Richmond Business & Commercial News

Richmond.com purchased by Media General

Per the Richmond Times Dispatch website, the local newspaper's parent company announced today the purchase of Richmond.com (see the article here).

And the backlash on the internet has been fierce so far.  For a sample of the general opinion, take a look at the comments on the very same article also released on Richmond.com.

It's a big move both for Media General expanding their influence online, and for Richmond.com being taken under the wing of a media giant.  Let's hope that the worst fears of the public don't become reality, and maybe the combination of the two businesses will see good results for everyone. 

It is unfortunate to see an independent news source get gobbled up by the majority player in the area, though.

(for more updates, here is what people are saying about the merger on Twitter)

Getting shorted on tips?

We've all seen the rants about customers that don't tip, or the customers that are so cheap that they don't tip properly.  This post isn't about rehashing those same tired complaints, even as unfortunately on-the-mark as they are.  (Anyone that has been a waiter or bartender can attest to the truth of those anecdotes.)

This is about tipped employees getting their fair share of what they have worked so hard to earn, and about keeping yourself out of trouble if you are a restaurant owner.  Starbucks just learned a $100M lesson in California, and employers everywhere need to take note.

If there is a shared tip pool involved, then only certain employees can participate.  Here is the section on tip pooling from Fact Sheet #15 from the US Department of Labor:

Tip Pooling: The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), busboys/girls and service bartenders. Tipped employees may not be required to share their tips with employees who have not customarily and regularly participated in tip pooling arrangements, such as dishwashers, cooks, chefs, and janitors. Only those tips that are in excess of tips used for the tip credit may be taken for a pool. Tipped employees cannot be required to contribute a greater percentage of their tips than is customary and reasonable.

The basis of the argument in the Starbucks case in California was that shift-supervisors were sharing in the tip pool, which is against California labor law. 

In fact, a call to the Richmond District Office of the US Department of Labor verified that it is not California labor law that dictates this, but instead it is Federal law.  I was referred to the description quoted above, where only "waiters, waitresses, bellhops, counter personnel (who serve customers), busboys/girls and service bartenders" can participate in tip pools.  That's not to say that other employees can't be tipped, but they cannot participate in a tip pool.

Employers, take the lesson to heart before it costs you both in back-pay and legal fees!  (I'd like to point out here that I am NOT an attorney, but that's why I called the US Department of Labor to get their opinion.  There are always gray areas, and that's why there was a court case over this.  Check with your attorney to make sure you're covered.)

Fed up with health insurance premiums? Here's what to do about them.

You'll be hearing about this in the local news over the next couple of days, but there is a new player in the field of health insurance based right here in Richmond that is taking a new approach that is sure to keep costs lower both for companies and for employees.

With impressive resumes including top positions at Anthem and The Medical Society of Virginia, the key executives of nHealth Inc. are bringing a fresh look at the way health insurance benefits are handled.  They are bringing to bear the power of Health Service Accounts, coupled with insurance to cover catastrophic medical events -- and bringing a management/customer service aspect that will help employees as they manage their own healthcare.

The service works much like a 401k plan in the sense that there is more employee control over how the monies are handled.  This brings a sense of involvement by the individual, and should result in more responsible behavior.

Take a look at the U.S. Treasury Department's website to get more details on Health Service Accounts.  The associated legislation was passed in 2003, but I haven't seen a lot of information floating around about it.

Click here to bring up a document with more details on the concept of the company and on how it all works. 

I'll leave most of it there for you to read, but I love that even John Snow, former Secretary of the Treasury for the United States (now living in Richmond), felt moved to support the new company by saying:

“I am proud to have been associated with passage of the legislation creating Health Savings Accounts.  HSAs offer great promise to empower individuals, families, and employers to slow down the growth of health care costs and expand health insurance coverage.  HSAs aim to put American consumers back in charge of their health care decisions.  They offer a particularly good option for small-businesses to make affordable health insurance coverage available to employees and their families.  For all these reasons, I am so pleased to see nHealth bringing this important healthcare innovation right here to Richmond.”

My fiance has been using an HSA program for a few years through her employer, and it seems to be very easy to use --  some of the drugstores even have a breakdown on their receipts of how much of each purchase can be used under the plan.  I can't wait until I can get on the program myself.

What about you?  Have you had any experiences with HSAs -- good, bad, neutral?  Do you think this will have any effect on premiums and healthcare costs?  Leave a comment with your thoughts.

Truth AND Consequences: Rolls-Royce comes to RVA

In some of the biggest news that Prince George County, Virginia, has seen in quite some time, Governor Tim Kaine announced on Tuesday that Rolls-Royce PLC has chosen to locate their new plant 25 miles south of Richmond City.  The facility will test and assemble engines for mid-size business jets, and will have the capacity "to produce components for the F136, an advanced fighter engine for the Department of Defense's Joint Strike Fighter." (from "Turbine-Maker Rolls-Royce to open plant in Virginia" in The Beaufort Gazette)

Rolls-Royce PLC will employ 170 people when the plant opens in 2009, and may employ up to 500 with potential expansions.  The company has purchased 1,000 acres in the county, but the actual size of the facilities have yet to be determined.

Virginia won out over 7 other states that were under consideration for the plant site, and the state schools were cited emphatically as a driving factor behind the decision.  That's a great endorsement not only for the economic environment in Virginia, but obviously a win for the schools as well.

A point of contention among some (see comments at the bottom of this RTD article) is the monetary incentive that the state of Virginia has promised to Rolls-Royce PLC to get their commitment to our area.  The cash value of all of the related incentives is $56.8M.  Of course, with a price-tag like that there is going to be some second-guessing on how appropriately it was handled.

One of the comments on the article suggested that the money would be better spent for incubating local businesses, rather than courting a large corporation.  Given my slant towards small, independent businesses, I was inclined to agree -- at first.

At first glance, an investment of that magnitude could make a huge impact on many local businesses by itself, and here we are throwing it away on a large corporation that already has more money than they know how to handle.  On the other hand, the local presence of a world-class company will bring not only recognition to Virginia, but also business opportunities (large AND small) and increased educational opportunities (through interaction with the state schools).

Now, I have to agree that this should not become a habit, but sometimes it makes sense to pony up the incentives to bring an international company here. 

In this case, I think it makes perfect sense.  Good job, Virginia!

(see the official press release from Rolls-Royce PLC here)

Bandazian is in Style this week!

The current issue (1/17/07) of Style Weekly has an article in the Food & Drink section called "Fire in the Belly" that I suggest everyone should read.  Go ahead, read it and then come back here.  (come on, it's not THAT long)

Every time there is an article about a business changing hands, usually restaurants, the business broker isn't mentioned.  This isn't an issue of vainity in wanting to get press coverage, but merely a business matter.  I have said for the past couple of months that every time a high-profile restaurant is reported as being sold and we are not mentioned, it just perpetuates the myth that most business sales are made without broker involvement.

The article is right on track about how this activity tends to happen very quietly -- discretion and confidentiality is almost always a concern with businesses that are currently in operation.

I will be doing periodic press releases for completed business sales going forward, and will put these press releases up as posts here, as well.  This article is a great start!

There will be a follow-up posting here to go into some of the other details mentioned in the article, so keep an eye out for it!

Ukrop's is NOT for sale

Greg Gilligan reported in this morning's Richmond Times-Dispatch that the rumors that have been flying around about Ukrop's grocery store chain being for sale are not true.

The rumors were squashed (or so the Ukrops hope) by both Robert S. Ukrop and James E. Ukrop denying flatly any truth to the rumors that have been flying around the River City over the past week.

There seems to be some confidence in the statements, but as a business broker I know that in order to keep business flowing and to maintain confidentiality, sometimes you have to deny sales negotiations even if the cat is out of the bag.

Lessons from "Five Guys"

Five Guys Famous Burgers and Fries is a 120-unit chain that is based out of Lorton, Virginia.  They have developed a great reputation for fresh burgers (nothing kept frozen) and fresh-cut fries.  There are 8 locations total in Henrico, Richmond, Chesterfield, and Mechanicsville.

Yesterday, Nation's Restaurant News did an "Operational Spotlight" on the chain to highlight how they keep their health standards high.  A lot of it had to do with the open kitchen (no hiding anything) and the risks inherent in using only fresh ground beef.

I especially liked this quote, and I think that all businesses can benefit from the wisdom:

In fact, if a customer notices something awry in terms of food safety and cleanliness, they are encouraged to speak up. "We really look to our customers to be our first line of defense," says Chamberlain. There are signs posted prominently listing the number to call for customer comments.

This is not a new practice, but the sincerity behind it goes a long ways towards making it work the way it is supposed to.  The signs for this aren't hidden in a corner of the drive-thru window.  They are hard to miss, in fact.

We all ask for feedback (or at least we all SHOULD be), but how many of us are brave enough to ask for customers to call us when they notice a problem.  I know there are some that do, but we need to be sure to ask for it -- criticism and all.

In light of that -- please give me feedback, especially if you see me missing something, or screwing something up (but be gentle!).

 

Walmart's $4 prescriptions

Just a quick newsworthy blurb that I heard on NBC12 yesterday:

We've all heard of the plan that Walmart has to sell generic prescription drugs at the low, low price of $4.00.  Well, Virginia has now been added to the list of states running the new program.

(11/30/06 UPDATE:  deleted dead link from "blurb that I heard on NBC12 yesterday")

Luck Stone Corp. Goochland Expansion

Richmond.com heralded the expansion in Goochland of the Luck Stone Corporation headquarters.  Luck Stone has "become the largest private employer in Goochland County."

Link: 'More Luck than Ever ':

Company officials yesterday unveiled plans for a $25-million expansion and renovation of the company's corporate headquarters at an unveiling ceremony.

After planning for the past 18-months, Luck Stone now has plans for a 60,000 square-foot expansion of its current 35-year-old headquarters building and a total renovation of its existing 25,000 square feet of office space.

Independent Pharmacies Being Swallowed

By now, I'm sure everyone has heard the news that Rite Aid is buying the Brooks and Eckerd chain of drugstores, making it the largest chain on the East Coast.  If you haven't heard the news, check out these stories:

USA Today:  Rite Aid to buy Brooks, Eckerd
RetailNet.com: Rite Aid confirms Brooks-Eckerd purchase
RTD: Rite Aid to buy Eckerd stores

Now that we're all caught up on the news, let's review the consequences underlying this big merger.  In this era of mega-supercenters (a la Walmart and Target), the little guy either learns to adapt and leverage the boutique concept, or they get squeezed out.  We have seen this over and over again in different retail industries.

This is being played out in the pharmacy sector, as well.  On USATODAY.com, the article entitled "Amid Rite Aid deal, independent drug stores ailing" summarizes some of the details that independent pharmacies totaled 47% of all stores in 1994, but they are now only 32% of the total stores.

The only independents I can think of in Richmond are the one on West Cary Street by VCU and Westwood Pharmacy.  Anyone else?