If it costs $18 an hour to hire cashiers, then how in heck can you afford to open a store?
Simple, you get rid of the cashiers.
All week I have been mulling over the brilliance and simplicity of the business model of Dirty Lemon, a subsidiary of Iris Nova, which has opened a store in Tribeca, New York to sell its pricey waters. It doesn't have a cashier to be found.
Instead, Dirty Lemoners, or whatever they call themselves, visit the store, text that they have bought one of the company's $10.83 bottles -- nice bottles! -- of charcoal activated lemony water, which tastes really good and is good for you, and then go on their merry way.
Now, at first I thought this brainchild of Zak Normandin, which has all kinds of funding for all sorts of big names, seemed like a clarion call for a top.
Human nature told me that. At one point, we ran an art gallery right near the Drug Store, as it is called, and when we did our openings, we served wine. The idea was simple, if you came in to look at the paintings of undiscovered artists that we had found, you could browse through the rooms with a plastic cup of a decent bottle of chardonnay.
We had to stop it with the wine after the fourth time -- we got lines all the way up the stairs for wine and then people would leave instantly. What people won't do for about $0.50 worth of crummy white. So much for an honor system.
But here's a store, again, right down the block, that's going all-out honor system for something 20x as expensive -- and apparently it is working, because the company is going to open a second store in Emerald City -- that is, Hudson Yards on the west side of Manhattan.
Why does all of this matter? It's very simple. If this method catches on, then you can see how unemployment can stay low and no real wage inflation builds up because fewer people are being offered that $18 an hour job.
Now, there's also another reason. As a small business owner who has lost his wife to washing dishes all too often at our second restaurant, I can tell you that trying to open something new if you can't replace the $18 an hour dishwasher with an honor system, you aren't going to open the restaurant. We are seeing restaurants going out of business left and right in our part of the city simply because it costs too much money to operate.
But that, again, keeps a lid on wages, because you simply don't create the jobs that pay $18, or $20 as they are doing at Bank of America (BAC) . Of course, the fine print isn't written on the latter, but the secret behind paying $20 an hour to your people is to have fewer people and better digital offerings, because, alas, it's a really bad idea to run a bank on the honor system.
So, while I initially figured that $10.83 for a bottle of water -- the same price as a 12-pack of Bud or Coors Light -- meant a top, what I forgot about was the millennial generation loves ordering things by phone -- in this case, text messaging to a Twilio-based (TWLO) system to artificially ring up the sale. While jobs aren't created, they just aren't destroyed.
It's how the Fed can get away without raising rates. It's how the Nasdaq keeps going higher.
And it's about how you can't give away twelve packs of allegedly corn-syrup-filled beers, let alone a hated plastic cup of a low-end wine made by a brand that Constellation Brands (CNST) just sold, because cheap spirits just don't sell well anymore.