Thinking About Thinking

The Grassroots Deli Economic Forecast

Posted in Economy, Pop Culture by larrycheng on October 20, 2009

When the market crashed over a year ago, I got pretty motivated to stay on top of global macroeconomic research.  So, I started reading about 7 different sources of economic forecasts and analysis.  As the year has progressed, I have narrowed in on a couple that I think are keepers.  My two favorites are The High Tech Strategist by Fred Hickey and some of the commentary of Jurrien Timmer who runs the Fidelity Dynamic Strategies Fund.  But, neither of them has replaced my true source of grassroots economic information, from appropriately named, Grassroots Deli.

Grassroots Deli is a hole in the wall deli across the street from my office on 183 Devonshire Street in Boston’s financial district.  They have great homemade muffins in the morning and a mean turkey platter for lunch.  The owner mans the register and she remembers everyone’s name and usual order.  It’s a little bit like Cheers – where everyone knows your name.  (BTW, this is for another blog post, but I think she’s cracked the code on customer retention in the restaurant business – good food and remember the customer’s name.)

Every once in awhile, I ask her how business is which is my gauge for the health of the economy.  Here are some tidbits of what she’s said over the past:

  • Summer 2008: She was feeling the effects of the vacancy level at 1 Federal Street.  She commented that the money managers spend a lot more money on lunch than the lawyers do – and it’s the money managers who left the building.  I guess money managers are OK paying $10+ for lunch which is important in her business.  She was also feeling the pain of the high oil prices which led to fuel surcharges tacked on by her food suppliers.
  • Fall/Winter 2008: Feeling the sting of many layoffs around the downtown – deer in headlights.  Even more infuriating was the continued oil surcharge from food suppliers despite oil falling from $100/barrel to $35/barrel.
  • Summer 2009: Business demand is still well below average, but what’s hurting her business is the price of sugar.  Sugar had climbed from $0.12/pound to $0.18/pound inside of a year.  Climbing commodity prices across the board are hurting her margins since she can’t raise her prices.  Profits are being squeezed at the cost of goods line – business is tough.

I got my latest update today:

  • Fall 2009:  Hopes of a pick-up in business after Labor Day have now faded.  Business is still very slow.  She said her paper supplier who has been working the Boston and Cape Cod region for 38 years said his business in Cape Cod fell by more than $1 million year over year.  It’s at it’s worst point in 38 years.

Well, the food is great at Grassroots Deli, but business is still challenging.  Her business is probably a microcosm of many different businesses as she is doing a great job servicing her customers but there are things out of her control.  Her little business illustrates the fundamental and wide-ranging impact of things like commercial vacancy rates, rising commodity prices, and high unemployment.  I’m definitely rooting for a better forecast next time.  Official Grassroots Deli Economic Forecast: not out of the woods yet.

8 Responses

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  1. SR said, on October 20, 2009 at 3:05 pm

    For the record, Johnny the old grillman at Grassroots makes the best sausage egg and cheese in Boston. Best recent quote, after preparing a particularly tasty-looking omelet for a customer: “dang, put that up on facebook!”.

  2. Desmond Pieri said, on October 21, 2009 at 8:19 am

    Larry, I trust your metric — the owner of the Grassroots Deli — more than I trust today’s headline in the Wall Street Journal, “Business Spending Looks Up.” Small companies that sell to the everyday person are closer to reality than large companies that sell to other large companies.

  3. James O' Boston said, on October 22, 2009 at 10:08 am

    fact check: Sugar is not $18/lb anywhere on earth. That linked chart must have a problem with the units…

    this seems more in line with reality:

    http://www.guardian.co.uk/business/2009/oct/06/sugar-prices-soar-new-oil

    Yes, prices are up but sugar’s not $18/lb

    • larrycheng said, on October 22, 2009 at 11:02 am

      You’re right – I read the article and it talked in cents per pound, though the chart is delineated at dollars per pound. So, I think the chart is mis-marked. Thanks for the heads up – the edit has been made.

  4. […] recession may be joylessly over, but things aren’t looking too good according to Fidelity Ventures VC Larry Cheng’s favorite economic indicator: The Grassroots […]

  5. Andy Idsinga said, on October 25, 2009 at 6:23 pm

    Good post thanks.

  6. Peter said, on February 9, 2010 at 11:16 am

    Sadly, the economic indicator known as Grass Roots is closing at the end of the month. It has been a fixture there for decades.

  7. Desmond Pieri said, on February 9, 2010 at 11:40 am

    There is all this talk about the economy turning around; I’m nos so sure. Grass Roots is only one data point. Another; at a conference this week, a good friend said he now has 19 good friends who are either unemployed or are working for no pay. Things are still tough out there.


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