WEBVTT - Stew Leonard Jr., Stew Leonard's President & CEO Talks Consumer Affordability Crunch

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>We're thinking about Moral Day, We're thinking about what goes

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<v Speaker 2>into a Memorial Day picnic and celebration. This is happening

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<v Speaker 2>as global food prices climbed to their highest level in

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<v Speaker 2>more than three years, as the Iran War disrupted supply chains.

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<v Speaker 2>You know, we kind of kicked it off talking with

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<v Speaker 2>Stuart and Mike Michael McKee of course about inflation concerns

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<v Speaker 2>and that includes food. So we've got a great voice

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<v Speaker 2>to get into all of this.

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<v Speaker 1>Well, let's head to Stu Leonards in Norwalk, Connecticut, to

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<v Speaker 1>the president's CEO of Stu Leonards. Stue Leonards j Stu

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<v Speaker 1>Leonard Junior joins us. Stu Happy Summer. I just want

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<v Speaker 1>to start off with the question, is is it a

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<v Speaker 1>happy summer at this point? What are sales telling you?

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<v Speaker 1>What are customers telling you?

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<v Speaker 3>Well, first of all, Hi, Carol and Tim hoy doing

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<v Speaker 3>first of all the thing that would make me happier

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<v Speaker 3>if he didn't talk.

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<v Speaker 4>About all the rain and everything that you know that

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<v Speaker 4>that doesn't help our sales.

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<v Speaker 3>We want everybody to go out and barbecue and cook

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<v Speaker 3>jeez burgers out the.

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<v Speaker 2>No.

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<v Speaker 3>But I would say, right now, sales are brisk, customers

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<v Speaker 3>are buying, but they're also complaining.

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<v Speaker 4>Okay, they're complaining about the.

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<v Speaker 3>Prices of food right now, and not only just food,

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<v Speaker 3>but I think they're overall, you know, expenses in their

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<v Speaker 3>normal lives. Like as an example, the other morning, I

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<v Speaker 3>got a phone call from our farmer, tomato farmer in Florida.

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<v Speaker 3>He said, you know, I got some bad news. He said,

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<v Speaker 3>you know, we had a big freeze down here. I

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<v Speaker 3>had to replant my crop. Tomato prices are gonna be up,

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<v Speaker 3>and it's gonna cost me two thousand dollars more to

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<v Speaker 3>send the tractor trailer truck from Florida up to the

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<v Speaker 3>New York area to your stores. And then I come

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<v Speaker 3>down here in the store and I'm talking to a

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<v Speaker 3>customer that just said, hey, I just went and filled

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<v Speaker 3>up my suburban and that cost me fifty dollars more

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<v Speaker 3>and my energy costs and home insurance everybody.

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<v Speaker 4>So I'm stuck in the middle a little bit.

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<v Speaker 3>On one hand, I got to negotiate with this farmer,

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<v Speaker 3>which I did, and we're going to split the cause.

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<v Speaker 3>But I can't raise price. So you know, our prices

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<v Speaker 3>at Stud's compared the last Memorial Day, probably up about

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<v Speaker 3>three percent. They don't need be up like one percent

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<v Speaker 3>if it wasn't for meat, you know. And you asked

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<v Speaker 3>me about some props earlier, but you know here's one

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<v Speaker 3>of our great Oh yeah, this is what you know.

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<v Speaker 3>If you can put this on the Gorilla week and

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<v Speaker 3>you know for a World Day, it's the crowd please but.

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<v Speaker 1>Stu, yeah, it would be. But that's going to set

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<v Speaker 1>you back. I mean, you're talking about a very expensive

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<v Speaker 1>cut of meat there, and you mentioned cheeseburgers earlier. Mike

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<v Speaker 1>McKee talking to us a little earlier and he said,

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<v Speaker 1>you know at some places they're charging you just for

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<v Speaker 1>walking by the meat department. That's how expensive it's gotten.

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<v Speaker 3>Yeah, but you know one thing people are doing is

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<v Speaker 3>they're switching from their protein like you know, that's obviously

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<v Speaker 3>the most expensive thing, and buys a big rip by steak.

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<v Speaker 3>Then you can also go down to just getting some

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<v Speaker 3>plain hamburgers. So you've noticed people switching a little bit.

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<v Speaker 3>They're going to chicken and that's only in the four

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<v Speaker 3>to five dollars a pound range right now, they're going

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<v Speaker 3>to port I've even been doing that instead of having

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<v Speaker 3>a steak, get a nice port chop, and it's like

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<v Speaker 3>ten bucks a pounds less?

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<v Speaker 1>How much how much is that tomahawk that you held

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<v Speaker 1>up per pound?

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<v Speaker 3>Oh gosh, I bet you this will be about seventy dollars. Okay,

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<v Speaker 3>get this, but hey, if you went to a restaurant

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<v Speaker 3>and you ever ordered something like this, you'd just be

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<v Speaker 3>paying one hundred and fifty or at least double or

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<v Speaker 3>more for that page.

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<v Speaker 4>So how many people?

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<v Speaker 2>How many people can eat that chop?

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<v Speaker 1>How much would I eat?

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<v Speaker 2>I know my husband be like, that's mine, But I'm

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<v Speaker 2>just saying two or three people could probably chop into that, right.

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<v Speaker 3>Oh yeah, for sure. You know, it really depends. I mean,

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<v Speaker 3>who's a big meat either. You know, your husband probably

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<v Speaker 3>would love to devour I got a son in law

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<v Speaker 3>who loves me all the time, and he could make

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<v Speaker 3>a big dent in effic so you know.

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<v Speaker 4>But but you.

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<v Speaker 3>Know it's you know, right now you're seeing people really

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<v Speaker 3>just trying to save money. But you know what the

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<v Speaker 3>thing with meat right now is we're at a fifty

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<v Speaker 3>year low and herd price ouse sizes in America. We

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<v Speaker 3>just had some of our ranchers back from the Midwest

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<v Speaker 3>and they're really just saying there's just less cattle.

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<v Speaker 4>And why is that?

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<v Speaker 3>Because you know, it costs them a lot of money

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<v Speaker 3>to feed them because of the droughts and everything that

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<v Speaker 3>happened in the Midwest, and there's not as much you know,

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<v Speaker 3>grass out in the field for the cattle to eat.

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<v Speaker 3>They got to import the corn and the soy and

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<v Speaker 3>al balpa for the cattle to eat.

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<v Speaker 2>So see, that was that was that was a problem.

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<v Speaker 2>I feel like last year too, like we've been talking

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<v Speaker 2>about the herd situation for a while, is that as

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<v Speaker 2>you talk to the ranchers, any of that going to

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<v Speaker 2>get better or easier or.

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<v Speaker 4>No, it's it's getting better now.

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<v Speaker 3>But it takes two years to really grow a little

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<v Speaker 3>cab from like three four hundred pounds when they're born

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<v Speaker 3>all the way up to maybe sixteen hundred pounds when

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<v Speaker 3>they're you know, harvested. So you know it takes time,

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<v Speaker 3>but you're seeing it build right now. It is, it

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<v Speaker 3>is growing. And that's why I'm optimistic about a couple

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<v Speaker 3>of things. One of them is I do think meat

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<v Speaker 3>prices are going to be coming down in the future.

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<v Speaker 3>You know, even our ranchers and everything agree with that.

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<v Speaker 3>And the second thing, I really think fuel prices are

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<v Speaker 3>gonna come down once we get things straightened out in

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<v Speaker 3>the Middle East, which can't be forever.

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<v Speaker 4>I mean, it's got to be resolved at some point.

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<v Speaker 3>So I think we're gonna see some softening on these

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<v Speaker 3>inflation numbers as far as food goes.

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<v Speaker 4>In the future.

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<v Speaker 3>But you know, here, here's what's really interesting, Carol, I

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<v Speaker 3>think you have to break up this inflation and to

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<v Speaker 3>supply and demand and actual cost like from our standpoint,

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<v Speaker 3>Like I'll give you an example. You can go buy

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<v Speaker 3>this watermelon right here by the way. Watermelons are great

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<v Speaker 3>right now. They're really sweet. So here's here's a watermelon.

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<v Speaker 3>You can go buy that. It's about six bucks or

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<v Speaker 3>seven bucks or four you can do this. We can

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<v Speaker 3>have somebody cut these up. The labor for me to

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<v Speaker 3>have a nice lady or guy back there cutting these up.

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<v Speaker 3>It's for us nearly twenty five dollars an hour right

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<v Speaker 3>now without benefits, and that's never going So that's never

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<v Speaker 3>going down. And so there's a couple of things that

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<v Speaker 3>are not going to go down. Labor is not going

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<v Speaker 3>to go down. That's that's inflationary right now. But I

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<v Speaker 3>think the supply and demand of food. Like for instance,

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<v Speaker 3>I always laughed when I would read about people saying

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<v Speaker 3>about egg prices. Eggs had nothing to do with inflation,

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<v Speaker 3>that no government policy or anything. That just had to

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<v Speaker 3>do with the Avian flu. So supply and demand is

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<v Speaker 3>is built in. And if you look, we just had

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<v Speaker 3>some fires out in Simi Valley, as I'm mentioned, the

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<v Speaker 3>cold snapdown in Florida.

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<v Speaker 4>Right, so the droughts out these affect food Trust.

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<v Speaker 2>We got to run. Always love checking you with you, Stu,

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<v Speaker 2>Happy Memorial Day. We're going to keep our fingers crossed

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<v Speaker 2>you don't get rain. Stu Leonard Jr. Of course, President

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<v Speaker 2>CEO of STU Leonard's enjoyed talking with him. We talked

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<v Speaker 2>with his daughter, Blake, who runs their spirits and wines

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<v Speaker 2>business a little bit earlier