WEBVTT - More States Likely To Pile On Google Post-Election: BI's Rie 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.560 along with essential market moving news. Kind the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:21.160 and on Bloomberg dot com with us now in studios 0:00:21.160 --> 0:00:24.360 Sarah Ponzac, Bloomberg Cross Asset Reporter. We'd also like to 0:00:24.400 --> 0:00:28.880 welcome Jennifer Ree, senior litigation analyst for Bloomberg Intelligence. Jen, 0:00:29.040 --> 0:00:31.000 let me start with you because we got the filing 0:00:31.080 --> 0:00:34.839 a little bit earlier. Google now actually officially being sued 0:00:34.960 --> 0:00:40.680 for anti trust. Say, you know, problems, stuff that hurts 0:00:40.760 --> 0:00:43.639 the consumer essentially in its search business. First of all, 0:00:43.680 --> 0:00:47.760 the stalk isn't reacting. What's the sort of time frame 0:00:48.000 --> 0:00:51.599 for how long these things can run? Oh, Bannie, these 0:00:51.640 --> 0:00:54.040 things can go so long. I mean this is really 0:00:54.080 --> 0:00:57.640 just the beginning of a marathon. Litigation is very slow 0:00:58.360 --> 0:01:01.160 and in it can go for years. So I think 0:01:01.200 --> 0:01:03.320 you know the absolute quickest where there could be a 0:01:03.320 --> 0:01:06.280 district court opinion, it might be three years. That would 0:01:06.280 --> 0:01:08.399 be the quickest. It's more likely to be four or 0:01:08.440 --> 0:01:11.440 five years, and then whoever loses is likely to appeal. 0:01:12.200 --> 0:01:15.080 When you think back about the last very big monopolization 0:01:15.160 --> 0:01:17.959 suit by the dj which was against Microsoft, I mean 0:01:17.959 --> 0:01:20.479 from start to finish, really the whole thing took about 0:01:20.520 --> 0:01:23.440 ten years before we ultimately knew what was going to 0:01:23.480 --> 0:01:26.119 happen and what the impact was. And I think this 0:01:26.200 --> 0:01:29.800 won't be as long, but it will be many years. 0:01:29.840 --> 0:01:34.120 So investors clearly aren't scared. Is the assumption that Google, 0:01:34.440 --> 0:01:36.520 you know, is not doing harms to consumer, or that 0:01:36.560 --> 0:01:40.319 it doesn't really matter whether Google is or isn't, or 0:01:40.360 --> 0:01:43.640 whether any of these companies will follow zeus. It's that 0:01:44.319 --> 0:01:46.959 they still make lots of money for their investors, right, 0:01:47.280 --> 0:01:49.200 you know. I think it's a number of things. First, 0:01:49.200 --> 0:01:51.320 this has been foreshadowed for a really long time and 0:01:51.400 --> 0:01:54.800 it was expected, so it's no big surprise UM. And 0:01:54.840 --> 0:01:56.960 I think the second thing is there are some analysts, 0:01:57.040 --> 0:02:01.080 including Bloomberg Intelligence, UM equity analysts just under Warrell, who 0:02:01.080 --> 0:02:04.200 believed that even if the worst case scenario happened and 0:02:04.240 --> 0:02:06.200 the company is forced to break up, it might not 0:02:06.320 --> 0:02:09.040 actually you know, hurt the valuation, that it could actually 0:02:09.040 --> 0:02:12.280 be good UM and the second thing is the third 0:02:12.320 --> 0:02:14.440 thing I guess is that these lawsuits are very hard 0:02:14.480 --> 0:02:17.480 to win in court. The DJ has an uphill climb here, 0:02:17.480 --> 0:02:20.160 and it has an even steeper uphill climb if it 0:02:20.240 --> 0:02:23.079 actually did seek a breakup remedy, and it's just unlikely 0:02:23.120 --> 0:02:24.480 that they're going to be able to get there at 0:02:24.480 --> 0:02:27.120 the end of the day. So Sarah plants like Google 0:02:27.160 --> 0:02:30.560 obviously one of the major large mega captics if you like, 0:02:31.080 --> 0:02:33.200 this is clearly not going to have an impact on 0:02:33.240 --> 0:02:35.840 this particular trade. But are we seeing this particular trade 0:02:35.840 --> 0:02:38.640 fade just a little bit anyway in recent days. It 0:02:38.680 --> 0:02:40.840 doesn't seem like it, especially I'm looking at the best 0:02:40.840 --> 0:02:43.120 performers on a points basis right now in the SMP five, 0:02:43.800 --> 0:02:48.680 your top names are Apple, Microsoft, Facebook, Amazon, Procter and Gamble, 0:02:48.720 --> 0:02:51.320 which did report earnings today and raise its forecast, and 0:02:51.360 --> 0:02:55.320 then Google parent Alphabet. So we're not seeing it reflected 0:02:55.320 --> 0:02:57.919 in the near term trade. I will say that year 0:02:57.960 --> 0:02:59.680 to date, if you look at the year to date 0:02:59.680 --> 0:03:02.480 perform into some of these companies, Alphabet is at the 0:03:02.480 --> 0:03:05.240 bottom of the pack, but still up still a very 0:03:05.280 --> 0:03:09.079 strong gain in a year that really has been precluded 0:03:09.440 --> 0:03:13.200 and dominated by a pandemic by a recession, so you 0:03:13.240 --> 0:03:16.160 can't buy any means say that that is bad. But 0:03:16.280 --> 0:03:20.160 as Jen said, it's a marathon. I wrote about antitrust 0:03:20.160 --> 0:03:22.880 claims almost exactly a year ago for Business Week, and 0:03:22.919 --> 0:03:25.799 I remember analysts saying then that it wasn't a worry. 0:03:25.840 --> 0:03:28.520 And we are a year later, we have seen some progress, 0:03:28.600 --> 0:03:31.600 and it still seems as though analysts are saying it's 0:03:31.639 --> 0:03:33.799 not a worry now when you're not seeing it feed 0:03:33.800 --> 0:03:36.040 through the stock prices. One point that I want to 0:03:36.040 --> 0:03:38.960 pick up that Jen pointed out too, is that some 0:03:39.040 --> 0:03:41.880 analysts do truly believe that the sum of Google's parts 0:03:41.880 --> 0:03:44.880 will actually be worth more broken up. When you separate 0:03:44.880 --> 0:03:48.840 Google Search, YouTube, Google Cloud, what is the valuation that 0:03:48.920 --> 0:03:51.560 each of these fetch it. In some cases, some do 0:03:51.680 --> 0:03:53.880 say that in the worst case scenario, if you want 0:03:53.880 --> 0:03:55.840 to call it bad, if Google is broken up, it 0:03:55.920 --> 0:03:59.680 doesn't necessarily mean a lower valuation. Some of the headlines 0:03:59.680 --> 0:04:03.040 coming out the call that's actually ongoing. Advertisers must pay 0:04:03.080 --> 0:04:06.480 a toll to Google Search. Potentially, the US is asking 0:04:06.520 --> 0:04:10.119 the court to order Google to stop anti competitive conduct, 0:04:10.600 --> 0:04:14.400 and that structural relief maybe needed to cure harm. Google 0:04:14.440 --> 0:04:17.320 relief may need to go beyond stopping harm as well. 0:04:17.360 --> 0:04:19.479 So the d o J is sort of looking for basically, 0:04:19.680 --> 0:04:22.560 you know, penalties here, maybe even a break up of 0:04:22.760 --> 0:04:25.880 parts of Google jen you know, we have something like 0:04:26.000 --> 0:04:31.760 eleven eleven attorneys general on this, why these particular states, 0:04:31.800 --> 0:04:36.039 and doesn't change post election? You know, I don't think 0:04:36.040 --> 0:04:38.159 it changes post election. But I think what we could 0:04:38.160 --> 0:04:41.480 see post election is actually another suit. Um. There are 0:04:41.520 --> 0:04:44.160 other states that have been investigating Google and and don't 0:04:44.160 --> 0:04:46.080 agree with the suit because they think it doesn't go 0:04:46.160 --> 0:04:49.359 far enough and it should have additional allegations related to 0:04:49.400 --> 0:04:52.440 other conducts, for instance within the ad tech market. So 0:04:52.520 --> 0:04:54.839 it's a possibility what we could see is a separate 0:04:54.839 --> 0:04:58.600 group of states that could file a lawsuit that mirrors 0:04:58.640 --> 0:05:02.440 this and adds more allegations to it. I definitely think 0:05:02.440 --> 0:05:05.400 that's the possibility, and I think that's why only eleven 0:05:05.440 --> 0:05:07.880 states joined, because are the states that clearly think this 0:05:08.000 --> 0:05:09.800 is the right suit, and there are other states that 0:05:09.880 --> 0:05:12.560 think this business exactly the right suit. How is the 0:05:12.640 --> 0:05:15.520 US going about this differently to Europe? I mean, obviously 0:05:15.560 --> 0:05:17.919 it's an entirely different system, and so there needs to 0:05:17.920 --> 0:05:20.320 be a different approach, but at the same time Europe 0:05:20.360 --> 0:05:23.640 as an agglomeration of states as well in some ways, 0:05:23.640 --> 0:05:26.599 and it's managed to do this. You know, I'm really 0:05:26.600 --> 0:05:29.440 glad you brought that up, because this complaint is very 0:05:29.480 --> 0:05:32.880 similar to what the EU charge school with Google with 0:05:32.920 --> 0:05:35.040 two years ago. Now, the first thing is that the 0:05:35.080 --> 0:05:37.279 way they've set it up, the states are sort of 0:05:37.320 --> 0:05:39.680 the countries within the EU are a bit less sovereign. 0:05:39.800 --> 0:05:42.680 Let's say in the States here, where the European Commission 0:05:42.720 --> 0:05:44.719 is going to take on something, the states are then 0:05:44.880 --> 0:05:47.760 the countries are then seeding that matter to the EU. 0:05:47.880 --> 0:05:50.200 And that's what went on here with Google. But two 0:05:50.279 --> 0:05:53.320 years ago the European Commation charged Google with the very 0:05:53.360 --> 0:05:56.680 similar allegations here and didn't see fit to seek a 0:05:56.720 --> 0:05:59.719 structural remedy. You know. What they said is Google, you 0:05:59.760 --> 0:06:02.200 have to stop doing these things that are illegal, like 0:06:02.240 --> 0:06:06.280 your exclusive agreements, or you're paying off companies to exclusively 0:06:06.320 --> 0:06:09.560 install Google Search of the default, things like that. UM. 0:06:09.720 --> 0:06:12.160 And they're still sort of working through that, But there 0:06:12.200 --> 0:06:14.159 have been statements coming out of the EU that so 0:06:14.200 --> 0:06:16.600 far they think that this has worked. UM. And that 0:06:16.640 --> 0:06:18.600 would suggest to me it would be very difficult in 0:06:18.640 --> 0:06:22.000 the United States Court to go beyond that, well, thanks 0:06:22.040 --> 0:06:24.680 to both of you. Phenomenal. It's really these things. You 0:06:24.720 --> 0:06:26.680 can dive into them for hours and you don't be 0:06:26.680 --> 0:06:29.320 scratching the surface. There's so many lawyers I can tell 0:06:29.320 --> 0:06:31.719 you're working on these cases right now, and we also 0:06:31.760 --> 0:06:33.960 have our own January and Sara Pansa like working on 0:06:34.000 --> 0:06:37.400 them as well. Jenuery, Senior Litigation analyst for Bloomberg Intelligence, 0:06:37.480 --> 0:06:43.680 joining us and Sarah Ponzac, Bloomberg Cross Asset Reporter. What 0:06:43.839 --> 0:06:46.719 is New York City without the bright lights? Is it 0:06:47.760 --> 0:06:50.760 someplace that people will come even if there is no Broadway? 0:06:50.839 --> 0:06:53.720 Or is that what really gives it its heart? Broadway, 0:06:53.839 --> 0:06:57.279 Lincolns under Carnegie Hall, the public Theater, all of the 0:06:57.440 --> 0:07:02.640 arts organizations that keeps the spirit of New York alive 0:07:02.760 --> 0:07:05.560 and the people here, all of the performan's artists. Let's 0:07:05.560 --> 0:07:07.080 bring in somebody who knows a little bit about a 0:07:07.080 --> 0:07:09.040 lot of things when it comes to New York City, 0:07:09.080 --> 0:07:13.040 from its real estate to its theater. Is Kenneth laub Is, 0:07:13.160 --> 0:07:17.520 a producer, real estate developer, and composer. Ken Thanks for joining. 0:07:17.760 --> 0:07:20.240 When you speak with your friends these days, what's the 0:07:20.280 --> 0:07:23.200 thing that most comes up among you all. I mean, 0:07:23.200 --> 0:07:25.720 obviously the pandemic and where we are in it. But 0:07:25.840 --> 0:07:28.400 in terms of New York City and what gives it 0:07:28.400 --> 0:07:32.360 its character, what do you all talk about? Well, let 0:07:32.360 --> 0:07:34.560 me let me, for the benefit of your listeners, give 0:07:34.640 --> 0:07:37.520 them a little bit background. New York City is, you 0:07:37.680 --> 0:07:40.600 probably know, is the coachural center of the United States, 0:07:40.640 --> 0:07:46.040 if not the world, and approximately three thousand jobs associated 0:07:46.080 --> 0:07:50.000 directly or indirectly with Broadway communally, I'm not just talking 0:07:50.040 --> 0:07:54.160 about performance dresses, directors and back state people, but also 0:07:54.480 --> 0:07:59.640 the hotel's restaurants and the numerous other the people who 0:07:59.640 --> 0:08:02.440 are at tached a Broadway for a living. You have 0:08:02.600 --> 0:08:06.160 sixty million people visit New York City yearly, that's what 0:08:06.320 --> 0:08:10.600 the tourists people put out, thirty million taking a show, 0:08:11.320 --> 0:08:16.880 come from abroad or sixty and older. That's one point 0:08:17.040 --> 0:08:21.040 eight billion dollars in revenue that comes from Broadway receipts. 0:08:21.040 --> 0:08:24.320 So I guess you could say easily that Broadway is 0:08:24.440 --> 0:08:27.000 a vital part of the New York City echo system, 0:08:27.120 --> 0:08:30.720 and we talk about that a lot. So can you 0:08:30.760 --> 0:08:33.120 know Broadway is closed until the end of May. That 0:08:33.200 --> 0:08:36.200 means tourism, you know, it has to be down because 0:08:36.440 --> 0:08:38.760 a lot of tourists come to New York specifically to 0:08:38.760 --> 0:08:41.080 see a Broadway show, and you know, they spen spend 0:08:41.080 --> 0:08:43.440 their time in Times Square because that's the theater district, 0:08:43.480 --> 0:08:46.440 and as you say, stay in hotels off the Time Square, 0:08:46.480 --> 0:08:49.720 and seniors all over the country come with deals to 0:08:49.920 --> 0:08:52.280 visit Broadway and it's just it's wonderful, you know, And 0:08:52.520 --> 0:08:55.840 that's that's just Broadway. I mean, technically you could suggest 0:08:55.880 --> 0:08:59.120 that perhaps some of the other venues are more for locals, 0:08:59.120 --> 0:09:02.160 but Broadways he brings people in from the outside. What 0:09:02.280 --> 0:09:04.679 are Broadway producers thinking in terms of when there will 0:09:04.720 --> 0:09:09.720 next to be a new production on Broadway. Well, the 0:09:09.840 --> 0:09:13.760 arts are essential to the city's identity, economy, and quality 0:09:13.800 --> 0:09:17.360 of life. We're living through the worst cultural recession in 0:09:17.400 --> 0:09:21.480 our history. It's estimated that we will have lost about 0:09:21.520 --> 0:09:25.440 thirty billion dollars from cultural institutions. So you might say 0:09:25.480 --> 0:09:28.720 we've lost part of our city's hart and wallet. But 0:09:29.400 --> 0:09:31.720 but it doesn't end there. There's a there's a much 0:09:31.800 --> 0:09:34.960 bigger issue that we need to touch on here, and 0:09:35.080 --> 0:09:39.040 that is we've heard these various dates about Broadway getting 0:09:39.120 --> 0:09:40.800 up and running in the last one I had to 0:09:40.880 --> 0:09:44.200 push back now to May of next year, and I'm 0:09:44.240 --> 0:09:47.240 not sure if that's even going to be realistic. People 0:09:47.840 --> 0:09:52.199 don't really understand that there are several issues here. Um, 0:09:52.360 --> 0:09:55.360 let me give you some examples. The problems for theaters 0:09:55.400 --> 0:09:59.120 and concert halls. Starts with a ventilation systems, which in 0:09:59.160 --> 0:10:02.559 many cases in the it's updating. There are cramped courters 0:10:02.559 --> 0:10:06.440 for artists and other workers in backstage areas, and there's 0:10:06.480 --> 0:10:09.440 a lack so far of federal guidance about what safety 0:10:09.480 --> 0:10:13.920 measures are required. Some of these theaters, like the Blasco, 0:10:13.960 --> 0:10:17.480 of the Lys, the Huts, and others, are hundred years 0:10:17.480 --> 0:10:23.840 old or more. They have narrow passageway dressing rooms sometimes 0:10:23.920 --> 0:10:27.440 shared that are the size of closets, and actors who 0:10:27.440 --> 0:10:30.120 do quick changes are in there with a lot of 0:10:30.160 --> 0:10:34.319 other people who are helping them and assistance or breathing 0:10:34.400 --> 0:10:38.080 the same cubic feet of oxygen. So they're going to 0:10:38.120 --> 0:10:42.240 have to be new rules set forth here before we reopen. 0:10:42.760 --> 0:10:46.120 And from what I've been told, the state and the 0:10:46.200 --> 0:10:50.440 city are working on guidelines that will require mask or 0:10:50.440 --> 0:10:53.960 fairish coverings for all staff and businesses, will require business 0:10:54.080 --> 0:10:58.240 to maintain six feet of distance or more, he will 0:10:58.360 --> 0:11:03.800 um end up putting in a limited visiting capacity, which 0:11:03.840 --> 0:11:06.559 frankly is not a way for Broadway to make money. 0:11:06.720 --> 0:11:08.520 They will be exactly And that's where I want to 0:11:08.559 --> 0:11:10.320 go now in the time that we have left. Because 0:11:10.720 --> 0:11:13.320 we all know that only the longest running shows make 0:11:13.400 --> 0:11:16.520 money for their producers, right, you know, the hope is 0:11:16.559 --> 0:11:18.640 that you'll make your money back. But for many of 0:11:18.640 --> 0:11:20.840 these shows, even as good as they are, they just 0:11:20.880 --> 0:11:22.679 call so much to put on that they don't get 0:11:23.400 --> 0:11:25.800 you know, they don't make profits for their producers. But 0:11:25.840 --> 0:11:27.720 at the same time, they're part of the cultural fabric. 0:11:28.160 --> 0:11:33.000 Are their theaters that do not survive this in Broadway? 0:11:33.640 --> 0:11:36.400 Would you repeat that question again? Are there theaters that 0:11:36.679 --> 0:11:39.240 go away? So the Shubert family, for example, do they 0:11:39.280 --> 0:11:41.400 need to close some of their theaters or will they 0:11:41.400 --> 0:11:45.880 all survive this. I'm not sure the answer that question 0:11:45.960 --> 0:11:50.000 unless they are able to make the appropriate changes that 0:11:50.120 --> 0:11:54.600 meet with the state and city guidelines and that we 0:11:54.679 --> 0:11:59.000 have a reliable vaccine that makes people comfortable returning even 0:11:59.040 --> 0:12:03.200 on a limited base, even with discounted tickets. But for example, 0:12:03.360 --> 0:12:05.520 so they may not have the rental problem that most 0:12:05.520 --> 0:12:08.280 people have, right, they may have a thousand year deal, 0:12:08.640 --> 0:12:10.600 or they may own the building. Do you know what 0:12:10.640 --> 0:12:13.960 the situation is there? Ken, Well, I I think I 0:12:14.040 --> 0:12:18.240 just answered your question. The situation is very simple. They 0:12:18.320 --> 0:12:21.240 will do whatever it's necessary to get up and running, 0:12:21.480 --> 0:12:25.360 but they haven't yet defined what that means, and they 0:12:25.360 --> 0:12:29.480 will vary from one facility to another. A modern theater 0:12:29.600 --> 0:12:32.040 will not have these problems, but some of the older 0:12:32.080 --> 0:12:37.520 ones will have considerable difficulty meeting those guidelines. So can 0:12:37.640 --> 0:12:40.360 final question, because you're also a real estate mogul for 0:12:40.440 --> 0:12:43.439 many decades in the city, what do you see happening 0:12:43.600 --> 0:12:46.400 with real estate in the center of the city. Do 0:12:46.480 --> 0:12:51.600 we see prices drop substantially from here for buyers? They've 0:12:51.640 --> 0:12:55.880 already dropped plenty. And I think there will be um 0:12:56.040 --> 0:13:01.520 some stabilization UM, probably in to the election and going 0:13:01.600 --> 0:13:06.719 into the next year. But I think that uh, commercial 0:13:06.760 --> 0:13:10.040 real estate is going to be heard in a variety 0:13:10.080 --> 0:13:12.840 of different ways, and there will be a lot of 0:13:12.920 --> 0:13:19.120 potential foreclosures UH and dead issues that will emerge. UM. 0:13:19.160 --> 0:13:22.440 All this has to be worked out over a period 0:13:22.480 --> 0:13:25.800 of time. But let me add been closing this interview 0:13:25.880 --> 0:13:29.000 that there's a there's an expression and this is applicable 0:13:29.080 --> 0:13:32.920 to Broadway. Charlie Chaplin once said nothing is forever in 0:13:32.960 --> 0:13:37.720 this world, and that includes our problems. So positive thinking 0:13:38.240 --> 0:13:41.480 is a prerequisite here. Absolutely can we rely on you 0:13:41.559 --> 0:13:44.600 for that. Thank you so much. Ken Laub, who is 0:13:44.760 --> 0:13:48.800 a real estate developer, producer and composer part of the 0:13:48.880 --> 0:13:52.440 fabric of Broadway, joining us there. And of course we 0:13:52.480 --> 0:13:54.839 know that Broadway will be back. We know that we'll 0:13:54.840 --> 0:13:57.120 see all of those shows again, and all those shows 0:13:57.160 --> 0:13:59.520 that you missed first time around, you'll just just be 0:13:59.679 --> 0:14:03.160 so happy to see them when it all happens again. 0:14:03.559 --> 0:14:09.040 All we need is a vaccine. Tropical Smoothie Cafe. It 0:14:09.160 --> 0:14:11.600 began in Atlanta and it is now an eighthound of 0:14:11.600 --> 0:14:15.480 fifty plus fast casual franchise serving not just smoothies but 0:14:15.559 --> 0:14:18.920 also all sorts of salads and drinks and wraps and sandwiches. 0:14:19.160 --> 0:14:22.400 Let's bring in the person who is CEO of Tropical 0:14:22.400 --> 0:14:25.920 Smoothie Cafe, and that is Charles Watson. Charles, thank you 0:14:25.920 --> 0:14:29.080 for joining my pleasure. Bonnie. Thanks for having me talk 0:14:29.120 --> 0:14:31.320 to us about how difficult it must be right now, 0:14:31.480 --> 0:14:34.560 what the challenges are for Tropical Smoothie Cafe and how 0:14:34.560 --> 0:14:38.440 many you've managed to keep open. Yes, absolutely well. I'd 0:14:38.440 --> 0:14:41.160 say our story is actually a very positive one. Like 0:14:41.280 --> 0:14:45.040 many restaurant chains, we fell off the COVID cliff about March, 0:14:45.640 --> 0:14:47.840 and for our brand, we bottomed out in April in 0:14:47.960 --> 0:14:51.360 terms of COPS sales, climb back up the sales ladder 0:14:51.360 --> 0:14:54.200 in May, and we went positive COMPS sales to the 0:14:54.200 --> 0:14:57.320 tune of twelve percent in June. So while it was 0:14:57.480 --> 0:15:00.480 a very tenuous and difficult time, I tell you that 0:15:00.520 --> 0:15:04.320 we are comping positively in and very happy with how 0:15:04.360 --> 0:15:08.560 our franchisees have fought back amid deependent pandemic to serve 0:15:08.600 --> 0:15:10.760 our guests. So we're actually in a relatively good space 0:15:11.120 --> 0:15:13.960 and expect to beat our twenty nine teen COMPS sales 0:15:14.400 --> 0:15:17.120 by shifting a lot of our business to focus on 0:15:17.240 --> 0:15:21.760 convenience the anytime, any place for our guests to access 0:15:21.800 --> 0:15:25.680 the brand through digital channels, third party delivery, our website, etcetera. 0:15:25.760 --> 0:15:27.840 So we've done well in coming out of the pandemic 0:15:28.040 --> 0:15:30.480 right and you're even opening new cafes across the US, 0:15:30.560 --> 0:15:34.480 so very much congratulations. How have you done though? When 0:15:34.480 --> 0:15:37.720 it comes to things like rents, franchise e s paying 0:15:37.880 --> 0:15:40.880 you guys. I mean, have you had difficulties that way 0:15:40.920 --> 0:15:44.400 that you've had to sort of overlook or you know, 0:15:45.160 --> 0:15:48.680 make easier for franchise e s to pay their rent 0:15:48.800 --> 0:15:51.160 or what have you. Sure, So we've done a lot 0:15:51.160 --> 0:15:54.120 of work working with our franchisees and concerts to aid them. 0:15:54.120 --> 0:15:56.680 So obviously, through the time the p p P loans, 0:15:57.200 --> 0:15:59.760 our franchise development team and our real estate team really 0:15:59.800 --> 0:16:03.920 turn into PPP and rental negotiation folks there for about 0:16:03.920 --> 0:16:05.840 three months and that net we've come out of it 0:16:06.280 --> 0:16:09.440 um and or not having any rental rate issues or 0:16:09.480 --> 0:16:12.200 any default issues because the businesses bounced back in the 0:16:12.280 --> 0:16:16.520 franchisees are cash flowing. That said, everyone is expecting rental 0:16:16.600 --> 0:16:19.200 rates to come down precipitously. We have not seen that. 0:16:19.320 --> 0:16:22.240 I think that landlords across the country, especially in the 0:16:22.280 --> 0:16:24.800 prime retail spaces that we look for, especially those that 0:16:24.840 --> 0:16:27.320 are in cap and drive through, they are really holding 0:16:27.320 --> 0:16:30.240 onto the rental rates that they said in twenty nineteen 0:16:30.240 --> 0:16:32.560 and haven't come off of those. The other big challenge 0:16:32.560 --> 0:16:35.080 that we're having uh to the bottom line for our 0:16:35.120 --> 0:16:38.520 franchise ease is the rapidly escalating triple net charges that 0:16:38.720 --> 0:16:42.240 we're seeing is especially real estate taxes. In some markets, 0:16:42.320 --> 0:16:45.560 we're seeing triple nets consistently a fifteen to twenty dollars 0:16:45.560 --> 0:16:48.120 per square foot, so that's certainly a challenge, but we 0:16:48.200 --> 0:16:50.760 hope that the real estate correction does come around to 0:16:50.800 --> 0:16:54.520 provide some relief on those rental rates for our franchise's absolutely, 0:16:54.600 --> 0:16:57.680 I mean particularly when you see you know, new places 0:16:57.720 --> 0:16:59.560 that have come up for rent are obviously renting a 0:16:59.680 --> 0:17:03.320 lug cheaper prices in some of the large major metropolitan 0:17:03.360 --> 0:17:05.480 areas at least I don't know about around the country, 0:17:05.840 --> 0:17:08.159 but certainly in New York and San Francisco and places, 0:17:08.200 --> 0:17:11.040 there are discounts on on new rental properties. Do you 0:17:11.080 --> 0:17:15.159 need more PPP money? We do not. We do not. 0:17:15.320 --> 0:17:17.600 We're in a very very good position or franchise ease 0:17:17.720 --> 0:17:20.080 or or cash flow positive. Many of our franchisees are 0:17:20.119 --> 0:17:23.880 having having a fantastic year. Again, a very difficult year 0:17:23.920 --> 0:17:25.840 and very fraud but we've been able to come through it. 0:17:25.920 --> 0:17:28.639 So for our particular brand, and I don't speak for 0:17:28.720 --> 0:17:30.720 all restaurant brands, because I know that there are many 0:17:30.760 --> 0:17:33.040 many that are hurting and I feel for them, but 0:17:33.119 --> 0:17:35.640 we do not currently know. So that's that's a great 0:17:35.680 --> 0:17:39.760 success story. What about your hiring and layoffs. Did you 0:17:39.800 --> 0:17:41.800 need to lay off people? Did you manage to hold 0:17:41.840 --> 0:17:45.760 onto everybody? Well, we actually took it took the opportunity 0:17:45.800 --> 0:17:48.159 to to reorganize this as we talk about the shift 0:17:48.160 --> 0:17:51.480 to digital and the the underlying foundational changes that are 0:17:51.480 --> 0:17:54.080 happening in the restaurant business. In order to provide guests 0:17:54.680 --> 0:17:56.879 with the access and the convenience and the ease that 0:17:56.920 --> 0:17:59.719 they're looking for, we had to make additional investments in 0:18:00.240 --> 0:18:03.639 in digital properties. So we did have to restructure and 0:18:03.640 --> 0:18:05.520 move some people around, but we did not have any 0:18:05.880 --> 0:18:08.680 standard layoffs just to uh, just to keep our g 0:18:08.800 --> 0:18:10.680 and A down. Yeah. I mean, it's really interesting the 0:18:10.720 --> 0:18:13.919 way you say that what we originally started off as 0:18:13.920 --> 0:18:16.160 a sort of a cafe enterprise almost became a real 0:18:16.280 --> 0:18:18.720 estate type of enterprise. So I imagine you needed to 0:18:18.760 --> 0:18:21.320 scale up in some areas or some of your employees did, right, 0:18:22.080 --> 0:18:24.040 And indeed, so I would tell you it's the scale 0:18:24.080 --> 0:18:26.359 up for us in the technology area the business and 0:18:26.400 --> 0:18:28.640 also the development area of the business. We've opened eighty 0:18:28.680 --> 0:18:31.120 restaurants so far this year, and we sold almost two 0:18:31.160 --> 0:18:34.040 hundred franchises so back to your point about real estate. 0:18:34.080 --> 0:18:36.760 What we found is for new development restaurants, of which 0:18:36.800 --> 0:18:40.040 we have a pipeline of over five hundred, it's actually 0:18:40.080 --> 0:18:43.760 getting the landlord's attention on doing new deals because they 0:18:43.760 --> 0:18:46.640 are spending so much time working out with existing tenants. 0:18:46.640 --> 0:18:48.360 So that's actually been a little bit of a headwind 0:18:48.359 --> 0:18:50.800 for for us as a brand that's trying to sign 0:18:50.840 --> 0:18:54.520 new leases and open new locations, which is relatively interesting. Yeah, 0:18:54.600 --> 0:18:57.920 that's so interesting, Charles. Are you ready for more shutdowns? 0:18:58.119 --> 0:19:00.560 We have, you know, epitying me all just saying we're 0:19:00.560 --> 0:19:03.680 headed for a difficult three to six months. We are 0:19:03.680 --> 0:19:05.760 ready for it. Again. I hate to be a broken record, 0:19:05.760 --> 0:19:07.439 but it's the shift to digital. We think that we 0:19:07.480 --> 0:19:10.520 can we can maintain and continue to move the business forward. 0:19:10.520 --> 0:19:14.160 We certainly wish it on no one, consumers or anyone else. 0:19:14.320 --> 0:19:16.440 We're prepared for it, and we do not think it 0:19:16.480 --> 0:19:18.400 will be good. We think it will be a continued hit, 0:19:18.600 --> 0:19:20.840 but we think that we can weather the storm much 0:19:20.960 --> 0:19:23.360 much better based on the past six months of work 0:19:23.400 --> 0:19:25.440 we've done as a brand. We're almost out of time, 0:19:25.480 --> 0:19:28.000 But I am curious as to what your plans are. 0:19:28.320 --> 0:19:30.760 Is this private equity of fact, might you ever go public? 0:19:31.040 --> 0:19:34.400 How what will the exit look like? Oh? Good questions, 0:19:34.440 --> 0:19:37.800 good questions. We're currently owned by Levine Likeman Capital Partners, 0:19:38.119 --> 0:19:41.040 private equity firm based out of Los Angeles, fantastic partners 0:19:41.040 --> 0:19:43.880 of ours, and what they do with us, no one knows, 0:19:43.920 --> 0:19:45.760 So we'll see. I think I think a public option 0:19:45.840 --> 0:19:47.800 is certainly possible, but I think that's uh, you know, 0:19:48.080 --> 0:19:50.320 three or four, five years out. All right, Well, you 0:19:50.400 --> 0:19:52.720 keep us posted. I'm sure we'll be the first to know. Charles, 0:19:52.760 --> 0:19:55.240 thank you so much for joining on. Congratulations on the 0:19:55.280 --> 0:20:00.000 success navigating through the pandemic for Tropical Smoothie Cafe once again, 0:20:00.680 --> 0:20:03.200 started off in Atlanta and now across the country. That's 0:20:03.240 --> 0:20:08.560 CEO Charles Watson. Back markets now, and let's bring in 0:20:08.640 --> 0:20:12.360 David Kat's ce IO of Matrix Advisors. David, I want 0:20:12.400 --> 0:20:15.119 to talk to you about the election, the outlook, the 0:20:15.200 --> 0:20:17.119 VIX being close to thirty, and so on. But first 0:20:17.160 --> 0:20:19.520 I have to ask you about Google, because we finally 0:20:19.560 --> 0:20:21.840 got what we were anticipating, the d o J suits. 0:20:22.119 --> 0:20:25.960 The stock didn't do much, except at a certain point 0:20:25.960 --> 0:20:27.840 it did start to decline and now we're sort of 0:20:27.880 --> 0:20:31.920 a flat does an investor care about a d o 0:20:32.000 --> 0:20:36.040 J suit against Google, It's never a good thing. Now, 0:20:36.080 --> 0:20:38.600 clearly this is going to be a headwind for a 0:20:38.720 --> 0:20:41.840 number of years. If you look back at the IBM 0:20:41.920 --> 0:20:44.880 suit maybe thirty or forty years ago, or the Microsoft 0:20:44.920 --> 0:20:48.600 suit twenty years ago. Uh, these things are negative and 0:20:48.640 --> 0:20:51.600 they definitely slow a company down. In terms of Google, 0:20:51.640 --> 0:20:55.320 we expected to the same. Having said that, we think 0:20:55.359 --> 0:20:57.880 that their prospects are very good. They're going to get 0:20:57.880 --> 0:21:00.359 through this, and it is one of the cheap of 0:21:00.440 --> 0:21:04.239 the high priced hot technology companies. So we would use 0:21:04.280 --> 0:21:08.000 any weakness to either start positions in Google or add 0:21:08.040 --> 0:21:10.080 positions in Google, because we do think they We're going 0:21:10.119 --> 0:21:14.600