Crains New York - June 4, 2012 - (Page 2)

COMMENTARY I A good cause in our backyard n spring, thoughts turn to nature. So it figures that Central Park: An Anthology (Bloomsbury, $16), featuring writers like Susan Cheever, David Michaelis, Mark Helprin, Jonathan Safran Foer and Bill Buford, and in part benefiting the Central Park Conservancy, which runs Manhattan’s 843-acre masterpiece of landscape architecture, should have just hit stores. So, too, that on the night of June 6, the conservancy said Doug Blonsky, president of the conservancy. “But we’d never drilled down to find out which held the donors.” Now they have, and the picture is nowhere near as pretty as the park on a June day. On average, only 17% of parkside apartments have chipped in to maintain their backyard since 2010, according to Ms. Coppersmith. To increase that number, the conservancy began recruiting those ambassadors to advocate for the park and started celebrating buildings like Hampshire House, the San Remo and 1040 and 1150 Fifth, where at least half the apartments have contributed to the conservancy. The conservancy also recruits developers and businesses operating near the park. So Arthur and Will Zeckendorf, developers of 15 Central Park West, bought each initial purchaser there a one-year conservancy membership, but only 16 of 201 households activated them. Ms. Coppersmith doesn’t buy the argument that for many, it’s their second, third or fourth home. “Whether they live here or not, the park elevates the value of their apartments,” she reasoned. “They need us.” The same goes for all the trophy buildings ringing the park. “At your home in the country, you pay for a gardener,” one ambassador tells the neighbors he targets. “Double that and give it to the conservancy. We take better care of it, and it’s a better asset.” Writing this persuaded me to buy a membership. How about you? LISTEN to a discussion at CrainsNewYork.com/podcasts Beverage makers sour on sweetened-drink ban Move could cut into their 85% margins BY LISA FICKENSCHER It’s no wonder that the business community has reacted harshly to Mayor Michael Bloomberg’s proposal to banish super-size portions of sugary drinks: Soda is a cash cow like no other in the food-service industry. “The profit margins are very high on beverages,” said Alan Vituli, former chairman and chief executive of Carrols Restaurant Group Inc., which owns more than 500 Burger Kings in the U.S., including New York. That is an understatement. A soda priced at $1.49,for example, costs a retailer approximately 25 cents. The remaining $1.24 is pure profit. Beverage manufacturers such as Pepsi and Coca-Cola vie for exclusive contracts with restaurant chains like Burger King and Applebee’s, and offer financial incentives. “We spend months and months evaluating the contracts to see which one will give us the most,” said Zane Tankel, chief executive of AppleMetro Inc., which operates more than 30 Applebee’s in the city. Applebee’s has a nationwide contract with Pepsi, which provides the chain with 20-ounce glasses emblazoned with the Pepsi logo. At New York Applebee’s, a 20-ounce glass with free refills goes for $2.99. “There is no doubt that the margins on soft drinks are greater than those on food and even alcohol,” said Mr. Tankel. Experts predict that if the mayor will be hit hardest because they will have to shift their focus to less lucrative products, like energy drinks and juices, that cost more to produce. And they are fighting back the hardest. After news of the mayor’s plan broke last week, the American Beverage Association ran an ad in The New York Times. Among its claims is that sugarsweetened beverages make up just 7% of the average person’s daily diet. The ad comes on the heels of a seven-figure campaign launched in the city in April that touts the industry’s diverse product lines and its efforts to reduce the calorie count of certain beverages. “Offering such a wide range of lowand no-calorie options means on average there are now 23% fewer calories per serving,” an ad from April claims. A spokesman for the association, Chris Gindlesperger, said the trade group will be exploring its legal options to combat the proposed ban, but he did not elaborate. Soda may be the biggest target of the ban, but sweetened teas are also included. Honest Tea, for example, which is considered one of the healthier brands because of its low sugar content and organic ingredients, would not be able to sell its top product, Honey Green Tea, in New York City if the ban is passed. At 70 calories and 16.9 ounces, the product exceeds the ban’s limits by 20 calories and 0.9 ounces. “What if San Francisco comes up with a rule that’s not the same as New York’s?” asked Honest Tea founder Seth Goldman.“We would have to go through all sorts of gyrations for an arbitrary number that is not based on any rational reason.” newscom SUGAR HIGH: Soda provides fat profit margins. hosts its annual Taste of Summer party at the park’s Bethesda Terrace. A donation of $400 ($10,000 to $20,000 for tables) will buy you grub from 40 city restaurants—including ‘21,’ Armani Ristorante, Benoit, Circo and Le Cirque, Serendipity, SD26 and Swifty’s— entrée to a silent auction and dancing under the stars. Less visibly, the conservancy has launched a program that hits me where I live, on the park’s periphery, which has lately renewed its claim to be the city’s hottest residential zone, home of Dmitry Rybolovlev’s (or is it his daughter’s?) $88 million spread at 15 Central Park West, Steve Wynn’s $70 million duplex at the Ritz-Carlton and composer Igor Krutoy’s $48 million condo at the Plaza Hotel. Their backyard, Central Park, accounts for their premium price tags. Small wonder, then, that four years ago, the conservancy commissioned a survey of the neighbors’ contributions to the park’s upkeep. The result was what Terri Coppersmith, vice president for development and visitor experience, dubbed its Ambassador Program, which honors parkside buildings that cough up the most cash for upkeep. According to the conservancy, 550,000 people live within a 10-minute walk of the park, 65% of the 40 million or so bodies who enter annually are regulars (presumably neighbors) who come once a week or more, 31% use it every day, and yet only 55,000 generous souls help pay the 85% of its budget that is raised privately. “We’d always targeted neighborhood buildings,” implements his ban, which will prohibit restaurants and other retailers from selling sugary drinks containing more than 16 ounces or more than 25 calories per eight ounces, consumers will have to change their purchasing habits—and restaurants will, too. “Over time, if you make consumption more difficult, like the tax on cigarettes, ultimately consumption will diminish,” said Mr. Vituli. MICHAEL GROSS Soda’s shrinking sales In fact, soda sales have been declining for more than a decade, while sales of bottled water and energy drinks have been increasing, partly in response to public health campaigns aimed at educating consumers about good nutrition.Restaurants will simply shift their promotions to encourage customers to buy larger cups of the legal alternatives: The mayor’s proposal exempts diet sodas, fruit juices, dairy-based drinks and alcoholic beverages. “If the ban goes into effect, we’ll sell a lot of beverages with synthetic sweeteners, and our water sales will go up,” said Mr. Vituli. The big beverage manufacturers Central Park ‘elevates the value of their apartments’ For-profit colleges tested A new law could take away tuition loans— even at career schools with excellent grades BY JUDITH MESSINA The for-profit college sector has long been seen as the ugly duckling of the education business, under fire in recent years from media and regulators even as it has attracted a rapidly growing share of American highereducation students. Some of the criticism is warranted: Certainly, there are fly-by-night and other for-profit schools that aggressively recruit unprepared students and load them up with debt, but never get them across the finish line or into a well-paying job. But a new federal law, scheduled to take effect in July, may do some real damage to the entire sector by targeting the problems of some players but unfairly burdening the operations of others, say some for-profit advocates. They point to government data that show graduation rates and student loan repayment rates at some New York for-profit schools are comparable to those at traditional public and nonprofit colleges. The new regulations could slice into for-profits’ eligibility for federal tuition loans. If former students’ debt payments are too high relative to their incomes or if they don’t pay back their federal loans on time, the federal government could take away schools’ eligibility, one program at a time. The regulations may especially hurt programs such as culinary arts and fashion, whose graduates start by earning low salaries. Also, in an economy in which even students from elite schools can’t find jobs, it’s more likely that students will default. “What this will do is throw students out of programs,” said David Rhodes, president of the School of Visual Arts. More than 55,000 students attend for-profit colleges in New York state, where enrollment has grown 19% between 2008 and 2011, compared with a 7.6% overall growth in the state’s college population. Many schools serve a population of minority, lowincome and older students who would likely never go to college if not for the flexible programs, access to governSee FOR-PROFIT on Page 9 COMPARE AND CONTRAST: ENROLLMENTS For-profit colleges Private nonprofits Public colleges 2008 46,400 512,100 683,000 2011 55,100 541,200 739,000 % change +18.9% +5.7% +8.2% Note: Data are rounded. Source: NYS Department of Education 2 | Crain’s New York Business | June 4, 2012 http://www.CrainsNewYork.com/podcasts

Table of Contents for the Digital Edition of Crains New York - June 4, 2012

Crains New York - June 4, 2012
Table of Contents
Drink stink: Big Soda aims to fight Bloomberg ban
To your health: Late nightclub owner bequeathed bar’s profits to hospitals
New York, New York
Tax cuts for wage hikes: A political deal takes shape in Albany
Sugar buzz: Readers weigh in on the idea
Viewpoint
Opinion
Small Business
Real Estate Deals
Classifieds
NASCAR’s marketing chief hits the road
Seed money for social entrepreneurs
Hot Jobs
Tracey Stewart finds her “moment of Zen”
A dream of a wine bar opens
The Week Ahead

Crains New York - June 4, 2012