> Buffett cautioned Huggins to never sacrifice quality for profit.
Funny how that's the complete opposite of another celebrated investor: Jorge Paulo Leman from Brazil's 3G Capital Partners (Heinz, Popeye's, Anheuser-Busch, Tim Horton's, Bugger King, etc).
Their game is to buy brands with very strong customer loyalty and slash costs (and quality). In the long run they'll destroy the brand but until then will make enough profits to more than compensate for the investment.
To be fair, even before that acquisition, the quality had been going down. The biggest jump imo was when they went from making the donuts in-house to having them delivered and just heated at the location.
I haven't been to a TH for ages. Their coffee tastes badly and the food is ... merely food. Back in 2005 when I first arrived in Canada TH was the first store I visited.
I went to a TH in Toronto in 2018 after hearing about it from Canadian friends for years… I would describe the food at that time as ‘technically food.’ The coffee, well, I threw that away and went to another shop.
Weird fact: there are dozens in Glasgow, Scotland. There was a recent announcement that they will be opening the first one in London soon.
We don't visit for the quality of the food or coffee. When we RVed around Canada a Tim Hortons was a great opportunity to get online and plan our next steps. It now had a kind of sentimental attachment which reminds us of the trip.
> Buffett cautioned Huggins to never sacrifice quality for profit.
It might be a good investment, but from my experience See's Candies is only good at packaging their mediocre products made with corn syrup. Before someone cites their FAQ: No, most of their candies do not have "cherry ingredients including glacé whole, glacé halves, and whole dipping cherries" sourced from a 3rd party supplier.
The largest part of their strategy has been cutting central costs (which are, not coincidentally, obscenely large at consumer goods companies). That has been their strategy since the early days.
The cost-cutting that you are seeing across the industry started because 3G exposed the fact that a lot of companies were running with incredible amounts of fat. But during that time, you have also seen massive increases in competition across the sector due to changes in consumer demand that has led to brand-destroying behaviour.
I don't believe it's smart to have people on the payroll just because. If they're not producing value for a business, then a business should remove them. Yes, it does suck for the person getting fired, but that's life, they'll find a different job.
People aren't entitled to their jobs any more than any other business is entitled to their customers. To think that they are is to infantilize salarymen and to perceive them less as free economic agents and more like serfs, incapable of proving their worth in a free, competitive market.
The difference is that Buffett uses subsidiaries to reduce Berkshire's long term cost of capital for other projects, rather than trying to squeeze returns from them directly.
Before the fast food brands revitalized Burger King (and somewhat Carl’s Jr.) were famously a bit of a cut above in quality (and price) but now everyone works on an on-demand model and the difference is harder to notice.
Before the fast food brands revitalized Burger King (and somewhat Carl’s Jr.) were famously a bit of a cut above in quality
Yep. And it put one of my relatives on the unemployment line.
<anecdote>
He was responsible for importing cheap meat from Australia and New Zealand for Burger King and a bunch of prisons.
In the early 90's there was a brief wave of "made in USA" pride that swept America, and Burger King changed suppliers and advertised "Made with all American beef!"
That cut my relative out of the picture, and his prison clients weren't enough to make up for the loss, so he lost his job.
Agreed, tastes like a mix between beef & chicken. Sadly barely any restaurants serve kangaroo.
I would much prefer a variety of meats that are more sustainably farmed with choices varying by season and availability limited by ecological factors with open-market pricing (with a fairly heavy tax) to naturally introduce a premium on delicacies.
With the release of their chicken sandwich, Popeye's had one of the most successful fast food product launches in the past few years. This launch was so successful that nearly every major restaurant chain launched their own chicken sandwich afterward, and it completely turned around the public image of Popeye's.
Popeye's was mentioned in two Grammy-nominated songs in 2022, and dozens of other rap songs in the past few years.
Reviewbrah famously went on a rant about RBI (after they ruined one of his favorite Popeyes items) and how they turn everything into garbage: https://youtu.be/5d5NJgO38AE?t=362
When it was run by Al Copeland, Popeyes was actually very good. He tried to purchase another large fried chicken chain, went bankrupt, and was forced to give up Popeyes, but kept a number of dishes and ingredients. Copeland's restaurants still serve the original biscuits, which are incredible.
Apparently Popeyes reacquired most of the ingredients and dishes in 2014, but they unfortunately didn't bring back the original biscuits.
It's still probably better than McDonald's, but the bar is pretty low there. Full disclosure, I sold the QSR stock I'd had for a few years when everything went to shit in 2020 and bought MCD on the same day... I like that McDonald's goes out of the way to supply locally, it seems like a better model for surviving black swan events. Both garbage, but that's the cafeteria choice you get in late stage capitalism.
Still, I watched with some admiration as MCD navigated the local export restrictions on beef in Argentina, and opened cafes there, served only grass fed local beef... then promoted that guy to open cafes in Europe and watched again as they brought hyperlocal beef producers in so you could buy a Charoux burger in Paris. That was deft.
ohhhh... wow. ok. This got my juices going. Next time. Saint-Nectaire is perhaps my favorite cheese... their "Michelin" sounds a lot like the home burger I developed living in Auvergne. Which was: 50% steak hache / 50% ground pork, smashed thin with two patties, rocket, grilled onion, Charroux mustard, mayonnaise, St Nectaire on one patty and Blue d'Auverne on the other, on a hollowed out flattened wide baguette. Monster. Most of the necessary things aren't available in the States... but it's very cool that the King Marcel burger seems to match this flavor profile.
It's been my experience that most "American" foods - and Chinese food too - are much better in France. Like, this is embarrassing, but compared to any roadside chain in America, the Buffalo Grill is incredible. It would be the best restaurant in most cities under 50,000 people in the US. It looks like an Applebee's and then they have freakin steak tartare which would be inconceivable in the US. And it's actually edible.
He, they, may make money doing this but the cost to themselves is one I would be unwilling to give.
He, they, will always be known for this behavior, that will be there legacy. If you are wealthy, why spend the extra effort beyond being comfortable in gaining more wealth at the expense of companies, their customers. Like what relative improvement does 50 extra million mean to someone like that? It's seeking money for money's sake. Why not use the extra time and energy you have to make the world better, be known for something better, leave a positive legacy? Why do people like this choose to trade their dignity, their legacy, for more money that they don't even need?
Funny how that's the complete opposite of another celebrated investor: Jorge Paulo Leman from Brazil's 3G Capital Partners (Heinz, Popeye's, Anheuser-Busch, Tim Horton's, Bugger King, etc).
Their game is to buy brands with very strong customer loyalty and slash costs (and quality). In the long run they'll destroy the brand but until then will make enough profits to more than compensate for the investment.