Speaker 1: This is Bloomberg Business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news as it happened. Bloomberg
Speaker 1: Business Week with Carol Messier and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. Hi, everyone, Welcome to the weekend
Speaker 1: edition of Bloomberg Business Week. While markets are digesting a
Speaker 1: second straight seventy five bases point hike from the Federal
Speaker 1: Reserve and a promise to carry on and it's fight
Speaker 1: against inflation and Tim, we also got a second consecutive
Speaker 1: quarter of negative GDP growth in the US. It was
Speaker 1: a lot, It was a lot. All of this, though,
Speaker 1: Carol said, against the backdrop of an earning season that's
Speaker 1: really kicking into high gear right now. I mean, here
Speaker 1: a few names, right, Microsoft, Alphabet, Meta Platforms, Apple and
Speaker 1: Amazon all reporting this week. In fact, it's you know,
Speaker 1: a market cap half of the market cap of the
Speaker 1: S and P five founder. It's pretty incredible, Like blows
Speaker 1: your mind, it really does. So ahead on this broadcast,
Speaker 1: we're gonna talk to a suite of top executives, including
Speaker 1: the CEOs of Chipotle and tell on their latest results
Speaker 1: and their outlooks. For the rest of talking Burritos and Barbie,
Speaker 1: we're also going to speak with the founder and CEO
Speaker 1: of Susie Cakes, go behind the scenes of an HBO drama,
Speaker 1: and dig into regulators delayed crackdown on popular by now
Speaker 1: pay later platform sounds like a pretty good program, right
Speaker 1: would stick around all about to come. We begin there
Speaker 1: with a catch up on crypto from the finance section
Speaker 1: of the magazine. Digital Tokens plunged this year. They've taken
Speaker 1: the crypto exchange coin based down with them too. Now,
Speaker 1: US regulators are investigating the company and whether it improperly
Speaker 1: let Americans trade digital assets that should have been registered
Speaker 1: as securities. Bloomberg business Week columnist Max Chafkin is here
Speaker 1: to break down the battle between coin base and the
Speaker 1: sec It's a story that takes us back to September.
Speaker 1: We've had two things that have happened over the last
Speaker 1: couple of years with coin Base, as the kind of
Speaker 1: crypto market, said Booms. This company has moved kind of
Speaker 1: closer into the kind of center of the cultural as right, guys,
Speaker 1: and as they as a company approached a direct list
Speaker 1: thing last year one of which is that the company
Speaker 1: kind of embraced it is kind of like culture war thing.
Speaker 1: It It basically told its employees that they couldn't, you know,
Speaker 1: protests in favor of Black Lives Matter, which won a
Speaker 1: lot of praise from you know, right wing types you know,
Speaker 1: who are sort of into that kind of thing. And
Speaker 1: at the same time, the company was sort of making
Speaker 1: some some pretty significant changes to its business to allow
Speaker 1: more of these kind of lightly traded they're sometimes called
Speaker 1: all coins if you want a clean for these. These
Speaker 1: are basically, you know, it's like the crypto equivalent of
Speaker 1: a penny stock. So so some of them, you know,
Speaker 1: of course are are are legitimate. Some of them have
Speaker 1: sort of gone nowhere. But what has happened, um over
Speaker 1: the last year or so is that coin Base went
Speaker 1: from being you know, kind of seen as a relatively
Speaker 1: sober minded, you know, one of the more um, you know,
Speaker 1: conservative of the crypto and exchanges insofar as that's possible,
Speaker 1: to kind of embracing a more um edgy, you know,
Speaker 1: confrontational pose with regulators. UM. Part of that is this
Speaker 1: kind of like cultural component. Part of it is listing
Speaker 1: lots and lots more of these um alt coins um
Speaker 1: probably most famously Doze, which is like a joke cryptocurrency
Speaker 1: that that the company added um uh in may. So
Speaker 1: I do wonder what's the responsibility of these companies to investors,
Speaker 1: you know, in terms of what they are offering up,
Speaker 1: like you know, buy or beware, Like who's responsible at
Speaker 1: this point? Yeah? Absolutely, coin bys has done some of that. Um.
Speaker 1: The thing that happened to this company is that, you know,
Speaker 1: as I said, it followed initially, Coinny says a long history.
Speaker 1: You know, it's been around, I think for almost ten years,
Speaker 1: backed by some of the biggest names in tech. Um
Speaker 1: what happened is that it sort of fell behind the
Speaker 1: ball on these kind of lesser known currencies. So you
Speaker 1: had this sort of meme stock moment happened, and and competitors,
Speaker 1: most notably Binance, basically distinguished themselves by allowing a lot
Speaker 1: more different securities or or sorry we're not I guess
Speaker 1: we're not allowed to call them securities because because that's
Speaker 1: kind of coin business whole position. But um uh, these
Speaker 1: different digital assets and coin base kind of in this
Speaker 1: frenzy to catch up, I think, basically allowed a lot
Speaker 1: more of these things on and that's kind of where
Speaker 1: they find themselves today. Where you have UM. You have
Speaker 1: this Department of Justice UH arrest of a former coin
Speaker 1: based employee who's you know, accused of basically insider trading UM.
Speaker 1: And then you have the SEC saying that some of
Speaker 1: these tokens that we're being traded are in fact unlicensed securities.
Speaker 1: The upshot of that is that, you know, the SEC
Speaker 1: is is you know, maybe suggesting or interested in the
Speaker 1: question of whether or not coin bases operating you know,
Speaker 1: unlicensed security change, which would be really bad for the business.
Speaker 1: They've put out after these these UM complaints drop the
Speaker 1: d o J one on the SEC one. And it's
Speaker 1: important to say that coin base has not itself been
Speaker 1: named in any of these complaints. You know, they're not
Speaker 1: shar they haven't been sued UM. And although you know
Speaker 1: Bloomberg is reported on this you know investigation, you know
Speaker 1: they have some see, haven't taken any UM formal action UM.
Speaker 1: Their position, the company's position is that it doesn't list securities.
Speaker 1: These things are digital assets and and therefore you know
Speaker 1: it's it's in full compliance. I guess they was wondered
Speaker 1: to Max, like, if we find out that there's some
Speaker 1: internal conversations, you know, basically to the extent of, yeah,
Speaker 1: we don't really think this is anything, but we got
Speaker 1: to put it on our platform because if we don't,
Speaker 1: somebody else's Like you do wonder like what's the responsibility
Speaker 1: of a company and its leaders when they maybe they
Speaker 1: don't believe in something, but at the same time they
Speaker 1: know investors are interested in it. Right, And this has
Speaker 1: kind of been something I think has been kind of
Speaker 1: whispered about in in crypto circles, but maybe not said
Speaker 1: publicly until these um, you know, until this happened last week,
Speaker 1: which is that you know, there are a lot of
Speaker 1: assets on coin base that are pretty obscure, right, They're
Speaker 1: not It's not like bitcoin and ethereum. It's it's things
Speaker 1: like pot call, which is a you know, social network
Speaker 1: for pets. Right, it's very lightly traded um. And you
Speaker 1: know you can buy it pointment. And and there's a
Speaker 1: question about what when you when you when you invest
Speaker 1: in that token, what exactly are you doing? And I
Speaker 1: think the the kind of coin based position, right is
Speaker 1: that you're buying a you know, you're not buying a security,
Speaker 1: You're buying some kind of token that's going to be
Speaker 1: useful in this company. But I think that, you know,
Speaker 1: the reality is a lot of people who are transacting
Speaker 1: in these digital assets are are basically gambling, right, and
Speaker 1: and and then so there's a question about whether or
Speaker 1: not that should be regulated. And then there's also a
Speaker 1: question whether or not, you know, there's even a problem
Speaker 1: with that. That was Bloomberg Business Week. Call him this,
Speaker 1: Max Chafkin coming up. Mattel's CEO talks toys, Barbie Dolls,
Speaker 1: hot wheels, and Elon Musk. Yeah, you're gonna buy an
Speaker 1: Elon Musk doll if they have one? They don't know.
Speaker 1: That sounds kind of weird. That's the kind of a
Speaker 1: weird question to ask. If he comes O. Sorry, sorry,
Speaker 1: how about an Elon Musk action figure? Is that better?
Speaker 1: As long as it comes with a Tesla and a
Speaker 1: space X rocket? Okay? Fair? You're listening to Bloomberg Business Week.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes. Tim Steinovik from Bloomberg Radio.
Speaker 1: Well the beets hoping it's latest seventy five basis point
Speaker 1: high will help bring down prices and so is our
Speaker 1: next guest and cries as German and CEO of Mattel
Speaker 1: the manufacture of course of Barbie and hot wheels and
Speaker 1: so much more. America's second largest toymaker recently reported second
Speaker 1: quarter results. Even as persistent inflation ways on margins, Mattel well,
Speaker 1: it's maintaining its full year guidance. These were excellent results
Speaker 1: for Mattel without eight consecutive quarter of topin growth. Our
Speaker 1: profits also grew significantly, with adjusted operating income up despite
Speaker 1: high inflation, and following a record first half, we expect
Speaker 1: to continue growing in the second half. All in all,
Speaker 1: we're very happy with the position we are in. We
Speaker 1: expect to when market share going forward, and we reiterated
Speaker 1: fullier guidance for strong top line growth, increase profitability, higher
Speaker 1: growth margin. And all of this is in spite of
Speaker 1: significant inflation and negative currency impact. So are you like,
Speaker 1: come on, investors, you still got it wrong. Look, we
Speaker 1: are very focused on managing the company. We have been
Speaker 1: growing now consistently. We're executing on our strategy we have
Speaker 1: you know, we won market share for two years in
Speaker 1: a row and we expect to win market share this
Speaker 1: year as well. Our supply chain is in very good shape.
Speaker 1: All of our own and operated factories are fully um
Speaker 1: fully operational. Product is flowing in. We're seeing we're expecting
Speaker 1: a second half retail sales to be above the first
Speaker 1: half levels. We're seeing the industry growing as well. What
Speaker 1: happened that your margin is drunk? That maybe even caught
Speaker 1: you guys by surprise. No, the margin impact was expected.
Speaker 1: It was factored into our guidance. We talked about it
Speaker 1: at the beginning of the year. Uh, and if anything,
Speaker 1: it's getting better actually because we did revise our guidance
Speaker 1: on gross margin UM Uh, not by much, but nevertheless
Speaker 1: a positive you know, uplift. We're able to upset currency
Speaker 1: negative currency impact and maintain and reiterate our guidance for
Speaker 1: the full year. So the margin, the margin reduction was
Speaker 1: very much expected and and said, you know, factored into
Speaker 1: into our guidance at the beginning of the year. Over time,
Speaker 1: over time, we do expect that the combination of pricing
Speaker 1: and cost savings will more than exceed the impact of
Speaker 1: inflation and contribute to margin expansion. Give me an idea
Speaker 1: of what you're seeing with pricing power right now? Where
Speaker 1: are you able to raise prices so that consumers will
Speaker 1: continue to pay, but you can better cover increasing costs
Speaker 1: on your side without destructing demand. As pricing is one
Speaker 1: of the options we consider in times of inflation. Uh sorry,
Speaker 1: this is not obviously unique to Mattel or unique to
Speaker 1: the toy industry. But we've said before and we're being
Speaker 1: very consistent about it, is that when we raise prices,
Speaker 1: we always keep consumers in mind. We're being very thoughtful
Speaker 1: and strategic and are committed to maintaining the highest quality
Speaker 1: and best value for consumers. We haven't seen, um, you know,
Speaker 1: any negative impact for the pricing actions we too class year.
Speaker 1: We just took another action that will become that will
Speaker 1: be factored into our numbers in the second half. Um
Speaker 1: and this is something that we previously announced, So this
Speaker 1: is not new news and we haven't seen a negative impact.
Speaker 1: You know. These actions are very methodical and thought through
Speaker 1: what is selling, what is not. Where are you seeing
Speaker 1: maybe some consumer sensitivity because of the overall inflationary environment. Well,
Speaker 1: in the in the second quarter, we saw comprehensive growth,
Speaker 1: uh you know, in constant currency, we were up in
Speaker 1: double digit strong double digit in North America, Emia and
Speaker 1: Latin America. We grew in all of our reported categories
Speaker 1: and in three in our three power brands, Barbie, Hot Wheels,
Speaker 1: and Fisher Price. So the performance was pretty pretty comprehensive
Speaker 1: with some really strong numbers. We did say that Hot Wheels,
Speaker 1: as an example, is on on track to achieve its
Speaker 1: fifth record year in a row. Uh, Barbie is just
Speaker 1: coming off an all time high one and we said
Speaker 1: that we expect to be sales for Barbie to be comparable,
Speaker 1: so we're holding a very high bar and even all
Speaker 1: the pretty pretty strong performance across the board. So we
Speaker 1: were talking about the Barbie movie. Do you anticipate making
Speaker 1: more money from the movie and your partnership on the
Speaker 1: Barbie movie or more from the lift that the Barbie
Speaker 1: brand gets thanks to the movie. We absolutely see the
Speaker 1: opportunity as as incremental to our toy business. Our strategy
Speaker 1: to capture the full value of our i P is
Speaker 1: about participating in highly a creative business verticals that are
Speaker 1: adjacent to the toy industry and are also driven by
Speaker 1: big franchises and big brands, but we want them and
Speaker 1: expect them to be a creative in and of themselves.
Speaker 1: So the partnership or you know, the Barbie movie and
Speaker 1: the the The partnership that we have with Warner Brothers
Speaker 1: um is such that we have a maningful economic participation
Speaker 1: uh in in the Barbie movie as well us for
Speaker 1: that matter, all of our multi projects, we do have
Speaker 1: economic participation, and of course we understand that in success
Speaker 1: there will be a benefit for the toy business, but
Speaker 1: we do expect the economic participation outside of the toy
Speaker 1: aisle as well. We do not fund the movie. We
Speaker 1: do not uh you know, participate in in movie financing.
Speaker 1: This is not our expertise and not our business. But
Speaker 1: we do participate economically both as the I T owner,
Speaker 1: as the owner of the brand, and as a producer.
Speaker 1: We are a producer on all of our projects. Do
Speaker 1: you get a piece of the box office? You know,
Speaker 1: we haven't been specific in the commercial terms, but box
Speaker 1: office and research are part of the equation of uh
Speaker 1: of of you know, of typical participations. Hey, can we
Speaker 1: talk to you about SpaceX? Tell us about the collaboration.
Speaker 1: It's a multi year agreement that Mattel has announces SpaceX
Speaker 1: to produce toys and collectibles. Yeah, this is an exciting
Speaker 1: partnership to create space exploration toys and collectibles under the
Speaker 1: Matchbox brand. The toys will come out next year. The
Speaker 1: collectible uh toys will be available on Mattel Creation or
Speaker 1: Director consumer side. And this is really about um, you know,
Speaker 1: scaling our portfolio. Um, it's about innovation. It's about thinking
Speaker 1: out of the box and bringing new partners to the
Speaker 1: toy aisle. That was Mattel's CEO, Enn Cries. Still waiting
Speaker 1: on an update. Tough on that Elon Musk action figure doll,
Speaker 1: whatever you want to call it, Carol, He was pretty
Speaker 1: mum on that. Certainly more to come on Bloomberg Business
Speaker 1: Week or see Suitet. Lineup continues with the CEO of
Speaker 1: Echo bat find out why he says Lead is the
Speaker 1: world's best recycling story. Yeah, that's an interesting one. But
Speaker 1: he's also thinking about how the Pivot evs with their
Speaker 1: lithium ion batteries is also affecting his world. This is
Speaker 1: Bloomberg broadcasting from the financial capital of the World, Bloomberg
Speaker 1: eleven Frio in New York to Washington, d C. Bloomberg
Speaker 1: to Boston, Bloomberg one oh six one does San Francisco,
Speaker 1: Bloomberg nine sixty to the country. Sirius XM CHADO one
Speaker 1: nineteen and around the globe, the Bloomberg Business app and
Speaker 1: Bloomberg Radio dot com. This is Bloomberg Business Week, Bloomberg
Speaker 1: ANAF recently reporting have a tipping point for battery electric
Speaker 1: vehicle ascendency has been reached globally and it's about once
Speaker 1: five of new car sales go fully electric, everything changes,
Speaker 1: according to a Bloomberg analysis of the nineteen countries that
Speaker 1: have made the e V pivot, which kind of got
Speaker 1: us wondering about battery recycling overall. Well, fortunately we got
Speaker 1: Marcus Randolf with us. He's executive chairman, CEO and president
Speaker 1: Echo Bad. It's the world's biggest recycler of batteries. Marcus,
Speaker 1: give us a macro view of your world right now
Speaker 1: and help us understand the biggest challenges your company is facing.
Speaker 1: Let me start with the quiz. I love this because
Speaker 1: it's surely helps people understand what bad areas are about.
Speaker 1: What do you think is the most highly recycled products.
Speaker 1: I know what it is because I looked at the website.
Speaker 1: But but you put your paper out on the curb,
Speaker 1: you know, and your battery lead Battery recycling and recovery
Speaker 1: of lead through the recycling process. So so lead is
Speaker 1: by far the world's best recycling start. And we're talking
Speaker 1: about batteries like during cell batteries. Those aren't let lithium ion,
Speaker 1: just lithium referring to lead acid batteries. Now, so so
Speaker 1: you find, well, well, the car batteries, car batteries, those
Speaker 1: big black boxes card with the two little posts on
Speaker 1: those things, we recycle a hundred and three million of
Speaker 1: those years. So what happens is we moved to e VS.
Speaker 1: What does that mean for you? EBS does two things.
Speaker 1: One is, obviously it opens up the world for lithium
Speaker 1: ion batteries, which are very different. But one of the
Speaker 1: things that gets missed is EVS also used lead acid batteries.
Speaker 1: So a lot of people say lead acid batteries are
Speaker 1: going to die, they're going to re replaced by lithium.
Speaker 1: Not true. You know, they're still going to be used.
Speaker 1: Admittedly they don't use as much lead acid as a
Speaker 1: car does, but there's still it's still ancial part of
Speaker 1: our going forward business. So how much demand or what
Speaker 1: are you seeing like in your business? The thing you're
Speaker 1: never going to get away from is what is it
Speaker 1: mean to have this big boom and e v s
Speaker 1: and what is that going to do for lithium? So
Speaker 1: you know that the low end of projections is sort
Speaker 1: of compound annual growth rate. You know that didn't really
Speaker 1: matter how much when you know you're just selling a
Speaker 1: few of easy year, which is where we were it
Speaker 1: or ten years, everybody's worried about lithium. But now now,
Speaker 1: I mean, you know, including plug in electric hybrids, last
Speaker 1: year there were six point six million electric vehicle soul
Speaker 1: six point six million, almost double what they were the
Speaker 1: prior year. So you say, where's this industry going? For US?
Speaker 1: Lithium is both our greatest threat and our greatest opportunity.
Speaker 1: So you you look at what we're trying to do
Speaker 1: as we go forward, and that's to be we are
Speaker 1: by far the industry leader and let asset side, and
Speaker 1: we are rapidly becoming. So on the lithium you have
Speaker 1: to because we want to, you know, to be honest,
Speaker 1: I mean, it is going to be challenging for let
Speaker 1: us batteries or a long term because lithium are just
Speaker 1: their energy density is much more favorable and ability to
Speaker 1: fully discharge is better, so they have big advantages. But
Speaker 1: on costs, they get killed. And so if you have
Speaker 1: low cost applications where you need big surges of power.
Speaker 1: That's right down the world of lead acid batteries. As
Speaker 1: you get over to cars that have long, steady draws
Speaker 1: at last for hours, lithium batteries are fantastic. They're just expensive.
Speaker 1: They're hard to recycle. So I give you the numbers
Speaker 1: for lead acid recycling and recovery lithium recoveries. Now, the
Speaker 1: u e U is trying to legislate sixty percent recovery
Speaker 1: and there are a lot of companies that are making it.
Speaker 1: How usable is it on the other side of that recycling? Uh?
Speaker 1: It is and it isn't. You look at lithium batteries.
Speaker 1: You know, the lithium, nickel, and cobalt deposits in the
Speaker 1: US are not very good. So all this sus come
Speaker 1: from from someplace else. Then the manufacturers are very interested
Speaker 1: in retaining control through the recycling process. So let add
Speaker 1: the battery. You get rid of it out of your car,
Speaker 1: you leave it at pet boys and they give it
Speaker 1: to us, and it just disappears in the system. In lithium,
Speaker 1: the car manufacturers want to own that stuff right through
Speaker 1: the process. That kind of the takeaways here is you're
Speaker 1: going to see a lot of demand. I think there
Speaker 1: are a lot of questions about is there enough supply.
Speaker 1: You know, the recycling is really important, particularly because the
Speaker 1: manufacturers weren't on the resources. But starts a different world.
Speaker 1: But the question I think that you're asking is when
Speaker 1: you recycle it it is recycling? Is it comes back
Speaker 1: to write the matterufactor or is it it did well? Actually,
Speaker 1: so what happens? So they don't have the deposits, so
Speaker 1: they ship the materials here, they make the batteries, or
Speaker 1: they make them in chump. By the way, China has
Speaker 1: remember the giga factories, Well China has about ten times
Speaker 1: more in the US does. So you start severely disadvantage.
Speaker 1: You don't have many giga factories, you don't have many resources.
Speaker 1: Then you get on the back end of this and
Speaker 1: right now there isn't a single company in the US
Speaker 1: that can make cathode quality lithium ion batteries. So they
Speaker 1: process it here, send it back to China, then it
Speaker 1: comes back here again. You know. So where this industry
Speaker 1: has got to evolve is it needs to get to
Speaker 1: where we have the full cycle processing capability here, and
Speaker 1: we're unique is Eco BAT, because we're in the front
Speaker 1: end of that and we do the logistics, the discharging,
Speaker 1: the disassembly, the shredding, the production of what's called black mass,
Speaker 1: which is sort of all of the metals and one
Speaker 1: then it goes off to others who handle the very
Speaker 1: back into the process. Right based on what you're seeing
Speaker 1: this pivot right to alternative energy EVA. What are you
Speaker 1: seeing or how quickly you know as you as you
Speaker 1: think about the story and lead it is the best
Speaker 1: recycled product. And it's also if you don't get it
Speaker 1: right on the recycled side, you are not going to
Speaker 1: have the climate changing elements necessary to deal with windpower
Speaker 1: and solar power. You need energy storage. That was Marcus Randolph,
Speaker 1: CEO of Eco Bat. The company calls itself the world's
Speaker 1: biggest recycler of batteries. You're listening to Bloomberg Business Week.
Speaker 1: Up next, we go from batteries to burritos. Another big
Speaker 1: quarter for the king of fast casual dining. We're talking Chipotle,
Speaker 1: Mexican Grill. Get me some gwalk right now, we're getting
Speaker 1: extra all right, we catch up with the CEO, Brian
Speaker 1: Nicol He joins us. Next, this is bloom Bark. You're
Speaker 1: listening to Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovik from Bloomberg Radio. Shares of Chippotle
Speaker 1: Mexican Grill rolling big time this week. On Wednesday, the
Speaker 1: day after releasing its latest quarterly update, the fast casual
Speaker 1: giant reported second quarter earnings that topped analyst projections. The
Speaker 1: burrito maker is adding new locations and customers are proving
Speaker 1: they're willing to pay more. The company also provided an
Speaker 1: upbeat sales forecast, despite rising food costs and pressure on
Speaker 1: those wages, those are going up. Chipotle Chairman and CEO
Speaker 1: Brian Nichol joined us to help break down the numbers.
Speaker 1: Our customer mix definitely over indexes with higher income, and
Speaker 1: we saw that group actually increase their purchase frequency with us,
Speaker 1: and their spend was also a little bit up. So
Speaker 1: what we concluded is we've seen some trade down and
Speaker 1: people are switching some occasions in digipol way, so we
Speaker 1: feel like we're gaining market share for our company. Uh
Speaker 1: And then at the same token, we did see a
Speaker 1: slight slow down with the lower income consumer from a
Speaker 1: purchase frequency standpoint, but not in their absolute spend. And
Speaker 1: you know, the thing that was really powerful for us
Speaker 1: throughout the quarter is our restaurants were staffed and our
Speaker 1: team members did a great job of servicing both our
Speaker 1: digital business, which is rough, and our frontline business, which
Speaker 1: is really accelerating as people kind of come back to
Speaker 1: normal routines. And uh, that was really the thing that
Speaker 1: I think carried us through the quarter. And then obviously
Speaker 1: our brand has tremendous value, uh and as a result,
Speaker 1: we were able to pass through some pricing to offset
Speaker 1: a lot of the inflationary pressures we've been dealing with. Brod,
Speaker 1: I gotta ask you, I mean restaurant margin in the
Speaker 1: quarter compared with an estimate of where you just kind
Speaker 1: of blown away by the performance, considering the declines we've
Speaker 1: seen in consumer sentiment and so much recessionary talk. I
Speaker 1: really think it goes back to the strength of both
Speaker 1: our teams that are executing in our restaurants, because you know,
Speaker 1: they're the ones that turn the top line into the
Speaker 1: bottom line based on how they perform in the restaurant.
Speaker 1: And then I think the I would say the strength
Speaker 1: of the brand, which is you know, it's really based
Speaker 1: on great culinary, great ingredients, you know, customization and convenience,
Speaker 1: and I think we did a great job of executing
Speaker 1: against all those markers and as a result, you know,
Speaker 1: we were rewarded with people's business that then our teams
Speaker 1: did a great job of executing so that it flowed
Speaker 1: to the bottom line, you know, to achieve a ten
Speaker 1: percent pump and also be able to deliver the margins
Speaker 1: at the restaurant in this environment, I think it speaks
Speaker 1: of testament to just the value proposition, the strength of
Speaker 1: the brand and the strength of the people working in
Speaker 1: our restaurants. Let's talk about wages, because labor costs for
Speaker 1: the quarter were increased about thirty basis points from last
Speaker 1: year twenty four eight percent. You did that wage raise
Speaker 1: last year. That's sort of widespread wage increase. Are you
Speaker 1: gonna have to do that again? You know, we are
Speaker 1: continuing to see pockets of me to do movement on
Speaker 1: our wages. The good news for us is we took
Speaker 1: a really big move about a year ago, which you mean,
Speaker 1: and then really what we've been doing is just monitoring
Speaker 1: kind of at the local level what's happening with wages
Speaker 1: and opportunity at our company so that we need to
Speaker 1: attract retain the right people. And we still are dealing
Speaker 1: with I like to say, pockets of challenges on that front.
Speaker 1: Where are those geographical pockets? Yeah, and it's almost Look
Speaker 1: it's like store by store, it's not contained one region
Speaker 1: over another region. It really depends on what I would
Speaker 1: call kind of the market area. You know, there's a
Speaker 1: lot of dynamics that go into it. Is there big
Speaker 1: box retail nearby? What are the other alternatives for the
Speaker 1: employee pool that we compete with. While you raised wages
Speaker 1: pretty much across the board last year, by not necessarily
Speaker 1: you will have to do the same thing this year
Speaker 1: or your you might might have to. We're look, we're
Speaker 1: still moving forward with MERITA increases, and we did a
Speaker 1: little bit bigger MERIT increase than usual given the inflationary environment.
Speaker 1: Because we don't want to fall behind on wages either,
Speaker 1: I should probably caveat. We're trying to run our wage
Speaker 1: program on more of a system basis, where it happens
Speaker 1: every six months we re evaluate wages, you know, we
Speaker 1: pass along merit increases and also we provide promotions for folks.
Speaker 1: And before we were having to come in between those
Speaker 1: because the competition to get labor to work had really
Speaker 1: increased dramatically because there were fewer people applying. Luckily, that
Speaker 1: seems to have gone to more of a normal pace
Speaker 1: where applicant flow as well as our ability to then
Speaker 1: retain people as as starting to get more I would
Speaker 1: say to a normal approach for us or normal run rate.
Speaker 1: I gotta ask you only because it's been another story
Speaker 1: that we've been following for the last few months about
Speaker 1: unionization that we're seeing certainly among you know, restaurants. Are
Speaker 1: you how do you guys feel about that or is
Speaker 1: that part of your move to make sure you stay
Speaker 1: ahead of when it comes to higher wages, because would
Speaker 1: you prefer that your restaurants don't become unionized or are
Speaker 1: you okay about it? Yeah? Look, I really don't see
Speaker 1: the need for union. I believe our jobs and the
Speaker 1: culture and the opportunities are best done within our restaurants
Speaker 1: and within our company. We don't need a third party
Speaker 1: to be a part of that conversation. We've got great wages, Okay,
Speaker 1: they're great jobs. Were a growth company. You have the
Speaker 1: ability to join our company with you know, a high
Speaker 1: school degree or some equivalent. And also if you talk
Speaker 1: to any like new immigrants or refugees, this company delivers
Speaker 1: jobs and deliver the American dream. And I can share
Speaker 1: many stories where you know, I was just with somebody
Speaker 1: that was a refugee from the Congo. He's now one
Speaker 1: of our highest level general managers making six figures leading
Speaker 1: a multimillion dollar restaurant, a team of thirty plus people.
Speaker 1: And the guy is electric, and you know what, he's
Speaker 1: gonna be able to continue to grow with U. There's
Speaker 1: a young woman, she immigrated from Chihuahua, Mexico, single female,
Speaker 1: didn't know English, learns English. You know, nine years later,
Speaker 1: she's our top restaurant general manager in the entire copy.
Speaker 1: So yeah, there's just tremendous opportunity for people to go
Speaker 1: from a crew position, work their way up to being
Speaker 1: a general manager, becoming what we call a restaurant tour
Speaker 1: which is our top general managers, becoming a multi unit leader.
Speaker 1: And when you're when you're building thus restaurants a year,
Speaker 1: there is so much suction for people to get promotered
Speaker 1: and moved up. I I think last year we promoted
Speaker 1: you know, like nineteen thousand people just tremendous opportunity, and
Speaker 1: I'm very proud of our company and I'm very proud
Speaker 1: of the jobs that we provide to our people. Hey, Brian,
Speaker 1: A lot those still out of your control, especially when
Speaker 1: it comes to costs, and this is something that we
Speaker 1: heard fed J. J. Powell talking about the rising costs
Speaker 1: across the board, especially for food. You did those say
Speaker 1: that other parts of the business, you've seen prices plateau.
Speaker 1: Where has inflation been transitory in your business? Don't mistake
Speaker 1: that for transitory because it hasn't gone back. Right. The
Speaker 1: good news is we finally had like I don't know
Speaker 1: if you can call this a trend, but we have
Speaker 1: like a month or two where we didn't see everything
Speaker 1: going up. But as you mentioned, we had some major
Speaker 1: inputs going up still and in a meaningful way. And
Speaker 1: that's why, you know, unfortunately we got to take another
Speaker 1: price increase in August. As much as I hate to
Speaker 1: do it, we're fortunate that our it has the pricing
Speaker 1: power to do it and we can maintain the integrity
Speaker 1: of our value. Was it what ingredients? What ingredients are
Speaker 1: you referring to? Was a chicken? Was at steak? What
Speaker 1: was it that plateau. It was it was more in
Speaker 1: the proteins, so like poor beef in some produce items. Unfortunately,
Speaker 1: packaging aluminum, uh, dairy tortillas, avocados, chicken continue to have
Speaker 1: a lot of pressure. One thing I want to ask
Speaker 1: you about, Brian. I mean, you're continued to grow in
Speaker 1: terms of the number of restaurants and especially the pickup windows.
Speaker 1: So where is it that you really continue to see
Speaker 1: growth in terms of the types of restaurants you want
Speaker 1: to be opening up. Yeah, look, the restaurant the Chipotle
Speaker 1: lane format um is you know, a traditional Chipotle with
Speaker 1: a pickup window where you don't have to get out
Speaker 1: of your car, and those restaurants, and we now have
Speaker 1: four hundred and thirty of them, and I think the
Speaker 1: last time we spoke, or maybe the first time we
Speaker 1: spoke about this, I think when we were talking about it,
Speaker 1: we had like ten and this we're back in like
Speaker 1: two thousand nineteen. So it just shows the power of
Speaker 1: our development. But they continue to really perform. You know,
Speaker 1: our digital business is about big uh in in that
Speaker 1: execution and then the total business is also opens at
Speaker 1: a higher volume as well. So uh, that's what we're building. Um,
Speaker 1: we just opened our first one up in Canada to
Speaker 1: a really successful opening, and then just recently we opened
Speaker 1: one and kind of a smaller town outside California. It's
Speaker 1: like a new record opening for us. So it's got
Speaker 1: a lot of momentum. We'll continue to build the inline
Speaker 1: um Chipotle's as well where we can't get the chipotlen
Speaker 1: but it's clear consumers like the additional access point of
Speaker 1: not having to get another car, and it really it's
Speaker 1: the fastest drive the experience you can have because you've
Speaker 1: ordered ahead, you've already paid for it. If you order
Speaker 1: a fountain drink, that's the thing that you gotta wait on.
Speaker 1: Otherwise you pull up, say your name, and you know
Speaker 1: you got a burrito and you're ready to go. Hey, Brian,
Speaker 1: about a year ago we were interviewing you and I
Speaker 1: asked you about Chipole accepting crypto, and I gotta be honest,
Speaker 1: you kind of laughed it off, and and here we
Speaker 1: are a year later, and you know, June of this
Speaker 1: year you announced that you now up crypto at US
Speaker 1: locations his partnership with Flexa. So essentially, people load up
Speaker 1: this app with with their crypto and then you accept
Speaker 1: that app at the restaurant's what how's that going right now?
Speaker 1: What percentage of sales is in crypto at this point?
Speaker 1: It's uh, you know, look, it's a really neat tool
Speaker 1: that Flexa provides so that people can monetize their crypto. Um,
Speaker 1: but you know, they carry all the risk and uh,
Speaker 1: it's a very very small percentage of sales um arguably
Speaker 1: as almost negligible. But um, you know, for those that
Speaker 1: have it and want to monetize it, we found I
Speaker 1: think a pretty clever solution. All right, but you are
Speaker 1: doing and then buy the dip game, right and if
Speaker 1: you win, you can get it. But you could get
Speaker 1: you gotta could get a crypto. We've got a lot
Speaker 1: of creative people in our own marketing department, I'll tell
Speaker 1: you that much. Well, well, why do you promotion in time?
Speaker 1: Even dose coin is in there like so no, no, no,
Speaker 1: but but it is interesting, is it just kind of
Speaker 1: it's appeals to your audience, and you know what is it?
Speaker 1: You know, look, we have a commitment to a relevant
Speaker 1: both in culture, food, culture, you know, music, you know,
Speaker 1: I guess tech falls all the way to this idea
Speaker 1: of crypto, and uh, I think the team does a
Speaker 1: fabulous job of staying on the front end of where
Speaker 1: young people want to be. Uh, and then also being
Speaker 1: very relevant. You know, I never want our brand to
Speaker 1: be out of sync with the conversation. And uh, you know, look,
Speaker 1: the reality is the things that drive culture, right, It's food,
Speaker 1: it's fashion, it's sports, it's music, like it's tech. So
Speaker 1: we want to be president in those things. That was
Speaker 1: the chairman and CEO of Chipotle Mexican Grill. We're talking about,
Speaker 1: Brian Nicol. And that wraps up the first hour of
Speaker 1: the weekend edition of Bloomberg Business Week from Bloomberg Radio.
Speaker 1: I'm Carol Masser and I'm Tim Stanivack. Ahead in our
Speaker 1: next hour, the cover story the massive credit trap forming
Speaker 1: underneath the millions of people using buy Now, Paid Later platforms.
Speaker 1: Don't you feel like you could you could see this
Speaker 1: one coming? Yeah, I mean from a mile away, How
Speaker 1: is this any different than a credit card? Exactly? It
Speaker 1: just seems like that trouble was coming. We're also going
Speaker 1: to go back behind the scenes of the second season
Speaker 1: of the HBO drama Industry. It's set to premiere on Monday.
Speaker 1: It's a fun one, and the entrepreneur behind the cookies
Speaker 1: and cakes and more of Susie Cakes. I just like
Speaker 1: saying Susie Cakes. Well, you gotta go to California or
Speaker 1: Texas to get them, all right, or you can order them.
Speaker 1: That's true, you can order all right. That's all coming
Speaker 1: up next. This is Bloomberg. This is Bloomberg Business Week,
Speaker 1: inside from the reporters and editors who bring you America's
Speaker 1: most trusted business magazine, plus global business, finance and tech
Speaker 1: news as it happened. Bloomberg business Week with Carol Messier
Speaker 1: and Bloomberg Quick takes Tim Stinovic on Bloomberg Radio. Play
Speaker 1: ahead in our second hour of the weekend edition of
Speaker 1: Bloomberg Business Week, including a season two preview of the
Speaker 1: HBO series Industry. The show's co creators take you inside
Speaker 1: the high pressure and cutthroat world of high finance. I'm
Speaker 1: looking forward to that. When I bunched the whole first season,
Speaker 1: I did, Oh yeah, it was great. Play us A
Speaker 1: female founders secured just two percent of venture capital last year.
Speaker 1: That's according to a Bloomberg story from back in a January.
Speaker 1: The CEO of Susie Cakes is overcoming that trend by
Speaker 1: baking her way to the top and helping other women
Speaker 1: do the same. She's been doing it for a while
Speaker 1: and has really gone through a lot of tough times
Speaker 1: and kind of the overall economy. So looking forward to
Speaker 1: her story. First up this Hour, this week's cover story,
Speaker 1: it's about by Now Pay Later companies known as b npls.
Speaker 1: They include big names, a firm Clarina and after Pay.
Speaker 1: Each offers installment financing with an attractive hook, pay quickly
Speaker 1: in four rounds and there's no interest. Sounds amazing, Yeah,
Speaker 1: it sounds amazing, right, we could go wrong credit, though,
Speaker 1: Carol is Credit and regulatory bodies in the US and
Speaker 1: Europe are starting to sniff around now that more users
Speaker 1: are getting in over their heads. Joining us with more
Speaker 1: are Bloomberg investigative reporter, as made to pres and Business
Speaker 1: Week editor Joel Weber. What really stood out here was
Speaker 1: how much we were all suddenly being indated with with
Speaker 1: sort of these offers, like you go to a checkout
Speaker 1: and it's sort of like, you know, do you want
Speaker 1: to pay in four easy payments? And we were sort
Speaker 1: of like, where did this come from? Like it is
Speaker 1: suddenly everywhere and lo and behold, it really took off
Speaker 1: during the pandemic and we were all doomed scrolling, and
Speaker 1: it turned out that this industry just boomed on it.
Speaker 1: But now we're seeing economic headwinds. Regulators have taken note
Speaker 1: and lo and behold, uh, there's good old fashioned debt
Speaker 1: problems even when you're you know, supposedly paying and four
Speaker 1: for four easy payments. So, so as may as you
Speaker 1: kind of dove into this topic topic, I'm curious, there's
Speaker 1: a real fundamental loophole that the buy now, pay later
Speaker 1: industry is built on, which was it's one thing if
Speaker 1: you pay in five payments, but it's another and four.
Speaker 1: Why why that distinction and why does it matter so much? Yeah,
Speaker 1: So this story really focuses on the pay and for
Speaker 1: a model in particular, and that's what really unites these
Speaker 1: companies so affirmed after pay Karna. They all kind of
Speaker 1: do different stuff, but their main product is paying for,
Speaker 1: or one of their main products is paying for and
Speaker 1: that's what they all do at the same And so
Speaker 1: the way that they're able to really change the consumer
Speaker 1: credit game was by bypassing consumer protection regulations. That explains
Speaker 1: one of the reasons why these two have just seemingly
Speaker 1: exploded overnight and So if you take the Truth in
Speaker 1: Lending Act, for example, that's a landmark law at an
Speaker 1: ACCID and it requires extensive disclosures for what are called
Speaker 1: unsecured consumer loans split into payments are five or more.
Speaker 1: The law doesn't touch pay and four because it's pay
Speaker 1: and four for payments. How big has this industry become?
Speaker 1: Usage has increased, you know, over the past two years.
Speaker 1: Usages increase every year, So consumers, you know, they're really
Speaker 1: making up a larger part of particularly e commerce spending. Um,
Speaker 1: they're slowly creeping into brick and mortar, but it's really
Speaker 1: just e commerce. So we're looking at at like, you know,
Speaker 1: a few percent two percentage points of consumer spending online,
Speaker 1: but obviously growing, you know, every single day. As far
Speaker 1: as valuations, I mean, if you look at Learned, the
Speaker 1: value has dropped significantly recently, but it's still worth seven
Speaker 1: billion dollars after pay was sold to Block, the Digital
Speaker 1: Payments Company for twenty nine billion dollars. So these companies
Speaker 1: are are very big. They're making Hey, they're missing billionaires.
Speaker 1: You know that Karna headline, Uh, you know when the
Speaker 1: valuation got got slash recently was really interesting because it
Speaker 1: was sort of like if everything seemed like it was
Speaker 1: going great for this industry and then you saw that
Speaker 1: valuation gets last and it was sort of like, wait,
Speaker 1: what what is your reporting bear out there? What like,
Speaker 1: what what's going on with the industry and why are
Speaker 1: valuations maybe continuous? Suddenly there's I mean, there's a number
Speaker 1: of reasons. So first of all, losses are up there,
Speaker 1: say seeing you know, more people obviously, you know, usage
Speaker 1: has increased, so they're having more customers. But also more
Speaker 1: customers are unable to pay back their loans, so investors
Speaker 1: obviously don't like that. Stocks are way down. You know,
Speaker 1: competition is increasing. Apple recently announced that it would get
Speaker 1: into the game with it's a version of pay and
Speaker 1: for Work called Apple Pay. Later, pay Pal joined the
Speaker 1: crew a couple of years ago with its version of
Speaker 1: payand for you know, even big banks these days are
Speaker 1: looking at the npls. But also we saw, you know,
Speaker 1: we looked at the Consumer Financial Protection Bureau complaints their
Speaker 1: database and complaints are mounting, and then of course regulation
Speaker 1: is likely comings. Um, the NPP is now looking into
Speaker 1: this industry and trying to really figure out like what
Speaker 1: kind of consumer harm is happening? And we definitely found
Speaker 1: that there was absolutely consumer harm being happening. I mean,
Speaker 1: in part because it's just so easy to get these loans.
Speaker 1: You know, the credits, the old traditional credit system, you know,
Speaker 1: excludes people unfairly a lot of the times. But it
Speaker 1: also sometimes you know, prohibits people from being able to
Speaker 1: take on debt because they truly cannot. They truly cannot
Speaker 1: take on debt, and this is a problem. You know,
Speaker 1: the b NFL industry often will give you a loan
Speaker 1: even if you can't qualify elsewhere. How do they make
Speaker 1: money if they're they're not charging you for the ability
Speaker 1: to pay back over time exactly, you know, so so
Speaker 1: usually paying for is always interest free. You can get
Speaker 1: hit with late fees. But primarily what the NFL companies
Speaker 1: do to make money is that they charge the merchant
Speaker 1: a percentage of whatever it is you're buying, and the
Speaker 1: merchant thinks that that's worth it because they you're more
Speaker 1: likely to buy with these things. And then also your
Speaker 1: card is going to be bigger, You're gonna buy more
Speaker 1: stuff because you think that it's cheaper because you're only
Speaker 1: paying and you're praying and for payments. You also, you know,
Speaker 1: they do with some Klarina and a firm for example,
Speaker 1: also have longer term interest loans that they offer until
Speaker 1: they make some interest off that. But this is kind
Speaker 1: of their main selling point. I mean, they really say
Speaker 1: the merchants are their primary customer. You know, we as
Speaker 1: shoppers think that we're getting the good deal, but really
Speaker 1: it's merchants are their primary customer. Um, so that's really
Speaker 1: the and that's and that's also sorry. What what they
Speaker 1: say helps distinguish them from credit cards because it makes
Speaker 1: them better than credit cards because credit card companies, you know,
Speaker 1: they may are credit card issuers, they make a lot
Speaker 1: of money off of the interests and fees that they
Speaker 1: charge on people that don't pay their bills on time.
Speaker 1: That was Bloomberg News. Invest get a reporter Asme de
Speaker 1: Prez along with Business Week editor Joel Weber. You're listening
Speaker 1: to Bloomberg business Week coming up the co creators of
Speaker 1: investment banking, drama industry. We have this big issue thinking, God,
Speaker 1: does anybody who actually want to watch the TV Shoesn't
Speaker 1: features COVID spoiler alert, You're gonna want to tune in.
Speaker 1: This is Bloomberg, This is Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Stinovic from Bloomberg Radio. Well,
Speaker 1: if you didn't have plans for your Monday night, now
Speaker 1: you do. On August first, the second season of the
Speaker 1: investment banking drama Industry returns to HBO. I can't believe
Speaker 1: we're already at August? Can you? Are you gonna know?
Speaker 1: Are you getting ready for another binging round? Oh? Yeah,
Speaker 1: I mean, I highly recommend season one, And after catching
Speaker 1: up with the show's co creators Mickey Down and Conrad
Speaker 1: k I'm even more excited for season to Carol, it
Speaker 1: has been a couple of years since the show premiered
Speaker 1: back into they filmed it before the pandemic, right, we
Speaker 1: asked how they addressed that time gap. We had a
Speaker 1: pretty natural hiasis from a storytelling point of view, because
Speaker 1: obviously there's a two year gap between the end of
Speaker 1: the first season and when it's a in season two.
Speaker 1: And actually, I mean we gave us quite a big
Speaker 1: creative decision because obviously the biggest thing that's ever happened
Speaker 1: to workplaces in the last hundred years happened, and we
Speaker 1: had this were this big issue, thinking, God, does anybody
Speaker 1: who actually want to watch a TV shows that features
Speaker 1: covid um but but so, But what we decided to
Speaker 1: do was sort of jumped the characters forward, started them
Speaker 1: in a psychologically quite different place to where we saw
Speaker 1: them in the end of season one, and make sure
Speaker 1: that covid was sort of textually in the story and
Speaker 1: quite kind of doing with a light touch, but also,
Speaker 1: you know, make sure that they had a psychological impact
Speaker 1: of all the characters. That make sure it didn't drive
Speaker 1: the plot too much, because we didn't think anybody wanted
Speaker 1: to be plunged back into that kind of you know,
Speaker 1: working from home world. How do you think about the
Speaker 1: evolution of this series and the topics that you want
Speaker 1: to cover. It's really funny because we had some really
Speaker 1: consultants in the first on the first season and obviously
Speaker 1: me and contradies to work in finance, but you know,
Speaker 1: we're ten years out of the game, so it was
Speaker 1: really helpful to have some people who were on the
Speaker 1: ground um and in season two we had some really
Speaker 1: really good consultants. We had some i mean, we had
Speaker 1: a sort of secret consultant. It was a pretty high
Speaker 1: profile guy in the in the industry. There was not
Speaker 1: warm with the name he was. He was he was
Speaker 1: really really good at giving us some sort of air
Speaker 1: to the ground stuff. And it was really odd because
Speaker 1: all the things that we came up with this season
Speaker 1: it seems to have come true. I mean there were
Speaker 1: loads of it was sort of these little thing I mean,
Speaker 1: there was obviously there were some very esoteric um things
Speaker 1: to be touching this season, the idea of cr mess
Speaker 1: and you know, there's a there's the idea of Telly
Speaker 1: health and uh, you know, obviously response to for their
Speaker 1: good COVID pandemic and all that stuff. It feels like
Speaker 1: it was quite nice to be able to try and
Speaker 1: predict stuff and see what actually happened. And you know,
Speaker 1: obviously it's a pretty tumultuous time with financial markets at
Speaker 1: the moment, which was was great for good Amber Mickey.
Speaker 1: I'm wondering how from a writing perspective you bring people
Speaker 1: up to speed on what not that they missed in
Speaker 1: season one. But since so much time has passed between
Speaker 1: the two seasons, how you remind people of what actually happened.
Speaker 1: Are we going to see some sort of previously on
Speaker 1: or how do you handle that as as a writer. Yeah,
Speaker 1: it's a really good question, and especially since you know,
Speaker 1: because of the COVID pandemic, there's basically been two years
Speaker 1: in between the seasons. Um, I think we are we
Speaker 1: kind of you know, it's it's what The first episode
Speaker 1: of the second season is a little bit of a
Speaker 1: balancing act because you want to you obviously want to
Speaker 1: throw people into the deepend and you know, not have
Speaker 1: too much throat clearing and too much reminders of what
Speaker 1: happened season one. But obviously, especially given the time gap
Speaker 1: between the two seasons, you don't want people to be
Speaker 1: lost either. I think practically there probably will be a
Speaker 1: sort of season recap, but there are a few little
Speaker 1: sort of nods the first season and the reminders. But
Speaker 1: I mean, yeah, I mean it's Um, I think I
Speaker 1: think it's and I suppose even if you haven't seen
Speaker 1: the first season, I think this is this season sort
Speaker 1: of stands up and you know, we stow the characters
Speaker 1: back here and and then you know, the inside the
Speaker 1: interest of Harper coming back into work after a year
Speaker 1: of isolation is a pretty relatable one, and I feel
Speaker 1: like that, Yes, all right, I gotta ask you. There's
Speaker 1: a lot of sex, drugs, and rock and roll in
Speaker 1: the series and Conrad, come on in, or let's start
Speaker 1: with you, Conrad. I mean, keep it clean. It's a
Speaker 1: family audience. But I mean, is that the reality of
Speaker 1: what you guys saw when it came to the financial world? Um, well, look,
Speaker 1: I mean the answer we always give that question is
Speaker 1: it's obviously slightly sensationalized. When people always say, oh, is
Speaker 1: this based on your sort of biography or your live
Speaker 1: reality of working in these places, we obviously, I mean,
Speaker 1: you know, it's not a documentary of making a TV show,
Speaker 1: So we obviously sensationalize things and lean into certain things.
Speaker 1: And me and Mickey, because we're creative partnership, I think
Speaker 1: we're very We're kind of a bit braver in some
Speaker 1: of how bold we are because we wrote that stuff
Speaker 1: with each other. We try and push each other. We
Speaker 1: always for some reason, maybe it because we're demented, we're
Speaker 1: always learned in quite perverse places. But I mean us,
Speaker 1: I think I think look that that we love I
Speaker 1: mean the just talking about the sex scenes. I mean,
Speaker 1: I know you have a family audience, but like we're
Speaker 1: very proud of people always like, oh it was in
Speaker 1: gratuousnes is it objectifying? And like we actually think in
Speaker 1: season two there's actually more sex, but weirdly it's more
Speaker 1: character based. We feel like we're telling more story. And
Speaker 1: it was a very it was the kind of the
Speaker 1: the dialogue we were having between the actors, the intimacy coordinators,
Speaker 1: the producers. It was a very much a kind of
Speaker 1: concerted effort to make those things really feel like they
Speaker 1: were earning their place in the show. And the one
Speaker 1: thing I will say so the people put off by
Speaker 1: the sex and the drugs in the season one, and
Speaker 1: obviously you have a more financially skewed audience. Me and
Speaker 1: Micky are incredibly proud of the finance story that anchors
Speaker 1: season two in a way that in a way that
Speaker 1: we would I mean, in a way that we never
Speaker 1: really dug We never dug up into the real weed
Speaker 1: about start in season one. I mean we've been in
Speaker 1: season two. We've actually rendered it even more authentically. Well,
Speaker 1: Ma didn't finish up with us if you could, because
Speaker 1: I do love that you guys get into hedge funds
Speaker 1: and the private wealth management division. We talked about it here.
Speaker 1: I mean, people in our world are getting richer and richer,
Speaker 1: and they just need more and more advisors in private
Speaker 1: wealth divisions to manage it all. Yeah, I mean it's
Speaker 1: it's a depicture of private wealth management. Is I'd say
Speaker 1: it's pretty sensationalized. I mean I actually an internship in
Speaker 1: private wealth management that was my first ever job outside
Speaker 1: out of university. And this is us a little bit
Speaker 1: of a piece of revenge against him, I think, and
Speaker 1: not giving me a job at the end of it.
Speaker 1: There are personal aspects that make their way into it.
Speaker 1: So guys, um, no banking after this, you're completely done
Speaker 1: with banking. Does it make you want to get back
Speaker 1: into it? Give it another shot? Banking is done with us,
Speaker 1: and I think I think banking med it's it's mind
Speaker 1: up when they and they pushed me very very keenly
Speaker 1: towards the door. Well yeah, but you know it is.
Speaker 1: But it is funny actually writing about it, and that
Speaker 1: wouldn't me and make you have this awful term for
Speaker 1: it where we're not in finance anymore because we're writing
Speaker 1: about it, we're kind of finance adjacent. And you do
Speaker 1: you realize how you realize just how many incredibly unique
Speaker 1: and strange and idiosyncratic characters are in that world are
Speaker 1: thanks to make down and Conrad k co creators of
Speaker 1: the HBO Show Industry, talking all about season two and
Speaker 1: I looked it up, Carol. The first three episodes are
Speaker 1: called Daddy, the Giant Squid, and the four Oh my God.
Speaker 1: That alone just makes you want to tell it's going
Speaker 1: to happen The Giant Squid. We've got to check it out.
Speaker 1: Still to come on Bloomberg Business Week, The sweet taste
Speaker 1: of success. As life gets more complicated and people are,
Speaker 1: you know, on their devices more and more, this premise
Speaker 1: of connecting through celebration with face to face and sharing
Speaker 1: a cake has really resonated. The founder and CEO of
Speaker 1: Susie Cakes joins us on the other side. This is
Speaker 1: Bloomberg Broadcasting from the financial capital of the World Bloomberg
Speaker 1: eleven Frio in New York to Washington, d C. Bloomberg
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Speaker 1: Bloomberg Radio dot Com. This is Bloomberg Business Week. The cakes, cupcakes, cookies, bars,
Speaker 1: pies and pudding. Susy Cakes is celebrating its sweet sixty
Speaker 1: and if you're from California, or perhaps you've been to
Speaker 1: Texas or California recently, you might have seen as Susie
Speaker 1: Cakes in the Flesh Well. Susie Sarach. Susan Sarach is
Speaker 1: the founder and CEO of Suzie Cake. Take us into
Speaker 1: the origin story here, because you've got a pretty great beginning,
Speaker 1: taking the ingredients of taking the recipes from your grandmother's
Speaker 1: and building a really what's become an empire. Thank you
Speaker 1: for mad Yes. I grew up in Chicago and both
Speaker 1: of them grandmother's, Mildred and Madeline, lived across the alleys
Speaker 1: from each other, so while I was growing up, we
Speaker 1: always had some great desserts around the house. Fast forward.
Speaker 1: I went to um Hospitality School for college and then
Speaker 1: worked in the hospitality industry about fifteen years. While I
Speaker 1: was in food and beverage and hotels and restaurants, I
Speaker 1: noticed a lot of women leaving the business because it
Speaker 1: was difficult to have a family or have a life
Speaker 1: outside of work working seven So I grew up a
Speaker 1: business model predicated on women. Have women having careers in
Speaker 1: hospitality without having to sacrifice other areas of their life,
Speaker 1: combined with these amazing three by five dred Ruscipe cards
Speaker 1: I had from my grandmother's. So let's talk about your business.
Speaker 1: So I think about sixteen years in, you have made
Speaker 1: it through the financial crisis, the pandemic, and then today's
Speaker 1: supply chain stresses and more, and also an environment that
Speaker 1: continues to be disrupted in innovation, whether it's in the
Speaker 1: food space, how we work, who's working, how do you
Speaker 1: think about it today and how you run it? You know,
Speaker 1: one thing I've always been is very true to what
Speaker 1: our core mission is, which is connecting through celebration and
Speaker 1: not trying to be all things to all people and
Speaker 1: just being very good at what you do. And so
Speaker 1: what I have focused on since day one was creating
Speaker 1: the highest quality scratch made products combined with the highest
Speaker 1: level of guest service to all of our guests, and
Speaker 1: being very straightforward and open about what we're doing. Our
Speaker 1: kitchens are open, we use high quality ingredients, we don't
Speaker 1: sacrifice on that. And I think as troubling and up
Speaker 1: and down as the economy has been and times are,
Speaker 1: people really want to celebrate now more than ever. To
Speaker 1: be able to bring that joy to people and bring
Speaker 1: your mindset to a simpler time. A lot of people
Speaker 1: tell me our cakes you're buying them of their childhood
Speaker 1: or you know, when when life was easier, And so
Speaker 1: I think that Susy Cakes has really strived over the
Speaker 1: past sixteen years because as life gets more comp located
Speaker 1: and people are, you know, on their devices more and more,
Speaker 1: this premise of connecting through celebration with human beings face
Speaker 1: to face and sharing a cake and celebrating somebody has
Speaker 1: really resonated. How's it going for you at your locations
Speaker 1: throughout California and Texas. Are you having a hard time
Speaker 1: keeping employees, are you having to raise wages? And are
Speaker 1: you seeing differences in different areas of the country. It's
Speaker 1: been very challenging actually in both areas of the country.
Speaker 1: And UM, you know, in order to meet the decreased
Speaker 1: labor market early in we had to quickly alter our
Speaker 1: business model to fewer days, fewer operating hours per day,
Speaker 1: and fewer product offerings, so we really had to lean
Speaker 1: heavily on technology and UM have a focus on driving
Speaker 1: more sales online. So as a result, we've increased our
Speaker 1: online sales from six percent to thirty one percent which
Speaker 1: is huge, but that allowed us to have less team
Speaker 1: members in the store taking orders and having an easier
Speaker 1: production model, creating less waste. We actually ended up with
Speaker 1: a more profitable business model. You pitched your business for
Speaker 1: like two years? Is that fair? Yes? I would say
Speaker 1: the better part of eighteen twenty Was it just that?
Speaker 1: Because we talked about this a lot at Bloomberg UM
Speaker 1: about the ability or inability of women and certainly minorities
Speaker 1: to attract investment dollars? What was it was? It? Was
Speaker 1: it just because did you bootstrap or did you get money?
Speaker 1: Or like, tell me about it? Very bootstrapped? Um three um.
Speaker 1: Really literally everyone who I spoke to and showed my
Speaker 1: business model too said Susie cakes was a bad idea,
Speaker 1: and um even the FDA said, Susie um baking is
Speaker 1: a hobby out of business. It was incredibly frustrating and
Speaker 1: difficult at times to keep going knowing that so many
Speaker 1: people were saying people are respected, we're saying that it
Speaker 1: was a bad idea and so are really only options
Speaker 1: that we had were bootstrap upping and you know, gathering
Speaker 1: uh money from friends and family. Who would you know
Speaker 1: at least you know, have a little bit of faith
Speaker 1: in me um to get the first door open. So
Speaker 1: much of my time outside of work is spent on
Speaker 1: supporting the next generation of female entrepreneurs because they are
Speaker 1: still struggling with getting uh funding and um, you know
Speaker 1: it needs it needs to shift and I don't know
Speaker 1: what will create that shift, but I'm still seeing it.
Speaker 1: Sixteen years later. That was Susan Sarach, founder and CEO
Speaker 1: of Susie Cakes. And by the way, they do ship nationwide,
Speaker 1: so yeah, I mean, you know they've got that famous
Speaker 1: Southern red velvet cake. All right, Well, now I'm hungry.
Speaker 1: You're listening to Bloomberg Business Week coming up. If you're
Speaker 1: looking for a European summer getaway, you may want to
Speaker 1: think outside the box. Okay, So forget about France, forget
Speaker 1: about Italy, forget about Greece. Our Pursuits team tells us
Speaker 1: where to eat, the drink and stay in the distinctive
Speaker 1: country of Wales. This is Bloomberg. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovik from Bloomberg Radio Time Now for our weekly dive
Speaker 1: into the Pursuit section of Bloomberg Business Week magazine. We
Speaker 1: are thrilled to have not one, but two great guests
Speaker 1: to take us through it. Yeah, we got Bloomberg Pursuits
Speaker 1: editor Chris Rouser with us also contributing writer Brandon Presser.
Speaker 1: Brandon traveled to the United Kingdom and to the longest
Speaker 1: place name in Europe to give readers a look at
Speaker 1: the amazing culture, food and adventure that Wales has to offer.
Speaker 1: Maybe not the typical destination for European travelers. All right,
Speaker 1: So Chris, why was our intrepid reporter sent there and
Speaker 1: what did you find out? I want to know what
Speaker 1: this pitch was like. Well, every year, as you guys know,
Speaker 1: we do a list of the places to go in
Speaker 1: the following year. It's one of our holiday traditions. We
Speaker 1: do about twenty five amazing interesting places to go and
Speaker 1: for our list, Whales on the list and it was
Speaker 1: Brandon's idea to do it, and we included it in
Speaker 1: our places to Go in two And there's a real
Speaker 1: revival of wealth wealth culture on the international scene. So
Speaker 1: the Welsh food and products and drinks are really getting
Speaker 1: a lot of attention. Okay, Brandon, So come on in
Speaker 1: here before we get to you know, what you ate,
Speaker 1: what you drink. I just want to know what the
Speaker 1: landscape there is, Like I would say so very concisely,
Speaker 1: it's like Ireland on steroids. Um. So you have all
Speaker 1: those touchstones like the jagged cliffs and you know, the
Speaker 1: green pastors, but then you kind of kick it up
Speaker 1: ten notches where these pastors lead to craggy mountains and
Speaker 1: the cliffs you know, run eight hundred miles of coasts.
Speaker 1: So it's it's very dramatic. I don't think people do
Speaker 1: think about going there, but it sounds like there's just
Speaker 1: some wonderful things to explore from. I mean, I saw
Speaker 1: this sounds like whales. Why why I thought a princess
Speaker 1: of Wales and prince of what like, that's where I went.
Speaker 1: I'm just going to tell you, UM, tell us what
Speaker 1: you found out. Well, this of all, when I was
Speaker 1: telling people that I was doing a story on whales,
Speaker 1: and everyone was like, oh, yeah, you know ocean conservation.
Speaker 1: You know, we really have to save the whales. And
Speaker 1: I was like, no, no, we all in the classry
Speaker 1: and they're like, well, this is the country. There was
Speaker 1: a lot of teaching amongst friends, but um, first of all,
Speaker 1: so I sort of took that advind when I was there.
Speaker 1: So for me, in addition to looking at the landscape,
Speaker 1: it was really about trying to identify and isolate the
Speaker 1: distinct Welsh culture as separate from the rest of the UK.
Speaker 1: Do we get to the elephant in the story? And
Speaker 1: what is this long word name? None of us are
Speaker 1: going to be able to pronounce this? What what is
Speaker 1: this longest place name in Europe? So there's Um in
Speaker 1: the north part of Wales. There's a little island right
Speaker 1: up because called the Isle of Anglesey and Um there's
Speaker 1: a small town Um. And all the town names, true
Speaker 1: to many destinations, are placed descriptors. So because Welsh is
Speaker 1: one of the most ancient languages, there's a lot of
Speaker 1: compound place names, and this one is the most eccentric.
Speaker 1: It has fifty eight letters. It's basically describing church of
Speaker 1: a saint, near a place, near a whirlpool, near a forest.
Speaker 1: You're not going to even try to say it. I mean,
Speaker 1: I have a deep pound respect for Welsh culture and
Speaker 1: by a touching to say the place say, I feel
Speaker 1: like I would disrespected it does It does have a
Speaker 1: short name though, right is it Landfair yeah, so the
Speaker 1: double l is like an aspirated like like it's like
Speaker 1: bend fare well. But but a lot of a lot
Speaker 1: of the culture that you write about has to do
Speaker 1: with the language and the history of the language, because
Speaker 1: there are a lot of words in in Welsh that
Speaker 1: don't necessarily translate to words that we would have in English,
Speaker 1: and a lot of them describe the natural world and
Speaker 1: you know, what you eat and drink. Yeah, absolutely, I
Speaker 1: think you know who that the Danish sort of exported
Speaker 1: as an idea of coziness became this you know phenomenon.
Speaker 1: I have a friend with a good tattoo even and
Speaker 1: basically very crazy tattoo on her arm, and uh, this
Speaker 1: is a this is sort of the same thing. And
Speaker 1: I don't think that the Welsh are trying to actively
Speaker 1: export it. But they have so many words to describe
Speaker 1: the landscape. They lived so close to the earth, the
Speaker 1: harvest from the earth, you know, the farm's table is
Speaker 1: meters not miles, and and so they have all these
Speaker 1: things like pingo is the word that they used to
Speaker 1: describe a tree that feels very heavy with fruit. So
Speaker 1: Chris as you went through it, and as um Brendan
Speaker 1: was reporting, and maybe reporting back or not reporting back, Um, like,
Speaker 1: what did you want to know or as you edited
Speaker 1: the story, what was it that just jumped out for you?
Speaker 1: I mean I wanted to know about the food. Honestly,
Speaker 1: you know, the best restaurant in the UK this year
Speaker 1: was was in Wales, i think for the first time.
Speaker 1: And there's also been this movement to do the way
Speaker 1: that French has aot s or Italy has the ots
Speaker 1: like denominations that protect food culture. Wales is starting to
Speaker 1: do that with its whiskey and when it's with its cheese,
Speaker 1: just really marking how important that stuff is. So we
Speaker 1: want Brandon to taste everything. Okay, well, let's let's do
Speaker 1: a little bit of that at least. You know. How however,
Speaker 1: Brandon can explain it to us. And I want to
Speaker 1: start with the idea, Brandon, of the international element, because
Speaker 1: it does seem like the food there has even though
Speaker 1: it's using local ingredients, the influence is really global. Absolutely.
Speaker 1: I think since the terrain is diverse and sort of
Speaker 1: surprisingly diverse, that you're having a lot of different culinary
Speaker 1: elements that are pulled from the mountains, from the pastures,
Speaker 1: from the ocean. So it comes together as like a
Speaker 1: very complex culinary cannon that could actually rival France or Italy.
Speaker 1: They just haven't commoditized their culinary cannon yet. How much
Speaker 1: did you sample? I was thinking about this because it
Speaker 1: wasn't there. There wasn't there one place. Five tour are
Speaker 1: multiple Well there was in a Shereum, which one was
Speaker 1: the first is the first Welsh restaurant ever to win
Speaker 1: Best Restaurant in the UK. I had been um tracking
Speaker 1: down the chef owner and his wife and had been
Speaker 1: emailing them and texting them, and I was like, I
Speaker 1: really would love to come to visit. I know that
Speaker 1: you're really popular, but they had just one a second
Speaker 1: Michelin started so that feeling they were kind of on
Speaker 1: the rise, And it just so happened that the day
Speaker 1: that we had all agreed to meet was the day
Speaker 1: after they had just won this award um and they
Speaker 1: were like, you know, we can get you in, we
Speaker 1: can sneak you with seats and it's really fun to
Speaker 1: do a thirty four course tasting meal, but doing it
Speaker 1: alone for five hours was very focused on the food
Speaker 1: because I had no one to talk to you. I
Speaker 1: gotta say, this just sounds fantastic in terms of the food,
Speaker 1: what you can drink, and what you can see. Um,
Speaker 1: but what you cannot pronounce, we'll have to deal with
Speaker 1: that later. Anyway, everybody should go to the magazine or
Speaker 1: check out the story online to really see the name
Speaker 1: of this place that you cannot pronounce or at least
Speaker 1: we can't pronounce in its entirety. Brandon, thank you so much.
Speaker 1: Really appreciate it. It's another great read, and that of
Speaker 1: course is contributing Bloomberg Business Week writer Brandon Pressor Chris,
Speaker 1: we want to explore a little bit more with you though.
Speaker 1: What else is in the pursuit section of the magazine?
Speaker 1: And I have to say I love James tarmy story
Speaker 1: about Barbara Krueger Um, the artist who we probably all
Speaker 1: know her work, and yet it's interesting to see that
Speaker 1: it maybe hasn't you know, risen in terms of value
Speaker 1: or popularity to some other um kind of pop artists. Yeah,
Speaker 1: so I love this story. When James pitched it, James,
Speaker 1: you know, always wants to explain an artists markets to
Speaker 1: people to like, to our readers who are very interested
Speaker 1: in investing in art. So he wants to tell our
Speaker 1: readers why an artist's work invaluable why it changes in value?
Speaker 1: And Barbara Kruger is, uh. She was a former magazine
Speaker 1: editor actually magazine designer who became an artist years ago.
Speaker 1: She was kind of around at the same time as
Speaker 1: war Hall and some other people who will after that.
Speaker 1: And uh, you recognized her work because you know, you
Speaker 1: may remember the New York Magazine cover that she did,
Speaker 1: which was Elliot Spitzer when he had his downfall. And
Speaker 1: it was a picture of Elliot Spitzer and it said
Speaker 1: in her famous red box with forturo white font, it
Speaker 1: just said brain and it had an narrow point to
Speaker 1: his crotch. Um. Uh, So she still does she still
Speaker 1: does work for New York Magazine. But mostly, you know,
Speaker 1: mostly she's a contemporary artist. Her work is near the
Speaker 1: top end of the contemporary market, and she's been working
Speaker 1: for many decades, but it's never it never really started
Speaker 1: breaking the million dollar mark until pretty recently. She had
Speaker 1: a small but very dedicated group of collectors. And now
Speaker 1: there's these four shows all around the world. One in Berlin,
Speaker 1: one was Veniceianale installation, and then MoMA New York has one,
Speaker 1: and the Werner Gallery has a show. Her prices are
Speaker 1: boosting by twenty or more on the primary market. And
Speaker 1: that's that's a big move for someone who's been around
Speaker 1: for a long time and just shows her strength and
Speaker 1: the way that she's talking about culture and capitalism. Okay,
Speaker 1: and there's some really cool and and you know, I
Speaker 1: mean the Supreme, the company Supreme, Like if you see
Speaker 1: a Supreme shirt, you're going to recognize her work there.
Speaker 1: And there's some really cool backstory there. So I encourage
Speaker 1: everybody to check it out. But Chris really he really
Speaker 1: wants to talk beer. Yeah, I want to talk to her.
Speaker 1: I mean that's yeah, I want to talk to you here.
Speaker 1: So we've talked like non alcoholic drinks with you. We've
Speaker 1: talked about like non alcoholic beer, nonucolic cocktails. But we're
Speaker 1: talking craft beer with alcohol but without a key ingredient gluten.
Speaker 1: Is it beer exactly? You can make beer without hops. Perhaps.
Speaker 1: We have a great craft beer writer, Tony Rehagan, and
Speaker 1: he pitched this idea to me and I said, I
Speaker 1: don't know about this um And the story is the
Speaker 1: story about gluten free beer, and it centers on these two, uh,
Speaker 1: these guys, Trevor and Maureen Easton, who living Wisconsin, love beer.
Speaker 1: And then one day Maureen became gluten intolerant and her
Speaker 1: husband was like, I'm not gonna you know, I'm not
Speaker 1: gonna have you not be a part of this like
Speaker 1: tradition and that we have a drinking beer. We're not
Speaker 1: gonna get left out of all this fun. So we
Speaker 1: started trying to homebrew beer without gluten. And he says,
Speaker 1: you know, at first, my my only market with Maureen,
Speaker 1: his wife, and then they actually figure out way to
Speaker 1: make it good. Now they have a huge market and
Speaker 1: they have a business that's national and there's other people
Speaker 1: doing it too. And the reason they can do it
Speaker 1: now in a way that they sort of did it
Speaker 1: perforce because they're using different grains which are more widely
Speaker 1: available because bluten free dining is more common. So it
Speaker 1: used to be um they use a grain that kind
Speaker 1: of they kind of gave like a sweet puckery flavor
Speaker 1: to beer, and now they use buckley sorghum rights other
Speaker 1: things to get something that really tastes like the beer
Speaker 1: that you know and love. Think. Thank you to Bloomberg
Speaker 1: Pursuits editor Chris Rouser, and of course earlier Bloomberg contributor
Speaker 1: Brandon Depressor, and that wraps up the weekend edition to
Speaker 1: Bloomberg Business Week from Bloomberg Radio. Thanks so much for
Speaker 1: joining us and Carol Masser and I'm Tim Stanivk. Be
Speaker 1: sure to tune into Bloomberg Business Week Monday through Friday.
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Speaker 1: Have a great weekend, everyone, Stay safe everyone. This is
Speaker 1: Bloomberg