WEBVTT - Boeing’s Turbulent Year, 2025 Restaurant Outlook, Generation Beta 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week, 0:00:10.800 --> 0:00:14.080 Insight from the reporters and editors that bring you America's 0:00:14.080 --> 0:00:19.080 most trusted business magazine, plus global business, finance and tech news. 0:00:19.440 --> 0:00:23.560 The Bloomberg Business Week Podcast with Carol Masser and Tim 0:00:23.600 --> 0:00:25.840 Stenebeck on Bloomberg Radio. 0:00:27.160 --> 0:00:28.960 No question the idea of safety on a lot of 0:00:28.960 --> 0:00:30.080 minds after the events over. 0:00:29.920 --> 0:00:30.760 The last few days. 0:00:30.800 --> 0:00:31.760 Absolutely okay. 0:00:31.800 --> 0:00:35.360 We heard from law enforcementerience stuff, law enforcement folks in 0:00:35.680 --> 0:00:39.320 Las Vegas a little earlier today. They talked about what 0:00:39.440 --> 0:00:42.000 happened in Las Vegas. We heard earlier in the day 0:00:42.000 --> 0:00:45.080 too about what happened in New Orleans. The event New 0:00:45.159 --> 0:00:50.519 Orleans talking that one specifically being called terrorism. FBI officials 0:00:50.520 --> 0:00:53.720 say they haven't found evidence linking separate deadly New Year's 0:00:53.720 --> 0:00:57.840 attacks in New Orleans and Las Vegas. Those are still unfolding, 0:00:57.880 --> 0:01:01.120 though the details there. The two incidents, though, rattling Americans 0:01:01.120 --> 0:01:03.520 as they rang in New Year's, prompting heightened concerns over 0:01:03.600 --> 0:01:06.720 US security less than three weeks before Donald Trump is 0:01:06.760 --> 0:01:08.000 set to take over as president. 0:01:08.160 --> 0:01:09.840 And then there was the spate of plane crashes late 0:01:09.920 --> 0:01:13.800 last month. The Azerbadjhan Airlines flight that crashed in Kazakhstan 0:01:14.080 --> 0:01:16.479 on Christmas Day, and then you also had the flight 0:01:16.520 --> 0:01:19.119 that crashed in South Korea, killing all but two on board. 0:01:19.120 --> 0:01:22.759 There's a lot of things going on that make us 0:01:22.920 --> 0:01:26.560 question safety security in today's environment. 0:01:26.680 --> 0:01:29.080 It's something Sean Galloway is always thinking about. He's CEO 0:01:29.160 --> 0:01:31.520 at Proacts Safety. It's a consulting firm that for more 0:01:31.560 --> 0:01:35.080 than thirty years has provided strategies for improving safety within 0:01:35.160 --> 0:01:39.000 different organizations, including organizations such as Boeing. He joins us 0:01:39.000 --> 0:01:42.039 from Houston, Texas. Sean, good to have you with us. 0:01:42.480 --> 0:01:44.639 Give us an idea of how you think about events 0:01:44.680 --> 0:01:46.920 over the last week, because what I just shared, we're 0:01:46.959 --> 0:01:51.440 certainly they really run the gamut of things that affect 0:01:51.440 --> 0:01:55.480 a person's safety and individual safety. But they're also rare, but 0:01:55.560 --> 0:01:57.560 they're top of mind because they're in the news. How 0:01:57.560 --> 0:01:58.960 do you think about events such as these? 0:02:00.560 --> 0:02:02.520 These are Carrollton, thank you for having me on here. 0:02:02.760 --> 0:02:05.520 These are some of these black swan events that you 0:02:05.640 --> 0:02:09.600 rarely see coming. However, they're often indicators. And what I've 0:02:09.639 --> 0:02:13.760 often said is anytime you're surprised by a significant event 0:02:13.919 --> 0:02:17.840 or a tragedy. Either you weren't paying attention to the indicators, 0:02:18.080 --> 0:02:23.320 you weren't giving them the attention that was necessary. It's 0:02:23.639 --> 0:02:27.400 it's unfortunate that events like this have to have to 0:02:27.440 --> 0:02:30.359 necessitate a change. If you look and there's a lot 0:02:30.360 --> 0:02:32.880 of great people that work for Boeing, I know many 0:02:32.919 --> 0:02:35.920 of them personally, and if you go back over a 0:02:35.960 --> 0:02:38.960 decade two thousand and five and several years later, you 0:02:39.000 --> 0:02:42.160 look at what happened with the BP events, the Texas 0:02:42.200 --> 0:02:45.160 City explosion in March of five that fifteen people lost 0:02:45.200 --> 0:02:47.600 their lives and over one hundred cerrusly injured. Then we 0:02:47.639 --> 0:02:50.800 had deep Water Horizon, the Waconda incident, both of those 0:02:52.680 --> 0:02:57.800 moments before, days before both of those locations, the rig 0:02:58.120 --> 0:03:01.800 and the plant vpleehip was there to give them an 0:03:01.840 --> 0:03:05.040 award for their safety performance, and then both of those 0:03:05.120 --> 0:03:08.520 tragedies occurred. It's the same situation kind of here. In 0:03:08.600 --> 0:03:12.280 my opinion with what's happening with Boeing is that they're 0:03:12.280 --> 0:03:16.400 a great organization, a legacy organization again in my opinion, 0:03:16.440 --> 0:03:20.000 with a lot of wonderful people with great intent. They also, 0:03:20.160 --> 0:03:23.160 from what I've seen, went from an organization that I 0:03:23.160 --> 0:03:27.320 would refer to having strong signals to an organization that 0:03:27.400 --> 0:03:31.160 had weak signals. It was an organization run by engineers. 0:03:31.520 --> 0:03:34.160 Engineering was often on the floor, people could talk about things, 0:03:34.200 --> 0:03:37.360 and unfortunately, over time it seem some of that became suppressed. 0:03:37.560 --> 0:03:39.240 Sel and take a step back for us, because we 0:03:39.280 --> 0:03:43.320 are intrigued by your relationship or your workings, your company's 0:03:43.360 --> 0:03:48.280 workings with Boeing in particular. Tell us how long you've 0:03:48.280 --> 0:03:50.320 been involved with the company. Tell us about kind of 0:03:50.320 --> 0:03:53.080 maybe the changes that you've seen and your involvement in 0:03:53.160 --> 0:03:55.600 helping them get through what has felt like crisis after 0:03:55.640 --> 0:03:58.880 crisis after crisis. Although things seem to be getting better, 0:03:58.920 --> 0:04:00.920 but it does feel like there's still a lot of 0:04:01.000 --> 0:04:02.000 questions to be answered. 0:04:03.440 --> 0:04:06.200 Yeah, I can't speak to the detailed specifics of the 0:04:06.200 --> 0:04:08.680 type of work that I do with organizations like Boeing. 0:04:09.160 --> 0:04:12.800 My work focuses on the pursuit of excellence and safety. 0:04:12.840 --> 0:04:16.719 So that's both performance and that's culture. So organizations like 0:04:16.720 --> 0:04:19.040 Boeing will bring people like me in from time to 0:04:19.080 --> 0:04:21.520 time to make sure they're not breathing their own exhaust, 0:04:21.560 --> 0:04:24.120 to make sure they're truly seeing things as they are, 0:04:24.440 --> 0:04:27.040 So they like an objective. Third party individual take a 0:04:27.080 --> 0:04:29.479 look at things. They also bring in people like me 0:04:29.640 --> 0:04:31.520 to keynote it at some of their events. 0:04:31.920 --> 0:04:34.440 What does that mean? What does that mean to keynote it? 0:04:34.520 --> 0:04:36.600 What does that mean when you come into Boeing and 0:04:36.720 --> 0:04:40.440 a company that's dealing with some really serious issues, what 0:04:40.480 --> 0:04:41.520 does it mean to keynote it. 0:04:42.920 --> 0:04:45.480 So this was in twenty seventeen, so it was prior 0:04:45.560 --> 0:04:49.720 to prior to the catastrophic events that happened in twenty 0:04:49.720 --> 0:04:53.800 eighteen twenty nineteen with the with the plane crashes. Keynoting 0:04:54.040 --> 0:04:57.159 a private event, so company leadership was there together to 0:04:57.200 --> 0:04:59.920 look at their long term safety strategy, look at their 0:05:00.279 --> 0:05:03.560 their business strategy. And at the time I had just 0:05:03.600 --> 0:05:06.200 authored a book called Forecasting Tomorrow, kind of looking at 0:05:06.279 --> 0:05:08.760 making predictions over the next ten years. So they brought 0:05:08.760 --> 0:05:10.920 me in to serve as a keynote speaker to that 0:05:11.200 --> 0:05:14.039 and that's what led to me having the privilege of 0:05:14.080 --> 0:05:17.320 walking the seven thirty seven Max factory floor in the 0:05:17.440 --> 0:05:20.839 end of February twenty seventeen. So for me personally, it's 0:05:20.839 --> 0:05:23.919 always stuck with me. Did I see one of those 0:05:23.920 --> 0:05:27.840 two planes in the assembly process? Obviously I'll never know, 0:05:28.279 --> 0:05:31.920 but it's It's something that's always resonated with me because 0:05:32.160 --> 0:05:36.040 most of my work is on the proactive side. That's 0:05:36.040 --> 0:05:38.760 the name of our company. However, we are brought in 0:05:38.839 --> 0:05:42.680 from time to time on either side of litigation, but 0:05:42.920 --> 0:05:46.320 primarily I'm brought in from the company standpoint to make 0:05:46.360 --> 0:05:48.720 sure events like this are they want to offer it 0:05:48.920 --> 0:05:49.680 so before. 0:05:49.360 --> 0:05:51.960 It goes so, before anything goes wrong, right to say, 0:05:51.960 --> 0:05:53.880 hey guys, here's what you need to be thinking about. 0:05:55.120 --> 0:05:58.080 That's exactly right. And sometimes this is done through attorney 0:05:58.320 --> 0:06:02.320 privileged documents so we can be fully transparent and tell them, 0:06:02.320 --> 0:06:04.719 you know, these are the issues. This is because culture 0:06:04.760 --> 0:06:07.839 is a byproduct. And now the FA and now all 0:06:07.880 --> 0:06:11.640 of these third party investigations are identifying these cultural deficits, 0:06:11.920 --> 0:06:14.680 some things that aren't where they want them to be 0:06:14.720 --> 0:06:18.839 as an organization. But every company of substance of size 0:06:18.920 --> 0:06:21.640 is going to have opportunities to improve culture. But culture 0:06:21.680 --> 0:06:25.160 is a by product. You can't directly manage the byproduct 0:06:25.200 --> 0:06:27.920 of culture, just like the results of an organization or 0:06:28.040 --> 0:06:31.679 byproducts sometimes of collective intentionality or sometimes luck. 0:06:31.680 --> 0:06:34.080 Son, you know, I do wonder you know Boing went 0:06:34.120 --> 0:06:36.440 through a lot of changes corporate culture. We talked about 0:06:36.480 --> 0:06:40.440 the changing of headquarters and senior management then not being 0:06:40.520 --> 0:06:43.040 you know, very far from you know, their main plant, 0:06:43.040 --> 0:06:43.960 to add on the west. 0:06:43.760 --> 0:06:44.920 Coast and so on and so forth. 0:06:45.000 --> 0:06:47.839 But I am wondering, when you keynoted the address or anything, 0:06:47.880 --> 0:06:50.840 did you start to see some changes did you give 0:06:51.000 --> 0:06:52.880 the company and it kind of heads up, like, wait 0:06:52.920 --> 0:06:54.600 a minute, you guys might want to rethink some of 0:06:54.640 --> 0:06:55.560 your strategy here. 0:06:58.320 --> 0:07:01.679 I think they had a good plan at the time. 0:07:02.440 --> 0:07:08.120 I didn't have insight into the potential business distructors of 0:07:08.160 --> 0:07:11.440 that plan because the safety strategy can't be a standalone 0:07:11.600 --> 0:07:15.160 concept or plan for an organization. The safety strategy has 0:07:15.200 --> 0:07:18.600 to support the overall business trajectory, but it also has 0:07:18.640 --> 0:07:22.600 to protect against internal and external risks that might affect 0:07:22.640 --> 0:07:26.440 that plan. So my work was primarily on the safety 0:07:26.440 --> 0:07:30.720 strategy side of things. The business strategy and organizations like Boeing, 0:07:30.760 --> 0:07:33.800 they typically are forecasting several decades out because they're looking 0:07:33.840 --> 0:07:36.560 at the next platform. They're looking at, you know, what's 0:07:36.640 --> 0:07:40.720 going to be coming twenty years from now. I saw 0:07:40.800 --> 0:07:45.400 some I saw a lot of great leaders with wonderful 0:07:45.720 --> 0:07:50.160 plans to execute on. But I think the erosion of 0:07:50.440 --> 0:07:54.080 trust and the erosion of communication and speaking up about 0:07:54.200 --> 0:07:57.800 quality or safety concerns. What seems in my opinion to 0:07:57.880 --> 0:08:02.400 have been unintentionally but suppressed over time is what led 0:08:02.440 --> 0:08:06.160 to one of the big contributing factors of kind of 0:08:06.160 --> 0:08:11.680 what's happening today that, as you mentioned, distancing senior leadership, 0:08:11.760 --> 0:08:15.280 who are ultimately responsible for any organizational culture, even though 0:08:15.320 --> 0:08:17.640 they're not really part of the culture because they're too 0:08:17.680 --> 0:08:20.520 far removed, they're responsible for it. And when I look 0:08:20.520 --> 0:08:22.840 at the plan that they have today, that's one thing 0:08:22.880 --> 0:08:25.680 that I would offer some advice on is that if 0:08:25.720 --> 0:08:27.920 you look at what they're focusing on, it's primarily around 0:08:28.040 --> 0:08:31.960 changing employee behavior versus what are the leadership truly being 0:08:32.000 --> 0:08:32.480 held account. 0:08:32.840 --> 0:08:34.880 We only have about thirty seconds left, but I open 0:08:34.920 --> 0:08:37.240 talking about the incidents on New Year's even New Year's 0:08:37.280 --> 0:08:40.720 Day in New Orleans and Las Vegas, respectively. How would 0:08:40.760 --> 0:08:44.679 you advise large municipalities just in thirty seconds to keep 0:08:44.720 --> 0:08:49.360 people safe during events such as these are during New 0:08:49.440 --> 0:08:50.360 Year's stuff like that. 0:08:51.600 --> 0:08:54.440 I think it's largely around having the showing the force, 0:08:54.480 --> 0:08:57.400 but it's also situational awareness. When I'd served in the military, 0:08:57.480 --> 0:08:59.439 keeping your head on a swivel. You have to pay 0:08:59.440 --> 0:09:02.200 attention happening around you at all times. You also have 0:09:02.240 --> 0:09:04.440 to have contingency plans. And if you look at this 0:09:04.480 --> 0:09:07.640 recent crash running into a wall, unfortunately, you know that 0:09:07.720 --> 0:09:10.440 wasn't part of the contingency thinking. So I think you 0:09:10.559 --> 0:09:12.520 have to have a proactive side of things, but you 0:09:12.600 --> 0:09:15.800 also have to have emergency response and reactive because things 0:09:15.840 --> 0:09:18.720 will not go to plan. And if and when things 0:09:18.800 --> 0:09:22.360 don't's what's the next step. What happens afterwards. So it's 0:09:22.400 --> 0:09:25.200 not all about prevention, it's also about recovery, all. 0:09:25.160 --> 0:09:26.720 Right, Gonna leave it on that note, Sean, Thank you 0:09:26.760 --> 0:09:30.000 so much, appreciate it. Sean Galloway, you CEO Proacts Safety. 0:09:30.120 --> 0:09:31.720 Joining us from Houston, Texas. 0:09:33.120 --> 0:09:36.800 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:36.880 --> 0:09:39.880 live weekday afternoons from two to five these during listen 0:09:39.960 --> 0:09:43.520 on Applecarplay and Android Auto with the Bloomberg Business app, 0:09:43.679 --> 0:09:45.960 or watch US live on YouTube. 0:09:46.600 --> 0:09:47.320 Cheryl get this. 0:09:47.640 --> 0:09:52.400 Yeah, did a deep dive into the USDA's economic statistics. 0:09:52.440 --> 0:09:54.040 I was just thinking about Mike McKee the whole time, 0:09:54.040 --> 0:09:55.600 because I know he like knows all this stuff. 0:09:55.640 --> 0:09:56.840 All right, what of that deep dives. 0:09:56.880 --> 0:10:01.280 Okay, fine food purchase and consumed outside the so think restaurants, fast, 0:10:01.280 --> 0:10:03.200 casual bars, hospital, schools, delis. 0:10:03.720 --> 0:10:06.120 Yes, they have this information. It's a category. 0:10:05.760 --> 0:10:08.640 Accounted for close to sixty percent of food expenditures in 0:10:08.679 --> 0:10:10.000 the US in twenty twenty three. 0:10:10.360 --> 0:10:12.480 Food away from home. It's a lot of money, right, 0:10:12.520 --> 0:10:12.760 a lot. 0:10:12.800 --> 0:10:13.000 Yeah. 0:10:13.040 --> 0:10:16.160 Food away from home spending climbed from one point three 0:10:16.240 --> 0:10:18.800 trillion in twenty twenty two to one point five trillion 0:10:19.160 --> 0:10:21.560 in twenty twenty three. This is according to the USDA's 0:10:21.880 --> 0:10:25.880 Economic Research Surface. I didn't know that even existed. It's 0:10:25.880 --> 0:10:26.400 pretty cool. 0:10:26.880 --> 0:10:27.520 Makes sense though. 0:10:27.640 --> 0:10:31.120 Phil Catharacis watches this number closely. He's the president and 0:10:31.360 --> 0:10:35.000 CEO over at IFMA, the Food Away from Home Association. 0:10:35.040 --> 0:10:37.599 It's a trade group for the food service industry. He 0:10:37.679 --> 0:10:39.400 joins US from Washington, d C. 0:10:39.520 --> 0:10:39.760 Phil. 0:10:39.760 --> 0:10:42.960 How are you good, great, Tim, Thanks for having me. 0:10:43.000 --> 0:10:45.319 Hey, good to have you on the program this afternoon. 0:10:45.679 --> 0:10:47.760 Food away from Home. I did decide to sort of 0:10:47.760 --> 0:10:50.240 deep dive into this because I had never looked closely 0:10:50.280 --> 0:10:53.080 into this category. But it really is exactly what it 0:10:53.120 --> 0:10:56.320 sounds like. Anything that you buy outside the house to 0:10:56.440 --> 0:11:01.840 consume outside the house. So bars, hospital, pre made fooded 0:11:01.880 --> 0:11:03.640 delis everything, right. 0:11:04.960 --> 0:11:07.800 Yes, It's a term that's been used by the government 0:11:07.840 --> 0:11:10.800 to report and we as an industry just started using 0:11:10.880 --> 0:11:13.920 it as we transformed our seventy year old organization from 0:11:14.280 --> 0:11:17.280 being a manufacturer driven to the food away from home, 0:11:17.320 --> 0:11:21.200 which includes everything you just mentioned, from food manufacturers to 0:11:21.240 --> 0:11:28.440 the distribution companies, the restaurants, independent restaurant chain restaurants, casual dining, hospitals, 0:11:29.000 --> 0:11:32.960 kiosks even now delivery is a component of all of this. 0:11:33.120 --> 0:11:34.320 That's what I wanted to ask. 0:11:34.640 --> 0:11:37.000 Yeah, so it includes like Uber eats, door dash, if 0:11:37.000 --> 0:11:38.800 I call the local Taie food place and they deliver 0:11:38.840 --> 0:11:40.160 on their own, it includes that as well. 0:11:41.160 --> 0:11:41.960 Yeah, delivery. 0:11:42.000 --> 0:11:44.319 You know, coming out of the pandemic, everybody was so 0:11:45.080 --> 0:11:48.000 caught up with how we were going to transform the business, 0:11:48.400 --> 0:11:52.200 and the resiliency of the restaurant industry just keeps surprising people. 0:11:52.600 --> 0:11:56.720 But delivery has become an incredible part of what's taken 0:11:56.800 --> 0:11:59.600 place and facilitated food away from home. 0:11:59.840 --> 0:12:01.320 This is a question that when I was talking to 0:12:01.360 --> 0:12:03.120 Carol about this during prep. This is a question that 0:12:03.360 --> 0:12:05.880 she had when I told her this number. She said, 0:12:05.920 --> 0:12:08.400 is this all about prices? Going up or is it 0:12:08.520 --> 0:12:12.360 people actually eating more outside the home like transaction? 0:12:12.559 --> 0:12:13.480 Yeah, what's happening here? 0:12:14.080 --> 0:12:14.280 Yeah? 0:12:14.400 --> 0:12:17.800 Yeah, of course, of course she has the it's both. 0:12:18.320 --> 0:12:22.200 Traffic has been a very stable, i would call it. 0:12:22.240 --> 0:12:27.040 In some instances, depending on the segment, it's been down. However, 0:12:27.160 --> 0:12:30.800 because prices have gone up and because of the promotional activity, 0:12:31.120 --> 0:12:35.240 you are getting more meals, higher check averages, and depending 0:12:35.240 --> 0:12:38.160 on the segment, you'll get more traffic. I'll give you 0:12:38.200 --> 0:12:40.840 an example, great organization in Darden and the way they 0:12:40.920 --> 0:12:44.720 run their business. They have multiple brands, you know, Olive Garden, 0:12:44.960 --> 0:12:46.400 and they have all the steakhouses. 0:12:46.760 --> 0:12:47.720 So when you look. 0:12:47.520 --> 0:12:51.160 At what they do at Olive Garden with the never 0:12:51.280 --> 0:12:53.880 ending pasta to get people back into their restaurants at 0:12:53.880 --> 0:12:56.600 thirteen ninety nine, that's a pretty good price point. So 0:12:56.640 --> 0:12:59.960 they're getting traffic, they're getting a higher check average because 0:13:00.160 --> 0:13:03.240 they're adding four ninety nine if you put some shrimp 0:13:03.320 --> 0:13:04.320 or protein. 0:13:04.120 --> 0:13:06.439 On that meal occasion. 0:13:06.559 --> 0:13:09.040 So the restaurant industry has been able to do some 0:13:09.120 --> 0:13:14.040 things to keep traffic up and also drive their check averages. However, 0:13:14.640 --> 0:13:16.480 you know there is a downside to all this, and 0:13:16.520 --> 0:13:19.040 we'll I'm sure talk about you know, pricing and inflation. 0:13:19.320 --> 0:13:21.480 Well, I'm the one that that DAWs my husband crazy 0:13:21.480 --> 0:13:23.040 and I'm like, yeah, let's get this. And then I'm 0:13:23.040 --> 0:13:24.720 like get this and the this, and they had this, 0:13:24.800 --> 0:13:26.560 and then like a simple salad all sudden is like 0:13:26.559 --> 0:13:27.319 forty bucks no. 0:13:27.320 --> 0:13:29.040 And then I'm like, I'm not going to get this delivered. 0:13:29.040 --> 0:13:30.600 I'm going to go pick it up myself and save 0:13:30.679 --> 0:13:33.320 twenty five percent because the delivery feel the tip. 0:13:33.720 --> 0:13:36.160 We do that all the time, or increasingly, not all 0:13:36.160 --> 0:13:37.720 the time, but increasingly if we can. 0:13:38.040 --> 0:13:39.559 All right, so what's the downside. 0:13:40.600 --> 0:13:42.520 Well, the other side of this is we got the 0:13:42.760 --> 0:13:45.000 inflation monsters roaring the beginning of the year. 0:13:45.040 --> 0:13:46.560 The commodity prices are soaring. 0:13:47.160 --> 0:13:49.520 I mean just when you think about coffee and chocolate 0:13:49.559 --> 0:13:52.000 alone and cacao and the coffee beans. 0:13:52.040 --> 0:13:53.200 But you know protein. 0:13:53.520 --> 0:13:55.400 If you go try to get a steak i ain OU's, 0:13:56.000 --> 0:13:58.719 you know filet somewhere depending on back to the dart 0:13:58.720 --> 0:14:00.599 and if you go to Ruth Chris you're going to 0:14:00.640 --> 0:14:02.760 pay eight ounces. You're probably going to get it for 0:14:02.800 --> 0:14:05.360 close to like fifty sixty bucks. If you're going to 0:14:05.360 --> 0:14:07.920 go to Longhorn, you can get a Texas t bone 0:14:07.960 --> 0:14:11.000 for twenty one to twenty two dollars. So, depending again 0:14:11.040 --> 0:14:13.160 on what you're looking for and what you're going to get, 0:14:13.360 --> 0:14:16.000 the concepts and the restaurant tours have been able a 0:14:16.040 --> 0:14:19.520 price accordingly. The problem though, is we've got costs in 0:14:19.560 --> 0:14:22.560 the supply chain. We've got not only commodity costs, but 0:14:22.600 --> 0:14:26.000 we also have organizational issues with not only the labor 0:14:26.040 --> 0:14:28.760 coming back, but labor is an issue when you think 0:14:28.760 --> 0:14:33.760 about just in cash and fast fast food in California 0:14:33.800 --> 0:14:37.560 starting it for one this year, twenty dollars minimum for 0:14:37.680 --> 0:14:40.560 being behind the counter at a McDonald's or a Burger King. 0:14:41.200 --> 0:14:45.720 So not only is it just availability of talent, but 0:14:45.840 --> 0:14:48.480 it also costs some money to be able to get 0:14:49.840 --> 0:14:53.040 the right people in the restaurant and make sure that 0:14:53.120 --> 0:14:54.760 the service is where you want it to be and 0:14:54.800 --> 0:14:57.560 they're trained and you don't have any problems. 0:14:57.600 --> 0:14:58.200 Hey, hey, I. 0:14:58.120 --> 0:15:00.440 Want to jump in real quick, twenty dollars minut wage 0:15:00.440 --> 0:15:03.320 for fast food workers in California. With the hindsight of 0:15:03.360 --> 0:15:05.520 a few months after that has been implemented, How has 0:15:05.560 --> 0:15:06.840 that worked out in your view. 0:15:07.080 --> 0:15:09.080 And how does the industry your members like? Are they 0:15:09.080 --> 0:15:09.760 happy about it? 0:15:10.440 --> 0:15:12.320 Yeah? No, no, one's happy about it, and. 0:15:12.280 --> 0:15:13.960 Then maybe the people who are working are happy. 0:15:14.600 --> 0:15:16.680 Right, the people that are working are happy about it, 0:15:16.640 --> 0:15:18.520 and it's not about that. I mean, we want to 0:15:18.560 --> 0:15:22.320 make sure workers are getting paid fairly, and you know, 0:15:22.800 --> 0:15:25.520 there's a balance here so that employment doesn't go down 0:15:25.560 --> 0:15:28.480 and people don't close restaurants because some have because of 0:15:28.520 --> 0:15:31.440 the labor problem. But you've got a situation in California 0:15:31.480 --> 0:15:35.160 where there's a panel of industry experts apparently that are 0:15:35.160 --> 0:15:36.960 going to determine what the rates are going to be, 0:15:37.240 --> 0:15:40.080 and it's a little bit awkward. Everybody's been trying to 0:15:40.080 --> 0:15:43.440 find a way to manage it properly, to keep to 0:15:43.520 --> 0:15:46.880 keep the staff, you know, feeling good about what's going on. 0:15:47.000 --> 0:15:50.160 But at the same time is a regulatory issue that 0:15:50.400 --> 0:15:53.160 is going to cause havoc and confusion as it goes 0:15:53.160 --> 0:15:57.080 across the states. Because there's also a tax credit a 0:15:57.080 --> 0:16:00.640 tip credit problem coming down the road. So when you 0:16:00.640 --> 0:16:02.880 start the factor that out and then you see what's 0:16:02.920 --> 0:16:06.960 happened with organized labor, people are paying attention to restaurant 0:16:08.240 --> 0:16:12.160 staff and servers and the back of the house and everybody. 0:16:12.160 --> 0:16:15.280 You need to be part of a happy, go lucky 0:16:15.320 --> 0:16:17.480 team that provides a great experience. 0:16:18.120 --> 0:16:21.680 Listen, we know, certainly coming off the pandemic, what a 0:16:21.720 --> 0:16:26.400 tough industry it is, the restaurant industry overall, even some 0:16:26.440 --> 0:16:30.160 of the really established names, the well known chefs and 0:16:30.200 --> 0:16:33.040 their organizations. I mean, it was not an easy environment, 0:16:33.080 --> 0:16:36.280 to say the least. Having said that, I mean, what 0:16:36.520 --> 0:16:40.320 is top of mind for the members of your organization 0:16:40.600 --> 0:16:43.160 as they look at twenty twenty five? Is it food costs? 0:16:43.200 --> 0:16:46.000 Is it labor costs? Is it the administration? Is it 0:16:46.040 --> 0:16:50.120 regulatory oversight? Is it concerns about the economy, the US 0:16:50.200 --> 0:16:52.040 economy and consumers pulling back? 0:16:52.080 --> 0:16:52.680 What is it? 0:16:53.880 --> 0:16:55.880 Oh my god, Carol, you named it all. 0:16:55.920 --> 0:16:58.000 I mean, part of what we talk about here is 0:16:58.480 --> 0:17:02.120 the VUCA environment when things or you know, there's volatility 0:17:02.160 --> 0:17:06.399 on certainty, complexity and ambiguity coming together. Well, that was 0:17:06.440 --> 0:17:09.160 happening when we came out of COVID. But now you've 0:17:09.160 --> 0:17:13.720 got you know, attention deficit disorder meets LUKA. Right now 0:17:13.800 --> 0:17:15.800 you have to be focused on what's going on in 0:17:15.800 --> 0:17:18.879 your restaurant, meaning that you've got to be careful with 0:17:19.240 --> 0:17:22.119 what's happening with your costs, your menu costs. 0:17:22.119 --> 0:17:23.520 You've got to be careful with what you've got on 0:17:23.520 --> 0:17:23.960 your menu. 0:17:24.200 --> 0:17:26.840 You got to have happy people restaurant in your restaurant, 0:17:27.200 --> 0:17:29.800 creating a service environment that people love. You've got to 0:17:29.800 --> 0:17:32.480 be on top of your promotional activity. 0:17:32.040 --> 0:17:32.960 To balance that out. 0:17:33.400 --> 0:17:35.600 You've got to be a good partner with your supply 0:17:35.720 --> 0:17:39.000 chain and the distribution community that's serving you and the 0:17:39.080 --> 0:17:42.200 manufacturers that are trying to get you product. You cannot 0:17:43.119 --> 0:17:48.879 be caught up in all this anticipatory, you know, distractions 0:17:48.960 --> 0:17:52.760 around tariffs and the immigration policy and some of these 0:17:52.760 --> 0:17:55.520 things that have been chatted about. Everybody's a little bit 0:17:56.040 --> 0:17:58.760 worried about what might happen. But you know, right now, 0:17:58.800 --> 0:18:03.560 I think everybody's spoken is really beyond the regulatory environment, 0:18:03.640 --> 0:18:06.080 and we have things in a regulatory that are taking 0:18:06.119 --> 0:18:09.600 place already that we've got to worry about. But it's 0:18:09.680 --> 0:18:12.520 those factors that again make up your P and L 0:18:12.560 --> 0:18:15.119 and make sure that the industry is not going to 0:18:15.200 --> 0:18:18.400 get caught up in some whipsaw because somebody is expecting 0:18:18.400 --> 0:18:19.080 that there might be. 0:18:19.080 --> 0:18:20.960 Terriffs or there might not be terriffs. 0:18:21.320 --> 0:18:23.919 There are things for us, particularly regulatory right now, that 0:18:23.960 --> 0:18:27.000 are taking place that are important to focus on that 0:18:27.040 --> 0:18:30.760 will cost restauranteurs in the supply chain and our members' money. 0:18:31.119 --> 0:18:32.760 Hey, one of the things Tim and I spend a 0:18:32.760 --> 0:18:36.000 lot of time talking about is the global food supply 0:18:36.119 --> 0:18:38.320 chain and the impact climate change has had on all 0:18:38.359 --> 0:18:42.399 of it. I am curious too that what you are 0:18:42.400 --> 0:18:44.680 hearing from members on that front how it is getting 0:18:44.720 --> 0:18:48.520 more difficult in terms of accessing the necessary food supplies 0:18:48.520 --> 0:18:51.320 that they need, and then how that potentially plays into 0:18:51.720 --> 0:18:54.080 inflationary pressures sticking around longer. 0:18:55.560 --> 0:18:58.399 Yeah, that's thank you for asking that question. One of 0:18:58.480 --> 0:18:59.920 the things that's going on right now. 0:19:00.040 --> 0:19:01.679 You're hearing a lot about it, and I've heard some 0:19:01.720 --> 0:19:05.000 of your experts talk about a cocoa and coffee. I 0:19:05.040 --> 0:19:08.360 mean the weather effects across the world. Are the adverse 0:19:08.400 --> 0:19:11.040 weather conditions that are taking place, particularly in the South 0:19:11.480 --> 0:19:14.160 in South America right now. The things that are happening, 0:19:14.160 --> 0:19:19.440 that drought in Brazil, the situation out in the Ivory 0:19:19.480 --> 0:19:24.080 Coast again not only crazy weather patterns but also a 0:19:24.160 --> 0:19:26.840 disease and the crop. When you're starting to look at 0:19:26.840 --> 0:19:29.960 those type of effects in the supply chain with raw 0:19:30.040 --> 0:19:33.600 materials that we import, that does drive prices to all 0:19:33.680 --> 0:19:37.320 time high, especially when you think about cocoa, and it 0:19:37.359 --> 0:19:40.760 also causes problems because you can't recover very quickly. 0:19:41.040 --> 0:19:44.480 In some of these instances. There's a thing called swollen. 0:19:44.480 --> 0:19:48.879 Swollen shoot disease that goes into the vines, and to 0:19:48.960 --> 0:19:52.399 replant coco something might take five years. So there's an 0:19:52.440 --> 0:19:55.480 effect with that. And then, of course the effect being 0:19:55.640 --> 0:19:58.399 halfway around the world is the supply chain, the cost 0:19:58.480 --> 0:20:01.920 of moving product from one end of it to the other, 0:20:02.359 --> 0:20:06.280 and that continues to be a point of concern when 0:20:06.320 --> 0:20:10.080