Saturday, November 7, 2015

Triangular Predicament

I have several family members and family friends that are franchisees of the AFC Sushi Corporation, a company which covers a niche of selling fresh sushi in supermarkets across the United States. They are normally the agents of many principals: supermarket management, the health department, and a regional manager of the AFC Franchise. For the most part, supermarket management and the AFC Franchise have their views aligned, so I will mostly focus on the tensions that arise from being an agent to the franchise and the health department.

The franchise rates good performance by the profitability of a store. If sales are satisfactory and the procedures are followed, the franchise has no reason to step in. The health department, on the other hand, rates good performance by how well the franchisees adhere to the health guidelines laid out by the state.

The two principals see eye to eye on several things, such as the need for sushi to be made fresh daily, but a problem arises from the fact that the agents shoulder a large amount of risk from the franchise principal: franchisees buy both contracts with certain supermarkets and supplies from the AFC Sushi Corporation and then must maintain the profitability of the location.

In order to maintain sales and overcome stereotypes of all sushi being raw fish and the cultural stigmas associated with such, franchisees put a particular emphasis on sales and satisfying customers. Due to the nature of supermarkets, many customers prefer grabbing a package and checking out, as opposed to ordering and waiting. Thus, a majority of the sushi must be prepared beforehand. However, the health department mandates that sushi must be chilled to a specific temperature before it can be put onto the cooling display. In order to maintain both sales and obey health guidelines, sushi must be prepared well in advance before it may be sold.

In practice, sushi is usually put into the cooling display right after being packaged. Sushi is a relatively elastic product, as it is luxurious and shrouded by social stigmas. From the eyes of the agent, maintaining sales involves capturing as much potential customers as possible, and hoping some will become regulars. But as supermarket customers, these potential customers are different from those that might visit a sushi restaurant, having higher degrees of fickleness and impatience. This means decorative sushi that is put out to display immediately, to cater to those unique circumstances.

A simple answer to satisfying both principals could be to have the agents come in earlier. But coming in early is not a practical answer for the agent, as the people I know begin their daily commute to their respective supermarkets between the hours of 3-6am. Changing the order in which certain types of sushi is made is likely to have no positive effect, as over the years, agents have been guided to an efficient order of preparing sushi, such that regulars are able to pick up their favorite sushi as they come through.

In the end, the agent usually chooses to satisfy the franchise principal and ignore a specific few demands of the other principal, the health department. The scenario is reversed during routine health inspections, as agents will slightly curtail sales to avoid being fined or compromising their contract.