WEBVTT - FedEx Warns of Pain Ahead With Tariffs Weighing on Demand 

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news. You're listening to the

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<v Speaker 2>FedEx reported some numbers. Le's get back to the corporate

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<v Speaker 2>earnings disappointing. They're saying tariffs are having an impact on

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<v Speaker 2>their core shipping business. Let's get the latest on that.

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<v Speaker 2>Lee Clascow, Bloomberg Intelligence Senior Transport Logistics and shipping analysts

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<v Speaker 2>and host Bloomberg Intelligence, Taking Transports podcast. If you like railroads,

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<v Speaker 2>trained trust, he is a big pot.

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<v Speaker 3>He's joining the cool kids now he is.

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<v Speaker 2>And if you're into all that logistics transportation stuff, this

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<v Speaker 2>Talking Transports podcast is the place for you to go.

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<v Speaker 2>Check it out, Lee, FedEx. What are they tell on

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<v Speaker 2>the street today?

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<v Speaker 4>So their last quarter was a decent quarter, but the

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<v Speaker 4>quarter uh looking forward to their first physical quarter is

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<v Speaker 4>not going to be a great quarter. And that's really

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<v Speaker 4>just given the uncertainty that is being driven by the tariffs.

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<v Speaker 4>So you know they're seeing weakness in their B to

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<v Speaker 4>B business they're seeing weakness in their industrial kind of

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<v Speaker 4>end markets, and they're obviously seeing some weakness for volumes

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<v Speaker 4>that are coming out of China into.

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<v Speaker 5>The United States.

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<v Speaker 4>So, you know, these are kind of the headwinds that

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<v Speaker 4>they're facing. You know, FedEx is doing what it can.

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<v Speaker 4>It has a couple of initiatives where it's trying to

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<v Speaker 4>take permanent cost out of its network. But at the

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<v Speaker 4>end of the day, the company is transitioning from one

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<v Speaker 4>that used to be B to B business to business

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<v Speaker 4>is now is.

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<v Speaker 5>Mostly you know, the growth really is B two C,

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<v Speaker 5>so that.

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<v Speaker 4>E commerce business, which is more expensive to deliver, so

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<v Speaker 4>that what they're trying to do is create a more

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<v Speaker 4>efficient network. And unfortunately for them, it doesn't happen overnight.

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<v Speaker 4>It takes a long time, and this is a kind

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<v Speaker 4>of a journey that they've been going through for the

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<v Speaker 4>last couple of years.

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<v Speaker 3>Here here's what was confusing to me is that UPS

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<v Speaker 3>did the same thing like in the last quarter, like

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<v Speaker 3>they didn't. They were like, it's uncertain, we don't know

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<v Speaker 3>what's gonna happen. FedEx said the same thing, but the

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<v Speaker 3>stock got really punished in afterwhere hours. And I appreciate

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<v Speaker 3>it's just down two percent now, But why wasn't this

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<v Speaker 3>already baked into the stock?

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<v Speaker 5>You know, that's that's a good question.

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<v Speaker 4>You know, I was thinking about got an uncertain tattoo

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<v Speaker 4>to my forehead because I'll.

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<v Speaker 3>Say it so much, but it don't do that.

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<v Speaker 6>That's gonna hurt.

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<v Speaker 5>Or probably spell it wrong too.

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<v Speaker 4>And you know what, you know, you know, what the

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<v Speaker 4>reality is is the stop and go and go and

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<v Speaker 4>stop with the tariffs are making it very difficult for

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<v Speaker 4>not only businesses to operate, but consumers. You know, you

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<v Speaker 4>saw the other day consumer confidence came in below expectations.

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<v Speaker 5>So the tariffs are.

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<v Speaker 4>Really having an impact on volumes. You know, once we

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<v Speaker 4>get more I think really what businesses really need to

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<v Speaker 4>know is kind of what are the rules of the road,

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<v Speaker 4>and then they can operate within those rules.

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<v Speaker 5>But the stop and go aspects.

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<v Speaker 4>Of the tariffs can be really confusing and disruptive to

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<v Speaker 4>supply chains, which is obviously you know FedEx and ups

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<v Speaker 4>their their core to to move that freight around the world.

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<v Speaker 2>What's there when you look at FedEx businesses, what's their

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<v Speaker 2>exposure to China? How are they exposed at China? Uh?

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<v Speaker 5>Well, they're exposed on there.

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<v Speaker 4>They're express businesses, so you know, they fly things from

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<v Speaker 4>all around Asia and Chrivzi China is the largest aspect

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<v Speaker 4>of that to the United States. You know, it's it

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<v Speaker 4>could be anything from commercial goods to consumer goods, so

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<v Speaker 4>you know, they do have a decent exposure.

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<v Speaker 5>You know.

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<v Speaker 4>One of the other things that FedEx does is they're

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<v Speaker 4>in the less than truckload business, which also came in

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<v Speaker 4>a little below expectations, and that's been a tough business

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<v Speaker 4>that's really kind of geared towards that that industrial economy.

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<v Speaker 4>So when you see the ism being in contraction territory

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<v Speaker 4>for twenty nine in the last thirty one months, that's

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<v Speaker 4>really weighing on that business. And FedEx does plan on

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<v Speaker 4>spending out that business sometime, you know, next year.

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<v Speaker 3>So what's the right question then to be asking for

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<v Speaker 3>a FedEx and a UPS at this point because you know,

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<v Speaker 3>the as you point out rightly, the uncertainty trade for

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<v Speaker 3>transports is definitely front and center, like no one's going

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<v Speaker 3>to have a firm outlook, So what's the next question.

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<v Speaker 4>I guess the next question is how are you restructuring

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<v Speaker 4>your networks to be able to handle the more expensive

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<v Speaker 4>home deliveries that we're all accustomed to. So, you know,

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<v Speaker 4>we're all accustomed to free shipping. You know, when you

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<v Speaker 4>order something online, how are they going to facilitate that

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<v Speaker 4>at They're at the lowest cost they possibly can because

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<v Speaker 4>they're you know, they face competition to FedEx and the

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<v Speaker 4>UPS is the world. They fed face competition from local players,

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<v Speaker 4>from gig economies, from the US Postal Service, and so

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<v Speaker 4>they they need to know bend that cost curve lower

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<v Speaker 4>to be able to drive better margins.

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<v Speaker 5>And you know, UPS N FedEx have been again.

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<v Speaker 4>Trying to restructure their networks. And I guess the real

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<v Speaker 4>question is when is it going to end and when

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<v Speaker 4>can we see margins start improving. But I don't think

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<v Speaker 4>that's going to be a twenty twenty five calendar year story.

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<v Speaker 4>I think that might be more of a twenty twenty

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<v Speaker 4>sixth story. And you know, as things normalize and buying

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<v Speaker 4>begins to grow again, I think that should really generate

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<v Speaker 4>pretty good margins in these types of businesses.

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<v Speaker 2>And Lee, let's pivot just here at the end. Here

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<v Speaker 2>you also cover the big ocean shipping companies. What are

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<v Speaker 2>they seeing in terms of freight and cargo and all

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<v Speaker 2>that kind of stuff again in a world where we're

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<v Speaker 2>operating with some uncertain terrorf levels.

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<v Speaker 4>Yeah, well they're they're enjoying the disruptions that are created,

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<v Speaker 4>the geopolitical disruptions because those are pushing rates higher than

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<v Speaker 4>they probably need to be.

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<v Speaker 5>So that's for them and that positive.

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<v Speaker 4>Then that negative, to your point, is on the volume side,

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<v Speaker 4>we are seeing a surge of freight that's going to

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<v Speaker 4>be heading to southern California in the weeks to come,

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<v Speaker 4>and so that's that is an incremental positive. But the

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<v Speaker 4>problem is that these surges in freight demand could create

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<v Speaker 4>air pockets and much tougher to second half comparisons when

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<v Speaker 4>it comes to volumes, So you could have strong volumes

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<v Speaker 4>near term, but kind of weaker volumes with the months

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<v Speaker 4>heading months further out.

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<v Speaker 3>All right, Ley, it's a pleasure. Thank you so much

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<v Speaker 3>to Klasical. He joins us from Bloomberg Intelligence. He covers

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<v Speaker 3>all the transports. There a senior transport logistics and shipping analysts.

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<v Speaker 3>He's doing the podcast train there's a Bloomberg Intelligence talking

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<v Speaker 3>transports podcast. I thought we were the only BI podcast.

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<v Speaker 2>No, he's look at that.

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<v Speaker 3>A lot of them out there, all right, all right,

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<v Speaker 3>you know.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

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<v Speaker 1>weekdays at ten am Eastern on Apple Corplay and Android

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<v Speaker 1>Auto with the Bloomberg This Up. Listen on demand wherever

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<v Speaker 2>Alex Steal Paul Sweeney live here in our Bloomberg INTERACTI

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<v Speaker 2>broker studio, streaming live on YouTube as well. All right,

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<v Speaker 2>up at the pantry on the sixth floor here, I

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<v Speaker 2>start every morning around six am with the bowl of

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<v Speaker 2>honey nut cheerios, and that is a General Mills product.

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<v Speaker 2>They had some numbers that weren't very good. The company

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<v Speaker 2>expects adjusted earnings per share to decline as much as

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<v Speaker 2>fifteen percent a constant currency basis this year. That's tough.

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<v Speaker 2>Let's go to Diana Recital Pain. Yes, she's a consumer

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<v Speaker 2>staples analyst Bloomberg Intelligence, joining us live here in our

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<v Speaker 2>Bloomberg Interactive Broker Studio. So Diana General Mills week earnings

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<v Speaker 2>outlook talk to us about what's going on in their business.

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<v Speaker 7>So it's pretty much what is happening across the package

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<v Speaker 7>food industry. Volumes are not coming in and they're going

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<v Speaker 7>to have to invest more in pricing, some cutting prices

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<v Speaker 7>as well as weak volume. It is basically flat. It's

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<v Speaker 7>to negative organic growth and that is obviously with a

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<v Speaker 7>negative product mix, is probably going to go down the

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<v Speaker 7>P and L.

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<v Speaker 3>But why, Like, we still got to eat so and

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<v Speaker 3>these are staples, right, So what's the problem.

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<v Speaker 7>Well, basically there's a greater private label penetration. People are

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<v Speaker 7>being more strategic with their spending and they're not.

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<v Speaker 3>So private labels like three sixty five from Whole Foods

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<v Speaker 3>or something.

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<v Speaker 7>Right, Za's exactly. And in the past few years, retailers

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<v Speaker 7>have invested a lot on private label brands. So the

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<v Speaker 7>competition has become more fears and it seems that the equity,

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<v Speaker 7>the brand equity that these companies used to.

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<v Speaker 2>Have is not hidden anymore.

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<v Speaker 7>Like people are just not buying their products.

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<v Speaker 2>I'm one of them. I mean, before the pandemic and

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<v Speaker 2>the inflation, I don't think I've bought one private label

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<v Speaker 2>thing ever. In fact, you know, I felt strongly about brands,

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<v Speaker 2>but now I'm like, screw it, And so we buy

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<v Speaker 2>so many private label products now versus and I don't.

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<v Speaker 7>Know, and you're not the only one we're seeing, like

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<v Speaker 7>across all age groups, particularly for gen zs, they're less

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<v Speaker 7>dedicated to brands that the older generations.

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<v Speaker 2>What do you do about that?

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<v Speaker 3>Yeah, then we have to make your own private Well,

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<v Speaker 3>you know.

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<v Speaker 7>Some of these companies do have some private label, but

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<v Speaker 7>it doesn't it obviously, they don't break it down and

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<v Speaker 7>they're trying to make it not as evident. And obviously

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<v Speaker 7>they want to invest, they want to increase marketing. They're

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<v Speaker 7>gonna probably cut prices, which is which is why you

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<v Speaker 7>see adjusted operating income probably gonna decline in fifteen percent

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<v Speaker 7>over the next fiscal year.

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<v Speaker 3>Can they invest in their own private label brand or

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<v Speaker 3>is that market so saturated? No, it's not necessarily like

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<v Speaker 3>in the marketing side.

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<v Speaker 7>That will fall on the retailer side to invest in

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<v Speaker 7>their private label. But I'm meaning more unlike this Cereal,

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<v Speaker 7>the brand Cereal branded Cereal.

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<v Speaker 2>All right, I'm asking for a friend who may or

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<v Speaker 2>may not be getting his first pet ever in his

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<v Speaker 2>lifetime on July sixteenth, a dog, Australian labradoodle. Not just

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<v Speaker 2>about the pet food business. What's that like?

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<v Speaker 7>So they have been it seems that that part of

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<v Speaker 7>their business stabilizing a little bit. They are now and

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<v Speaker 7>you probably will see Fresh Pet declining I believe four

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<v Speaker 7>to five percent today because they're start they're extending the

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<v Speaker 7>Blue Buffalo brand into fresh Pets.

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<v Speaker 2>Who's doing what well?

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<v Speaker 7>So General Mills is expanding Blue Buffalo into fresh food

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<v Speaker 7>fresh pet food, but Fresh Pet has like ninety percent

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<v Speaker 7>of the market share, so obviously you know that intrusion

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<v Speaker 7>is probably hitting them. We're not necessarily that convinced. They

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<v Speaker 7>weren't very forthcoming in terms of like the type of distribution. Obviously,

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<v Speaker 7>this is more refrigerated food that needs a little bit

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<v Speaker 7>different than like the boxes of cereal that they are

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<v Speaker 7>used to. So we're we're still you know, taking a

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<v Speaker 7>look how they're going to distribute that and how they

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<v Speaker 7>they're gonna kind of get share from Fresh Pet, which

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<v Speaker 7>has like their own fridges and stuff.

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<v Speaker 3>What consumer staple brand is doing everything right?

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<v Speaker 7>Uh? I would say, uh wow, that is from what

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<v Speaker 7>I'm seeing probably, I mean, like yogurt, like you're thinking

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<v Speaker 7>about Chiavani, like those guys seem to be so.

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<v Speaker 3>Like a specialty Hell yes, sort of staple eat place exactly.

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<v Speaker 5>You have.

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<v Speaker 7>You know, high protein, like all the good attributes that

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<v Speaker 7>people are looking for. I think those are like the

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<v Speaker 7>ones that will probably benefit from from this, and.

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<v Speaker 2>I'll sell what I but I still buy the brand

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<v Speaker 2>Campbell soup. Maybe that's just a kid thing.

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<v Speaker 3>That's like, that's definitely a kid think, but I feel

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<v Speaker 3>that way about like generics. We talked about this at

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<v Speaker 3>drug stores, like you got to get the real band aids.

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<v Speaker 3>Like if you don't get the real band aids, they

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<v Speaker 3>just fall off.

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<v Speaker 2>It's just terrific.

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<v Speaker 3>It's very upsetting, all right, Dana, Thanks very much. Dianna

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<v Speaker 3>as their opinion. Bloomberg Intelligence consumer staples analysts. Joining us there.

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<v Speaker 1>You're listening to the Bloomberg Intelligence Podcast. Catch us live

0:12:12.400 --> 0:12:15.800
<v Speaker 1>weekdays at ten am Eastern on Applecarclay, and Android Auto

0:12:15.880 --> 0:12:18.960
<v Speaker 1>with the Bloomberg Business App. Listen on demand wherever you

0:12:19.000 --> 0:12:22.000
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0:12:22.480 --> 0:12:25.320
<v Speaker 3>Happy Wednesday, everybody. Alex Steal here alongside Paul Sweeney. This

0:12:25.360 --> 0:12:27.720
<v Speaker 3>is Bloomberg Intelligence Radio. We cover all the tap news

0:12:27.720 --> 0:12:29.840
<v Speaker 3>and business economics and finance through our lens of our

0:12:29.840 --> 0:12:32.640
<v Speaker 3>Bloomberg Intelligence folks take over two thousand companies and one

0:12:32.679 --> 0:12:35.640
<v Speaker 3>hundred and thirty industries all around the world. We talked

0:12:35.679 --> 0:12:38.800
<v Speaker 3>earlier about General mills and sort of the issues there

0:12:39.200 --> 0:12:42.240
<v Speaker 3>with the private label brands and store brands. Let's take

0:12:42.280 --> 0:12:44.840
<v Speaker 3>another look at consumer products, but look at it at

0:12:44.880 --> 0:12:47.880
<v Speaker 3>the lens of restaurants and restaurant valuations.

0:12:47.960 --> 0:12:49.199
<v Speaker 2>Kind of the haves and have nots.

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<v Speaker 3>Michael Hale and Bloomberg Intelligence senior restaurant and food service

0:12:52.200 --> 0:12:55.440
<v Speaker 3>analyst joins us now fresh at up a recent report.

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<v Speaker 3>So I asked Diana this, like, who's the winner in

0:12:58.080 --> 0:13:00.480
<v Speaker 3>the consumer staples? And she was like ooh, and it

0:13:00.559 --> 0:13:02.040
<v Speaker 3>like took her a while to get there because it's

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<v Speaker 3>really rough. Same question to you, who are the winners

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<v Speaker 3>in the restaurant is uh?

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<v Speaker 8>You know, the two of the names that we really

0:13:09.600 --> 0:13:11.600
<v Speaker 8>like this year are Cracker Barrel and Shake Shack.

0:13:11.760 --> 0:13:13.040
<v Speaker 6>They Cracker Bail.

0:13:12.920 --> 0:13:15.000
<v Speaker 3>I still got to go many the goals.

0:13:15.200 --> 0:13:19.319
<v Speaker 6>They hired new CEOs last year.

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<v Speaker 8>Uh, they're really focusing on improving the operations first and

0:13:23.559 --> 0:13:24.400
<v Speaker 8>then the marketing.

0:13:25.040 --> 0:13:28.199
<v Speaker 6>Uh there and so we're really excited about.

0:13:27.880 --> 0:13:31.439
<v Speaker 8>Some of the changes and some of the early results.

0:13:31.920 --> 0:13:34.679
<v Speaker 8>You know, both of them we expect to outperform pretty

0:13:34.679 --> 0:13:36.800
<v Speaker 8>significantly on the on the top line this year.

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<v Speaker 2>Well, the Cracker Barrel, I mean I know my way

0:13:39.600 --> 0:13:41.400
<v Speaker 2>around at Cracker bar. I know where every little nud

0:13:41.520 --> 0:13:44.560
<v Speaker 2>nick is in every store. Every store is the same.

0:13:44.600 --> 0:13:47.280
<v Speaker 2>And then of course the same order the Country Boy breakfast.

0:13:47.440 --> 0:13:48.839
<v Speaker 3>But what'sn't that again, it's not like.

0:13:48.920 --> 0:13:52.640
<v Speaker 2>The Country Boy breakfast with the country ham okay, and

0:13:52.760 --> 0:13:54.800
<v Speaker 2>you get biscuits and gravy.

0:13:55.120 --> 0:13:55.640
<v Speaker 5>It's a whole thing.

0:13:55.679 --> 0:13:56.160
<v Speaker 3>It's a whole thing.

0:13:56.200 --> 0:13:59.520
<v Speaker 2>It's a whole thing. Unbuttoned yourself and sit right down. Yeah,

0:13:59.600 --> 0:14:00.559
<v Speaker 2>what did they changing here?

0:14:00.559 --> 0:14:00.920
<v Speaker 5>What is it?

0:14:00.960 --> 0:14:02.760
<v Speaker 2>Because that's kind of what they are. It seems like

0:14:02.800 --> 0:14:05.160
<v Speaker 2>their DNA is kind of that type of stuff.

0:14:05.480 --> 0:14:05.680
<v Speaker 6>Yeah.

0:14:05.760 --> 0:14:07.800
<v Speaker 8>So so one of the first things they did was

0:14:08.520 --> 0:14:11.920
<v Speaker 8>focus their menu right. There was a lot of items

0:14:11.920 --> 0:14:15.000
<v Speaker 8>on there that were not selling very good and also

0:14:15.040 --> 0:14:20.200
<v Speaker 8>bogging down the kitchen. That has made the experience better

0:14:20.280 --> 0:14:24.840
<v Speaker 8>for the employees. Employee turnover has plummeted. It was down,

0:14:25.000 --> 0:14:25.960
<v Speaker 8>you know, high.

0:14:25.720 --> 0:14:27.920
<v Speaker 6>Teens year over year in the last quarter.

0:14:28.080 --> 0:14:30.520
<v Speaker 8>So that saves them a lot of money on training

0:14:30.920 --> 0:14:33.120
<v Speaker 8>and things of that nature provide, you know, as the

0:14:33.160 --> 0:14:36.080
<v Speaker 8>longer your employees stay, obviously, the better experience your customers

0:14:36.120 --> 0:14:37.800
<v Speaker 8>get and then people come back.

0:14:38.680 --> 0:14:40.120
<v Speaker 6>They're also touching up the stores.

0:14:40.120 --> 0:14:44.080
<v Speaker 8>They're going to remodel the stores, lighting and paint are

0:14:44.120 --> 0:14:46.600
<v Speaker 8>some are some of the things that they're going to

0:14:46.680 --> 0:14:48.840
<v Speaker 8>do across all the stores. Some of the stores need

0:14:48.880 --> 0:14:51.800
<v Speaker 8>more work. They'll do the floors as well. That's something

0:14:51.840 --> 0:14:54.920
<v Speaker 8>they're starting to do. And then they're ramping up the marketing.

0:14:54.960 --> 0:14:58.000
<v Speaker 8>So now that the operations are running well, they're doing

0:14:58.040 --> 0:15:03.840
<v Speaker 8>more social media marketing talk, they're they they just had

0:15:03.840 --> 0:15:06.880
<v Speaker 8>their first NASCAR race and the Cracker Bar of four

0:15:06.960 --> 0:15:11.600
<v Speaker 8>hundred down in Tennessee, right Crystal, And they're advertising on

0:15:11.680 --> 0:15:14.280
<v Speaker 8>live sports as well as Bravo. There's a huge overlap

0:15:14.280 --> 0:15:19.080
<v Speaker 8>between casual dining fans and Bravo watchers, and so yes,

0:15:19.480 --> 0:15:20.440
<v Speaker 8>do not see that coming.

0:15:21.040 --> 0:15:23.040
<v Speaker 3>So on the other hand, what are some of the

0:15:23.080 --> 0:15:24.880
<v Speaker 3>companies that aren't doing so well?

0:15:25.400 --> 0:15:28.360
<v Speaker 8>Oh yeah, so you know some of the legacy casual

0:15:28.400 --> 0:15:31.880
<v Speaker 8>dining brands. Casual dining in general is having somewhat of

0:15:31.880 --> 0:15:37.480
<v Speaker 8>a renaissance. This year's casual Chili's is the one they've

0:15:37.920 --> 0:15:45.720
<v Speaker 8>Chili's is rocking it absolutely, and Applebee's is not. So

0:15:45.760 --> 0:15:49.320
<v Speaker 8>you got you got your preferences confused right now?

0:15:49.360 --> 0:15:51.040
<v Speaker 6>Backwards, I'd say so, yeah.

0:15:51.160 --> 0:15:54.080
<v Speaker 8>Dine Brands, which owns Applebee's and Ihop, they're having a

0:15:54.120 --> 0:15:58.720
<v Speaker 8>real real hard time resonating with younger consumers and and

0:15:58.920 --> 0:16:01.760
<v Speaker 8>haven't been able to bring those consumers into the brand.

0:16:01.760 --> 0:16:06.040
<v Speaker 8>They also have a large number of low income consumers

0:16:06.040 --> 0:16:09.480
<v Speaker 8>that visit those brands, and so that's really hurting their

0:16:10.200 --> 0:16:14.000
<v Speaker 8>hurting their results. And then blooming brands out Back Steakhouses

0:16:14.000 --> 0:16:18.360
<v Speaker 8>their biggest chain, they've same type of situation. They've struggled

0:16:18.360 --> 0:16:21.240
<v Speaker 8>to bring in younger consumers into the brands, and their pricing.

0:16:20.880 --> 0:16:22.520
<v Speaker 6>Got way ahead of itself.

0:16:22.640 --> 0:16:24.760
<v Speaker 8>So if you compare them to Texas Roadhouse, it's a

0:16:24.800 --> 0:16:29.400
<v Speaker 8>way more expensive experience and yet maybe not a better product,

0:16:29.560 --> 0:16:32.680
<v Speaker 8>not a better experience for the consumer, definitely not better service.

0:16:34.240 --> 0:16:38.800
<v Speaker 2>Your coverage is a great reflection of the consumer. What

0:16:39.040 --> 0:16:40.640
<v Speaker 2>are your takeaways? How is the consumer out there? What

0:16:40.640 --> 0:16:41.560
<v Speaker 2>are the restaurants telling you?

0:16:41.960 --> 0:16:44.080
<v Speaker 8>They're doing all right? They're doing alright. Last year was

0:16:44.080 --> 0:16:47.680
<v Speaker 8>a restaurant session. This year results are better, and we

0:16:47.760 --> 0:16:51.000
<v Speaker 8>expect them to get better in the second half. You know,

0:16:51.240 --> 0:16:54.040
<v Speaker 8>first quarter there was some consternation, but it was a

0:16:54.080 --> 0:16:56.200
<v Speaker 8>lot of bad weather. There was a bad flu season.

0:16:57.080 --> 0:16:59.560
<v Speaker 8>There was some pullback by low and middle income consumers

0:16:59.600 --> 0:17:01.840
<v Speaker 8>in March, but they seem to have rebound results have

0:17:01.880 --> 0:17:05.800
<v Speaker 8>been pretty strong thus far, and we and the economic

0:17:05.840 --> 0:17:07.920
<v Speaker 8>indicators that we watch are starting to get a little

0:17:07.960 --> 0:17:08.520
<v Speaker 8>bit better.

0:17:08.720 --> 0:17:12.840
<v Speaker 3>So unvalued appropriately for the conditions right now.

0:17:13.520 --> 0:17:16.760
<v Speaker 8>Well, you know me personally, I don't look at historical

0:17:16.840 --> 0:17:19.880
<v Speaker 8>valuations because the market cycles change so much.

0:17:19.920 --> 0:17:23.240
<v Speaker 6>I'm looking at it on a relative basis, right, and

0:17:24.280 --> 0:17:27.160
<v Speaker 6>relative to the peer group. Okay, yeah, and so I see.

0:17:27.280 --> 0:17:30.080
<v Speaker 8>And so it depends on the name, right, It definitely

0:17:30.080 --> 0:17:33.400
<v Speaker 8>depends on the name. But you know, I think restaurants

0:17:33.440 --> 0:17:35.080
<v Speaker 8>are set up for a nice strong second half. We

0:17:35.080 --> 0:17:36.960
<v Speaker 8>also have we are going to have that tailwind of

0:17:37.000 --> 0:17:39.919
<v Speaker 8>tax cuts, and so I think just getting that, having

0:17:39.960 --> 0:17:43.399
<v Speaker 8>that and be the narrative versus tariffs and war and

0:17:43.440 --> 0:17:46.240
<v Speaker 8>whatever else, I think it's going to help shift consumer

0:17:46.320 --> 0:17:47.240
<v Speaker 8>sentiment and spending.

0:17:48.000 --> 0:17:50.800
<v Speaker 2>Just the quick service restaurants, which otherwise is fast food.

0:17:50.920 --> 0:17:51.520
<v Speaker 2>How are they doing?

0:17:52.040 --> 0:17:56.880
<v Speaker 8>Fast food is struggling. Number one, they're lapping harder comparisons

0:17:56.920 --> 0:17:59.879
<v Speaker 8>from last year. Number two, they have more exposure to

0:18:00.160 --> 0:18:02.640
<v Speaker 8>income consumers, which continue to be hurt by the inflation

0:18:02.800 --> 0:18:03.400
<v Speaker 8>that we've.

0:18:03.200 --> 0:18:04.040
<v Speaker 6>Seen, right.

0:18:04.760 --> 0:18:10.560
<v Speaker 8>And number three, they've overbuilt so since the since the pandemic,

0:18:11.119 --> 0:18:13.720
<v Speaker 8>full service chains, casual dying chains, kind of pulled back

0:18:13.800 --> 0:18:14.960
<v Speaker 8>on their development.

0:18:15.040 --> 0:18:16.880
<v Speaker 6>They closed stores. Fast Food has.

0:18:16.800 --> 0:18:19.720
<v Speaker 8>Just been full steam ahead of opening stores, so supplying

0:18:19.760 --> 0:18:20.640
<v Speaker 8>de Man has gotten out.

0:18:20.560 --> 0:18:22.720
<v Speaker 3>Of whack, all right, Michael, thanks a lot, Really appreciate it,

0:18:22.720 --> 0:18:23.359
<v Speaker 3>really good stuff.

0:18:23.359 --> 0:18:24.200
<v Speaker 2>I still going to make it.

0:18:24.119 --> 0:18:24.919
<v Speaker 6>To crack a barrel.

0:18:25.280 --> 0:18:29.040
<v Speaker 3>Michael hallin the Brig Intelligence senior restaurant and food service analysts,

0:18:29.080 --> 0:18:32.640
<v Speaker 3>joining us on the winters and losers of a restaurant valuations.

0:18:33.280 --> 0:18:37.960
<v Speaker 1>This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

0:18:38.160 --> 0:18:42.120
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