Daily Intent

Santa Barbara, CA
Have you ever traveled abroad and craved McDonald’s?  A Big Mac or couple cheeseburgers?  American cheese on a basic hamburger patty sandwiched between a sugary, smashed bun.  And the fries?  Crispy, warm, salty sticks of deliciousness.

Maybe you weren’t entirely hungry, or possibly you’re a vegetarian.  Your craving will undoubtedly be directed toward their soft-serve, plain vanilla ice cream.

The charming hilarity of this craving is you rarely, if ever, eat McDonald’s in the states.

Psychologically there are many possibilities for why you decide to enter and order.  You might be seeking refuge from local, hard to stomach food.  Perhaps travel brings out the child in you, and you ate McDonald’s for special occasions growing up.  Or conceivably, you love McDonald’s, would eat McDonald’s every day, but society plays on your conscience.  You choose not to eat McDonald’s in the states because you choose not to look like one that makes unhealthy choices.  Then again, you could be one to just appreciate the feeling of habitually eating healthy food, and a physical vacation allows you to take a vacation from disciplined eating.

Whatever your reasoning, you are the person Ray Kroc was imagining when franchising his business.  For in this moment, you are a person relating to past experiences that wants a familiar, consistent experience.

There is great sophistication in this model.

Franchise models are based on standards.  With standards comes the ability to ensure consistency.  With consistency you are able to monitor quality.  Having a consistently quality product then allows you to replicate and capitalize on economies of scale.

Franchises aren’t new to any of us, however Monday I learned of a new spin on franchising that is being used to positively impact the poorest 2 billion in the world.

I attended a talk put on by The Eleos Foundation, a Santa Barbara based foundation that focuses on sustainable market based solutions in the areas of health and education in the developing world.  In other terms, they invest in organizations that have figured out how to serve the poorest of the poor and still make a profit, thus allowing them to scale out the model to many communities.

One such organization, The Healthstore Foundation, is led by CEO Gunther Faber, a recently retired executive from GlaxoSmithKline.  As Vice President GSK, Sub-Saharan Africa, he traveled to every country in Africa.

Mr. Faber shared with us his belief in why the franchise model, in this space known as Micro-Franchising, is the best way to ensure a healthier Africa.

A nurse is the franchisee, aka the owner, of the local shop.  She has medicines in her shop to treat preventable diseases (which kill 70% - 90% of Africans).  She is supported and trained by the umbrella foundation.  She is able to profit as a small business owner and give back.

Dollars and cents have created the largest barrier to serving Africa.  Currently, the model allows them to provide treatment for $2.40/person, less than a cup of coffee, with an ultimate goal of $1/person.  This is workable. 

Might this micro-franchising have staying power?  I believe so.  It resembles in many ways microfinance, empowering the locals in innovation and trade.  As we see with microfinance, micro-franchising should influence not only health, but education and culture. It puts money in the pockets of the locals who know best what is needed for their children and development.

It is the tweaking of a tried and true model.  And, though McDonald’s missed projections for the most recent quarter, we can be quite confident of micro-franchising and its basic health services success.

Can you think of a twist on a proven model that will have long term positive impacts?
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Congratulations to all those that completed the Inaugural Santa Barbara International Marathon this past weekend!
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LEARN
Buzzword: RevPar
“Revenue Per Available Room- A performance metric in the hotel industry, which is calculated by multiplying a hotel’s average daily room rate (ADR) by its occupancy rate. It may also be calculated by dividing a hotel’s total guestroom revenue by the room count and the number of days in the period being measured.

Keep in mind that RevPAR does not take into account revenue from other hotel services, such as restaurants, spas, golf courses, marinas, casinos etc.”  -Investopedia.com

  Six Points to Ponder:

   1. Holiday Hangover.  The Markets are off slightly this week.  Lower trading volumes and world market volatilities play a role.   - The Dow is trading  at 10,279, S&P 500 at 1088 and the Nasdaq stands at 2167.  Oil is down $7 since last week, $70/bbl.
   2. Job Line Steps Back.  The unemployment rate dropped from 10.2% to 10%.  After two years of unemployment growth, the line in November took a small step backwards, seeing a few leave the line.  Job creation, when?
   3. Bank of America Increases Freedom.  Bank of America took back their colors and announced they would be paying back the $45Bn TARP debt.  Repayment of debt can be be quite liberating.
   4. WhiteKnightTwo SS2.   Richard Bronson and Virgin Galactic continued their rapid pursuits of privatized space travel with their unveiling of WhiteKnightTwo.
   5. Google Goggles. Google announced a new application called “Goggles” which will allow you to search what you see via your smart phone.  Snap a photo and search details surrounding the image, the history, the location, etc…
   6. Bowling for Dollars.  Saturday the Alabama Crimson Tide washed away the Florida Gators title hopes with an impressive victory.  Meanwhile the Texas Longhorns hooked the other spot for the National Championship game.  Both universities stand to make huge dollars.  $18M per conference!

Positives:

    * Chairman Bernanke spoke yesterday about the Fed’s plans to keep rates low into 2010.  The markets reacted negatively to the remarks.  Wall Street doesn’t like the reality of Fed Interest Rates remaining low for the foreseeable future as it signifies a slow and weakened economy.  The positive of these low rates is in the housing sector.  If you own and can afford your home, or rent and want to buy a home, you benefit.  Low rates continue to drive the housing market toward stability and affordability.  Rates are at historic lows.  Paired with lowering home prices in many sectors and tranches, affordability continues its growth.
    * I’m not ready to declare a .2% decline in unemployment as a victory, but let’s look at it as a small, short term victory which gives more hope to families moving through the holiday season.
    * Paying back the TARP money will give Bank of America more freedom in making decisions.  The government doesn’t know what is best for the banks long-term ability to provide value.
    * Inspiring innovation continues to happen.  Space travel is making every attempt to be apart of our daily lives in the next century.  Are you on board?  Then again you could be wandering the streets with your new Google Goggles witnessing dimensions you’ve never seen. 

Negatives:

    * We’re keeping things all positive this week.  The holiday party season has fallen upon us.  Let’s keep our conversations in the positive .
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GET INVOLVED
Local:

Ugly Sweaters for Lives
Where: The Neighborhood
When: Saturday, December 12th.  8pm
Cost: $5 Suggested Donation.  $15 gift.
Why:   A group of Santa Barbara Lifeguards will be returning to Ecuador in February for Carnaval.  The beaches will be sardined with people and heavily in need of competent lifeguards.  Their efforts saved lives last year.  This year will be no different.
How: In an ugly sweater.
For other fun ideas, go to www.lovemikana.com

Eat and Be Well,

Jeff Bochsler