[I actually drafted this post about a week ago, when Mama Fu's was still open; I just found out this week that they've closed down. I don't think that this post would have made much difference for them by itself; it was likely too late. But still, I shouldn't have waited. I'm telling you, "too late" can sneak up on you in a hurry. If there's a place you like, don't wait around.]

The other day at Mama Fu’s, I talked to one of the owners for a few minutes while she folded napkins and I ate Honey Glazed Chicken.

She said things were rough, though they had picked up a little in the last few days. The Bridge Street opening has hurt them badly. She said it has always been brutal, but now it’s “doubly brutal.” I feel really bad for her, because I know what it’s like. I’ve been there, but I didn’t know what to say.

The truth is I hadn’t eaten at Mama Fu’s in a couple of months. I like the place; no, I love the place. I talk to people about how I like Mama Fu’s, and take people there. I can’t think of anywhere else in Huntsville that I enjoy as much for the price as Mama Fu’s. There are places I prefer to eat, but they all cost more. It’s convenient for me; I drive by it all the time. But for various reasons I just hadn’t made it there.

I wanted to tell her, “Hang in there, it will get better,” but I don’t know if it will or not. I wanted to say something to encourage her, but it occurred to me that it won’t help. What she needs, as the owner, is not encouragement; she needs customers.

Unless you’ve owned a retail establishment, you may not understand that the way to express appreciation for it is to go there and spend money as often as possible, and encourage your friends to do the same. Everything else – compliments, encouragement, smiles – is just a packet of sweetener for whatever the owner is having to drink.

My wife and I had a lovely bookstore and coffee shop a few years ago. It was a fantastic place – I still miss it to this day – but it was never profitable, not for a month, hardly ever for even a week. We stuck it out for 3 years before finally shutting it down.

When we closed the store, we had people come by in tears. They were so upset, but yet they were often people we hadn’t seen in weeks. We had people going on about how much they missed us, how much they’d loved us, who came in once a month and hardly spent anything. They couldn’t imagine why we would close: “It was such a lovely place, and it was always so busy!” Well, it wasn’t busy enough, and too many people just came there to mill around and talk, and didn’t buy anything. If half the people that said they loved it had supported it the way they say they loved it, we wouldn’t have had to close.

I don’t say this to whine, because by now I know it’s probably good that we did close. But I learned this then, and had forgotten it. Mama Fu’s has reminded me, and I’m sharing it with you: it won’t do you much good to be standing outside the shuttered front door saying, “I loved this place! Oh, my goodness! Why did they go out of business?” Usually, the store went out of business because I, and people like me, didn’t spend enough money there. We got bored, we got distracted, we didn’t think about it, and we didn’t patronize them enough.

It’s hard to be in business, and it’s especially hard to be in a food business. It’s a lot like the music business, but without the glamour and riches. it’s vicious and cut-throat, expensive and difficult, capricious and terrible, and almost everyone fails at it sooner or later.

So here is a warning to you: if there is a place that you like to eat and it’s not a big successful money-printing chain like McDonald’s (they’re like roaches, you can’t kill them) – if it’s an independent place that you like, go there as often as you can.

But what’s more important, urge other people to go there. Sell for them. Not in an annoying-salesman way, but by telling people, “I went there, it was great, you have to go try it.” And then ask them, “Have you gone? Have you had the mushu pork? Have you had the Philly cheese-steak? Did you try that chicken sandwich I told you about?” Grab them by the collar and say, “Oh, let’s go there for lunch!” Go spend money and encourage other people to go and spend money. That’s how you support places you like, and that’s how you keep them in business.

You will be surprised how much difference a single person shopping or eating at your place regularly can make to a small store.

Update (2008-11-28): Seth Godin has the same idea.

It turns out that cutting inventory by 10% and facing books out (instead of just showing spines) increased their sales by 9%. This is counter to Long Tail thinking, which says that more choices and more inventory tend to increase sales.

I don’t think that’s what the Long Tail suggests. In fact, part of its premise means it can’t apply to a brick-and-mortar store, where display space is fixed (and expensive).

The key conditions are well-summarized in the Wikipedia entry:

The key supply-side factor that determines whether a sales distribution has a Long Tail is the cost of inventory storage and distribution. Where inventory storage and distribution costs are insignificant, it becomes economically viable to sell relatively unpopular products; however, when storage and distribution costs are high, only the most popular products can be sold.

Borders’ action here, instead of being “against Long Tail thinking” is actually perfectly aligned with it: they realize that their sales distribution does not have a long tail, because their customer base is too small and their cost of additional inventory is relatively high. So they have taken steps to increase the popularity slightly of a slightly smaller number of items.

Seth’s a very smart guy; it’s hard for me to tell if he’s misrepresenting the long-tail on purpose for something, or if he actually missed it on this one. I’m guessing the former, since the real point he seemed to be making in his post was a good one. Or am I the one missing the boat here?

Now, you don’t have to accept that the Laffer Curve is true if you don’t want. You don’t have to accept that the earth is round, or that the sun goes around the moon, or that the Washington Redskins are evil, no matter who coaches them. Facts don’t care if you believe them, and you certainly don’t have to believe them.

Still, it’s just willfully ignorant to go around trumpeting that you reject the “Laffer Curve Theory” if you don’t even know what it is. And most of the people I’ve heard take issue with it clearly didn’t know what it actually says. I’m not saying that, “They disagreed with me, so they were wrong.” I’m saying that they were busy disagreeing with some straw man they’d concocted that had hardly any resemblance to the Laffer Curve itself.

So, if you want to know what the Laffer Curve is about, Larry Kudlow pointed to this terrific video a few days ago, from the Center for Freedom and Prosperity. It’s only around 7 minutes long, and moves quickly, and is quite clear. Just don’t get distracted by the short appeal for a flat tax toward the end; the Laffer Curve is not connected to any particular means of taxation.

p.s. – I’m not a flat-tax proponent myself, largely for pragmatic reasons, namely, I don’t think it would remain transparently applied, and would quickly turn into a bureaucratically-managed VAT nightmare. But that’s another story.

Marketwatch reported today that Countrywide reported that mortgage loan fundings for November 2007 were down 40% from November 2006.

The market has peeled off another 5% from CFC’s price today, though CFC’s been so volatile lately that it might be a little imaginative to call it a “reaction” to the news. It could be “reacting” to a butterfly landing on some institutional trader’s window and causing him for some reason to remember to unload another 100k of the shares. I don’t know.

Still, it’s interesting that this is being reported is that “CFC reports mortgage fundings down 40%”, as though this is the real news. But didn’t we already know that things are worse than last year? That’s not news any more. The news – the thing that is unexpected (or was to me) and of immediate interest – is that its total mortgage loan fundings were up 5 percent from the prior month. Why isn’t that the headline? When was the last month that CFC saw mortgage loan funding up from the prior month?

Again, I realize that there can be seasonal factors that make some months stronger than others, and so normally, comparing year-over-year makes more sense. But given that we’ve seen a massive dislocation and an ongoing effort to reprice mortgage risk, the huge year-over-year decline is already priced in. It seems to me.

Really, this isn’t about CFC, but about how financial reporting, and maybe most reporting, has to fit the current template. “CFC Mortgage funding up” doesn’t fit the “We’re all going to die because the 4% of the mortgage market in sub-prime loans is going to have above-average failure rates for a while” template. So the news, whatever it is, has to be reported in such a way that the template remains undisturbed (at least, that is, until the next template comes along).

Disclaimer: As you may have guessed, I am currently long CFC (though not in a big way).