Bundt, Bundt, Bundt...NOOOOO!

[J_Randall_Nye]

Bundt, Bundt, Bundt…NOOOOO!!

Shades of “Consumption Anarchy”

Except for a vague memory that the name of the brand Nothing Bundt Cakes was clever, I had never given another thought about the specialty baker. It wasn’t until a few months ago when a neighbor gifted some leftovers from a corporate event that I first sampled the product. The verdict? I thought it was good. But…sugar is poison and I have enough bad diet habits!

For some time I have been tweaking a concept for a charitable product fundraising platform. The idea includes food. But unlike familiar national campaigns involving a single product produced industrially (“those” cookies anyone?), the intent is for the products to be produced locally and to be of substantial quality. And also to be available twelve months a year. Ideally, the concept will partner with career tech programs and also create opportunities for special needs students and vulnerable adults. So, the following screenshotted story in the March 26 edition of the Wall Street Journal caught my eye. Clearly, KKR is a private equity behemoth. And KKR is set to buy Nothing Bundt Cakes from another private equity firm in a deal valued at more than $2 billion.

Something I didn’t know until I did a little investigation was that Nothing Bundt Cakes has a very well organized program offering their products to local nonprofits for use in fundraising. On the surface, that should sound like a great idea. Especially for someone interested in creating a product fundraising platform, right? Not so fast!

Something else that I discovered was that Nothing Bundt Cakes is a machine for extracting money from communities. And it is the powerfully soft-sell of “celebratory events” that drives the value being extracted. Of course, restaurant industry news stories don’t describe financial performance in those terms. But all one has to do is understand who gets what. According to Nations Restaurant News “profit per store” runs about $350,000.

One category of cash flows that results in extraction is the obvious; that is, royalties, franchise fees, pooled marketing fees and franchisee profits (if the owner of the franchise is not local). Ok, perhaps the amount of extraction for any one community is not too horrendous. Let’s say at least $250,000 per year? Frequently more? Then consider all of the other local brands that are built the same way. It adds up!

Less obvious is the effect that a “cherrypicking premium bakery” with ownership outside of the community might have on the viability of more generalized local bakeries. If prospective bundt cake customers all get sucked into the local Nothing Bundt Cakes franchise location then a locally owned operation is that much worse off. Since I have grandkids living in Germany and visit often, I am convinced that most of us Americans live in a bread desert. Many people have no idea what they are missing! Of course, German Bakeries sell products like bundt cakes that would truly fit the Nothing Bundt Cake mission, but those items are a fraction of sales and a fraction of the selections of artisanal baked goods available (and amazingly inexpensive). Photo below is from a bakery in the town where my family resides, Freiburg im Breisgau.

While it would be a very difficult case to make that the existence of Nothing Bundt Cakes alone means that I can’t easily and cost effectively get good quality German Brötchen any morning I want, it does illustrate a problem that, when combined with similar lost opportunities, could make just that case. And it could also mean that numerous opportunities for locals to lead better lives are being wasted because of…”consumption anarchy.”

Consumption anarchy?

The term sounds like something the Joker might come up with in The Dark Knight!

It is actually fairly simply. It is the condition when we consumers who all share very similar interests as consumers simply fail to have a meeting on a particular product/service we all are buying and resolve to hire a store manager. As a result, we all act completely independently with our decision to buy without any coordination. Buying is “consumption.” Acting without coordination is “anarchy.” Ergo, Consumption Anarchy.

A savvy reader of this post might ask the question, “what about the money it takes to open the store and pay the manager?” The answer is, without going into great detail, “it ain’t hard” in this modern economy. The proof of this just might best be illustrated in the actual Nothing Bundt Cakes franchise business model. Apparently, a significant majority of the Nothing Bundt Cakes franchisees are individual women. If an individual woman can orchestrate becoming a franchisee for Nothing Bundt Cakes, then a community of women (and not just women, of course) with a demand for bundt cakes (and other types of baked goods for celebratory events and general consumption) can easily swing it.

Oh, and I’m incubating a fund for that purpose on behalf of a charity. This isn’t just “tawk.”

Also posted on my Substack page HERE. Free to subscribe. All these efforts are targeted to start in NE Ohio.

[Don_K_Mutchler]

What seems to be at bottom here is the fact that Americans have been raised to believe that bigger is better and that cheaper is better. Both are wrong in the long run, but in the short run, what a person has in his/her pocket usually dictates buying choices, so that brings in the usual problem of wage inequity or simply, too many rich and not enough taxation; globalism (NAFTA, etc.), and keep in mind, blame for both sides (Reagan, Clinton, and honestly, pretty much every President; bad gov kowtowing to Profit/Corporate architecture).

National/international corporations, the global market, etc., all have use and perhaps even necessity in some cases, but overall, a large corporation does little more than kill local competition. It is a sweeping generalization, but yes, it may be best seen and understood in the areas of restaurants and agriculture, although the latter is pretty hazy unless one actually farms. I saw just the other day in the New Yorker an article about a multiple generation farmer who said he was the last in line because it just wasn’t viable to be a small farmer anymore. Big agribusiness/corporations eat up the Federal subsidies, and all those nifty tariffs, and probably the ‘normal’ restrictions/regulations regarding commodity sales make for the Little Guy having to accept prices based on not what he/she needs (local economy), but on what the global economy dictates. And that is not quite true, because “global economy” includes all the revenue as well as return on investment necessary (they argue) to keep those behemoth corporations fat and oiled. (And let’s not forget that much US ag is exported; that may be necessary, may be good, but not if a large corporation is effectively competing with local/small farmers and dictating the prices.)

None of this is straightforward. But what is straightforward is that a business that extends beyond one store – food, clothing, otherwise – starts to be something other than “local”, and that needs to be considered when State or Federal governments look at these entities and how they affect communities, not how they effect GDP and all those other markers that may be important, but not today when the rent is due and a farmer, cook, etc., is working 40-hrs and playing the game right. Most large corporations are funded by investors – 401Ks, private, etc. – and that money may be “necessary” for that corporation, but that gives it buying power and other advantages that Local do not have. That too ought be taken into consideration; that too is why all those billionaires and millionaires should be paying a higher tax rate.

I could ramble on, but my take on Mr. Nye’s post is one of agreement, but of also knowing it is a much, much larger issue than restaurant woes. And even that might get nasty. After all, Kent has one or two individuals who own the bulk of the restaurants in town. (Very same thing is going on in the college town in which I grew up in in N. Mississippi.) Not judging this, but asking: is it good or bad for the overall community?

And what of wages? Minimum wages dictates, quite strongly, how one can make a profit in a business, yet when so many can make millions, even mere hundreds of thousands per year, but the poor cook has to figure out how to survive on 20K-30K per year…as I said, complicated, complex. There is no silver bullet. But proper taxation for corporations is a start. Demanding (see Montana) that corporations act according to State interests, thus national interests is a start (e.g., if you’re an American Corp., then hire and operate in USA).

Etc., etc., etc….

[Jeff_Schrecengost]

My wife loves their gluten free chocolate chip cakes. So we’re not worried about all this rambling. Hard to find tasty GF products.

[Brad_Bolton]

There are two bakeries that make gluten free products at the Haymaker Farmer’s Market, one that is exclusively gluten free. The market is open every Saturday morning from now through November on South Franklin St. in Kent, under the rte. 59 bridge. Check their website for exact times. Lots of other local foods available, also.