All three brands deliver frozen sugar water in delicious 1 oz. hits.  They only have 15 calories each, so you could eat like a the whole 100-ct box and still not be full.  Despite an identical (and easily copied) product, the fine folks at Otter Pops have done a superior job marketing, and find themselves as the Kleenex or Band-Aid of the freezer pop industry.

I mean, with flavors like Alexander the Grape, Little Orphan Orange, and Sir Isaac Lime, how can you go wrong?

But here’s the amazing thing: one company owns all 3 brands.  Otter Pops, Mr. Freeze, and Frootee Ice are all owned by Jel Sert.  And it doesn’t stop there; Jel Sert also owns Pop-Ice, Fla-Vor-Ice, Wyler’s Italian Ice, and manufactures 6 other freezer pop brands under license.  With this all-star portfolio, they are the undisputed world leader in freezer pops.

I don’t know if there’s even another company competing in this space.  I think Jel Sert has a monopoly.  If antitrust regulators cared about a competitive environment freezer pops (and if they didn’t cost pennies apiece), they could make a strong case against Jel Sert.  The company has been on an aggressive buying spree, systematically acquiring rival brands throughout their history.  You could paint the picture they set out on a mission to dominate the industry and couldn’t be stopped.

The question I have is why?  Why have a portfolio of so many brands offering the same product?  It’s one thing if the freezer pops were somehow differentiated, but for the most part, they’re identical.  I believe Jel Sert could achieve some economies of scale by consolidating their lineup under the Otter Pop name.  I mean how many Frootee Ice customers are really going to boycott now that their frozen sugar water is being called something different?

So I burned my hand last week and was using the Frootee Ices on the wound.  Once they melted a little they had to be eaten  And thus the inspiration for this post.

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Restaurant.com sells gift certificates to local restaurants at deep discounts.  Their normal price is $10 for a $25 gift certificate, but they often run promotions where you can buy the same $25 gift certificate for just $2 or $3.

$25 worth of food for $2!  What’s the catch?

Each restaurant has their own set of restrictions.  Some of the most common Restaurant.com restrictions:

• Minimum purchase ($35 or $50)
• Dine-in only
• Not valid Friday or Saturday night
• Alcohol does not count toward minimum purchase
• Not valid toward tax or tip
• Limit 1 per table
• Not valid with any other offers
• Expires 1 year from date of issue (except in CA where apparently it is illegal for gift certificates to expire)

But abide by these rules and regulations, and the Restaurant.com gift certificates really do work!

The Business of Restaurant.com

I couldn’t find out for sure, but I don’t think Restaurant.com has a revenue-share agreement with the restaurants themselves.  Meaning whatever they charge for the gift certificate, Restaurant.com keeps 100% of the proceeds.  So restaurants are essentially “giving away” $25 gift certificates to get people in the door.  Why would a restaurant sign up for this “service?”

• Attract new customers.  Having a gift certificate mitigates risk for new customers to try a new restaurant.  Maybe they’ll become regulars.  Or maybe they’ll become regulars who always come armed with a Restaurant.com gift certificate.
• Fill empty tables.  Empty tables are a huge opportunity cost for restaurants.  Their overhead is the same whether the place is empty or packed, so might as well fill it, even if it is with low-profit-margin customers.
• Attract large parties.  Sometimes customers will come with a group of 4-6, which will more than make up for the discount given.
• Customer feedback.  Restaurant.com’s online system surveys each customer after they redeem their gift certificate.  While this feature is less valuable now that sites like Yelp are popular, it is still a chance for the restaurant to get candid feedback from customers.
• Gives the restaurant an online presence.  Obviously this feature was a bigger selling point back in 1999 before every restaurant had their own website, but is still preferable to have more web “real estate” than less.
• Cost-per-acquisition comparable or less than other advertising.  As far as I can tell, Restaurant.com is “free” for restaurants to sign up.  They just have to be willing to basically give discounts on customer checks, after certain criteria are met.  Relative to Val-Pak or other print, online, or radio advertising, Restaurant.com may actually be a cheaper method of customer acquisition.

So Restaurant.com makes their money selling gift certificates someone else has to honor.  I have to admire any business with a gross margin of 100%!  Clearly, they have some infrastructure costs, website maintenance, etc.  But their biggest cost has to be the sales staff required to sign up new restaurants and keep current accounts happy.

Restaurant.com Expert Tips

1. Read the fine print. Look for restaurants with a low minimum purchase, without day-of-week restrictions, and without exclusions on what you can order (alcohol, etc).
2. Check Yelp to see if the place is any good.  Getting a good deal on bad food isn’t really that good a deal.
3. Search for promo codes.  You can usually find one for 70-80% off — meaning your $25 gift certificate will only be $2 or $3 instead of the $10 regular price.

Here’s my “real life” example.  I searched our zip code on Restaurant.com and found a list of restaurants.  Some I’d heard of and some I’d even eaten at, but most were unfamiliar.  I was attracted to Mexxi’s Restaurant and Catering in nearby San Ramon.  Time to work the system.

1. Restrictions:  Minimum purchase $35, dine-in only, not valid toward tax or gratuity.  This means drinks count toward your $35, and you can go any day of the week.  Awesome.
2. Yelp. 4 Stars.  Also a 2009 “Best of the Bay” winner.  Score.
3. Promo code.  In under 5 seconds I found a code for 80% off.  Sweet.

So for $2, I acquired a $25 gift certificate to Mexxi’s.

Restaurant.com Cost Example

How will the math work once we go and eat?

Let’s say we order the minimum $35.  Add in tax (10%) and gratuity (18%) and the new total is $44.80… call it $45.  Knock off the $25 gift certificate and we owe $20.  Add in the $2 I paid for the gift certificate, and the out-of-pocket total is $22.  More than half off, not a bad deal!

For the restaurant though, maybe it’s not the greatest deal.  Of our $20 spent at the restaurant, $9.80 was tax and tip.  Not being familiar with typical margins at Mexican restaurants, I can’t say whether or not Mexxi’s will make money collecting $10.20 on a $35 check.  My guess is they at least break-even or else they wouldn’t be signed up with Restaurant.com.

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My hypothesis was that watermelon was basically the cotton-candy of fruits: melt-in-your-mouth deliciousness, but basically no nutritional value beyond sugar.

What I Found

Turns out watermelon does have some value beyond being a low-calorie way to fill up your belly.  A 1-cup serving (who can eat just 1-cup?) contains just 46 calories, with no fat, no cholesterol, and a negligible amount of sodium.  The calories come primarily from carbs: 1g of fiber and 9g of sugars.  I was surprised to find out that watermelon also contains a small amount of protein.  From the seeds maybe?

For vitamins, watermelon is a very good source of vitamin A and vitamin C.  Who knew?  Even more surprisingly, a cup of watermelon delivers 5% of your daily value of potassium, which is about as much as half a banana.  Watermelons are rich in lycopene, a powerful antioxidant most commonly found in tomatoes.

Researchers have linked watermelon consumption to reduced blood pressure, reduced risk of kidney stones, a stronger immune system, reduced cancer risk, arthritis relief, reduced diabetes risk, reduced heart attack risk, improved night vision, and improved asthma symptoms.  What I thought was just sugar-water is pretty much a miracle food.

Haha those studies were probably sponsored by the Watermelon Farmers Association.

Next up, watermelon Jolly Ranchers.

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The study was on new sandwich spreads that I guess are intended to compete with mayonnaise and mustard.  I don’t know what company is researching this new market opportunity, but they had flavors like garlic-parmesan, bbq-bacon, sundried tomato, and pesto.  The pesto one was pretty good, the rest kind of gross.

I’m curious to see if any of these products get the go ahead for launch and start showing up in the grocery store!

I participated in a similar study in Atlanta on Miller Chill before it came out.  Funny story about how I was recruited for that test.  Middle-aged black woman is wandering the parking lot at my condo complex.

Her: “Excuse me, how old are you?”

Me: “Um 24. Why?”

Her: “We need white men for this paid study on beer.”

Me: “Get paid to drink beer?  I’m in.  And yes I can bring some more white friends.”

Haha apparently she was having trouble finding white guys in the ATL.  Very strange.  It turns out she got paid like $10 or $15 for every person she brought in for the study.  Interesting job.  We ended up getting $60 or $70 for our beer drinking trouble.  Anytime.

For this sandwich spread test I got $30 for about an hour’s worth of time.  Not an amazing hourly wage but pretty darn good for the work involved.

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“Produced in a facility that processes peanuts and other nuts.”

Who is this warning for?  The allergic semi-suicidal customer debating whether or not to risk his life on the off-chance this bag loudly proclaiming to contain peanuts is really full of imitation, allergy-safe peanuts processed in a peanut-free environment?

I can think of two real reasons why the King Nut Company prints this warning.  Perhaps they were sued by a non-fictional version of the above customer, and the jury decided the company didn’t do enough to warn the customer of the contents of the bag.  Now they go out of their way to cover their butt.

But more likely is that it is required by law.  Silly to have on a bag of peanuts of course, but valuable to have on other less-obviously-nutty items.

Another one for the Captain Obvious files: While in New York, I saw a sign for “Japanese Sushi.”  Is there any other kind?

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Busted! Well, partially.

There are real baby carrots!  Aren’t they cute?  You can find them in the grocery store next to the baby corn and mini-bananas.

But the part about baby carrots being created from larger carrots is also true.  And it turns out the “manufactured” baby carrots are far more popular, and their story is a great business lesson.

In the 1980s, California carrot farmer Mike Yurosek grew sick of throwing away thousands of pounds of un-sellable (bent, twisted, knobby, partially rotted) carrots.  This waste was common; Mike and other farmers would routinely scrap a third of their carrot crop or more.

Yurosek figured if he could salvage any part of these wasted carrots, it would all be gravy.  He cut the reject carrots into 2 inch pieces, peeled them, packed them in plastic bags, and branded them Bunny-Luv.

And the rest is history.  Today baby carrots are a $400 million business and outsell regular carrots 4 to 1.  Not bad for a little side project aimed at reducing waste!  What other “baby carrot” opportunities might we be sitting on right now?

Did You Know?

• Carrots are now grown specifically for the purpose of making them into baby carrots.  Farmers are actually breeding them to grow longer to increase their per-carrot yield.
• Baby carrots are somewhat less nutritious than regular carrots, because the skin and nearby surface lost in the manufacturing process are very nutrient-rich.
• Overall carrot consumption has increased 33-50% since the introduction of baby carrots.
• Bakersfield, CA is the carrot-capital of the US.

Source: http://www.carrotmuseum.co.uk

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And you can get a free short stack at IHOP.  Donations encouraged to support local children’s hospitals.

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One of the best (read: worst) products I found was Totino’s Party Pizza.  These little frozen pizzas would go on sale for $1 , and they provided 760 calories.  You could cook them in the microwave and not even have to turn on the oven.  Definitely a very efficient and cost-effective 5-minute greasy gut bomb of a meal.

A McDonald’s double cheeseburger from the dollar menu only has 440 calories.  Does any other “real” food deliver more calories per dollar than Totino’s pizza?  I don’t know if such a miracle product exists.

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