Travel Tracks by Dave Heron ~ GIMME A PIZZA

I remember a pizza restaurant years back that had a reputation for making, serving and selling, some of the finest pizza in Eastern Canada.
The place was full 7 days a week, so much so that their biggest repair issue was having to replace the front door on an annual basis as a result of excessive use.
They made money hand over fist.
So much so they decided to expand.
They opened a second outlet a couple of miles from their prime location.
Now instead of 1 outlet covering a market territory of say 20 square miles - there were 2.
At pretty much twice the cost.
With pretty much the same number of clients.
Something had to be done.
Their marketing guru concluded if they couldn't increase the revenue, they'd decrease the cost.
The 1st thing to go was the premium cheese - there was a 2nd rate product available at half the cost.
Retained earnings increased and the guru, fresh off a victory, decided to take it a step further by reducing the size of the pizza shell by 1 inch.
After a month, no-one had commented so the fresh basil was the next ingredient to get the axe.
They were on a roll.
Where product cost had originally been 65% of the selling price, it was now down to 40%.
By watering down the tomato sauce, another 10% cost saving was achieved.
Unfortunately, they'd also lost 20% of their clients who had gone over to a competitor who was using something other than road kill for the toppings.
Marketing said he had a fix in the wings.
"We'll get rid of our waiters, clients can carry their own pizza home and we'll cut the price to get customers back through the door"
To get the word out, they developed a terrific web-site that invited clients to order on-line at rock bottom prices.
The pictures looked terrific.
The prices beat the nearest competitor by 10%.
Unfortunately , a month into the new marketing strategy, customers came to the realization that six bucks for a pizza made out of cardboard and tomato sauce-while admittedly cheap - was such a lousy product it didn't deserve their support.
Predictably, what was once a great pizzeria, closed their doors.
Rumor has it, the management team went out and started an airline.
And this story is going where you ask?
American Airlines is the latest in a string of carriers to be contemplating a reorganization under a protection from creditors arrangement.
Blaming high labor costs, unions, fuel costs and a market downturn, management gurus at American are scrambling to explain to creditors why the stock at American plummeted over 40% on October 3rd on whispers of a bankruptcy filing.
"We're fine - we've got $318 Million in cash reserves and another $4.8 Billion in short term investments."
Hopefully that 4.8 isn't invested in themselves.
Not to mention the short term liabilities of $9.7 Billion they're currently saddled with.
As with other legacy airlines, American has eroded the quality of their product over the past 10 years to the point where not only is the general public saying -"No" but - "Hell No".
Yes you can find some ridiculously low prices on some of their flights in the US - often to the initial envy of Canadian flyers.
Plus charges for everything from bringing your wallet on board the aircraft to asking their staff a question, i.e, "why are we 4 hours late?" - "Because we're waiting for pizza - that'll be $20".
Everybody loves a bargain.
Not everyone considers the lowest price to be a bargain.
Except maybe the marketing guru over at the airline who couldn't be reached for comment.
He was out picking up pizza at the recycling center.



Adios until next time
Dave Heron

Dave Heron is the owner and operator of: Pace Setter Travel & Tours (1995) Inc; P.O. Box 612, 70 McRae Street, Okotoks.
Tel: 403.938.5454
Toll Free: 1.800.206.7223.
Fax: 403.938.5568
Email: pacesetter@nucleus.com