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> Buffett cautioned Huggins to never sacrifice quality for profit. Funny how that's the complete opposite of another celebrated investor: Jorge Paulo Leman fro

> Buffett cautioned Huggins to never sacrifice quality for profit. Funny how that's the complete opposite of another celebrated investor: Jorge Paulo Leman from Brazil's 3G Capital Partners (Heinz, Popeye's, Anheuser-Busch, Tim Horton's, Bugger King, etc). Their game is to buy brands with very strong customer loyalty and slash costs (and quality). In the long run they'll destroy the brand but until then will make enough profits to more than compensate for the investment.

hackernewds 4y ago
> Bugger King
catgary 4y ago
What that company did to Tim Horton’s was basically an act of war against Canada.
- themitigating 4y ago
  I'm from NY so I consider myself a bagel snob. The bagels at Tim Hortons in Ontario are worse quality than anything I've ever had in the states. They are similar to packaged bagels from the supermarket
  - kevin_thibedeau 4y ago
    Tims has gone downhill since they got bought out by an American holding company.
  - BoorishBears 4y ago
    Fun fact: there's a few Tim Hortons locations in NYC
    - VBprogrammer 4y ago
      Weird fact: there are dozens in Glasgow, Scotland. There was a recent announcement that they will be opening the first one in London soon. We don't visit for the quality of the food or coffee. When we RVed around Canada a Tim Hortons was a great opportunity to get online and plan our next steps. It now had a kind of sentimental attachment which reminds us of the trip.
  - donthellbanme 4y ago
    NY bagels, and pizza, are always the best. I used to work for Marin Bagels. Hated the owner, but that's not my point. Making bagels last more than a day is difficult task. Real bagels need to be boiled. These boiled bagels that are only flour, water, and salt. (there's so much yeast in the air of a bagel shop they don't need to add anymore.) These bagels are only fresh for a few hours, and need to be freezed if you want anything resembling a fresh NY bagel. My point is bagels are hard to make. That is good bagels. Good bagels need to be made daily. Bagels in the store are basically white bread. I still think there's a market for fresh bagels flash frozen. I noticed one company doing it, but the price point was too high.
- imposterr 4y ago
  To be fair, even before that acquisition, the quality had been going down. The biggest jump imo was when they went from making the donuts in-house to having them delivered and just heated at the location.
- markus_zhang 4y ago
  I haven't been to a TH for ages. Their coffee tastes badly and the food is ... merely food. Back in 2005 when I first arrived in Canada TH was the first store I visited.
  - marcus0x62 4y ago
    I went to a TH in Toronto in 2018 after hearing about it from Canadian friends for years… I would describe the food at that time as ‘technically food.’ The coffee, well, I threw that away and went to another shop.
noduerme 4y ago
When were Popeye's or BK "quality" brands? I don't remember them getting any worse since RBI bought them.
- frakkingcylons 4y ago
  I feel like BK used to be a lot better back in the 2000s but that could just be fond memories.
  - DrewRWx 4y ago
    My guess is it is because that is the era when BK really leaned into the McDonalds sized chip on their shoulder. So, kinda like the petty thrills that the "console wars" had.
    - noduerme 4y ago
      It's still probably better than McDonald's, but the bar is pretty low there. Full disclosure, I sold the QSR stock I'd had for a few years when everything went to shit in 2020 and bought MCD on the same day... I like that McDonald's goes out of the way to supply locally, it seems like a better model for surviving black swan events. Both garbage, but that's the cafeteria choice you get in late stage capitalism. Still, I watched with some admiration as MCD navigated the local export restrictions on beef in Argentina, and opened cafes there, served only grass fed local beef... then promoted that guy to open cafes in Europe and watched again as they brought hyperlocal beef producers in so you could buy a Charoux burger in Paris. That was deft.
      - PoignardAzur 4y ago
        > Both garbage, but that's the cafeteria choice you get in late stage capitalism. If you're in Paris and you're willing to pay 15€ for your burger menu, King Marcel is ridiculously good.
        noduerme 4y ago
slavboj 4y ago
The difference is that Buffett uses subsidiaries to reduce Berkshire's long term cost of capital for other projects, rather than trying to squeeze returns from them directly.
lotsofpulp 4y ago
And yet Buffett decided to become business partners with them: https://finance.yahoo.com/video/warren-buffett-kraft-heinz-performance-210542443.html https://finance.yahoo.com/video/warren-buffett-kraft-heinz-p...
- parenthesis 4y ago
  And has probably regretted it.
- lasc4r 4y ago
  The two strategies don't seem that different, one lowers quality the other massively hikes prices. Customers are getting ripped off either way.
skippyboxedhero 4y ago
That isn't their strategy. The largest part of their strategy has been cutting central costs (which are, not coincidentally, obscenely large at consumer goods companies). That has been their strategy since the early days. The cost-cutting that you are seeing across the industry started because 3G exposed the fact that a lot of companies were running with incredible amounts of fat. But during that time, you have also seen massive increases in competition across the sector due to changes in consumer demand that has led to brand-destroying behaviour.
- backtoyoujim 4y ago
  By "fat" I assume that you mean "people with jobs that pay enough to let them buy things like expensive chocolates ?"
  - cercatrova 4y ago
    I don't believe it's smart to have people on the payroll just because. If they're not producing value for a business, then a business should remove them. Yes, it does suck for the person getting fired, but that's life, they'll find a different job.
  - golergka 4y ago
    People aren't entitled to their jobs any more than any other business is entitled to their customers. To think that they are is to infantilize salarymen and to perceive them less as free economic agents and more like serfs, incapable of proving their worth in a free, competitive market.
  - skippyboxedhero 4y ago
    No, I mean people who earn $100-200k/year and do nothing. Consumer products company had hundreds of these people.
chaostheory 4y ago
> Buffett cautioned Huggins to never sacrifice quality for profit. It might be a good investment, but from my experience See's Candies is only good at packaging their mediocre products made with corn syrup. Before someone cites their FAQ: No, most of their candies do not have "cherry ingredients including glacé whole, glacé halves, and whole dipping cherries" sourced from a 3rd party supplier.
- littleweep 4y ago
  As a big Coca Cola fan WB has no problem with corn syrup.
iancmceachern 4y ago
He, they, may make money doing this but the cost to themselves is one I would be unwilling to give. He, they, will always be known for this behavior, that will be there legacy. If you are wealthy, why spend the extra effort beyond being comfortable in gaining more wealth at the expense of companies, their customers. Like what relative improvement does 50 extra million mean to someone like that? It's seeking money for money's sake. Why not use the extra time and energy you have to make the world better, be known for something better, leave a positive legacy? Why do people like this choose to trade their dignity, their legacy, for more money that they don't even need?
kafkaesque 4y ago
A lot of tourists and foreigners come to Canada and say they want to try Tim Horton's because they've heard it's quintessentially Canadian. I have to always correct them and tell them it's not Canadian.

hackernewds 4y ago

> Bugger King

catgary 4y ago

What that company did to Tim Horton’s was basically an act of war against Canada.

themitigating 4y ago
I'm from NY so I consider myself a bagel snob. The bagels at Tim Hortons in Ontario are worse quality than anything I've ever had in the states. They are similar to packaged bagels from the supermarket
- kevin_thibedeau 4y ago
  Tims has gone downhill since they got bought out by an American holding company.
- BoorishBears 4y ago
  Fun fact: there's a few Tim Hortons locations in NYC
  - VBprogrammer 4y ago
    Weird fact: there are dozens in Glasgow, Scotland. There was a recent announcement that they will be opening the first one in London soon. We don't visit for the quality of the food or coffee. When we RVed around Canada a Tim Hortons was a great opportunity to get online and plan our next steps. It now had a kind of sentimental attachment which reminds us of the trip.
- donthellbanme 4y ago
  NY bagels, and pizza, are always the best. I used to work for Marin Bagels. Hated the owner, but that's not my point. Making bagels last more than a day is difficult task. Real bagels need to be boiled. These boiled bagels that are only flour, water, and salt. (there's so much yeast in the air of a bagel shop they don't need to add anymore.) These bagels are only fresh for a few hours, and need to be freezed if you want anything resembling a fresh NY bagel. My point is bagels are hard to make. That is good bagels. Good bagels need to be made daily. Bagels in the store are basically white bread. I still think there's a market for fresh bagels flash frozen. I noticed one company doing it, but the price point was too high.
imposterr 4y ago
To be fair, even before that acquisition, the quality had been going down. The biggest jump imo was when they went from making the donuts in-house to having them delivered and just heated at the location.
markus_zhang 4y ago
I haven't been to a TH for ages. Their coffee tastes badly and the food is ... merely food. Back in 2005 when I first arrived in Canada TH was the first store I visited.
- marcus0x62 4y ago
  I went to a TH in Toronto in 2018 after hearing about it from Canadian friends for years… I would describe the food at that time as ‘technically food.’ The coffee, well, I threw that away and went to another shop.

noduerme 4y ago

When were Popeye's or BK "quality" brands? I don't remember them getting any worse since RBI bought them.

frakkingcylons 4y ago
I feel like BK used to be a lot better back in the 2000s but that could just be fond memories.
- DrewRWx 4y ago
  My guess is it is because that is the era when BK really leaned into the McDonalds sized chip on their shoulder. So, kinda like the petty thrills that the "console wars" had.
  - noduerme 4y ago
    It's still probably better than McDonald's, but the bar is pretty low there. Full disclosure, I sold the QSR stock I'd had for a few years when everything went to shit in 2020 and bought MCD on the same day... I like that McDonald's goes out of the way to supply locally, it seems like a better model for surviving black swan events. Both garbage, but that's the cafeteria choice you get in late stage capitalism. Still, I watched with some admiration as MCD navigated the local export restrictions on beef in Argentina, and opened cafes there, served only grass fed local beef... then promoted that guy to open cafes in Europe and watched again as they brought hyperlocal beef producers in so you could buy a Charoux burger in Paris. That was deft.
    - PoignardAzur 4y ago
      > Both garbage, but that's the cafeteria choice you get in late stage capitalism. If you're in Paris and you're willing to pay 15€ for your burger menu, King Marcel is ridiculously good.
      - noduerme 4y ago

slavboj 4y ago

The difference is that Buffett uses subsidiaries to reduce Berkshire's long term cost of capital for other projects, rather than trying to squeeze returns from them directly.

lotsofpulp 4y ago

And yet Buffett decided to become business partners with them: https://finance.yahoo.com/video/warren-buffett-kraft-heinz-performance-210542443.html https://finance.yahoo.com/video/warren-buffett-kraft-heinz-p...

parenthesis 4y ago
And has probably regretted it.
lasc4r 4y ago
The two strategies don't seem that different, one lowers quality the other massively hikes prices. Customers are getting ripped off either way.

skippyboxedhero 4y ago

That isn't their strategy. The largest part of their strategy has been cutting central costs (which are, not coincidentally, obscenely large at consumer goods companies). That has been their strategy since the early days. The cost-cutting that you are seeing across the industry started because 3G exposed the fact that a lot of companies were running with incredible amounts of fat. But during that time, you have also seen massive increases in competition across the sector due to changes in consumer demand that has led to brand-destroying behaviour.

backtoyoujim 4y ago
By "fat" I assume that you mean "people with jobs that pay enough to let them buy things like expensive chocolates ?"
- cercatrova 4y ago
  I don't believe it's smart to have people on the payroll just because. If they're not producing value for a business, then a business should remove them. Yes, it does suck for the person getting fired, but that's life, they'll find a different job.
- golergka 4y ago
  People aren't entitled to their jobs any more than any other business is entitled to their customers. To think that they are is to infantilize salarymen and to perceive them less as free economic agents and more like serfs, incapable of proving their worth in a free, competitive market.
- skippyboxedhero 4y ago
  No, I mean people who earn $100-200k/year and do nothing. Consumer products company had hundreds of these people.

chaostheory 4y ago

> Buffett cautioned Huggins to never sacrifice quality for profit. It might be a good investment, but from my experience See's Candies is only good at packaging their mediocre products made with corn syrup. Before someone cites their FAQ: No, most of their candies do not have "cherry ingredients including glacé whole, glacé halves, and whole dipping cherries" sourced from a 3rd party supplier.

littleweep 4y ago
As a big Coca Cola fan WB has no problem with corn syrup.

iancmceachern 4y ago

He, they, may make money doing this but the cost to themselves is one I would be unwilling to give. He, they, will always be known for this behavior, that will be there legacy. If you are wealthy, why spend the extra effort beyond being comfortable in gaining more wealth at the expense of companies, their customers. Like what relative improvement does 50 extra million mean to someone like that? It's seeking money for money's sake. Why not use the extra time and energy you have to make the world better, be known for something better, leave a positive legacy? Why do people like this choose to trade their dignity, their legacy, for more money that they don't even need?

kafkaesque 4y ago

A lot of tourists and foreigners come to Canada and say they want to try Tim Horton's because they've heard it's quintessentially Canadian. I have to always correct them and tell them it's not Canadian.