The music industry has waged a tricky battle in its fight against the ever-changing ways consumers obtain music. The music industry was once a dominant force in the entertainment world; at its peak in 1999, 943 million CD albums were sold. While the industry was at its peak, it was also on the verge of a slippery slope it wasn’t prepared for. In the same year, Napster made its debut, not only changing the way music was distributed but slashing the price to free. Napster took off in popularity gaining over 60 million users and dramatically changed consumers’ mindset on what the value of music was. As a legal response to illegal downloads, iTunes was created in 2003, but many believe that the four year lag was the industry’s fatal mistake.

iTunes created a digital music option for consumers, allowing the purchase of single tack for around $1 but, compared to free, $1 doesn’t look so appealing. iTunes became the dominant legal option for music sales over the next several years as the iPod changed the way consumers listened to music. Apple, while still making some profit from its music sales, wasn’t concerned with large margins on the digital tracks as the company’s profits were in the hardware it sold to hold the music. The iPod was Apple’s main priority and the iTunes store was just a part of making the iPod marketable to consumers. By offering consumers low prices on music, the iPod grew in popularity and, though legal digital downloads meant some revenue for artists, it wasn’t much.

“In the popular digital realm, a $9.99 download on a program like iTunes nets artists a modest 94 cents — less than a 10% cut. The record company takes $5.35 and Apple keeps the remaining $3.70.” -Investing Answers
iTunes was able to create a digital revenue stream for artists; however it was still a dramatic drop from the money physical CDs netted.

iTunes affected the industry in more ways than just price shifts, it caused an unbundling of the industry. iTunes offered consumers the option to purchase individual tracks as well as the full album. This dramatically shifted the average purchase amount, as consumers no longer needed to spend the full $9.99 for the album but, rather could pick and choose the songs they liked. In an industry that used to rely on a few track hits to boost a whole album, this posed a major problem. In the traditional media packaging format seen in many other areas of the entertainment industry, mediocre content is bundled with prime content and consumers pay for the entirety, with the prime content carrying much of the value. This change meant a content shift in the industry and the pressure on artists to produce hit after hit.

“Steve Jobs said to us, ‘There’re two things you have to accept: 99 cents for every single song, and every song has to be sold as a single.’ And we went home and swallowed hard because that was tough for us to accept for us as a music industry…. If certain songs were really popular we should be able to set the price at whatever we thought was the right price as opposed to the $1 price. Steve said, ‘You know, you’ve got to keep it simple, you’ve got to keep it clean.’”
-Chief Strategy Officer for BMG Music Entertainment when the iTunes Music Store launched

Apple was the site consumers used for digital downloads and Apple’s high market share meant it set prices.

There is no doubt that iTunes and illegal downloading presented the music industry with a number of obstacles but, though less obvious, it also presented opportunity. The digital age gave music the opportunity to be present everywhere and the ability to expand to a global playing field. Though iTunes hadn’t created the profit stream the industry has hoped for, it forever altered music consumption. Digital downloads offered instant gratification at a time when consumers wanted to be able to receive what they wanted with a few clicks of the mouse. iTunes gave consumers accessibility and, as with most things, give the consumer what they want and they will continue to consume. In iTunes’ first year, it sold 25 million digital tracks and the number rose to an incredible 1 billion by 2006.

“Apple made music ubiquitous in a way it never was before. And they set music free from large PCs. Earlier MP3 players did that, too, but not like this. That ubiquitousness has driven a consumption of music that is unparalleled in the history of the world.”
-Jeff Price, founder of TuneCore and co-founder of spinART Records

Apple was able to make big strides in the digital music space but it never was able to fully bridge the gap the loss of physical CDs created. iTunes was thought of as the industries answer to illegal downloads but did not save the industry. However, it did start the process for the industry to reinvent itself. iTunes had two main problems it wasn’t able to solve. The first was as a distributer, it didn’t please the music producers and artists who received little revenue from the site. The second was iTunes was too late to the game, and was stuck fighting a consumer mindset that still remembered times of free music.

iTunes two main flaws opened the doors for a new business model to enter the game, streaming. Music streaming entered the industry offering consumers an all-you-can-eat buffet of music and the pay-for-song model crumbled. Streaming gave music to consumers for free and fulfilled the consumer ideals from the Napster days. A number of new music applications following the streaming model have popped up, with one of the most notable being Spotify. In 2011, Spotify launched its service creating a major new business model for the industry. With the creation of Spotify, consumers could now get access to unlimited music for free, or for $5-$10 dollars a month, if they paid for a subscription. The free version of Spotify is supported by ads, while paid users have access to a premium service that is ad-free. Spotify has been growing at a rapid pace the last two years and in May of this year it announced that it had reached 10 million paid users. While 10 million paid users may sound like a lot, the number is not even close to the 30 million users who use the site for free. Spotify’s rapid consumer approval meant it had the possibility to dramatically changed the industry once again. iTunes proved that consumers want easily accessible music for very little money; Spotify took this model one step further by offering a free option. Spotify though a hit with consumers, didn’t solve iTunes first problem, revenue to producers.

In Spotify’s business model, executives have stated that 70% of the revenue from the site goes to royalties, but even with this large percentage, many in the industry haven’t felt they are properly compensated. With this pay structure, artists end up receiving fractions of cents per song played ($.0033) on average. Spotify’s pay structure brought up a tricky problem for the company as the ($.0033) was per stream, meaning a single customer could rack up multiple royalties on the same song. In a more technical break down, the royalties are paid out to artists by taking an artists total streams compared to total streams for Spotify, with the largest artists getting the most money. While the multiple royalties could potentially add up to the same revenue per customer as a single iTunes track purchase, Spotify created the problem of sticker shock with its producers. Artists and music producers are given their earning figures on a per stream basis and fractions of a cent didn’t go over well with already frustrated musicians. Spotify’s problem, like many other streaming services, was that it had created a new business model in an industry that didn’t understand it. Spotify’s revenues, while reoccurring, look shocking next to the one-time revenue an artist gets from iTunes. Spotify came into the industry at a time when artist were already frustrated by the loss of the golden days of music, leaving it to fight an uphill battle from the start.

As Apple proved with iTunes the music industry must adapt to its consumers’ needs and Spotify has been able to just that. In 2013, digital sales dropped from $1.34 billion to $1.26, while the number of songs streamed continued to increase, reaching over 118 billion raising income from streaming by 51%. Spotify has proven to be something the industry cannot ignore, and streaming, while a contested model, looks like it’s around to stay. Though Spotify has been at the center on controversy since its start, as it entered a situation that was already a disaster, could it be the answer to illegal downloading that Apple wasn’t?

Spotify has the potential to do what Apple does on a much larger scale, which is dramatically increase the consumption of music. In Spotify’s few years of existence, it has already proven to be an extremely effective outlet to share music, not only boosting the amount of music consumers listen to, but the variety of music as well. The site spreads music very quickly and through playlists introduces new music to consumers. Consumers using the site can also generate playlists and share them, creating a social interaction with the music. Spotify goes even one step further with publicity as it offers the ability for users to share what they are listening to in live time on their other social media accounts like Facebook.

“Streaming is about access versus ownership,” says Fredric Vinna, Spotify’s vice-president of product. “Now you can have up to 30 million songs in your pocket. We want to connect fans and artists, fans and brands, fans with fellow fans,” he says.

In this way, Spotify has been able to create a music sharing space that goes past the traditional outlets of the past such as YouTube. Further then just allowing users to discover new music, Spotify is able to add personalization to the business model. Using complex algorithms the company can monitor and track consumers patterns, allowing the company to make personal music recommendations. Spotify is continuing to expand on this personalization model, adding new ways to benefit consumers by analyzing their use.

“We will even have movement sensors in Windows phones that will help us match a song list to the cadence of your exercise routine.”- Fredric Vinna

Spotify has to potential to greatly surpass Apple’s consumer reach and do what the music industry needs most, increase consumption. As a service that gives the consumer what they want, Spotify has been able to dominate music distribution. The only question left is, will this dominance equate to revenues?

Spotify offers fractions of a penny per stream, but fractions of a penny multiplied by millions of plays add up. With Spotify’s growth already and its potential growth in the future the streaming model might actually turn out to be one that is profitable. Spotify has not only seen growth in its free users, but has been growing largely with its subscription based users as well, surpassing 10 million. If this growth continues with subscription-based users, Spotify will not only see an increase in the number of streams, but will be able to raise royalty payments, further increasing profits for artists. In a study done by Russ Crupnick of NPD Group, a respected music consultancy. They found that looking at the U.S. internet population of 190 million, only 45% buy music of any form. The average annual spend of that minority is only $55.45, while the average paying Spotify user generates more the two times that amount. Spotify says it has paid out more than $1 billion in royalties since its launch in 2008 to the end of 2013. That is certainly some profit and while it mightnot be close to what the golden ages of the music industry brought in, Spotify has been able to create profit on consumer preferences. With every new user, Spotify increases revenues and in turn increase the amount of royalties they can pay out.

This chart shows Spotify’s total royalty payments per year-

“Last year we saw some growth in music industry revenues – the first time in ages,” says Gennaro Castaldo, spokesman for the BPI (2013). “We’re pointing forward again and streaming is helping with that recovery.”

While the industry was hit hard in 2011, it has since been on the track to recovery. Artists can no longer rely solely on album sales so they have diversified their revenue streams to compensate. The music industry which in 2004 could have been given up for dead has made a remarkable recovery and is continuing to head towards the direction of growth and profitability. Streaming sites like Spotify have changed the economics behind the music industry by changing the way money flows from consumer’s hands to the artists. Consumers have certainly benefited from these streaming sites in the form of lowers cost and better user experience and artists have seen benefit as well in the form of increased consumption. Though the industry has not been able to fully recover, the revenues it once generated, it is well on its way.

 

 

 

When Russia revealed vast diamond reserves in 2012, the diamond market was expected to suffer terribly. The Russian government kept the mine – whose deposit may last the next 3,000 years – classified for nearly half a century in order to protect its national benefit in diamond industry. However, two years have passed since the revelation and the price of diamonds doesn’t seem to have been affected much. On the contrary, the price has continued to rise, as we can see from the chart below.

Source: www.ajediam.com

This might prove the famous slogan: A Diamond is Forever. But what exactly does it mean? Indeed, the price of diamonds seems to be impervious to anything – from recessions, the laws of supply and demand, to even Antitrust Laws. This article will look into how the De Beers Group is able to dominant the diamond market by controlling supply, establishing a unique distribution system, evading antitrust laws, and positioning diamonds as a necessity of life, and thus reveal the secret of the whole diamond industry – why “A Diamond is Forever.”

• Are Diamonds Scarce?

Adam Smith put forward the paradox of value in his book Wealth of Nations: Water is extremely useful, yet people can trade diamonds – which are of little use – for a large amount of goods, but not water. It is the scarcity of diamond that endows it with such high value – the supply of water is abundant, but that of diamonds is rare.

Diamonds were rare in the eighteenth century. At that time, only a few kilograms of gem quality diamonds were yielded around the world every year. The royal families monopolized them because diamonds are solid, long-lasting, and beautiful. However, later in the nineteenth century, diamond mines were discovered in Canada, Russia, and Australia. According to Does Scarcity Make Diamonds Expensive, an article written by Zhuojun Xu in SWEEKLY Magazine, nearly 25 tons of diamonds were mined in 2011, but the price of diamonds kept increasing steadily.

Why? In 1970, Carl Menger, William S. Jevons, and Leon Walras, three economists from Austria, Vienna and France, separately but almost simultaneously developed the idea of marginal utility. They came to the same conclusion that price or exchange value is based on marginal utility, not total utility or use value. In other words, the more difficult it is to get one more unit of a certain product, the more expensive it will be.

Snap Lake Mine, located in Canada, the De Beers Group’s first diamond mine outside of Africa.

Resource: https://www.canada.De Beersgroup.com/Mining/Snap-Lake-Mine/

Soon after the De Beers brothers found the vast diamond mine in South Africa in 1870, British financiers who were in charge of keeping the mining business running realized that the price of diamonds depends solely on the fact that it’s rare. They then began to control diamond output to create an illusion of scarcity. Due to absolute control of resources, the public could only know what the diamond giants told them: Diamonds are rare, and so they’re expensive. The De Beers Group further put forward the Peak Diamond Theory in 2010. According to the company, the total existing diamond reserves on earth are about 3 billion carats, which will last for only another 30 years according to current mining rates. We all know that it doesn’t matter if something is scarce or not, but whether people believe so – this is even more true in the diamond industry, which is purely built upon “people’s vanity and greed.”[1] The Peak Diamond Theory throws the public in deeper fear of extinction of diamonds, and has further convinced them that diamonds are expensive for a reason. As long as they believe that diamond is becoming harder and harder to get, they’ll be willing to pay higher and higher prices.

• Iron Hand

Now we know how diamonds are made rare, then how is the illusion of scarcity maintained? The De Beers Group introduced a way of controlling circulation of diamond in the open market, which is called Central Selling Organization (CSO). Since then, De Beers Group had been able to monopolize both production and distribution of diamonds for a very long time.

A flow chart of how CSO works. DTC (Diamond Trading Company) is the organization which holds the “sight” event.

Resource: http://www.allaboutgemstones.com/diamond_pipeline.html

The CSO worked through a corporation called Diamond Trading Company (DTC). The CSO employs “supplier of choice (SOC)” system. It sells to 125-250 sightholders selected by the company at sight visits, which are held by DTC every five weeks. Each of the sightholders is a leader in the industry, who owns large-scale factories and a huge distribution network. However, even these magnates are not able to negotiate with De Beers. The company puts diamonds in sealed boxes according to their quality. Sightholders can only see the price on the box but not the diamonds. They either take the entire box or none – De Beers Group has sole power to determine how many diamonds to sell and at what price. The founder of Harry Winston, a top fine jewelry brand in America, was once kicked out of the “sightholders list”, because he said CSO was “a most vicious sytem.[2]” However, he wasn’t able to find another diamond supplier, so he had to apologize in order to go back to the list again.

Matthew Hart wrote in Diamond: A Journey to the Heart of an Obsession that, in order to reinforce the CSO, if any small diamond producers try to sell diamonds without De Beers, the group will put a large number of diamonds onto the market to lower the market price to bring the competitor to the ground.

Under strong control of resources from De Beers Group, the diamond trading system is able to keep running, and that’s how the value of diamonds is kept stable.

• Battles Against Anti-Trust Laws

It seems that nothing can stop De Beers from taking control of the diamond market. However, it had been encountering setbacks for nearly 60 years when it tried to extend its branches in America, the largest diamond consuming market in the world. However, De Beers always seems to be able to find a way to regain its control of the market, directly and indirectly.

Since the mid 1940, De Beers had been sued again and again in the U.S. Court for violating antitrust laws, which prohibited the group from selling diamonds to American market directly – even appearance of employees from the company was forbidden in the U.S.. During that time, De Beers distributed only through intermediaries in the U.S. – for example, Harry Winston, as mentioned earlier. De Beers had been eager for transforming from supply-side to demand-driven management as more and more mines were discovered. Therefore, though De Beers was still controlling the market in effect at that time, it wanted to sell diamonds via its own brand.

A turning point took place in 2001 when Nicky Oppenheimer took over the position as CEO of the De Beers Group. He came up with an idea which helped the company bypass antitrust laws in the U.S.. De Beers created a joint venture with LVMH, a worldly renowned luxury retail conglomerate, and successfully opened its first retail store in Manhattan, New York. It doesn’t violate the laws because technically, it is LVMH who is selling diamonds as an agent of De Beers’s own brand, not the De Beers Group itself.

The De Beers Jewelry retail store in New York.

Resource: http://www.2luxury2.com/the-jeweller-of-light-opens-first-store-in-canada/

The move means that after disappearing in the U.S. for almost 60 years, De Beers was finally able to return to the American diamond retail market officially. De Beers used to monopolize the raw diamonds market since it controls majority of resources, but now it no longer needs to lean solely on limiting supply. Its legitimacy in selling at retail level grants the group not only a longer value chain, but also a new profit point. Henceforth, the De Beers Group has transformed from merely a monopoly in diamond production and distribution, to a giant who also has a place in the retail market.

• Higher investment value than gold?

Elizabeth Taylor and her 69.42-carat pear-shaped diamond – Taylor Burton

Resource: http://www.jointventurejewelry.com/blog/2011/03/the-many-jewels-of-elizabeth-taylor

Speaking of impervious pricing, we have to talk about the investment value of diamonds, because people are likely to invest in things with stable value, such as gold. But are diamonds the same case? The public is constantly fed with stories of making money by reselling diamonds. We all know the story that Richard Burton gave Elizabeth Taylor one of the biggest diamonds in the world whose price was $1 million, and Taylor auctioned it for more than $3 million. Jewelry companies and the media always claim that diamonds weighed more than one carat have high investment value, and it keeps increasing by 5% every year – but is this true?

In 1970, a London magazine company spent 400 pounds on two 1.5-carat diamonds, in order to verify if their value would go up. Eight years later, when the chief editor Dave Watts tried to sell the 2 diamonds, most of the stores refused to pay in cash. The highest offer was 500 pounds for 2 diamonds. Taken the inflation at that time into consideration, the 2 diamonds only worthed 167 pounds if it had been in 1970.

The Netherland Consumer Organization had conducted a similar experiment. They bought a diamond weighed more than 1 carat, and tried to sell it to the top 20 jewelry brands after 8 months. Nineteen of them refused to purchase. The only one company who was willing to buy the diamond offered a price much lower than it cost.

Zihong Wan is the founder of MAKELUMER, the first diamond retailor in China. According to him, if consumers buy diamonds in traditional department stores, 25% of the market price goes to the store, 42% to the brand, and 33% to the supplier. He also pointed out that the retail price of diamonds of general brands is 4 times the factory price, with a markup rate of 300%, and that of luxury brands, such as Cartier and Bulgari, can reach as high as 500% to 700%. Suppose a consumer buys a diamond ring for $20,000 in 2010, and he wants to sell it after 10 years. According to the pricing structure, he can only sell it at around 20% of the diamond ring’s market value in 2020 at most. Even if he just wants to not lose money –not taken inflation into consideration – he will need to sell it for more than $100,000. This means that the market price of the diamond ring in 2020 has to be 5 times that in 2010. However, if we take a look at the first graph in the article, we can easily find out it used to take price of diamonds about 30 years to quintuple, and then another 20 years to double. From the calculation, it seems that investing diamonds is not that profitable, especially that we were not considering inflation. Lack of reselling channels and the pricing structure of diamonds bring doubts to the investment value of diamonds.

• Will the Price of Diamond Fall?

As mentioned earlier, the value of diamond depends not only on its actual value, but also how much people believe it is worth. Since Harry Oppenheimer hired Ayer – an advertising company – in 1938, it has been trying to associate diamonds with timeless love, upscale fashion, and unique art. It employed celebrities, designers and famous paintings from Picasso, Derain and Dali to reinforce advertising effect. In 1947, the most renowned slogan of De Beers Group was born: A Diamond is Forever. Since then, diamonds’ status as a symbol of “eternity” has been well establishd. Besides the illusion of scarcity, people believe that diamond is no longer merely a “product,” but a synthesis of love, status, power and wealth. Consumers are willing to pay for not only what diamond is, but also what it means. Moreover, the De Beers Group is trying to position diamonds as a possible form of heirloom, to encourage people to keep their diamonds instead of selling them for profit, which will further stabilize the market price.

One of the advertisements for De Beers Group’s “A Diamond is Forever” campaign.

Resource: http://www.globalchange.umich.edu/globalchange2/current/workspace/sect008/s8g7/diamond_general.htm

As mentioned earlier, Zhuojun Xu, a journalist from Sweekly Magazine, stated that vanity and greed are the two essential factors that keep the whole diamond industry functioning – one day they exist, the industry will keep flourishing. However, since the whole industry lives on a beautiful bubble, diamond merchants have to keep it from shattering by ensuring people’s desire for diamonds and their willingness to keep them. Edward J. Epstein, the author of the Rise and Fall of Diamonds, told people not to sell their diamonds, or the market price won’t be stable – maybe, that’s what “A Diamond is Forever” really means.

 

 

 

[1] Zhoujun Xu, Does Scarcity Make Diamonds Expensive, SWEEKLY

[2] http://edwardjayepstein.com/diamond/chap18.htm

Whether you buy a house, a pair of shoes, or dinner out at your favorite restaurant, the sticker price is never the price you pay. The same is true for businesses calculating exactly how much a minimum wage hike might actually cost. Beyond the obvious increase in payrolls for workers who would move from around $9 an hour to more than $13 are a host of hidden costs. Let’s consider.

Anyone who’s received a paycheck probably noticed the roughly 8% missing for Federal Insurance Contribution Act (FICA) taxes. This includes a 6.2% deduction for Social Security tax and a 1.45% deduction for Medicare tax. What some people may not realize is that employers are required to match the amount deducted from each employee’s paycheck for these taxes. The employer contribution increases if a worker’s wage increases.

To keep things simple, consider an employer’s total cost for an employer who makes the current $9 an hour minimum wage and works 30 hours a week (or 120 hours a month), and how it would rise if Los Angeles accepts Mayor Garcetti’s proposed wage increases. Staring in January, an employee would earn about $150 more a month, but this would cost the employer roughly $167 more per month; a little more than $200 each year in FICA taxes alone. Similarly, by 2017 that same employee would earn around $510 more a month, but cost the employer $550 a month. This amounts to another $500 the employer must pay annually in taxes, in addition to about $6,100 more it would pay in wages. Consequently, a 47.2% wage increase for employees translates to a 47.2% increase in the cost for their employer to pay them those additional wages.

An extra $6,600 a year might seem insignificant compared to some businesses’ total revenues, but the full effect of this increased cost largely depends on a business’s size. Does a company employ 10 people, or 100? The annual difference in an employee’s cost will add up quickly.

Thus, a wage increase of $4.25 an hour would actually cost employers paying minimum wage about $4.60 more an hour. This does not factor in other expenses that increase in conjunction with wages; at a minimum employers must also account for increased premiums for general liability insurance and workers’ compensation insurance.

 

Longing to have his own restaurant for years, Philip Ozaki happily left his head chef position at Plan Check Kitchen when Richard Larios and Timothy Cam made him an offer he couldn’t refuse—-shared ownership of Dirt Dog.

On August 1, the three welcomed the opening of Dirt Dog, whose mission is to “provide the best and unique tasting bacon wrapped hot dogs in a community oriented social environment.”

Dirt Dog locates on Figueroa Boulevard, right north to University of Southern California. What Ozaki, Larios and Cam did is simply turning the famous Los Angeles street food into an indoor business.

“It used to be street food. People have it at midnight after partying. But now we are providing the bacon-wrapped hot dogs here all day everyday,” said Philip Ozaki, Head Chef and Chief Operations Officer of Dirt Dog.

Compared to the hot dogs served by street-side vendors, Dirt Dog is using a higher quality of ingredients and coming up with more choices of flavors. It guarantees that its hot dog is made from “100% premium all beef Nathan’s 5/1 dog, wrapped in center cut bacon, topped with grilled onions & red and green bell peppers.”

 

Within the first month, more than six websites have reached out to Dirt Dog and wrote about them, including LA Weekly and Cue The Critic. This Wednesday, Jack F.M. (93.1) will also join Dirt Dog to give free hot dogs.

Bacon-wrapped hot dog has never drawn so much attention before, however, it does not make any difference to the condition of traditional hot dog vendors.

Los Angeles Times published a story suggesting that the weak economy forces more Angelenos become street vendors.

According to the research group, Economic Roundtable, 43 percent of the vendors in Los Angeles prepare and serve food-related products. Their sales can add up to $42 million a year.

Unfortunately, street vending is still fighting for its legal permission to come out of the shadow. 271 citations were issued against sidewalk vending during last fiscal year, however, the number surged to 286 only for the first quarter of 2014.

Officials’ opinion varies on legalizing street vendors or not. The major concerns are the potential costs of the enforcement system, the upcoming costs for maintaining the clean streets where street vendors operate their businesses, and also the potential tax revenue.

Prices of the merchandise sold by street vendors are usually negotiable. Therefore street vendors become the major shopping destination of many low-income families. The Economic Roundtable also suggests that every dollar earned by LA street vendors will finally generates economic impacts of $1.6 on the local economy.

Enjoying the legal permission to make street food, the three owners of Dirt Dog haven’t forgot to repay the community that supported them.  They decide that for each quarter, 10% of their profits will be put into community services.

Similar to investing the community, Ozaki firmly believe that investing the workers in the restaurant is going to reward more than what you expected.

“If you are treating them well, they will treat your customers well. Then more customers will be happy to eat here,” Ozaki said.

When new customers step in Dirt Dog, they will never feel lost in the menu. A waitress is always holding a menu and ready to explain everything on it. Many customers would like to spend several minutes with her before placing the order, and end up having the most satisfactory choice.

On Yelp many reviews mention their superb customer service, one of which even writes: “Customer service at its finest!”

Ozaki, Laoris and Cam are glad to see that their investment is paying back. “It took us 2 months to hire people,” Ozaki said. “We interview 3 or 4 people everyday,” Laoris added.

Finally they hired 15 workers, and offered them salary all above the minimum wage.. When talking about the possible rise of minimum wage from $9 to $15, he admitted that the major cost of Dirt Dog is on labors. The cost on ingredients and marketing only account for about 10% of its whole spending.

“But we are ready to pay them more and we have already paid them more than most of the businesses here,” Ozaki said. He said after the workers in nearby businesses getting to know that they offer a better salary, there are new workers come in everyday to seek their job. And he has already hired more than four workers who used to work for their neighbors in the plaza.

“Even the manager of Five Guys wants to come here,” Ozaki said proudly.

Dirt Dog now opens from 11 a.m. to 10 p.m. but in two months, Ozaki said they will start to open at 7 a.m., serving breakfast and getting license to sell liquor for the late night hours.

No matter how the economy changes, the three owners are very ambitious and confident about Dirt Dog’s future.

“We definitely have a backup plan and but for now we are doing alright and the sales is getting better and better,” Ozaki said confidently.