the response, “Weekends and holidays do not count.  A deadline is a deadline.  Deliver on time as promised or send back our money.”  I quickly learned the meaning of never giving excuses and always executing flawlessly with delivery schedules.

The deadline was looming and we still didn’t have the next million dollars.  Frantic calls to factories ensued with all hands on deck at my company.  While we’ve done plenty of large dollar orders, this one was different, this one smelled of opportunity and adventure.  I needed my best and brightest to all pitch in for a successful outcome.  Without exception, every single staff member stepped up to the plate and performed like rock stars.  I was so incredibly proud of my team.  As the final hours of the day before delivery counted down, we were all set with most products, aside from one major group of items.  Would we make it?  With the help of a valued partner, the answer was clearly affirmative.  The manufacturer sent one truckload of equipment out as they frantically raced to build the final pieces.  These weren’t small items by any means, they were full sized pieces of commercial cooking equipment.  To make their obligation, the vendor ended up shipping several massive crates on an airline flight to make the delivery on time.  I definitely owed them a lot of thanks and genuine appreciation.  Once again, a valued vendor partner would show me how much they valued our relationship by coming through when I needed them most.

The items were in place, we had delivered to the freight facility as promised.  I was at a conference in Austin at the time of delivery, so I temporarily abandoned my luggage in my rental car while I took off on a cross country flight to meet staff members of mine already at the delivery location.  This was an important order and it was imperative that myself and my team be personally involved to make sure everything was accounted for properly.  After all, at this point, I knew nothing about the folks at the freight facility we were working with on this order.  As it turns out, they are fantastic people who run a first class operation with a dedication to perfection.  Between my team and theirs, every crate was inventoried, counted, re-counted, and inspected.  Everything was perfect.  Life felt fantastic, we had pulled off a miracle.

While I was riding an emotional high of accomplishing such an impossible goal, we still had one slight problem – we were still lacking a million dollars.  It was go time, this was one of those moments in life you’ve got make a decision and take a risk if you want to reap the rewards.  Go big or go home.  I went big, really big.  I authorized the planes to be loaded full of equipment.  A tense day ensued, would we get paid, or was I the world’s biggest sucker?  Needless to say, the next million dollars arrived, right about the time the last pieces of equipment were being loaded heading to Dubai, on time, without excuses.  Victory at last!  We were home free.

I’ve never been an international traveler in the past.  That often surprises people who now know me for my global jet-setting on a regular basis.  I had only traveled to Canada and the Bahamas, but those hardly count as international since they speak our language and accept our money.  Heck, I had never even been to Europe.  On a wing and a prayer, it was time to head half way around the world to give a handshake and a thank you to our customer.  Flights took me to London and then onto Dubai, United Arab Emirates.  I was a complete fish out of water, I had no idea what I was doing, no idea about local customs.  My only “formal” education about the Middle East was derived from quick Google searches waiting for flights at the airports.  The customer meeting was fantastic, though was quite short after traveling 37 hours to see them.  I was none-the-less greatly appreciative of their order and my new friends in the Middle East.  Upon arriving back at the hotel, good news awaited.  It turns out they didn’t order enough fryers.  $150,000 to be exact.  Could we help?  You betcha!  I thought to myself, “wow, I’ll be back next week to do this all over again if this is how things are done here.”  I didn’t realize the full value of being here in person to build relationships and say thanks until this very moment.  Later in my adventures, I’d learn this is key to doing business anywhere in the Middle East.  Relationships and reputations are everything, that makes this story especially fascinating since this first order didn’t follow the normal course of business in the region.

In the months and years that followed, so did more trips back and fourth to Dubai.  Each trip brought new business partners, new friendships, and more business.  Before long, customers began developing a deeper trust and started requesting items other than restaurant equipment.  First, it was electrical equipment.  Next came plumbing, then medical supplies, then auto parts, then our world exploded with the diversity of requests.  Not only were there industrial types of items, but also items such as video games, Christmas trees (shocking for the Middle East), decorations, fire fighting equipment, body bags (yes, you read that right, morbid, but true) – you name it, we were selling it.  Suddenly, Restaurant Equipment World didn’t seem like the right name for our organization now that we had become a general procurement company.  We own roughly 220 trademarked “World” names so wanted to stick with this theme.  Critical Supply World was born.  Critical Supply World would be my company that would provide everything and anything required by my customers.  The premise behind this company is doing everything fast.  Extremely fast.  Rapid procurement with no excuses, ever.  We delivery on time and within budget.  Always.

After too many trips to count and solid relationships flourishing, it was time to take things to the next level.  I needed to get a local business license and open up an office in Dubai.  I’ve formed companies domestically in the US, so I really didn’t think this would be a big challenge.  Boy, was I wrong.  Eleven months later, countless phone calls, e-mails, stamps, signatures, banking matters, attestations and everything else imaginable, we had finally done it.  I often tell people what takes 10 minutes in the US takes 10 days in the UAE when it comes to business formation and getting the related services set up.  Finally, we were now a company with a business license in the UAE.  I can’t take credit for this process alone though, it was the work of many people on my staff as well as great friends in the Middle East.  This was truly a team effort which has led to the opening of Pierce Sales Company, Inc. (FTZ Branch) – derived from the name of the parent corporation of both Restaurant Equipment World and Critical Supply World.

So here I am, all these years later, sitting here on a relaxing weekend afternoon looking at the amazing skyline of downtown Dubai, getting ready for a busy week meeting with customers, vendors and business partners.  I’ve become a resident of Dubai, although my full time home is still in the United States.  Travel back and fourth from the states seems routine, even the 16+ hour Emirates Airlines plane ride each way seems “normal” to me at this point.  The local culture and interactions with Emirati’s and ex-pats from other countries seems routine and comfortable to me as well.  I’ve made great friends and people whom I trust and respect throughout the region.  Business is done with honor and respect, it’s not unusual to do high dollar deals with a handshake and a promise.  People’s word here means something and that’s a great way to do business and build relationships.  Simply put, I love the city, I love the warm and friendly people, and I love how business is conducted with valued partners throughout the MENA (Middle East Northern African) region.

So, there you’ve got it.  The story behind my Dubai adventures.  A lot has changed from those early days, but Dubai still holds a magical place in my heart and has changed my life forever.

* Be sure to click on the picture at the top of this post for an artist’s rendition of the brilliant Dubai skyline.  It’s truly amazing knowing that not too many years ago, this was all desert.

Join Brad at Gulfood 2013 in Dubai, UAE

Gulfood 2013 Dubai UAE Logo

I’ll be leaving the states in a few days to attend Gulfood 2013 in Dubai, UAE.  For those of you not familiar with Gulfood, it’s the world’s biggest annual food and hospitality show.  This show is timed right on the heels of NAFEM which was fantastic.  It will be fascinating to see the global outlook for the industry to compare with the positive vibes in the air I’ve been experiencing domestically.

I’ve attended this show numerous times in past years and all I can say is “wow”.  It’s an unbelievable sight for a tradeshow.  The exhibit halls feel like they go on and on for miles.  Literally, anything and everything foodservice is on display.  You can source smallwares and heavy equipment, build a food production facility, buy packaging and machinery, discover ingredients from around the world, and anything else foodservice related you can imagine.

If you’re attending the show, feel free to send me a note so we can arrange a time to get together.  The actual show dates are February 25th-28th, but I’ll be in town and available for meetings before and after those dates as well.

Here’s to a great Gulfood 2013 show in Dubai!

NAFEM 2013 – A Look Back to a Bright Future Ahead

The NAFEM Show 2013

I just finished up a long week at NAFEM 2013 in Orlando which was fantastic.  The NAFEM (North American Association of Food Equipment Manufacturers) show only comes along every two years, this ensures there’s plenty of time between shows for new products to be developed and makes the show even more important to attend when it arrives.  Two years ago, the mood on the show floor was one of hesitation, doubt, and uncertainty.  This year however, the future looks bright for good things to come.  The event was so upbeat, attitudes were so positive across the board, I didn’t encounter a single negative view of what’s ahead.  This parallels the positive attitudes I’m seeing and hearing from customers of my own business.  The economy is back and is full steam ahead.  It will be interesting to see attitudes on a global economic scale when I return to Gulfoods in two weeks in Dubai.  I’m hopeful and optimistic the world economy is back on track as well.

The best part of the show as always were the people and relationships that make it all possible.  It was great to spend time with industry partners who I truly consider friends.  The NAFEM staff deserves kudos for the phenomenal job they did to make this all possible.  It’s no simple task to produce such a massive show, but they did so with military precision and a flawless execution.

Reflecting back upon the week of exhibits, meetings, dinners, parties, and sore feet from all the walking, I’m thrilled with the future outlook.  I’m energized and engaged to keep making myself a better person, build a stronger company, and reach for the stars to accomplish a long list of goals I want to achieve both personally and professionally.

Perhaps the most fitting event to top off the week was last night’s Jimmy Buffet concert.  Standing just a few feet away from Jimmy as he played with all his heart, I was reminded that along with all the work, all the meetings, all the efforts that are required for success, you’ve got to have some fun along the way too.  Work hard and play hard, I like it.

Here’s to a great NAFEM and a great future ahead in so many ways!  Cheers!

Minimum Advertised Pricing (MAP) Policies Harm Consumers and Businesses

I am firmly against the policy of manufacturers implementing Minimum Advertised Pricing (MAP) programs.  The following is a position statement I wrote which I have been distributing within the foodservice equipment industry on behalf of my company and several other concerned dealers for the past several months.  I encourage you to use these talking points within your own industry to eliminate this practice which harms consumers and businesses.

My position is based upon the following points:

1. Discrimination Against a Single Channel:  MAP pricing programs, as recently introduced within our industry, generally target only one channel of the marketplace – dealers who sell online.  If MAP pricing programs are to be implemented, it is imperative that they be implemented equally across all forms of distribution and not discriminate against a single channel.

2. Successful Online Dealers Have Significant Costs:  There is a common misconception that dealers who sell in the online marketplace should have restrictions put in place because their business model costs less than others to implement.  This could not be further from the truth.  In reality, the lowest cost business model in our industry is the contract model in which some dealers have exhibited that they need nothing more than a small office and a phone to conduct business.  For a successful e-commerce venture, dealers need to invest in technology, programming, servers, security measures, fraud prevention systems, redundant backup systems, power generation systems and countless other infrastructure items.  Additionally, successful e-commerce companies need to invest in training of manufacturer’s products so that they are knowledgeable to field calls, e-mails and live chat sessions from end user customers.  The argument that e-commerce is “inexpensive” and therefore needs price controls to keep it in line is misguided and often comes from individuals who have no hands-on experience with how the online world actually operates.

3. Manufacturer’s Shouldn’t Protect Inefficient Dealers:  Protecting the distribution channel from themselves is outside of the scope responsibility of the manufacturing community.  MAP pricing programs punish efficient dealers and reward those who are either unable or unwilling to change their business models to embrace the marketplace.  If Dealer A invests in technology, processes and systems to make their dealership more efficient than Dealer B, they are then able to maintain their margins yet gain a competitive advantage and sell products to the customer at a lower cost than Dealer B.  There is no reasonable justification that artificial price controls should be in place to ensure that Dealer B still maintains his margins even though he has chosen not to improve his business to compete in the marketplace.  In essence, the principal of survival of the fittest should prevail with Dealer A prospering, as they are able to provide more value to their customers at a lower cost.

4. MAP Pricing is Not Automatically Legal:  Since the recent Supreme Court ruling declaring that MAP pricing (referred to as retail price maintenance agreements) are not automatically per se unlawful, numerous manufacturer’s have been touting plans to implement such policies on the basis that they are now “legal.”  This could not be further from the truth.  Just because something is not inherently illegal does not make it legal in all forms.  Each case will now be reviewed under the “rule of reason” which will look at various factors in determining the legality of an individual agreement.  The legal community has speculated that this will create a period of turbulence in our court system as individual MAP pricing programs are litigated.  It is not in the manufacturer’s best interest to be involved in this legal environment.  In essence, MAP pricing programs carry a huge legal risk for manufacturer’s who choose to implement them.

5. Collusion Risk:  MAP pricing programs expose manufacturers and dealers who support the programs to a significant legal risk due to the possibility of collusion occurring.  This collusion may be between competing manufacturers, or may be between competing dealers.  There is a very fine line that must not be crossed or an individual MAP pricing program will likely be considered unlawful under the rule of reason.  Again, this is another legal risk that could possibly subject a company to anti-trust litigation.

6. MAP Pricing Hurts Customers:  MAP pricing hurts customers – period.  Implementing a program that makes it harder for an end user to compare prices among a variety of dealers is not in the customer’s best interest.  Why would a manufacturer bite the hand that feeds them by choosing to hurt their customers?

7. MAP Pricing Makes Purchasing More Time Consuming for End-Users:  MAP pricing makes customers jump through hoops.  How many times have you been to an online site that makes you add an item to the shopping cart to see the “real” price?  It happens often in the retail industry as a way to get around MAP pricing.  This is because MAP pricing programs can not dictate the selling price of an item or they are illegal.  It is common practice that adding an item to a shopping cart is part of the purchase process and not part of the advertising process, therefore not subject to MAP pricing restrictions.  By making the end user do this extra step, what are you really accomplishing?  Quite simply, you are making them jump through hoops to see your “real” product price.  At the same time, your competitor’s product, which doesn’t have MAP pricing, is visible without making the user perform any extra effort.  Again, this action is not in the end-user customer’s best interest.  The end-user customer is who pays our bills and puts food on the table.  The last thing that I would ever want to do is implement a program that would annoy these individuals or cause them extra effort simply to view the “real” price of a product they are interested in purchasing.

8. MAP Pricing May Hurt a Manufacturer’s Sales:  MAP pricing may actually hurt a manufacturer’s sales who chose to implement it.  Aside from the costs of implementation, the enforcement costs and the significant legal risk, there is the competitive pricing scenario to take into account.  If a competitor knows that a company has a MAP price for a product, they can easily price their competitive product (without MAP pricing) so that dealers can freely sell the product at a price which is less than their competitor.  If a customer sees two competitive products, one priced at $500 and one priced at $450, my viewpoint is that customer will likely give their primary attention to the lower priced product for consideration first.  They may still determine that the higher priced product is worth the (artificially) higher premium price shown, but this opens the door to focusing a customer’s attention away from your products and towards a competitors products who don’t have price controls in place.

9. Advertising vs. Browsing Differentiation:  If a customer enters a dealer’s showroom, walks down an aisle, and spots an item, that dealer can the display whatever selling price they deem appropriate for that item.  How is the online channel any different?  If a dealer advertises their online site (at their own expense) and draws customer to it, that customer enters their site and begins browsing their virtual aisles.  The differentiation between what is considered advertising and what is considered browsing is a legal question that is still up for discussion as the case law has not been decided.  This is yet another legal risk that manufacturer’s expose themselves to when they decide to implement a MAP pricing program.

10. MAP Pricing Can Be to Circumvented:  MAP pricing can be circumvented by dealers who wish to continue advertising products below MAP prices.  The previous point mentioned the strategy of utilizing the “add to shopping cart to see the price” method.  Dealers can also implement instant rebates, coupons, and other financial incentives to customers to immediately discount an item to whatever price they desire.  Dealers can also create free or low cost membership “clubs” which get around MAP pricing as the price shown is not being advertised to the general public in an open forum. Dealers can also simply sell a bundled product offering in which the user pays for an insignificant item, then also receives the item which previously had a MAP pricing restriction for “free”.  The end result of any of these work-arounds is that the dealer can advertise the product to the end user at the price they would have anyway prior to the implementation of MAP pricing.  The MAP pricing simply puts a larger burden on the dealer to circumvent the policy, while still staying within the guidelines of it.  As previously mentioned, it also requires the customer to perform more effort to purchase a particular manufacturer’s product, versus that of their competitors who don’t have MAP pricing restrictions.

11. MAP Pricing Favors Dealers Buying Through Re-Distributors:  MAP pricing programs favor those who buy through re-distributors rather than those who have established relationships with manufacturers and buy direct.  I’ve heard comments from a number of companies who prefer to buy products through the re-distribution channel specifically for this reason.  All of the “authorized” dealers are stuck with an inflated MAP price, while the third party dealer is free to advertise the products at a lower price.  Most customers are unaware whether a dealer is authorized or unauthorized, and are more likely to engage a company who advertises a lower price to procure a product than a higher price.  What’s the solution?  Do you void warranties for those customers who buy products via an unauthorized channel?  This again hurts the end-user customer who did nothing more than support your company financially by purchasing your product.  If steps such as warranty denial are implemented, how satisfied will the end user be with your company?  More importantly, how likely are they going to be to buy your product again in the future?  I firmly believe they will have a bad taste in their mouth and will move to a competitive product the next time they need to purchase an item.

12. Lack of Joint Marketing Dollars in Current Programs:  Traditionally, MAP pricing programs have been tied to advertising dollars being given to dealers.  In return for these funds, the dealer agrees to adhere to the MAP pricing program.  The feeling is this is a “fair and reasonable” trade-off – we give you money and therefore we have a say in your advertising.  Manufacturers in other industries have conducted themselves in this manner for years.  In the foodservice equipment industry however, the MAP pricing programs have not included these additional funds to be paid.  This creates a system in which a manufacturer is dictating policies, yet is not participating financially.  This is again an extremely fine line that must be examined closely.  If a dealer independently advertises a product using their own funds, does a third party manufacturer have the right to dictate pricing policies?  Again, the rule of reason applies.  Ask a dozen attorney’s for their legal opinion and you’ll likely get a variety of different answers.  Currently, the common viewpoint is that this is yet another aspect that will be decided by the court system through litigation.

13. Difficulty in Enforcement:  MAP pricing is difficult, if not impossible to enforce.  While you can enforce policies against your authorized dealer channel, as stated previously, those dealers who procure products through re-distributors, or re-sell them to separate “online companies” (often owned by the same people who own the parent corporation) are immune from enforcement.  Therefore, you’ll be spending time and resources to enforce policies against who are most likely your best customers – your authorized dealers.  Along these same lines, the enforceability issue reminds me of the whack-the-mole game at amusement parks.  As soon as you hit one mole and eliminate one violation, another one pops up.  Do manufacturers want to spend countless hours and massive amounts of money playing this game, or would they rather focus on running their business and bringing new and improved products to the market that will be more financially beneficial in the long run?

14. Exposure to State Anti-Trust Laws:  MAP pricing may violate state anti-trust laws.  Each state has its own antitrust laws that can be enforced against companies.  This is an important consideration when developing a MAP pricing program.  Essentially, to ensure you are in compliance universally, you will need your program reviewed in accordance with the laws of each of the 50 states so that it can be written and enforced in a manner which doesn’t violate any of those state’s laws.  I highly doubt that most manufacturers in our industry will take such a time consuming and expensive step, yet by not doing so, they are opening themselves to the possibility of anti-trust violations and litigation against their company.

15. Dealers are Typically Independently Operated:  Dealers in our industry are not typically mega-corporations. Though there are a few notable exceptions, for the most part dealers are made up of entrepreneurial families.  They put their heart and souls into the business and enjoy the freedom of running it in a manner they deem most appropriate to meet the financial goals of the business.  It generates animosity towards manufacturers who take it upon themselves to dictate to these individual business owners what they can and can’t do in their business in relation to selling various products.

16. MAP Pricing May Not Be What Most Dealers Desire:  I have seen estimates that more than half of people in the foodservice equipment industry do not feel that a MAP pricing program can be effectively implemented in our industry.  This is an important consideration that should remind you that decision on this matter should not be taken lightly.  You should at the very least survey your dealer base to see where people stand on this issue prior to moving forward. I personally have noticed that those dealers who are in favor of MAP pricing tend to be more vocal, and therefore may make manufacturers feel that this is a move that most dealers want.  In reality, this may not be the case.

17. The Free Enterprise System:  Lastly, the United States economy is based upon a system of free enterprise.  The free enterprise system is an economy in which the pricing of goods is determined by the market economy.  MAP pricing programs are contrary to this economic system, as they come strikingly close to a socialized system of price fixing.

I hope you’ve learned more about some of the implications of MAP pricing programs as you’ve read this posting.  I fully acknowledge that there are a wide variety of viewpoints on this subject as well as arguments that make a case in favor of MAP pricing.  I fully respect the opinions of those dealers and manufacturers who have these viewpoints.  I personally, and my company, however, feel that the risks and downsides of MAP pricing programs far outweigh the arguments in favor of such price control programs.

IMPORTANT DISCLAIMER:  The views expressed in this document are solely those of myself and my company.  They are not in any way reflective of nor the official policy statements or views of an organization, group or association that myself or my company are affiliated with in any manner.