WEBVTT - Charles Schwab, Manufacturing Data, IPO Market

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<v Speaker 1>Welcome to the Bloomberg Penl podcast. I'm Paul swing you.

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<v Speaker 1>Along with my co host Lisa Brahmas. Each day we

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<v Speaker 1>bring you the most noteworthy and useful interviews for you

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<v Speaker 1>and your money, whether at the grocery store or the

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<v Speaker 1>trading floor. Find a Bloomberg Penl podcast on Apple podcast

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<v Speaker 1>or wherever you listen to podcasts, as well as at

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<v Speaker 1>Bloomberg dot com. Let's switch gears, though, sticking with Wall

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<v Speaker 1>Street and talk about broker commissions today. This morning there

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<v Speaker 1>was news that Charles Schwab is eliminating commissions for stocks,

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<v Speaker 1>ETFs and options listed on US or Canadian exchanges. The

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<v Speaker 1>race to the bottom accelerates. David Ridder, Payments and specialty finance,

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<v Speaker 1>analyst for a bloomersig Intelligence, joining us from Princeton, New Jersey. David,

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<v Speaker 1>what do you make the news? Well, it's been something

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<v Speaker 1>that's been a long time coming. I mean, obviously speed

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<v Speaker 1>compression and brokerage and an asset management more broadly is

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<v Speaker 1>nothing new. I mean, interactive brokers made their own move

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<v Speaker 1>last week to cut commissions to zero for basic stock

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<v Speaker 1>trades um So I think it's going to have a

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<v Speaker 1>very different impact on the different players in the market.

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<v Speaker 1>In Schwab's case, um, you know, they only earned about

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<v Speaker 1>their net revenue from trading commissions versus um E Trade

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<v Speaker 1>and TD merrit Trade, where it's more than thirty five.

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<v Speaker 1>And I think you're seeing that reflected in the action

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<v Speaker 1>this morning. But but Schwab is really more an asset

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<v Speaker 1>gatherer than anything, and so I see this move for

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<v Speaker 1>them is a recognition of the fact that, you know,

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<v Speaker 1>we don't want to lose customers and assets in a

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<v Speaker 1>long term to these new stock trading apps, whether it

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<v Speaker 1>be robin Hood or whether it be JP Morgan's. You invest,

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<v Speaker 1>because that's how they make money. They make money on

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<v Speaker 1>new net new assets coming into the company. Uh. And

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<v Speaker 1>then you know of their revenue is net interest incomes.

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<v Speaker 1>So they're essentially a bank, right, so they're paying low

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<v Speaker 1>interest and reinvesting that money and safe security. So that's

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<v Speaker 1>the real driver, not trading missions. Insentially, look at the

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<v Speaker 1>stocks you mentioned, Dave Schwapp down nine, TD America trade

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<v Speaker 1>down about today in each trade down, so kind of

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<v Speaker 1>right in line with what you were saying. And my

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<v Speaker 1>question is kind of talk to us about some of

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<v Speaker 1>these new technological competitors that you mentioned kind of robin

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<v Speaker 1>Hood and things like that give us a sense of

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<v Speaker 1>what they are and what kind of market share are

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<v Speaker 1>they taking. Yeah, well, in the case of robin Hood,

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<v Speaker 1>you know, very rapid growth company, several million customers already

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<v Speaker 1>offering quote unquote free trades. I think what's under recognized though,

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<v Speaker 1>is uh nothing's free, right in the case of all

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<v Speaker 1>of these retail brokers that charge the customer of zero trading, See,

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<v Speaker 1>they're sending those trades to market makers, so companies like

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<v Speaker 1>Citadel and they're getting paid what's called payment for order

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<v Speaker 1>flow for those transactions. So in their release last week,

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<v Speaker 1>Interactive Brokers was very candid. They said, well, you know,

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<v Speaker 1>this is how we get paid. And if you still

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<v Speaker 1>want best, best execute ship, you can take our uh

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<v Speaker 1>four feet product instead of our free products. So I

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<v Speaker 1>just thought that was an interesting way to approach it.

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<v Speaker 1>But uh, you know, certainly these things are having an impact,

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<v Speaker 1>and for Schwab, they finally said to themselves, look, we

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<v Speaker 1>we don't want to lose uh these customers because they're

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<v Speaker 1>young people, right, so they're really the future drivers of

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<v Speaker 1>their growth. Right now, I'm looking at Schwab shares down

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<v Speaker 1>now more than nine so shareholders aren't buying it. Yeah.

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<v Speaker 1>I mean, I think for both of them. When I

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<v Speaker 1>described a minute ago what percentage of revenue they get

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<v Speaker 1>from trading commissions, um, I think the market is pricing

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<v Speaker 1>in perhaps half of that revenue going away. It's interesting, though,

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<v Speaker 1>because the last round of price cuts was a couple

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<v Speaker 1>of years ago. Fidelity sort of kicked it off by

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<v Speaker 1>going to four trade and Schwab matched them. What happened

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<v Speaker 1>across the entire industry was fascinating is that the net

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<v Speaker 1>inflows to the companies and the trading volumes increased, so

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<v Speaker 1>it actually drew in more customers. And so again I

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<v Speaker 1>think that Schwab's rationale here is we're trying to remove

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<v Speaker 1>any impediment to folks either getting more active or becoming

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<v Speaker 1>active in the markets for the very first time, and

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<v Speaker 1>then going forward into the future. So I'm not sure

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<v Speaker 1>we'll see exactly that again this time, but that's what

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<v Speaker 1>we saw last time. David Riddard, thanks so much for

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<v Speaker 1>joining us David's payments and specialty finance analysts for Bloomberg

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<v Speaker 1>Intelligence and joining us from the Bloomberg headquarters in Princeton,

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<v Speaker 1>New Jersey. I want to read a a tweet from

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<v Speaker 1>President Trump. Quote, as I predicted, j PAL and the

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<v Speaker 1>Federal Reserve have allowed the dollar to get so strong,

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<v Speaker 1>especially relative to all other currencies that are manufacturers are

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<v Speaker 1>being negatively affected, fed rate too high. They are their

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<v Speaker 1>own worst enemies. They don't have a clue, pathetic clamation

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<v Speaker 1>point end quote. So let's dig a little bit deeper

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<v Speaker 1>with that asset background. Uh. Tim Fury, chairman of the

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<v Speaker 1>Manufacturing Business Survey for the Institute of Supply Management, joins

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<v Speaker 1>us on the phone from Florida. So, Tim, quite, the

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<v Speaker 1>manufacturing data for the month of September much much lower

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<v Speaker 1>than people were looking for. What's your takeaway, Yeah, Hi, Paul, Yes,

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<v Speaker 1>So, so so it was a disappointment for sure, and it's

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<v Speaker 1>been driven by demand. For the second straight month we

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<v Speaker 1>had demand in the contraction mode. And more importantly this

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<v Speaker 1>month compared to last month, is that the three sub

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<v Speaker 1>indexes that support that demand number we're all in negative

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<v Speaker 1>territory two, which is a concern. So let me let

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<v Speaker 1>me just talk quickly about the new export order down

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<v Speaker 1>to forty one, which is a pretty heavy contraction. We've

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<v Speaker 1>had two prior months of contraction, but not to that level.

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<v Speaker 1>And about eighteen percent manufacturing GDP is exported, So without

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<v Speaker 1>that new export order coming up, I don't I would

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<v Speaker 1>be very surprised if that new order number currently or

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<v Speaker 1>forty seven point three gets above the fifty point. How

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<v Speaker 1>much is the decline in exports due to the stronger dollar, Well,

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<v Speaker 1>it's you know, it's hard to tell. I get comments

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<v Speaker 1>about that. Percent of my comments are tariff and trade related. Uh,

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<v Speaker 1>we're talking low single digits on the on the currency side.

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<v Speaker 1>So there's no doubt that from a supply manager perspective,

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<v Speaker 1>the trade issues are a much begger concern than our currency. So,

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<v Speaker 1>but I can't really put it into specifics beyond that. So, Tim,

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<v Speaker 1>the we have a you know, I guess my question

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<v Speaker 1>is when do we have a trend here? We had

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<v Speaker 1>August atteint one contraction and then coming in with this

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<v Speaker 1>data at forty seven point eight even bigger contraction. When

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<v Speaker 1>from your perspective at the Institute for Supply Management, do

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<v Speaker 1>you start sensing a trend here? Well, last month I

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<v Speaker 1>was asked several times about whether this was a blip,

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<v Speaker 1>and especially to come above fifty. I was hopeful that

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<v Speaker 1>the month of September would have a decently strong new

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<v Speaker 1>order number, which would allow production to expand again and

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<v Speaker 1>get us back about fifty. But I think, you know,

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<v Speaker 1>given the week new order numbers about the same level

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<v Speaker 1>as last month, nothing worse, nothing better, But you know,

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<v Speaker 1>supporting that is really the backlog of order numbers forty

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<v Speaker 1>five point one, which declined again this month. I was

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<v Speaker 1>hoping that that would would jump back up, so but

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<v Speaker 1>the backlog week, it means that you really don't have

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<v Speaker 1>as much to work on next month as you did

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<v Speaker 1>the prior month. Very concerning. And then you look at

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<v Speaker 1>the inventory number at forty seven give or take, it

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<v Speaker 1>says that supply managers are really watching their input materials

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<v Speaker 1>so that they're not going to get stuck with something

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<v Speaker 1>that they don't need. The two things that you look

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<v Speaker 1>at from a general manager standpoint is how much materially

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<v Speaker 1>you have taken in and the number one number two

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<v Speaker 1>is what's your head count? And I think we're at

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<v Speaker 1>that point where people are looking at that. We're when

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<v Speaker 1>the planning season here, for most plans get kind of

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<v Speaker 1>consummated by the end of November, and the employment count

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<v Speaker 1>has to really be looked that closer here because there's

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<v Speaker 1>no doubt we have a more production capacity that we

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<v Speaker 1>need to meet the new order level. We've been burning

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<v Speaker 1>into the back on now for fourth rate months. At

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<v Speaker 1>some point you have to make a decision. Tim Furi,

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<v Speaker 1>thank you so much, chairman of the Manufacturing Business Survey

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<v Speaker 1>Institute for Supply Management, joining us the phone from Florida.

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<v Speaker 1>What we've been talking about nineteen is being the year

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<v Speaker 1>where we get a lot of big, high profile unicorn

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<v Speaker 1>IPOs coming out of Silicon Valley, and I think a

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<v Speaker 1>little bit of a hindsight here, it's been kind of

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<v Speaker 1>a mixed bag. We've had some mixed performance, some real duds.

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<v Speaker 1>We've actually had some deals pulled. Most notably we work

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<v Speaker 1>um and um Endeavor was also pulled. To get a

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<v Speaker 1>sense of what's going on in the US I p

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<v Speaker 1>O market, we welcome Jackie Kelly, Jackie's America's I p

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<v Speaker 1>O leader for Ernst and Young joins us here in

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<v Speaker 1>our Bloomberg Interactive Broker studio. So Jackie, thanks so much

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<v Speaker 1>for joining us. You know again, we there's so much

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<v Speaker 1>anticipation for some of these big high profile deals coming public,

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<v Speaker 1>Uber Lift and all those types of things. It's been

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<v Speaker 1>kind of a mixed bag. What do you think the

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<v Speaker 1>I p O market is telling us these days? Well, um,

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<v Speaker 1>you know, the markets are actually the sentiments really positive.

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<v Speaker 1>Behind the scenes, Let's just say that we have a

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<v Speaker 1>few of the higher profile I p O s that

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<v Speaker 1>have been working through some market issues and other things.

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<v Speaker 1>But really this is a long term game. At the

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<v Speaker 1>end of the day. Uh, we're very excited that the

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<v Speaker 1>pipeline is very robust and UH, despite some of the

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<v Speaker 1>turbulence in the markets. Uh, the we still have a

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<v Speaker 1>number of companies lined up right now in the healthcare

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<v Speaker 1>sector that are looking to price over the next week

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<v Speaker 1>or two. And we have a number of companies also

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<v Speaker 1>in technology and other sectors that are getting on file

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<v Speaker 1>and interested in going public over the next let's say

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<v Speaker 1>six months plus. How much disappointment are you hearing from

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<v Speaker 1>your clients at this point and fear as they look

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<v Speaker 1>at the pipeline getting ready and then they look at

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<v Speaker 1>the wee work and the endeavor I p O s

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<v Speaker 1>that were both pulled or iced. Are you having trouble

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<v Speaker 1>convincing your clients? No, it's still good. It's very interesting. So, UM,

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<v Speaker 1>I think there's a lot of resilience to some of

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<v Speaker 1>these the turbulence in the markets and some of the pricings.

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<v Speaker 1>Companies are really focused, which is great, on getting themselves ready.

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<v Speaker 1>I think they recognize and this has been a few

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<v Speaker 1>years now that we've been in this sort of market

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<v Speaker 1>where things can shift on a dime with you. You

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<v Speaker 1>can be thinking you're going to price in a great

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<v Speaker 1>market and then you know, something changes and then the

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<v Speaker 1>market is not great. So companies are really focused on

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<v Speaker 1>getting themselves ready. They are focused on getting into the

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<v Speaker 1>filing process which is now available as confidential for everyone,

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<v Speaker 1>so everybody can get into the confidential filing process, get

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<v Speaker 1>themselves ready, and be ready to take advantage of a

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<v Speaker 1>market window win that market window opens. What do you

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<v Speaker 1>think some of them? What do you think the market

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<v Speaker 1>has been telling us with some of these high profile misfires.

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<v Speaker 1>Is our corporate culture becoming bigger part of kind of

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<v Speaker 1>what investors are looking for? I'm thinking in Uber, I'm

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<v Speaker 1>thinking we work you know where there's definitely been some

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<v Speaker 1>issues with some of the insiders or maybe some of

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<v Speaker 1>the corporate governance and think things like that. Yeahs, As

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<v Speaker 1>we're working with companies today, we focus on a number

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<v Speaker 1>of things and it really is about getting the whole

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<v Speaker 1>company ready to be a public company, and a critical

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<v Speaker 1>part of that is governance and an organization. There's sort

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<v Speaker 1>of the traditional sort of corporate governance and a lot

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<v Speaker 1>of us think about board governance, et cetera. But there's

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<v Speaker 1>also just sort of the governance and oversight from the

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<v Speaker 1>tone at the top of how you run your business.

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<v Speaker 1>And I think a lot of times, um, you know,

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<v Speaker 1>as companies are growing so quickly, UH, companies have to

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<v Speaker 1>start putting in infrastructure policies, a lot of things that

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<v Speaker 1>very mature companies are already well familiar with. But these

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<v Speaker 1>are rapid growth companies. They're going through that process as

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<v Speaker 1>they continue to grow. That really is it never ends,

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<v Speaker 1>but governance as top of the agenda. I think all

0:11:48.920 --> 0:11:52.079
<v Speaker 1>the companies are working on it. It is a process.

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<v Speaker 1>It's not something to turn on overnight, but they work

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<v Speaker 1>on it and they all have goals of having that

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<v Speaker 1>strong governance function in place. So our own Schnelly Boss

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<v Speaker 1>wrote a story about how a number of venture capitalists

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<v Speaker 1>are getting together in Silicon Valley, UH, and they do

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<v Speaker 1>not invite Wall Street because they are displeased with Wall

0:12:09.760 --> 0:12:12.120
<v Speaker 1>Street's role in some of the recent I p O s.

0:12:12.520 --> 0:12:14.920
<v Speaker 1>Do you think it's Wall streets fault that we saw

0:12:15.240 --> 0:12:18.920
<v Speaker 1>some less than optimal performances from some of the I

0:12:19.000 --> 0:12:22.839
<v Speaker 1>p O s. I think that, you know, performance is

0:12:22.960 --> 0:12:26.360
<v Speaker 1>very complex. UM. One of the most important things as

0:12:26.480 --> 0:12:28.679
<v Speaker 1>companies are looking to go to the public markets that

0:12:28.760 --> 0:12:32.000
<v Speaker 1>they really need to get right is predictability in their business.

0:12:32.360 --> 0:12:35.160
<v Speaker 1>And being a predictable business is a very challenging thing

0:12:35.240 --> 0:12:37.800
<v Speaker 1>to do for some of these high growth, disruptive companies.

0:12:38.200 --> 0:12:40.240
<v Speaker 1>I think what's been great is that many of these

0:12:40.280 --> 0:12:42.800
<v Speaker 1>companies have been able to grow in the private markets

0:12:43.040 --> 0:12:45.320
<v Speaker 1>and get funding in the private markets. We have robust

0:12:45.400 --> 0:12:48.839
<v Speaker 1>private markets that has allowed them to extend and and

0:12:49.160 --> 0:12:52.800
<v Speaker 1>and grow and scale without that visibility. But once you're

0:12:52.800 --> 0:12:54.600
<v Speaker 1>in the public markets, a lot of things are visible

0:12:55.000 --> 0:12:58.280
<v Speaker 1>and so UM, you know, I don't know that you

0:12:58.360 --> 0:13:04.200
<v Speaker 1>know ultimately, UM companies own uh their decision on timing.

0:13:04.800 --> 0:13:07.079
<v Speaker 1>They need to think seriously about am I ready to

0:13:07.120 --> 0:13:10.200
<v Speaker 1>be a public company? Am I running a predictable business?

0:13:10.720 --> 0:13:13.319
<v Speaker 1>Do I have that governance and controls and those things

0:13:13.360 --> 0:13:15.880
<v Speaker 1>in place that help make sure that I can meet

0:13:15.960 --> 0:13:19.520
<v Speaker 1>and beat expectations and things like that. Jackie Kelly, thank

0:13:19.559 --> 0:13:22.280
<v Speaker 1>you so much. For being with us. Jackie Kelly is

0:13:22.280 --> 0:13:24.800
<v Speaker 1>American's I p O, America's I p O leader for

0:13:25.040 --> 0:13:27.560
<v Speaker 1>Ernst and Young, joining us here in our bloomg inter

0:13:27.640 --> 0:13:40.600
<v Speaker 1>Active Broker studios. It's almost lunch here on Wall Street.

0:13:40.800 --> 0:13:44.000
<v Speaker 1>I think it's time to take a look at some pizza,

0:13:44.280 --> 0:13:48.080
<v Speaker 1>in particular Papa John's ticker p z Z a uh.

0:13:48.240 --> 0:13:50.400
<v Speaker 1>And we are so lucky to have Rob Lynch here

0:13:50.480 --> 0:13:53.240
<v Speaker 1>in our Bloomgard Active broker studios. He's CEO of Papa

0:13:53.320 --> 0:13:56.599
<v Speaker 1>John's International. He's been CEO for a hot month and

0:13:57.120 --> 0:14:00.360
<v Speaker 1>after coming in after a tumultuous period of time. Shares

0:14:00.400 --> 0:14:03.960
<v Speaker 1>of Papa John's up this year, but that follows at

0:14:04.440 --> 0:14:07.920
<v Speaker 1>nearly declined last year. What was the biggest challenge for you,

0:14:08.040 --> 0:14:10.839
<v Speaker 1>Rob when you came into the company, given uh, the

0:14:11.240 --> 0:14:15.640
<v Speaker 1>sort of unceremonious exit of the previous leader. Now, I

0:14:15.720 --> 0:14:19.400
<v Speaker 1>think the biggest challenge has been um making sure that

0:14:19.520 --> 0:14:21.880
<v Speaker 1>everyone is focused on the future. You know, we need

0:14:21.960 --> 0:14:25.640
<v Speaker 1>to move beyond um those tumultuous times. And you know,

0:14:25.720 --> 0:14:28.920
<v Speaker 1>I've been surprised that the resiliency of this of this company,

0:14:29.040 --> 0:14:32.400
<v Speaker 1>our franchisees are employees are all ready to do great

0:14:32.440 --> 0:14:34.960
<v Speaker 1>things and so that makes it a lot easier for

0:14:35.120 --> 0:14:37.960
<v Speaker 1>me to come in and drive change and get us

0:14:38.000 --> 0:14:41.000
<v Speaker 1>going on in the right direction. I'm a big pizza eater,

0:14:41.440 --> 0:14:44.840
<v Speaker 1>huge pizza eater, that's my you know, desert island food. So, um,

0:14:45.080 --> 0:14:47.560
<v Speaker 1>talk to us about the pizza business in the US

0:14:47.640 --> 0:14:51.600
<v Speaker 1>is a growing how's the market share shifting around between

0:14:51.720 --> 0:14:54.080
<v Speaker 1>chains like yourselves and you know, the mom and pops

0:14:54.120 --> 0:14:56.120
<v Speaker 1>and so on and so forth. Sure, you know, um,

0:14:56.200 --> 0:14:59.640
<v Speaker 1>the pizza business is a pretty stable business. Um, you know,

0:14:59.800 --> 0:15:02.960
<v Speaker 1>I've think the the interesting thing about the pizza industry

0:15:03.120 --> 0:15:06.520
<v Speaker 1>is all the technological disruption that's going on in the industry.

0:15:06.600 --> 0:15:09.440
<v Speaker 1>You know, pizza has owned delivery for a long time.

0:15:09.520 --> 0:15:12.040
<v Speaker 1>When you wanted something delivered, it was either pizza or

0:15:12.360 --> 0:15:14.680
<v Speaker 1>you know, Chinese food, right, And today you can get

0:15:14.720 --> 0:15:17.440
<v Speaker 1>anything through the third party aggregators. And so I think

0:15:17.800 --> 0:15:21.240
<v Speaker 1>the challenge for us is figuring out how we continue

0:15:21.320 --> 0:15:24.520
<v Speaker 1>to grow and frankly thrive in these new times. And

0:15:24.960 --> 0:15:28.920
<v Speaker 1>disruption creates opportunity, and so you know, we are focused

0:15:28.960 --> 0:15:33.000
<v Speaker 1>on and working with these new um companies with these

0:15:33.040 --> 0:15:36.640
<v Speaker 1>new capabilities to to create a symbiotic relationship where we

0:15:36.680 --> 0:15:39.680
<v Speaker 1>can both do great things. Over the next few years.

0:15:40.160 --> 0:15:42.560
<v Speaker 1>So can you give us an example of some innovation

0:15:42.640 --> 0:15:45.600
<v Speaker 1>I mean other than say an algorithm to better match

0:15:45.720 --> 0:15:50.560
<v Speaker 1>people and and sort of the delivery individuals, etcetera. Are

0:15:50.600 --> 0:15:53.200
<v Speaker 1>there any other advancements that you're looking at from a

0:15:53.240 --> 0:15:56.000
<v Speaker 1>technology standpoint? Yeah, I mean I think that you know,

0:15:56.200 --> 0:16:00.520
<v Speaker 1>our mobile application ordering is up about sixty sent year

0:16:00.560 --> 0:16:04.200
<v Speaker 1>on year, right, so people are definitely moving into the

0:16:04.800 --> 0:16:09.480
<v Speaker 1>application channel versus the phones and even the web ordering

0:16:09.560 --> 0:16:11.800
<v Speaker 1>that we used to that used to be so prevalent.

0:16:11.960 --> 0:16:15.000
<v Speaker 1>So you know, for us, that's a huge opportunity because

0:16:15.040 --> 0:16:17.880
<v Speaker 1>we take that that customer and you know data and

0:16:18.160 --> 0:16:21.200
<v Speaker 1>leverage that their purchase data to understand what their needs

0:16:21.240 --> 0:16:23.920
<v Speaker 1>are and target them more effectively with offers that are

0:16:24.000 --> 0:16:25.920
<v Speaker 1>most relevant for them. So we're not sending them a

0:16:25.960 --> 0:16:27.880
<v Speaker 1>bunch of spam or a bunch of you know, offers

0:16:27.920 --> 0:16:31.320
<v Speaker 1>that they don't care about. So um analytics and back

0:16:31.400 --> 0:16:35.160
<v Speaker 1>in artificial intelligence are allowing us to serve our customers better.

0:16:35.600 --> 0:16:40.200
<v Speaker 1>So what percentage of your businesses franchise e versus own stores?

0:16:40.280 --> 0:16:41.760
<v Speaker 1>And how do you think about that? Because I know

0:16:41.840 --> 0:16:44.320
<v Speaker 1>every you know, restaurant company has a kind of a

0:16:44.360 --> 0:16:46.960
<v Speaker 1>different view on that. Yeah, you know, I I love

0:16:47.040 --> 0:16:49.200
<v Speaker 1>it that we have a flexible balance sheet. We own

0:16:49.200 --> 0:16:52.800
<v Speaker 1>about of the system domestically and franchise is on about

0:16:53.840 --> 0:16:57.080
<v Speaker 1>and so that allows us to two seed markets with

0:16:57.240 --> 0:16:59.760
<v Speaker 1>our restaurants and bring in new franchise e s or

0:16:59.840 --> 0:17:02.280
<v Speaker 1>if and help some of our other French our current

0:17:02.360 --> 0:17:06.480
<v Speaker 1>franchisees grow and and and really maximize the opportunity in

0:17:06.560 --> 0:17:09.159
<v Speaker 1>those markets. You know, we new restaurant development as a

0:17:09.240 --> 0:17:13.119
<v Speaker 1>key indicator of a healthy system. Internationally, we're all franchise

0:17:13.200 --> 0:17:16.200
<v Speaker 1>We have two thousand restaurants internationally, we're number three globally

0:17:16.280 --> 0:17:19.720
<v Speaker 1>and pizza delivery UM and so you know that model

0:17:19.800 --> 0:17:22.720
<v Speaker 1>obviously is a franchise only model, and that allows us

0:17:22.760 --> 0:17:25.520
<v Speaker 1>to find partners in the geographies that we want to

0:17:25.560 --> 0:17:28.880
<v Speaker 1>move into who who know that marketplace, know the real estate,

0:17:29.000 --> 0:17:31.239
<v Speaker 1>know how to do business there. So we we are

0:17:31.400 --> 0:17:34.400
<v Speaker 1>definitely UM a blended company. There's a lot of talk

0:17:34.440 --> 0:17:36.880
<v Speaker 1>about the tight labor market. Do you find that it's

0:17:37.000 --> 0:17:40.159
<v Speaker 1>difficult to hire and retain people? Are more difficult than

0:17:40.240 --> 0:17:42.639
<v Speaker 1>it than it has been previously? And you were, uh,

0:17:42.840 --> 0:17:45.359
<v Speaker 1>the CEO of RBS previously, so this isn't new for

0:17:45.440 --> 0:17:48.280
<v Speaker 1>you in terms of running a food services company. Yeah,

0:17:48.320 --> 0:17:51.520
<v Speaker 1>it's it's definitely not a Papa John's problem. It is

0:17:51.840 --> 0:17:55.359
<v Speaker 1>is an industry challenge, right, I mean record low levels

0:17:55.400 --> 0:17:57.760
<v Speaker 1>of unemployment. I mean a lot of great things for

0:17:57.840 --> 0:17:59.680
<v Speaker 1>our country. It makes it a little bit tougher for

0:18:00.119 --> 0:18:03.359
<v Speaker 1>for companies like US and and so um. It just

0:18:03.560 --> 0:18:06.879
<v Speaker 1>makes it that much more important to foster UM a

0:18:07.040 --> 0:18:09.119
<v Speaker 1>culture that people want to be a part of, right

0:18:09.200 --> 0:18:11.440
<v Speaker 1>and to be the kind of the employer of choice

0:18:11.680 --> 0:18:14.040
<v Speaker 1>in the choice in the markets in which we compete.

0:18:14.280 --> 0:18:16.280
<v Speaker 1>And so that's been a big part of of what

0:18:16.400 --> 0:18:18.520
<v Speaker 1>I focused on coming in as the new CEO. How

0:18:18.560 --> 0:18:20.720
<v Speaker 1>do we make sure that we move kind of past

0:18:20.760 --> 0:18:23.320
<v Speaker 1>where we've been focused on the future and build, you know,

0:18:23.480 --> 0:18:26.320
<v Speaker 1>a culture where people feel like they have a future

0:18:26.400 --> 0:18:29.520
<v Speaker 1>that's bright. So looking forward, what's the kind of the

0:18:29.680 --> 0:18:32.240
<v Speaker 1>market I know it's a competitive marketplace. What's kind of

0:18:32.280 --> 0:18:34.639
<v Speaker 1>the marketing strategy that you guys like to employ to

0:18:34.720 --> 0:18:37.680
<v Speaker 1>kind of establish your brand in the marketplace, maybe differentiate

0:18:37.760 --> 0:18:40.480
<v Speaker 1>your brand in the marketplace? Do you use traditional media,

0:18:41.000 --> 0:18:43.760
<v Speaker 1>new media? What's what's working best for you guys? Pizza pizza,

0:18:43.840 --> 0:18:48.080
<v Speaker 1>Pizza pizza. That's our competitors. That's a competitor. We're better ingredients,

0:18:48.160 --> 0:18:51.040
<v Speaker 1>better pizza, and I like ours a lot better. Um,

0:18:51.240 --> 0:18:53.600
<v Speaker 1>but that's okay. Sorry to call you out. Please call

0:18:53.680 --> 0:18:56.480
<v Speaker 1>me out every time. I love it. Uh. Now you

0:18:56.560 --> 0:18:59.720
<v Speaker 1>know we we we want to communicate with our customers

0:18:59.760 --> 0:19:01.720
<v Speaker 1>and the most engaging and compelling way. I mean, we

0:19:01.760 --> 0:19:05.359
<v Speaker 1>still leverage television obviously is a big advertising channel. Um,

0:19:05.480 --> 0:19:08.359
<v Speaker 1>but the media industry is changing almost as rapidly as

0:19:08.400 --> 0:19:11.680
<v Speaker 1>the delivery industry, and so UM, we are focused on

0:19:11.840 --> 0:19:14.840
<v Speaker 1>making sure that that we've made the right investments in

0:19:14.960 --> 0:19:17.960
<v Speaker 1>technology and then the channels that our customers are moving towards.

0:19:17.960 --> 0:19:21.600
<v Speaker 1>I already mentioned the mobile applications. So UM, we're focused

0:19:21.640 --> 0:19:24.399
<v Speaker 1>on connecting with our customers across all the channels. You

0:19:24.880 --> 0:19:26.879
<v Speaker 1>came in here and said that your first job was

0:19:27.359 --> 0:19:30.320
<v Speaker 1>making pizzas. Is that correct? Um? And here you are

0:19:30.480 --> 0:19:35.720
<v Speaker 1>running a pizza chain franchise operator. I'm just wondering what

0:19:35.920 --> 0:19:38.399
<v Speaker 1>is your favorite pizza? First of all, my favorite pizza.

0:19:38.640 --> 0:19:42.040
<v Speaker 1>That's an easy one. Papa John's mushroom pizza. Mushroom pizza.

0:19:42.280 --> 0:19:44.080
<v Speaker 1>I don't know if you know this, most people don't,

0:19:44.400 --> 0:19:48.320
<v Speaker 1>but we actually use Baby Portobellows mushrooms on our pizza

0:19:48.480 --> 0:19:50.800
<v Speaker 1>Like that's a testament to the kind of quality, right,

0:19:50.840 --> 0:19:53.480
<v Speaker 1>and we chop them fresh in our restaurants every day. Okay,

0:19:53.880 --> 0:19:57.600
<v Speaker 1>do you ever make pizza. I've made probably about a

0:19:57.680 --> 0:19:59.760
<v Speaker 1>hundred and fifty thousand pizzas in my life, I know,

0:19:59.840 --> 0:20:02.919
<v Speaker 1>but yeah, Ceo. So, I have spent the last three

0:20:03.040 --> 0:20:05.600
<v Speaker 1>or four weeks going around this country meeting with my

0:20:05.680 --> 0:20:08.800
<v Speaker 1>franchise ease and every time I get there, you know,

0:20:08.880 --> 0:20:11.119
<v Speaker 1>they're expecting me to be kind of afraid of the

0:20:11.160 --> 0:20:13.520
<v Speaker 1>back of house, right, And I walk in and you know,

0:20:13.600 --> 0:20:15.719
<v Speaker 1>I've got my my shirt and my I roll up

0:20:15.760 --> 0:20:17.880
<v Speaker 1>my sleeves and I'm like, okay, let's sling some dough

0:20:18.040 --> 0:20:22.440
<v Speaker 1>and I started making pizza. I love it. I absolutely

0:20:22.520 --> 0:20:24.440
<v Speaker 1>love it. I got, you know, I got Like yesterday,

0:20:24.440 --> 0:20:25.639
<v Speaker 1>I was here in New York. I was up on

0:20:26.280 --> 0:20:29.920
<v Speaker 1>Fourth Street at one of our great franchisees restaurants, and

0:20:30.160 --> 0:20:31.960
<v Speaker 1>you know, I walk in and I've got my suit on,

0:20:32.119 --> 0:20:34.520
<v Speaker 1>I take the jacket off, but I walk, you know,

0:20:34.720 --> 0:20:37.400
<v Speaker 1>back back of house, make a pizza. Finish up. I've

0:20:37.400 --> 0:20:40.760
<v Speaker 1>got flower all over my slacks and shoes. Yeah, I'm like,

0:20:40.840 --> 0:20:42.520
<v Speaker 1>if you know, if you're not gonna to have flower

0:20:42.600 --> 0:20:45.200
<v Speaker 1>on your shoes. You're not a pizza maker. So yeah,

0:20:45.760 --> 0:20:47.760
<v Speaker 1>that's it. That's the story. That's a takeaway. Love it.

0:20:47.840 --> 0:20:50.280
<v Speaker 1>You don't have flower on your shoes, you got some

0:20:50.520 --> 0:20:55.160
<v Speaker 1>other business. Robert Lynch, chief executive Officer Papa John's International,

0:20:55.280 --> 0:20:57.680
<v Speaker 1>joining us here on our Bloomberg Interactor Broker Studio giving

0:20:57.760 --> 0:21:00.720
<v Speaker 1>us the up to date on Papa John's International. P

0:21:01.160 --> 0:21:04.080
<v Speaker 1>z z A is the symbol. Thanks for listening to

0:21:04.119 --> 0:21:06.760
<v Speaker 1>the Bloomberg pen L podcast. You can subscribe and listen

0:21:06.840 --> 0:21:10.160
<v Speaker 1>to interviews at Apple Podcasts or whatever podcast platform you prefer.

0:21:10.400 --> 0:21:12.800
<v Speaker 1>I'm Paul Sweeney. I'm on Twitter at p T Sweeney.

0:21:12.920 --> 0:21:15.359
<v Speaker 1>I'm Lisa abram Woyit's I'm on Twitter at Lisa abram

0:21:15.400 --> 0:21:18.679
<v Speaker 1>wits one Before the podcast, you can always catch us worldwide.

0:21:18.720 --> 0:21:19.640
<v Speaker 1>I'm Bloomberg Radio