Challenging the Status Quo – Tesla Motors

How does a company like Tesla Motors, which sells only 50,000 vehicles a year, a number which is deemed as microscopic when compared to much larger companies such as BMW, which sells over a million number of cars in a single year, be a multi billion dollar company?

With the increasing number of Tesla products out in the public right now, it will come as no surprise that the company is doing very well financially in the past few years. There was a significant increase in revenue between 2012 and 2013, increasing by 487% and then again from 2013 to 2014, increasing by 59.9%. Out of the $3,198,356,000 of revenue collected in 2014, $3,192,723,000 was gained from automotive sale alone.

Screen Shot 2015-12-07 at 3.02.45 PM

The sudden increase in revenue in 2013 caused the stock price for Tesla to skyrocket and almost reach its peak in the mid of 2014. Although the stock market price decreased in 2015, the stock market price for the company is predicted to increase when the new Model X and Model 3 are released in the next 2 years.

Screen Shot 2015-12-07 at 11.22.33 PM

Although Tesla Motors has shown a promising number of revenue for a company that was founded a little over 10 years ago, its numbers are like a drop in the ocean as compared to the numbers produced by its competitors across the board. Take BMW, for example, which is like Tesla Motors, is a company that manufactures luxury vehicles. BMW made a total of US $87,363,726,600 in revenue in 2014, that’s 27 times more than what Tesla made in the same year. The main reason for this is because of the far more diverse vehicle models that BMW has available for purchase as compared to Tesla, which currently only has 1 model, the Model S, available for purchase.

Screen Shot 2015-12-08 at 12.07.19 AM

Thus, as compared to BMW, Tesla will need to grow exponentially. It’s hard to imagine this sort of growth happening any time soon, regardless of Tesla’s product offerings as BMW has a total of 25 different models versus Tesla, which currently offers 1 model of vehicle available for consumers. Even when both the Model X and Model 3 are released for the public eventually, that would round up Tesla’s model line-up to a grand total of 3, which is not at all a number sufficient enough for the company to beat out its competitors.

With such a significant difference in the amount of revenue that the two companies are making, one might think that the market capital of BMW would be much greater than that of Tesla. However, that is not the case at all. Tesla has a market capital that is only half the amount of the market capital of BMW. That is pretty impressive for a company that is making 27 times less in revenue than its competitor. In fact, it is even much more impressive that a considerably small company like Tesla is able to reach a billion dollars in market capital, considering the fact that the company only produces about 30,000 vehicles a year.

    Screen Shot 2015-12-07 at 11.22.46 PM Screen Shot 2015-12-08 at 10.36.44 AM

Tesla Motors Inc., founded in 2003 by Martin Eberhard and Marc Tarpenning, is an American company that focuses on designing and manufacturing electric cars. Tesla Motors is the first public American Car Company since Ford Motors became public in 1956. The company has led the revolution by mass-producing the first line of all-electric vehicles in the world. Elon Musk joined Eberhard and Tarpenning in 2004, where he contributed $ 7.5 million to help fund the company.

Musk went on to become the Chairman of Tesla’s Board of Directors. Tesla was founded, in Musk’s own words, “to accelerate the advent of electric cars”. Every model designed, every vehicle manufactured had to be more than competitive; it had to be flawless. A single defect could set the electric movement back decades, as it had been in the past. Musk played a very active role within the company and oversaw the design and manufacture of Tesla’s first production vehicle, the Tesla Roadster.

The Tesla Roadster is an all-electric sports car that was the first highway-capable all-electric vehicle for sale in the United States. General production of the car began on March 2008. On June 29, 2010, Tesla launched its initial public offering on the NASDAQ, which raised $226 million for the company, selling 13.3 million shares of stock. By the end of 2011, Tesla stopped selling Roadster models in the United States, to focus on the launch of its newer, more defined Model S electric sedan. While not necessarily revolutionary, the Roadster was instrumental in establishing the Tesla brand.

The past few years have been looking pretty good for the company. The highly anticipated Model S, an all-electric, 4 door luxury lift-back sedan was released in 2012, saw global sales that totaled to 22,500 vehicles in the year 2013, selling a whooping 6.900 vehicles in the fourth quarter of that year, pushing the year-sale beyond the company’s target.


Most recently, Tesla Motors just announced new additions to the Tesla Family by introducing the Model X, a four door, seven-seater car that will be out for release in 2016 and the Model 3, the first affordable electric car that Tesla will produce will be released in 2017. Due to the different features and capabilities that all 3 cars have individually, the 3 vehicles have enough differentiating features from each other to prevent intercompany sales cannibalization despite all 3 of them being a high performance electric luxury vehicle.

In addition, Tesla Motors broke ground on the Gigafactory in 2014 in Nevada, which is expected to begin cell production in 2017. The Gigafactory, which would greatly increase battery production and reduce its manufacturing cost is expected to reach full capacity by 2020, and produce more lithium ion batteries annually than were produced worldwide in 2013.

There is also an increasing number of Superchargers that are available in the United States right now. The Supercharger, which is a high-powered facility where Tesla drivers can get free electricity to extend their range while traveling much like gas stations for electric vehicles, grew over 200% in the United States between the year 2014 and 2015. The company added 958 Supercharger and destination charger locations throughout the country, which bring the total to 1,346. 90% of the US population is within 175 miles of a Supercharging location, close enough to get access to the countrywide charging network.

charging Untitled

In the contrary, much like any other successful company in the business, there have been setbacks that Tesla Motors has faced as a company. For instance, a month ago on November 2015, Tesla Motors announced that they were conducting a voluntary recall of all the 90,000 Model S cars due to a single report in Europe of a front seat belt not being properly connected. The shares for Tesla Motors fell immediately after the issue was reported, it slid 1.9% to $217.49 on the same day, a 3-year low for the company.

Screen Shot 2015-12-08 at 7.17.01 PM

Another major issue that Tesla faces is probably the fact that, as mentioned before, the company is not able to sell as much cars as its competitors. In an interview with Automotive News, Musk revealed that he “wants the company’s estimated 2013 U.S. volume of 20,000 units to soar to 250,000 and to 500,000 globally by the end of the decade.” However, it is easier being said than done as Tesla’s established rivals, companies such as Audi and BMW have begun offering capable electric vehicles of their own, hence Tesla will not be the only choice for long-range zero-emission transportation in the future. With the introduction of the all-electric luxury vehicles such as the i8 and the E-Tron models released by BMW and Audi respectively, Tesla will no longer have the electric vehicle market to themselves in the near future. Therefore, with a new range of selections for the consumers to choose from, it is very unlikely that Tesla is able to sell 500,000 vehicles globally by 2020 despite Musk’s vision.

So back to the original question: how did Tesla become a multi billionaire company as compared to other companies that produce cars in much greater volume?

To start, we have to take into account that the valuation of an automotive company is based on scale. This means that the company has to operate the business by allocating and optimizing resources to drive the greatest results and volume across market segments. Companies that scale have operating leverage, which means they can grow revenue with minimal or no increase in operating costs.

To add on, the automotive industry is also a capital-intensive business. These automotive companies require substantial amount of capital for the production of their vehicles. This is because the automotive companies require high value investments in capital assets, such as the materials needed to manufacture a car.

With big automotive companies such as BMW, which produces an average of 2 million cars over the past few years, the marginal cost to make a few extra vehicles will not be as high as the marginal cost it would take for Tesla Motors to do the same thing.

Screen Shot 2015-12-09 at 2.34.15 PM

BMW sells an average of 2 million cars in the past 3 years

Hence, with the minimal marginal and operating cost despite the increase in the number of cars available for purchase, it is no wonder that a company like BMW is as successful as it is. Moreover, considering the fact that the price for a BMW vehicle ranges from $30,000 to $80,000, and the gross profit for the company in the year 2014 was $17 billion, it is no surprise that BMW, a company that was found almost a hundred years ago has a market cap of over $60 billion.

In contrast to BMW, Tesla produces only 30,000 vehicles on average for the past few years. Therefore, based on the difference in the number of quantity of cars produced by both companies alone, it is fair to conclude that the marginal cost to make extra vehicles for Tesla is larger than that of BMW. However, despite the statistics showing net loss for the company, the unprofitable company has a market capitalization of $31 billion, as mentioned previously.

Well this is because Tesla Motors is unlike any other automotive company out there in the market right now. There are a few factors that Tesla Motors possesses that make it stand out from its competitors, and hence leading investors to assign so much value to the company.

Tesla has a larger gross profit margin as compared to its competitors in the present, and it is very likely to continue to increase in the future with the completion of the Gigafactory.

When Tesla’s gross profit and revenues are compared to 4 other traditional automakers, Tesla’s gross profit percentage exceeded that for the other car manufacturers with 22.7%. Moreover, since the cost of goods sold per vehicle will most likely drop as production volume increases, Tesla’ gross profit will continue to increase and extend its gain over the likes of BMW.


In addition to that, when the new Tesla Gigafactory is completed in 2017, the cost of the battery pack will be reduced by 30%, which will further increase the profitability of Tesla Motors in the near future. Tesla’s battery packs are routinely estimated to be a good tier cheaper than other EV batteries, all thanks to Tesla’s continual improvement of the battery packs. Tesla’s constant work to improve its batteries is one side of the cost-cutting calculus, but another important side is simply scale. Scaling up production results in greater manufacturing efficiencies, manufacturing improvements, and cost reductions. Tesla is scaling up its production big-time via the Gigafactory, and no competitor is showing that anything similar is in the works.


Apart from the Gigafactory, Superchargers and high profit margin, the main difference Tesla Motors has that gives it a competitive edge from other companies is probably the unique way the company operates. Tesla has shown repeatedly that it cares more about providing the customer with good service, a good product, and honesty than making a little more money off of them. For example, Tesla sells vehicles directly to the public through its own stores and the Internet, rather than relying on dealerships like traditional automakers. This makes the experience of purchasing Tesla’s products more intimate and personal as compared to buying your vehicle through a dealership. That kind of reputation for integrity and morality is something long lacking in the automobile industry, and there’s no doubt that customers have found it to be very refreshing and desirable. If Tesla keeps it up, it’s going to gain more and more brand loyalists and hence increasing the company’s number of investors.

In conclusion, Tesla is only just beginning its outstanding journey as the revolutionary multi-billion dollar company that will change the way people look at Electrical Vehicles. Its innovative vehicles and operations will continue to redefine standards across the automotive industry and Tesla will probably be a name that one will hear a lot more of in the near future.


Food Waste

“One man’s trash is another man’s treasure.” This quote is proven to be true in the case of a Canadian couple, filmmakers Jen Rustemeyer and Grant Baldwin who spent 6 months eating nothing but discarded food out of dumpsters, a decision that they made after seeing the large amount of edible food wasted just because they were not up to the consumers’ standard of being “fresh”.

“We found 18-foot Dumpsters all the time filled with food, and the majority of that was because it was near the date label, but rarely past it,” said Baldwin, who spent 6 months hunting for discarded food inside dumpsters and behind wholesale warehouses. Food waste is a very serious issue in the United States. It is the largest single source of waste in the country, beating out other waste products such as plastic and paper in landfills. According to the US Environmental Protection Agency, more than 20% of what goes into municipal landfills is food, with food waste weighing at a total of 35 million tons in 2012.

Screen Shot 2015-12-02 at 8.32.09 PM

Surprisingly, most of these food waste were thrown out by farmers and warehouses. It turned out that there are specific rules and regulations that are put in place by grocery stores that the farmers have to follow. For instance, after visiting a peach farmer here in California, Rustemeyer and Baldwin found out that the farmer has to throw out between 30 to 70 percent of his peaches because they were rejected by grocery stores due to cosmetic issues such as it not being of a particular size. Supermarkets tell farmers what diameter, length and curvature that their produce has to be before actually accepting them. And what happens if the produces are not up to standard? They become food waste.

Food waste also impacts the economy significantly. The Environmental Protection Agency estimates that the typical American family throws out about $1,600 worth of food each year, in a country where nearly 18 million households struggle to put food on their table. The United Nations estimates that a third of all the food produced in the world is never consumed, making for a total of about 1.3 billion tons of waste a year. According to the Natural Resources Defense Council, in the United States alone, about 40 percent of all food, worth an estimated $165 billion, is wasted. Especially during holiday season, whereby household waste increases by more than 25% between Thanksgiving and New Year’s Day every year.


In conclusion, the next time you decided to toss out that bag of mixed greens that has been sitting in your refrigerator just because it looks wilted, think about how you’re negatively contributing to our economy.

Homeless in Hawaii

Contrary to popular belief, Hawaii isn’t the perfect paradise that many people imagine it to be. In fact, it is more of a Land of Struggle to many Hawaiians living in the island. Hawaii has one of the worst rates of homelessness in the country. According to the governor’s spokesperson Cindy McMillan, there is currently roughly 7,000 homeless people in the state of Hawaii. While the number presented is not as large as the homeless population of bigger cities like Los Angeles, which has a whopping 100,000 homeless people in the city, we have to take into account that Hawaii’s population is only about 1.36 million (according to the US Census Bureau), as compared to 10.02 million in the city of Los Angeles alone. At 465 people per 100,000 citizens, Hawaii has the highest rate of homelessness per capita of any of the 50 states.


To add salt to the wound, Scott Morishige, The Governor’s Coordinator on Homelessness mentioned that as homelessness increased by 23 percent between 2014 and 2015, the number of unsheltered families almost doubled. The increase was driven by years of rising costs in the island. Moreover, there were low wages and limited land for the island which prompt homeless Hawaiians to spend their night on beaches and local streets as there was no place called home that they can go back to. The government dealt with this problem by doing what they do best – chasing the homeless away.

Hawaiian civic leaders felt that the problem with visible homelessness could lead to the financial downfall of the island state because the Hawaiian economy relies so heavily on tourism. They claimed that visitors will be turned off from seeing homeless people sleeping in parks and the beach which will then decrease the rate of tourism of the island. Honolulu officials report that they do a major cleaning session regularly by disposing off unclaimed property left in the parks and beaches of Hawaii, in order to maintain Hawaii’s public image of being a paradise. Officials regularly ticket the homeless with fines, and new public park hours have been implemented. On December 2nd, 2014, Mayor Kirk Caldwell signed a bill that bans people from sitting or lying down on public spaces between the hours of 5am and 11pm. Those who do so can be fined up to $1,000 and jailed for up to 30 days.


The Hawaii government has also allowed the spending of $1.3 million to expand services to homeless individuals and families. Apart from helping the homeless build new shelters, the money also would go to the state’s Housing First program.
The Housing First program is a nationally recognized best practice that is proven to be the most effective and efficient approach to getting chronically homeless people off of the streets. The program helps houses chronically homeless in permanent supportive housing which takes them off of the streets by providing them with a stable and safe home. The program has been proven as a success on many different cities in the country such as Portland and Los Angeles.

The Trans Pacific Partnership Effect in California

NAFTA, the North American Free Trade Agreement is currently the world’s largest free trade zone but that position will soon be overtaken by the Trans Pacific Partnership (TPP) agreement, which involves the United States and 11 other countries that produce 40% of the world’s total GDP of $107.5 trillion, 26% of its trade and over 793 million of its consumers. It is basically a trade agreement that will help support economic growth and jobs by removing trade barriers (such as steep tariffs) for goods and services between the 12 countries involved. The TTP help boosts exports and economic growth by increasing the employment of the 12 countries involved. It is estimated to increase exports by $305 billion per year by 2025, by removing the 18,000 tariffs placed on US exports to the other countries.

So obviously the agreement creates an advantage to our country’s economy, but what would it mean to the state of California?

California has important trade and investment ties with the 11 other countries involved with TPP. In 2013, California exported $70.1 billion worth of goods to these countries, hence with the TPP agreement in motion, it will surely help strengthen the trade and investment relationships between California and the 11 countries and support the California jobs that depend on them. The TPP agreement will also provide California with an opportunity to increase its trade in goods with current US FTA partners, which of the 11 TPP countries, there are 6 of them (Australia, Canada, Chile, Mexico, Peru and Singapore). California exported $54 billion worth of goods to these six countries in 2013, accounting for roughly 32% of California’s goods exports globally. The TPP will help to support these global supply chains and facilitate further trade with these current FTA partners, along with 5 other countries that has the potential to expand in terms of trade relationship with California.

Screen Shot 2015-10-19 at 7.05.12 PM

As mentioned before, the TPP will also provide California with the opportunity of expanding its market for goods and services to the 5 other countries that are currently not a part of the US FTA. The 5 countries which have a combined population of 252 million people, and a combined economy of $5.6 trillion have the potential to be new markets for Californian exports. Although currently California has good trade ties with some of these countries, exporting $24.6 billion in goods and services in 2013 to the 5 aforementioned countries, the state still faces very high level of tariffs to export to them. For example, the tariff rate for export of fresh Californian Oranges go as far 32.0% to Japan.

Screen Shot 2015-10-19 at 7.33.04 PM

All in all, the TPP creates a better opportunity for California to not only expand existing trade between the six current US FTA partners, but it also help California expand to new markets around the world, which leads to an increase in the state’s economy, in terms of increasing investment ties between California and the TPP countries, and also supporting jobs in California.


Internet Streaming and its Impact on the TV Industry

The emergency of new technologies has brought a change in the media industry. The digital media has brought a change that is affecting the entertainment industry. In the past, the Television network was the leading entertainment channel with almost 90% of people across the world using this platform. This has changed today as new services have been introduced in the market that are more affordable and offer a flexible way of watching any channel that you want. They offer specific options that are able to meet all the consumer desires and needs. Majority of the citizens are considering using these services as a source of entertainment, an act that has led to a drop in the viewership of the Television network.

Internet streaming is leading today in the entertainment industry. Among the most common and known companies are Netflix, Hulu and Amazon Prime that are offering lower prices for one to watch any type of film that they want. These internet streaming services has changed the manner in which people view TV while at the same time it affects the economy of the cable TV which is doing poorly in terms of viewership. The main point that is driven here is that Internet streaming has changed the ways in which the entertainment industry works.

A drastic change has been experienced in the number of TV viewers ever since the introduction of streaming services such as Netflix. Internet streaming has given the people especially the youths a chance to watch films on their own pace, at any time they feel like and on which ever platform they feel is more affordable in terms of cost of viewership. With this change experienced by Television network, it will be important to determine how some of the big networks like NBC and CBS adapt to this change and their future plans as the internet streaming platform continues to dominate the entertainment industry. It is also important to consider the factors that have led to the drop in the TV ratings over the years. The most important aspect of this issue is the economic impact that the shifts from the cable TV to internet streaming have, taking into consideration the future of the TV industry.

The introduction of internet streaming has made it easy for people to watch movies across the world especially those who have access to the internet. Today, anyone can watch or download video from their homes or the comfort of their office. Various internet streaming websites decided to take advantage of the fact that several people have access to internet and are using this platform to watch various films. Companies such as Netflix and Hulu have transformed the consumption methods within the entertainment industry. These online companies offer small charges for live streaming or downloading of various video contents.

When compared to the cable network, majority of the viewers has stated “the internet streaming is more reliable and cheaper compared to cable network thus the reason for their shift in the mode of entertainment.” According to a number of audiences that were interviewed regarding internet streaming, majority replied that “it was all about mobility and immediacy; we want content which is just a click away that will meet our needs without limiting us to be in specific place in order to be entertained.” Some claimed that the internet streaming has enabled them to catch up with their favorite programs while they are travelling or when at home and everyone wants to watch the television they can get a chance to see what they want without fighting over the remote.

However, as the internet streaming network is becoming more popular across the world, the cable TV is deteriorating in terms of viewership, something that would affect the cable industry. For instance, according to a report released by New York Times magazine, by the end of last year, the cable TV industry had lost about 2.2 million customers to internet streaming. The report stated that the consumers of cable TV were “cutting the cord” at the same time stopping to subscribe for their services.

According to a report released by the Experian Marketing Services, those individuals in the world who has high-speed internet stopped subscribing to satellite TV. The number of those who cut the cord rose to 5.1 million by the year 2013 with more than 7.6 million homes not watching the cable TV. The report showed that in the near future, majority of adults across the world would not spend their time watching the cable Television and instead will prefer online streaming method.


There are those analysts who however believe that with time, internet streaming will go down and companies such as Netflix will decline in regards to ratings. Ted Sarandos, who is the Chief Content Officer at Netflix, was quick to brush off this claim stating that “we have witnessed the company and the internet streaming network viewership increase in ratings with majority of the entertainment fans preferring to watch films and news on their tablets; we are hoping that the online streaming industry will continue to grow as the world continue to become computerized.”

Nevertheless, regardless of the difference in views on whether the cable TV will be totally overtaken by the internet streaming or not, the fact is that with time, people will get bored of subscribing to particular streaming services. This may lead to a decrease in viewership in various online streaming networks, but the truth is that the industry will continue to exist and be used by those who prefer flexibility when it comes to entertainment. It means that online entertainment industries such as Hulu and Netflix will continue to function in future. The demand for these online streaming networks might go down, but just like the cable TV, they will continue to exist.

The shift to online industry has greatly affected the economy of selling and producing TV shows. However, in order to protect the cable industry, the broadcasters and the producers are guarding the financial details so that their online streaming competitors cannot acquire the information. The Canaccord Genuity Group Corporation stated that “despite the huge competition coming from the internet streaming industry, the cable TV will continue to survive in the entertainment industry through provision of grants and loans to maintain the industry.”

The CEO of the Netflix Company agreed with this fact stating that “the cable company still has power and more advantage over the online streaming because of the strong relationship that the industry had built with the studios and video producers of the network television programs which are aired online.” This relationship will enable the cable TV company to demand for a right to own some programs, something that will force the viewers to watch television in order to catch up with their favorite programs.

However, while it seems that the viewers have seized control and power on how and when to watch TV, they should be aware that the cable network is getting curved up to meet the economic demands from the distributors. This will make accessing various shows online complicated and next to impossible. The viewers will be left with no choice but to pay more for multiple services, something that most of them will not be ready or willing to do. While the cable TV will be looking for people to fund their services, they will tend to be strict. Several analysts have suggested that this move could create a network snowball that would in the long run affect the viewers.


It is true that a stiff competition has been set between the cable TV and online streaming industries such as Hulu, Netflix, HBO, and Amazon among many others. The competition is contributed by various economic forces that are active in the current situation. For instance, the value of the dollar has affected the cable TV which today is charged highly. In developing nations, in order for a person to comfortably watch their cable television, they have to pay for it monthly. Majority of the people consider the cost of paying the cable TV plus the programs being aired on the channels and weighs it against downloading movies through various online networks and watching them at any time or at their homes or in the bus while travelling. After this careful evaluation, most people tend to prefer the internet streaming because it is cheap and affordable.

Majority of the online streaming websites charge less than 10 dollars to download movies for a specific period of time. On the other hand, the cable TV charges are always fixed and in some nations where the rate of the dollar is high against the nation’s currency, the charges on watching television also increases. This has made several people to shy away from the cable television thus the reason for the lower ratings in watching the cable television.

The other factor that has changed the pricing in the entertainment industry is the oil prices across various regions in the world. Today, the prices of oil are low, but the citizens pay for the low costs indirectly. Economic analysts believe that it is the major cause of rise in particular products in the nation such as the price of watching cable television. It means that the price of oil change has the power to change the game for an industry or a region.

However, in order for the government to keep the economy of a nation rising, they may consider shrinking city budget which may not only hurt businesses, but also families at large. The family and the business will have less money to spend thus continued to deteriorate in performance especially for the businesses. The federal government can consider recovering the dollar by increasing the taxes; something that economic analysts believe will have no impact on the cuts.





The Current Econo-meat Status of PSC


                      Photo Credit: PSC Website

“Would you like to have some coffee before we get started, Kevin?” Meghan Fink, owner of Pasadena Sandwich Company asked me with a gleeful smile on her face. That’s what it’s all about here in the Pasadena Sandwich Company, customers first.

Pasadena Sandwich Company (PSC) is a family-owned restaurant that has been operating in the town of Pasadena, California for over 20 years. This family style restaurant is a costumer-oriented company, placing customers’ satisfaction at the core of their business mission, and treating each one like a family member. After their dad passed away 5 years ago, the Fink siblings decided to keep the restaurant that their dad has built from the ground up by running it together. Jonathan, the youngest of the 4, comes in to work every day at 6:30am just to roast the meat that they would serve later in the day. I had the blessed opportunity to have a little chat with Meghan, who was very happy to help me, about the economy and how her company works.

PSC has been described by Meghan herself as a company that is impacted by a secular shift. Since food is a necessity good, and is inelastic in economic terms, business has been steady for the past few years. Since the Pasadena community is rather small, as compared to big cities such as Los Angeles, people are always around to drop by for a quick lunch break. “The only time of the year where business is slow would be in August,” explained Meghan. “People go to vacations in August so that’s the only real impact we see on our sales.” However, since the pattern happens every year, the company knows what is coming on every August and hence are not impacted in a significant way. Also worth mentioning, was Meghan’s own little theory of how more people would come in to the restaurant at the second day of the day when there’s a weird weather pattern. “On a rainy day, the restaurant will be quiet, however, a day after that the restaurant will be crowded with customers!” Meghan laughed as she explained her theory.


                         Main Counter of PSC

When asked about whether the 2008 recession did a major impact on the restaurant, Meghan explained how in 2008, which was when her dad was still running the restaurant, they did not see a crazy hit on the company. Because of the reasonable price that they have kept for many years, and the great quality and quantity the restaurant served, people were still coming in the restaurant regularly amidst the recession. The only impact they see during the recession was to their catering business, which slowed down as compared to previous years.

The company, which is impacted most by the retail trade sales and food services sales has faced a few challenges over the years. One of which was the recent drought that the state of California is facing. Due to the recent drought, there has been a shortage of the supply of roast beef. This is a challenge for the company as beef is one of the core ingredients they use for their sandwiches. Another factor that affected their supply is the bird flu. To my surprise, Meghan revealed to me that the bird flu, is in fact happening right now! Due to the bird flu, there have been changes to the price of poultry meat such as chicken and turkey by the providers of PSC. However, Meghan also explained how the company has been loyal to their providers, whom they have been in business with ever since PSC is opened and hence even if prices were to increase, it will increase by only a little amount.

“Being a small business in California is also becoming more challenging,” Meghan explained. “The state is passing fewer and fewer things, and recently, they only declared 3 days of sick pay for the whole year!” That impacts the business as man-power is one of the company’s main resources. Since PSC is a small business, they do not have that much of a resource. There’s a total of 10 employees, including the 2 siblings, Jon and Meghan who are running the store. “If they raise minimum pay to $15 an hour, that will be what impact the business the most.” Explained Meghan. When asked if rising rates play a role in their business, Meghan simply replied, “Not really, tax goes up, and people go upset! But they still come in regularly, it is what it is.”

Being a part of a community that has a close relationship with each other have also helped PSC to become the successful company that they are today. PSC does marketing locally, they support schools and non-profit organizations and company by giving gift certificates. PSC is very big on the “Community for community” service, proven by the recent “Gobble Tournament” they did for a local high school where they fed football teams. Moreover, Cal Poly Pomona has just recently used PSC for one of their marketing class as an example of a company that helps the community by serving them, and in turn, the community helps them back. The customers of PSC have gone as far as helping them set up their social media, without even being asked! PSC’s popular social media sites such as Yelp, Facebook, and even their own website were set up by their own customers. Their customers do it for them as a part of the strong community support that they have for one another.

Operating a business by yourself might be a very challenging and risky thing to do, considering the roller coaster pattern of our economy, but with the help of family and a strong community, a small business can soar to great heights, as evidenced by PSC’s on going success.


A picture with Meghan Fink, Co-Owner of the Pasadena Sandwich Company

The Economic Indicators on Fast Food in America


It is no secret that Americans love their fair share of fast food. Whether it’s sugary donuts or greasy burgers, Americans are suckers for fast food of any kind, hence making us the number one biggest consumer of fast food in the world. So what are some fast food economic indicators?


According to “The Economist” magazine, during economic downturns, fast food restaurants across the country surprisingly do well amidst the downfall. Fast food restaurants did much better than pricey, more sophisticated restaurants during this period of time. This is because people would want to spend as little money as possible during these downturns, and thus choosing the less expensive food over costly ones. In the event of when long term recession makes even fast food restaurants fail, these fast food restaurant chains can still continue to survive by cutting their prices and do more advertisements across the country.

Contrary to the last paragraph, no amount of cheap food can stop some people from eating at home to save money. During the 2008 recession, unemployment rates were at an all time high, thus fewer and fewer consumers were dining out. This led to the merger of Wendy’s and Arby’s, which expanded the market share of both fast food chains, making it the 3rd largest food chain in USA. Due to this merger, the fast food chain also increased its costumer base, pulling consumers from 2 different fast food chains into 1. Therefore, I will not be surprised if more fast food chains do a merger in the future if there is ever going to be a recession again, as it will benefit the chains during this period of time.

Due to the health kick that everyone is in lately, consumers began to demand fruits and vegetables to be included in the menu of fast food restaurants. More and more Americans became more picky when it comes to the food they eat and the calories they burn each day. There was a sudden increase of menus with healthier options in well known fast food restaurants such as McDonald’s and Chickfila. They began introducing salads and fruit cups into their menus, some restaurants even began serving grilled chicken as a healthier alternative to fried chicken. According to QSR Magazine, 2011 sales for McDonald’s outperformed the company’s sales in 2009, by a whopping $1.5billion. The difference in sales was mainly due to the addition of fruit smoothies and salads into the fast food chain’s menu.

In conclusion, these are some of the economic indicators of the fast food chains in America. As long as there is never a repeat of the horrific 2008 recession in the near future, the future of the fast food industry seems to be bright in America.