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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the All Thoughts Podcast.

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Speaker 2: I'm Tracy Alloway.

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Speaker 3: And I'm Joe. Wasn't thal Joe.

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Speaker 2: I have a question, go on, what is your favorite

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Speaker 2: chain restaurant. It has to be a sit down chain restaurant.

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Speaker 3: Sit down chain restaurant. That's a really good question.

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Speaker 4: You know.

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Speaker 3: I actually really like Chilia's. I think they have Their

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Speaker 3: fijidas are absolutely legit. And I say this as someone

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Speaker 3: who is eating quite a lot of text mex Fijidas

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Speaker 3: from my time in Texas, and so I think I

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Speaker 3: have credibility and as a kid, and I haven't been

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Speaker 3: there in years, but I still think my memory of

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Speaker 3: the food is really good. I love Cracker Barrel.

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Speaker 2: Oh, breakfast at Cracker Barrel is really really good. Well,

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Speaker 2: I bring it up because today we're going to be

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Speaker 2: answering the question of where all of these restaurants actually

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Speaker 2: get their food from.

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Speaker 3: That's a great question. I don't I don't know anything

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Speaker 3: about it. I don't know anything about sit down chain restaurants.

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Speaker 4: I mean, I don't know.

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Speaker 3: I think about most chain restaurants period, let alone fast

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Speaker 3: food ones. But the world of sit down ones that

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Speaker 3: are real restaurants where there's waiters, waitresses, et cetera. I

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Speaker 3: don't know a thing about it.

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Speaker 2: You're not interested in my favorite restaurants. Oh, this is

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Speaker 2: how it works. I asked you a question, and you

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Speaker 2: were ciprocate.

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Speaker 3: I was going to and I was planning to, and

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Speaker 3: then you like turned a ninety degree angle to talk

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Speaker 3: about to talk about we were going to start answering

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Speaker 3: the question of where these comfort was like, oh, okay,

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Speaker 3: I guess we're going on to some new direction here.

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Speaker 3: We could just keep talking about favorite restaurant, Tracy, what

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Speaker 3: is your favorite restaurant to sit down in?

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Speaker 2: I actually have many? Okay, Red Robin, Oh, I still

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Speaker 2: love that place. They had a salad that was basically

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Speaker 2: just a plate of chicken tenders.

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Speaker 4: It was so good.

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Speaker 2: But build does a salad Fridays. You still love that place?

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Speaker 4: I know.

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Speaker 2: And there was one in London and it was like

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Speaker 2: my anchor to America in the early two thousands. And

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Speaker 2: Chili's Chili is with my Chili.

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Speaker 3: Yeah, yeah, it's legit. Keep going. We're going to make

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Speaker 3: up for the fact that I didn't ask you. But

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Speaker 3: now I'm just keep going well.

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Speaker 1: One thing.

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Speaker 2: One thing I did realize recently. I've never been to

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Speaker 2: an olive garden. I don't know why that is.

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Speaker 3: I've been a few times. It's not that terrible. I

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Speaker 3: don't think like I've been. I've even been to the

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Speaker 3: one in Times Square.

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Speaker 2: Yeah, but I feel like it's very hard to make

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Speaker 2: carbs badly. Right, it's just pasta and bread.

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Speaker 3: Yeah, uh, it's good.

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Speaker 2: Okay, all right, I am going to move the conversation

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Speaker 2: on now Apple Bee's.

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Speaker 3: Have been to the one in Times Square? There, solid

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Speaker 3: I do not like it. Why do we have to

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Speaker 3: move the conversation on. I don't get it. Why can't

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Speaker 3: we just keep talking about it? Sit down restaurant?

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Speaker 2: All right, Well, we'll get back to them. We'll get

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Speaker 2: to our recommendations. But on a serious note, one of

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Speaker 2: the reasons we are interested in this subject is because

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Speaker 2: we did a series last year called Beat Capitalism, where

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Speaker 2: we talked a lot about agriculture and the chicken industry specifically,

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Speaker 2: and anti trust and monopolies and things like that. And

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Speaker 2: one of the things that stood out to me from

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Speaker 2: that series was a comment from Doha Mechi, who is

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Speaker 2: the former Assistant Attorney General, where she talked about the

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Speaker 2: tyranny of the middleman in the economy, and I think

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Speaker 2: this is something that people are, you know, perhaps just

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Speaker 2: waking up to. There are all these companies out there

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Speaker 2: that you have probably never heard of, but have massively

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Speaker 2: dominant positions in the economy and charge a lot for

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Speaker 2: their services. And one of those happens to be a

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Speaker 2: very large company that provides food for all these sit

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Speaker 2: down chain restaurants.

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Speaker 3: You know, I'm going to play Devil's advocate on this

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Speaker 3: episode because, as.

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Speaker 2: You know, because you love chili so much, because I love.

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Speaker 3: Chili's, and I love food production at massive scales, and

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Speaker 3: I love.

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Speaker 4: All of this.

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Speaker 3: But it is true that there are all these companies

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Speaker 3: that are really important that sort of sit between whether

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Speaker 3: the retailer, the customer, or more in the case of food,

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Speaker 3: more frequently the farmer and the end retailer of the

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Speaker 3: farmer and the restaurant do we literally know nothing about.

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Speaker 3: And they're huge and they're massive, and they don't get

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Speaker 3: any attention, and so I am very interested in this topic.

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Speaker 2: All right, Well, we do have the perfect guest. It

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Speaker 2: is someone who has been on the show before I

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Speaker 2: think maybe a year or two ago. Now, yeah, wow,

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Speaker 2: time flies. But we're going to be speaking with Austin Frerik.

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Speaker 2: He is an anti trust and agricultural expert and also

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Speaker 2: the author of Baron's Money Power and the Corruption of

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Speaker 2: America's Food Industry. It's a great book even if you're

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Speaker 2: not interested in agriculture or anti trust specifically, it says

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Speaker 2: a lot about the US economy, so I would highly

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Speaker 2: recommend it. And Austin actually has just written a new

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Speaker 2: chapter for his book that is all about this particular company,

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Speaker 2: and I guess I should just say what it is.

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Speaker 2: It's called Cisco.

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Speaker 3: It's not the networking gear company.

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Speaker 2: Not the networking gear company, although it does have the

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Speaker 2: most generic origin story ever. So Cisco's stands for systems

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Speaker 2: and services company.

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Speaker 3: Yum delicious.

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Speaker 2: All right, Austin, welcome back to the show.

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Speaker 4: Thanks for having me on again. And I just want

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Speaker 4: to say, you guys have me on last year really

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Speaker 4: changed the course of my book, so I appreciate that.

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Speaker 2: Oh, thank you.

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Speaker 4: Well.

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Speaker 2: It was genuinely excellent. I am not just saying that.

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Speaker 2: I really enjoyed it. Okay, speaking of which, how does

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Speaker 2: it work when you decide to add a new chapter

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Speaker 2: to a book and why did you decide to do this?

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Speaker 4: Yeah. So the funniest thing about this book was when

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Speaker 4: I would do book talks, people kept telling me about

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Speaker 4: barons I missed, Like I was in Idaho. They're like,

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Speaker 4: let me tell you about a potato baron when I

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Speaker 4: was in Indiana. There.

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Speaker 3: We're going to get the name of the potato baron

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Speaker 3: after the episode.

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Speaker 4: So oh yeah, I have a whole purgatory folder that

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Speaker 4: I just put this information into. But Cisco kept coming

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Speaker 4: up and it was the weirdest placed origin story where

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Speaker 4: so I talked fast and I know it. So I

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Speaker 4: purposely been doing book talks and nursing.

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Speaker 2: Homes, so you have to slow down and practice.

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Speaker 4: Okay, I blame it on. I listened to podcasts like

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Speaker 4: one point five point five, especially Midwestern and older people.

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Speaker 4: You gotta take it down. And what kept happening when

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Speaker 4: I was doing.

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Speaker 3: You realize, if you're speaking fast because you're used to it,

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Speaker 3: then people who listened to you on those podcasts are

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Speaker 3: now listen you two and a half to three x speed. Anyway.

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Speaker 4: It's bad because my husband listens to them on two

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Speaker 4: x twos. We talked that way, and it's so a

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Speaker 4: lot of times you do nursing home gigs, they'll value

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Speaker 4: for dinner before and after. And it was people kept

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Speaker 4: complaining about the food. And I mean, anyone that's been

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Speaker 4: to a hospital or there's home in America, it's pretty bad.

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Speaker 4: I mean, we're serving our most vulnerable people the worst food.

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Speaker 4: And they kept coming up. But it's Cisco's one of

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Speaker 4: those things everyone kind of complains about, but no one knows.

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Speaker 4: And my mom used to have a bakery and I

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Speaker 4: write about that in my Coffee chapter. And she had

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Speaker 4: a Broadliner and her Broadliner disappeared. They got bought up

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Speaker 4: by a bigger entity, and so I was just curious.

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Speaker 2: And then that's broadline distribution.

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Speaker 4: Yes, right, thanks for that's an industry term. I think

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Speaker 4: of them as grocery store for restaurants. They were Amazon

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Speaker 4: Before Amazon, they were the everything store.

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Speaker 3: This is really important because when we're talking about Foo distribution,

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Speaker 3: so there are broadliners. You get everything there from well,

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Speaker 3: you know, your huge jar of olives to cheese or whatever.

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Speaker 3: But then also a restaurant might also have specialty distributors

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Speaker 3: too that like just really focus.

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Speaker 4: On one thing, right if they have the option. Okay,

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Speaker 4: in certain markets, usually most rural communities, there's very few options.

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Speaker 4: But like for example, New York has one most competitive

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Speaker 4: broadliner market, so restaurants here have a lot of different

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Speaker 4: source and options.

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Speaker 2: Yeah, I should just say this is going to be

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Speaker 2: a very odd, lotsy episode because it brings together baking, warehouses, logistics, trucking,

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Speaker 2: anti trust, all that good stuff. So I'm very excited. Okay, Well,

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Speaker 2: on that note, how did Cisco get to be a

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Speaker 2: dominant player in this particular space.

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Speaker 4: I love this origin story John Bot. He's a different

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Speaker 4: type of character compared to other barons my book. I

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Speaker 4: really like him, like he's like a model businessman where

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Speaker 4: he's one of those people comes out of Waco, Texas.

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Speaker 4: His brother and dad died young, dropped out of college,

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Speaker 4: leap Baylor to support his mom, worked at AMP, got

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Speaker 4: transferred to the AMP in Houston, and he's one of

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Speaker 4: those people you see in business history that just saw

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Speaker 4: things before other people. He saw two important things. Number one,

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Speaker 4: the rise of frozen food. We're talking like right after

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Speaker 4: World War two and how that was going to and

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Speaker 4: then also frozen food mixed with women entering the work

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Speaker 4: at workforce knowing that they want to make quicker meals.

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Speaker 4: So he thought, oh, people are gonna eat out more.

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Speaker 4: And the thing to keep in mind here is our

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Speaker 4: norm of eating out is a very new thing in America.

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Speaker 4: Historically used to like bring a dish to something, it

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Speaker 4: was like a church function. Now we eat up about

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Speaker 4: once a day. So he saw that thing ahead of people,

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Speaker 4: and he didn't think amp was moving fast enough. So

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Speaker 4: he founded a frozen essentially a frozen berry company. But

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Speaker 4: going back to this point, you made Joe about all

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Speaker 4: these different things. That's how the idea from Cisco came

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Speaker 4: from where literally some Irish oil man was opening a

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Speaker 4: fancy hotel in Houston, and he was working the loading

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Speaker 4: dock that night and he saw in the day a

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Speaker 4: frozen strawberries. A frozen strawberry. I don't have a competitive advantage,

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Speaker 4: but what I can do is this food buyer has

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Speaker 4: like thirty different vendors for all these different things. What

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Speaker 4: I can do is offer him as much as possible.

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Speaker 4: So the origin of Cisco was he brought nine companies

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Speaker 4: together to create it, and you realized some's gonna fill

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Speaker 4: this at some point. So even though they only did

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Speaker 4: business in a few state, he registered in all fifty

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Speaker 4: states so that's how Cisco is created.

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Speaker 3: I am fascinated by this idea because it's just one

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Speaker 3: of those things that hadn't really occurred to me until

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Speaker 3: like a read ear chapter, just like yeah, like it's

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Speaker 3: really weird how much we eat out or it's just

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Speaker 3: really novel in terms of the prevalence of restaurants. I

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Speaker 3: mean I eat out way more than I did, like

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Speaker 3: when I was a kid growing up.

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Speaker 4: I think about that all the time. Used like Bonanza

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Speaker 4: was like a buffet was like a special occasion once

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Speaker 4: a week.

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Speaker 3: And now I sit down Pizza Hut. That's another one

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Speaker 3: that was such a big deal. Yeah and yeah, no,

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Speaker 3: I just you just do it.

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Speaker 4: Now, Well, let me pose a question to you. What

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Speaker 4: do you think? And there's a new king The number

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Speaker 4: one sit down chain restaurant in America is where you

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Speaker 4: order off the menu.

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Speaker 3: Oh, this is tough.

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Speaker 4: Before I tell you it's my favorite train, your favorite chain,

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Speaker 4: maybe my husband.

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Speaker 3: I'm worried that, like I'm not going to know it,

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Speaker 3: and then I'm going to be really embarrassed at how

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Speaker 3: out of touch because you're going to say it is

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Speaker 3: going to be really obvious. What is it?

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Speaker 2: Cheesecake factory?

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Speaker 3: No are we are we talking about by dollar volume?

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Speaker 4: Dollar volume?

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Speaker 3: Okay?

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Speaker 2: All right, yeah, you're gonna have to tell us.

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Speaker 3: I think I'm having stage fright.

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Speaker 4: What's the Texas Roadhouse?

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Speaker 2: I love Texas Roadhouse? Oh my god. They have the

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Speaker 2: best red rolls.

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Speaker 4: My mom brings to block bags and like I should.

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Speaker 2: Have said, that was my favorite. They had one of those.

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Speaker 2: When I was living in Abu Dabi, they had one

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Speaker 2: and it was absolutely fantastic.

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Speaker 4: You want to understand America, go to a text roadhouse

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Speaker 4: on Friday night. Yeah, I wasn't one to buke Iowa.

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Speaker 4: I was on book tour last weekend. I got a steak,

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Speaker 4: vegetable and mashed potatoes homemade fourteen dollars.

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Speaker 2: Un ironically, their sticks are really good, Like they're good.

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Speaker 2: I always have to pull.

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Speaker 3: Where do they get there? Where do they get their food?

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Speaker 4: Oh? I mean who knows how they I mean you

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Speaker 4: need to get it from Cisco and they you don't.

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Speaker 4: I don't know.

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Speaker 3: They only charged fourteen because of the incredible miracle of capitalism.

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Speaker 3: Have been scared, Joe.

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Speaker 4: My hotic is two things they do scratch cooking. Most

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Speaker 4: chain restaurants now do frozen food. They're actually kind of

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Speaker 4: brocoling in the back and number two volume. Okay, yeah,

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Speaker 4: their surfers only have three tables and they move you

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Speaker 4: so quick.

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Speaker 2: I love that you're doing in person research on the

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Speaker 2: subject of chain restaurants. But you know, you mentioned that

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Speaker 2: we're not entirely sure where Texas Roadhouse gets its food from.

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Speaker 2: How does it work the contracts between a restaurant and

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Speaker 2: someone like a Cisco. What do we know about those

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Speaker 2: specific agreements?

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Speaker 4: So a few things. One we can kind of figure

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Speaker 4: out what chain Cisco does based on its website. So

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Speaker 4: it has a subdivision called Sigma. So if you go

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Speaker 4: to Sigma's website, it will rage about its corporate clients.

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Speaker 4: Some of them are all Garden Red Robin's one, you know,

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Speaker 4: different chains like that. The agreements, there's a lot. I mean,

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Speaker 4: what I do know from these agreements is what we

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Speaker 4: see with public universities, and even that are not transparent.

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Speaker 4: There's a famous one at the University of Iowa. Someone

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Speaker 4: wanted to know what's the contract for food here? And

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Speaker 4: it went up to Supreme Court in Iowa and it

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Speaker 4: was rejected, which is kind of a weird thing, Like

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Speaker 4: you think that our cultural state would have a really

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Speaker 4: good source in the food. You would know the contracts.

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Speaker 4: There's not a lot of disclosure here.

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Speaker 2: They filed to see the actual contracts.

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Speaker 4: Keep it closed.

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Speaker 3: Yeah, Okay, So let's say a red Robin is it

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Speaker 3: or an olive Garden is a client of Cisco. Would

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Speaker 3: that be a national contract that would cover every Red

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Speaker 3: Robin or Olive Garden or would there be any variation

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Speaker 3: and read in regional distribution or anything like that, Like I.

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Speaker 4: Would think so I would contextualize Cisco as think of

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Speaker 4: it as like fed extra food. Okay, A lot of

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Speaker 4: these companies that pattern products, and Cisco's just moving their

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Speaker 4: patent pattern fries, you know what I mean? Like they

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Speaker 4: all have their kind of That's what Cisco's there to

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Speaker 4: do is outsource that part or handle that.

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Speaker 2: Is there some giant like Cisco food production center in

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Speaker 2: like I don't know, the wilderness of Wyoming or something,

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Speaker 2: or are they sort of like scattered around the United States.

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Speaker 4: Scattered around? I mean, this is this is harder to understand.

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Speaker 4: There was a good Wall Street Journal article like twenty

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Speaker 4: years ago, how a lot of your Jollopeno poppers in

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Speaker 4: a restaurant I'll be all being made at one factory

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Speaker 4: in Mexico. You know, it's cheaper to pay someone offshore. Essentially,

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Speaker 4: you know, stuff it, but then you are sacrificing taste

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Speaker 4: at some point. But Cisco doesn't own production facilities. It

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Speaker 4: owned a slaughterhouse in Iowa at one point, but then

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Speaker 4: it sold it off. So I can't quite figure out

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Speaker 4: what they got into that. My guess is is for

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Speaker 4: most restaurants, people pick their vendor based on They called

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Speaker 4: center of the plate the protein, so they were trying

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Speaker 4: to do quality control.

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Speaker 3: Yeah, I'm sure you're the center of the plate. Yeah,

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Speaker 3: a restaurant to refer to whichever protein. I already but

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Speaker 3: this is so they don't have production what basically it

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Speaker 3: is and you already said it's like fed eggs at

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Speaker 3: its core, it sounds like it's logistics companies.

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Speaker 4: Yes, most of theirm place are truck drivers. Huh.

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Speaker 2: Your dad was a truck driver, right, you talk about

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Speaker 2: this in the book.

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Speaker 4: Yes, he works from a corn start company.

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Speaker 2: So what did that experience of growing up with a

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Speaker 2: truck driver dad teach you about a company like Cisco.

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Speaker 4: So my dad used to be first he's being in

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Speaker 4: the beer business, so he's a beer truck driver, and

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Speaker 4: then he worked in beer sales. So that's actually where

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Speaker 4: a lot of my I love looking at displays and

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Speaker 4: grocery stores because my dad used to merchandise, so I

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Speaker 4: love good merchandising. So like, my favorite grocery store is

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Speaker 4: HAP in Texas LOVEHV No One merchant, No One merchandise

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Speaker 4: is like that, Yeah, this is a fact, and so

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Speaker 4: you look at that. And so like my dad always

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Speaker 4: taught me like he could, he knew the type of

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Speaker 4: demographics of a grocery based on the number one beer,

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Speaker 4: like oh, this is a blue Moon hivy or this

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Speaker 4: is a you know, red red Dog hivy. So there's

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Speaker 4: different price points. And so my dad now does corn products.

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Speaker 4: But just understanding because there's independent truck drivers, there's in

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Speaker 4: house truck drivers, and there's kind of hierarchy to these

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Speaker 4: different worlds all that kind of stuff.

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Speaker 3: So let's talk about the competitive landscape because that's an

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Speaker 3: addition to the fact that you know, you are a

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Speaker 3: big fan of the stakes at Texas Roadhouse. That's why

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Speaker 3: we're here. What does the competitive landscape for sort of

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Speaker 3: this sort of broadline or food distribution to restaurant really

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Speaker 3: look like.

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Speaker 4: So that I mean, that's that's the big question anti

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Speaker 4: trusty market definition. I mean that is is like my

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Speaker 4: little pet peeve is, how do you define a market's everything?

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Speaker 4: So like Cisco try to buy us foods, you know,

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Speaker 4: back in twenty fifteen, and they argue their competition include

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Speaker 4: Sam's Club. I think people like I just remember personally

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Speaker 4: anadoltically my mom, we only went to Sam's Club when

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Speaker 4: she ran out cups and needed to get cups between

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Speaker 4: her next truckload. Most people would not include Costco and

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Speaker 4: Samski as a broadliner and Texas Roadhouse.

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Speaker 2: Is it going to Costco to buy steakes?

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Speaker 3: But in theory or restaurant, I mean, I take your point,

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Speaker 3: it's not really a comp but in theory, there probably

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Speaker 3: are restaurants that source from some of these whole Yeah.

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Speaker 4: I mean you can tell when you go in certain

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Speaker 4: local restaurants, you'll see Costco branded products in the back.

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Speaker 4: My bigger thing here is right now, a lot of

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Speaker 4: what is a market is defined by highly paid economists,

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Speaker 4: and these things aren't publicly disclosed usually. I kind of

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Speaker 4: keep in mind, I come out of the Treasury Tax

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Speaker 4: Analysis Office. The beauty of that world is you have

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Speaker 4: Treasury doing tax revenue estimates UFCCBO, and then you have

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Speaker 4: independent academic institutions like you PEN doing revenue estimates, so

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Speaker 4: you have three different estimates coming at you for the

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Speaker 4: same thing. I will love if we did something like

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Speaker 4: this with market definition because here's the thing, these markets

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Speaker 4: are pretty stable. Having like there should be a government

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Speaker 4: agency doing market definition reports.

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Speaker 3: So based on how you so the merger attempt was blocked.

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Speaker 3: It so based on however the regulators at the time defined, Okay,

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Speaker 3: this is the market, this is the circle we're drawing.

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Speaker 3: What are we talking about in terms of market share

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Speaker 3: and so forth?

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Speaker 4: So keep so at the time too, there's basically three

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Speaker 4: national broadliners and they were number one Cisco is trying

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Speaker 4: to buy number two US Foods. That was read. But

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Speaker 4: what's really interesting here is basically, even though Cisco got

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Speaker 4: stopped two things number one, number two is trying to

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Speaker 4: buy number three. Right now, US Foods is trying to

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Speaker 4: buy I have to write it down performance foed. But

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Speaker 4: then Cisco basically is engaged. When people call roll ups

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Speaker 4: to my calculations, it's buying over two hundred and sixteen companies.

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Speaker 4: So even though it got stopped once for this big merger.

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Speaker 4: It's market dominance really comes from rolling up you know,

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Speaker 4: a local Miami seafood place, local produce place, and that

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Speaker 4: Anaheim that kind of stuff.

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Speaker 2: So I know, roll up strategies started to get more

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Speaker 2: attention under the Biden administration, but historically it does seem

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Speaker 2: like regulators kind of go after the big M and

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Speaker 2: A deals and they kind of ignore all the small ones,

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Speaker 2: even though once you add up all the small ones,

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Speaker 2: it can get a company into a very very dominant position,

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Speaker 2: like with Cisco.

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Speaker 4: I think this is the biggest one of the biggest

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Speaker 4: dowop poles and modern competition policy in America. I mean,

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Speaker 4: go back to my coffee bearing JB. Move they did

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Speaker 4: was clinics because this sounds awful. They realize people are

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Speaker 4: economically irrational with their pets when it comes to healthcare,

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Speaker 4: so they bought over like fifteen hundred vet clinics they

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Speaker 4: rolled up. Commissioner con helped put a stop to that.

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Speaker 4: I generally think with big companies like this, once you

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Speaker 4: reach a certain size, you basically don't allow them to

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Speaker 4: acquire because you just know they're not buying a company

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Speaker 4: for pro competitive reasons. But a lot of this flies

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Speaker 4: into the right art because the Federal Trade Comission, you know,

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Speaker 4: it's very understaffed. They can't keep they cannot keep tracking

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Speaker 4: a seafood provider in Miami who's buying it.

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Speaker 3: Talk to us more about what they rolled up or

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Speaker 3: what they've been trying to roll up. So I take

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Speaker 3: it these aren't other broadliners. Are these specialty? Are these niche?

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Speaker 3: Are these regional?

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Speaker 4: Like?

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Speaker 3: What are they? What are the fragmented assets that they're

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Speaker 3: consolidating onto the Cisco umbrella?

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Speaker 4: All above?

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Speaker 3: Okay?

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Speaker 4: I mean they generally don't compete. They buy. Okay, like

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Speaker 4: in Iowa, they came dial because they bought a broadliner,

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Speaker 4: a local broadliner. That essentially what they did for earlier

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Speaker 4: their history. Now they tend to buy more specialties. So

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Speaker 4: they'll buy like hotel things, like little soaps. They'll buy

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Speaker 4: a company that does like Asian food. They'll all these

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Speaker 4: little things, and then they're starting to buy four in

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Speaker 4: like an Irish broadliner, a Canadian broadliner, Coasta Rica broadliner.

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Speaker 4: It's just kind of a blop that keeps growing.

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Speaker 2: Am I a tomato broadliner? I brought Joe tomatoes tomato,

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Speaker 2: really nice tomatoes.

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Speaker 3: Niche, I think you're a specialty distributed.

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Speaker 2: Yeah, okay, fair enough. I certainly don't do it in volume,

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Speaker 2: especially this year. Okay, Well, on that note, in your chapter,

437
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Speaker 2: it says that Cisco has something like twenty seven percent

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Speaker 2: market share.

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Speaker 4: It's unclear what the market share is.

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Speaker 2: Okay, So originally this was going to be my question,

441
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Speaker 2: like when we say that, what do we actually mean?

442
00:19:39,680 --> 00:19:42,280
Speaker 4: We don't know. I originally in that chapter have A

443
00:19:42,680 --> 00:19:45,280
Speaker 4: quoted as a fifty percent market share, but you sometimes

444
00:19:45,320 --> 00:19:47,920
Speaker 4: you'll see forty, sometimes you'll see thirty. It really comes

445
00:19:47,960 --> 00:19:50,080
Speaker 4: back to the market definition. That's why I want to

446
00:19:50,119 --> 00:19:53,560
Speaker 4: go back to having some public entity debate this so

447
00:19:53,600 --> 00:19:57,560
Speaker 4: it's transparent. But also partly what stopped that purchase of

448
00:19:57,720 --> 00:19:59,760
Speaker 4: US foods is when you have to see looked into it.

449
00:19:59,760 --> 00:20:02,840
Speaker 4: They are looking at metropolitans and they realize, like in

450
00:20:02,960 --> 00:20:04,800
Speaker 4: Las Vegas and San Diego, it would have like an

451
00:20:04,840 --> 00:20:07,560
Speaker 4: eighty percent market share. So even with food, we tend

452
00:20:07,600 --> 00:20:10,560
Speaker 4: to talk national food is so local food markets particular,

453
00:20:10,640 --> 00:20:12,560
Speaker 4: we really need to drill down regionally.

454
00:20:12,880 --> 00:20:15,119
Speaker 3: What do they use this power for? Sitting aside the

455
00:20:15,160 --> 00:20:16,639
Speaker 3: fact that they want to make a lot of money

456
00:20:16,760 --> 00:20:19,199
Speaker 3: like all companies do, like when I think about the

457
00:20:19,359 --> 00:20:24,080
Speaker 3: risk of anti competitive abuse or why I wouldn't want

458
00:20:24,119 --> 00:20:27,440
Speaker 3: one company to have such a dominant, you know, share

459
00:20:27,640 --> 00:20:29,760
Speaker 3: of a given market, I think, Okay, what is the

460
00:20:29,800 --> 00:20:33,159
Speaker 3: potential for abuse? So maybe they say no, you're not

461
00:20:33,320 --> 00:20:35,520
Speaker 3: you can't get access to all of this stuff unless

462
00:20:35,560 --> 00:20:37,920
Speaker 3: you buy our all of Maybe could be one sort

463
00:20:37,920 --> 00:20:39,560
Speaker 3: of thing, or they tell a restaurant you can't buy

464
00:20:39,720 --> 00:20:43,040
Speaker 3: X unless you buy our soaps. Like what is the

465
00:20:43,080 --> 00:20:46,560
Speaker 3: fear or what is the reality of what Cisco currently

466
00:20:46,640 --> 00:20:48,919
Speaker 3: does with the amount of power that they have.

467
00:20:49,200 --> 00:20:52,560
Speaker 4: Yeah, so two things number one, So it's it's not

468
00:20:52,600 --> 00:20:54,360
Speaker 4: like you get a big sales book with the prices

469
00:20:54,359 --> 00:20:56,720
Speaker 4: of Cisco. Those days are gone. Most of it's on

470
00:20:56,720 --> 00:21:00,800
Speaker 4: an app and this is a black box. My understanding

471
00:21:00,800 --> 00:21:02,520
Speaker 4: from people I've talked to is they always want to

472
00:21:02,520 --> 00:21:04,800
Speaker 4: make their margin. So they might sell you your center

473
00:21:04,840 --> 00:21:06,440
Speaker 4: of a plate, the protein at a loss or costs.

474
00:21:06,520 --> 00:21:08,239
Speaker 4: They get you in the door, but then they'll make

475
00:21:08,240 --> 00:21:11,240
Speaker 4: the margins up by tweaking the napkin prices. Here's the

476
00:21:11,280 --> 00:21:14,879
Speaker 4: thing one could argue that's in violation the Robits and

477
00:21:14,880 --> 00:21:18,080
Speaker 4: Batman Act because in theory, you should charge everyone the

478
00:21:18,119 --> 00:21:20,399
Speaker 4: same price for x amount of units, but we don't

479
00:21:20,440 --> 00:21:21,280
Speaker 4: know because.

480
00:21:20,960 --> 00:21:25,439
Speaker 2: Of Oh so we think it might be personalized up pricing,

481
00:21:25,520 --> 00:21:26,120
Speaker 2: but we're not sure.

482
00:21:26,200 --> 00:21:29,200
Speaker 4: We're not sure. Okay, that is what some people have accused.

483
00:21:29,400 --> 00:21:31,080
Speaker 4: The other thing to keep in mind here and the biggest,

484
00:21:31,240 --> 00:21:32,920
Speaker 4: honestly part of the reason why I wrote this chapter

485
00:21:33,000 --> 00:21:35,480
Speaker 4: is just the quality decline. I feel like most eating

486
00:21:35,520 --> 00:21:38,000
Speaker 4: out in America, especially local places, it's all kind of

487
00:21:38,000 --> 00:21:41,320
Speaker 4: eh because CISC companies like Cisco, they don't want to

488
00:21:41,320 --> 00:21:44,439
Speaker 4: buy from like a local provider. They want one entity

489
00:21:44,560 --> 00:21:48,160
Speaker 4: to do a bunch, and so it's just stifling out

490
00:21:48,200 --> 00:21:51,080
Speaker 4: that kind of innovation, the quality, and especially in rural America,

491
00:21:51,240 --> 00:21:52,919
Speaker 4: Cisco doesn't want to deal with local things, and so

492
00:21:53,000 --> 00:21:55,040
Speaker 4: especially in I think an undercurrent two of my book

493
00:21:55,080 --> 00:21:58,760
Speaker 4: I realized after the fact was the communities producing our

494
00:21:58,800 --> 00:22:00,719
Speaker 4: food are actually being hit hardest by the food system.

495
00:22:01,080 --> 00:22:04,560
Speaker 4: We saw in the Coger Albertson merger case failed merger

496
00:22:04,640 --> 00:22:07,720
Speaker 4: that they're gouging the most in real communities. Most the

497
00:22:07,760 --> 00:22:10,040
Speaker 4: broadliner dominance tends to be highest in real communities, and

498
00:22:10,040 --> 00:22:12,280
Speaker 4: real communities tend to have the most fast food, So

499
00:22:12,480 --> 00:22:14,440
Speaker 4: it's kind of getting the worst of all these worlds,

500
00:22:15,200 --> 00:22:18,400
Speaker 4: So like New York has the best food, Like it's

501
00:22:18,520 --> 00:22:21,160
Speaker 4: kinda the more yuppie you are in America, that probably

502
00:22:21,160 --> 00:22:22,320
Speaker 4: the better food selection you have.

503
00:22:23,240 --> 00:22:27,320
Speaker 2: That seems fair actually, and again like that's pretty ironic

504
00:22:27,320 --> 00:22:31,280
Speaker 2: given that most of the food is grown outside of cities. Obviously,

505
00:22:31,880 --> 00:22:34,240
Speaker 2: I'm going to ask the question that is very close

506
00:22:34,280 --> 00:22:37,960
Speaker 2: to Joe's heart. But with market dominance tends to come

507
00:22:38,160 --> 00:22:41,800
Speaker 2: pricing power. But on the other hand, with market dominance

508
00:22:41,920 --> 00:22:46,840
Speaker 2: and scale comes savings from volume. Do we have any

509
00:22:46,880 --> 00:22:50,320
Speaker 2: idea of like the net effect of a cisco on

510
00:22:50,680 --> 00:22:52,240
Speaker 2: food prices in restaurants?

511
00:22:52,560 --> 00:22:55,440
Speaker 4: We don't. I mean kind of what I realized writing

512
00:22:55,480 --> 00:22:57,600
Speaker 4: this chapter and just in general with this book is

513
00:22:57,960 --> 00:23:00,560
Speaker 4: I just kind of do everything as Goldilocks, and there

514
00:23:01,040 --> 00:23:03,800
Speaker 4: is beauty to scale, but things have just gotten too

515
00:23:03,880 --> 00:23:07,120
Speaker 4: far and things are out of whack. And I think

516
00:23:07,160 --> 00:23:09,800
Speaker 4: with price and I brought this up last time, and

517
00:23:09,840 --> 00:23:12,480
Speaker 4: it's the first slide I show people anytime I talk anymore,

518
00:23:13,320 --> 00:23:16,320
Speaker 4: is Americans been more on average on food than most

519
00:23:16,400 --> 00:23:19,240
Speaker 4: Western democracies. And I think it's like cliche to say

520
00:23:19,240 --> 00:23:20,760
Speaker 4: I went to Europe and had cheaper food and it

521
00:23:20,800 --> 00:23:22,800
Speaker 4: was better. I think that's how you've seen the system

522
00:23:22,840 --> 00:23:26,240
Speaker 4: play out because you basically big big, gets big. You

523
00:23:26,240 --> 00:23:27,879
Speaker 4: have all these big boys kind of like going at

524
00:23:27,960 --> 00:23:30,240
Speaker 4: each other, and it's just kind of this race to

525
00:23:30,280 --> 00:23:45,520
Speaker 4: the bottom.

526
00:23:46,400 --> 00:23:50,840
Speaker 3: Talk to us more about the food creator side of

527
00:23:50,880 --> 00:23:53,560
Speaker 3: the business. If I'm I don't know if I'm growing

528
00:23:53,600 --> 00:23:57,359
Speaker 3: tomatoes or if I'm or if me and Tracy are

529
00:23:57,400 --> 00:24:02,240
Speaker 3: growing tomatoes, to what degree the Cisco play us off

530
00:24:02,240 --> 00:24:05,480
Speaker 3: of each other or squeeze our margins in order to

531
00:24:05,560 --> 00:24:08,159
Speaker 3: get within the Cisco distribution system.

532
00:24:08,160 --> 00:24:10,520
Speaker 4: I think the best example of that's in seafood. Okay,

533
00:24:10,680 --> 00:24:14,400
Speaker 4: the seafood. Seafood in general America is just a dumpster fire.

534
00:24:14,400 --> 00:24:16,720
Speaker 4: To to be blunt with you, there's a really and

535
00:24:16,720 --> 00:24:19,000
Speaker 4: I'm gonna make a comparison here. CNBC came up with

536
00:24:19,000 --> 00:24:20,600
Speaker 4: a really good story the other day where Walmart and

537
00:24:20,600 --> 00:24:22,840
Speaker 4: Amazon are this big fight right now. Yeah, and Walmart

538
00:24:22,880 --> 00:24:26,960
Speaker 4: basically has very low standards for its third party platform.

539
00:24:27,240 --> 00:24:28,600
Speaker 4: There's a lot of fraud, a lot of abuse going

540
00:24:28,640 --> 00:24:30,240
Speaker 4: on that platform because it's trying to get market share

541
00:24:30,240 --> 00:24:34,000
Speaker 4: from Amazon. I would compare Cisco to that, where they

542
00:24:34,000 --> 00:24:36,879
Speaker 4: don't here's the thing, they don't really care how their

543
00:24:36,880 --> 00:24:39,199
Speaker 4: seafood source I mean, there's been so many allegations of

544
00:24:39,600 --> 00:24:44,080
Speaker 4: the calamari coming from Chinese slave labor fish that's saying

545
00:24:44,119 --> 00:24:47,320
Speaker 4: it's Gulf shrimp from the you know, from America. It's

546
00:24:47,359 --> 00:24:49,919
Speaker 4: not just all these like these constant abuses in this

547
00:24:50,080 --> 00:24:52,320
Speaker 4: seafood system, but Cisco not caring because all it cares

548
00:24:52,359 --> 00:24:55,720
Speaker 4: about is price. Think of Cisco like the Walmart food distribution.

549
00:24:56,080 --> 00:24:59,359
Speaker 2: That makes sense. So when you were reporting out this

550
00:24:59,400 --> 00:25:02,760
Speaker 2: particular chapter, did you hear any specific stories from either

551
00:25:02,840 --> 00:25:07,879
Speaker 2: restaurant owners or food producers about dealings with Cisco and

552
00:25:07,880 --> 00:25:10,600
Speaker 2: what it's like to actually negotiate with them.

553
00:25:11,080 --> 00:25:14,240
Speaker 4: The biggest critique I've heard is just the lack of selection.

554
00:25:14,800 --> 00:25:16,959
Speaker 4: Cisco is such a dominance in a lot of these markets,

555
00:25:17,000 --> 00:25:19,120
Speaker 4: local restaurant owners really don't have a lot of choices.

556
00:25:19,600 --> 00:25:22,480
Speaker 4: That's probably the biggest critique I heard. And just my

557
00:25:22,520 --> 00:25:25,320
Speaker 4: favorite phrase, and it's a subtitle of the chapter of

558
00:25:25,359 --> 00:25:27,920
Speaker 4: this chapter is Tonight's dinner fell off the Cisco truck.

559
00:25:28,280 --> 00:25:29,639
Speaker 4: We've all had those meals, you know what I mean.

560
00:25:29,680 --> 00:25:31,120
Speaker 4: You go to wedding and you can just tell it's

561
00:25:31,160 --> 00:25:33,880
Speaker 4: like the low Staer Cisco where it's just so blah

562
00:25:33,920 --> 00:25:36,359
Speaker 4: and tasteless, but a lot of restaurants. I mean, that's

563
00:25:36,440 --> 00:25:38,800
Speaker 4: kind of this whole undercurrent of this book. This chapter

564
00:25:38,960 --> 00:25:41,160
Speaker 4: is I kind of think of this as my Frankenstein chapter.

565
00:25:41,840 --> 00:25:43,879
Speaker 4: What started off as an aid to local restaurants make

566
00:25:43,920 --> 00:25:46,320
Speaker 4: their life easier is now undermining them because they're losing

567
00:25:46,359 --> 00:25:47,320
Speaker 4: their specialness.

568
00:25:47,720 --> 00:25:50,800
Speaker 2: Oh yeah, On that note, didn't the founder at one

569
00:25:50,880 --> 00:25:53,840
Speaker 2: point try to I guess he retired but was still

570
00:25:53,880 --> 00:25:56,080
Speaker 2: connected to the company, and then he tried to correct

571
00:25:56,280 --> 00:25:57,400
Speaker 2: some of what you're describing.

572
00:25:57,600 --> 00:25:59,359
Speaker 4: Yes, I mean, I can't say this enough. He is

573
00:25:59,400 --> 00:26:01,719
Speaker 4: a model business man. I mean, this guy he retired

574
00:26:01,720 --> 00:26:04,639
Speaker 4: in the late eighties. He stepped aside, donated the charities,

575
00:26:05,480 --> 00:26:07,480
Speaker 4: kept coming into the office each day, didn't want to

576
00:26:07,480 --> 00:26:11,280
Speaker 4: sign parking, and he always trusted his people especially. He

577
00:26:11,520 --> 00:26:13,960
Speaker 4: let basically each warehouse do its own thing, and I

578
00:26:13,960 --> 00:26:16,320
Speaker 4: would compare it to like Whole Foods, famously Whole Foods

579
00:26:16,400 --> 00:26:19,000
Speaker 4: let the managers do its own thing pre Amazon, so

580
00:26:19,040 --> 00:26:20,840
Speaker 4: if they saw a good thing at the farmer's market,

581
00:26:20,880 --> 00:26:24,240
Speaker 4: they could bring that producer in. He retires, few CEOs

582
00:26:24,240 --> 00:26:27,320
Speaker 4: come along. One comes along, and the old man hated

583
00:26:27,320 --> 00:26:30,080
Speaker 4: consultants number one. He's like they don't know my business.

584
00:26:30,160 --> 00:26:33,560
Speaker 4: Number two, they'll probably chait even though they're not supposed to.

585
00:26:33,600 --> 00:26:36,520
Speaker 4: They'll share my secret sauce with my competitors. New guy

586
00:26:36,560 --> 00:26:38,760
Speaker 4: comes in, hires consultants, and what the first thing he

587
00:26:38,800 --> 00:26:41,840
Speaker 4: says is centralized procurement. You instead of having all these

588
00:26:41,880 --> 00:26:44,159
Speaker 4: local different things, get all your berries from one person.

589
00:26:45,040 --> 00:26:48,720
Speaker 4: And what John saw is he saw change the numbers.

590
00:26:48,760 --> 00:26:50,120
Speaker 4: So he wanted to go to the board to talk

591
00:26:50,119 --> 00:26:53,480
Speaker 4: about this CEO. Time was kept being like, no, no, no,

592
00:26:54,200 --> 00:26:56,240
Speaker 4: this is a nine year old man who built this company.

593
00:26:56,280 --> 00:26:57,960
Speaker 4: This is his everything. He went around and got it

594
00:26:58,000 --> 00:27:00,480
Speaker 4: to the board. According to one ext if he was

595
00:27:00,520 --> 00:27:03,320
Speaker 4: in estquartered out the building, this broke the old man.

596
00:27:03,400 --> 00:27:05,960
Speaker 2: Did he like literally go into the building and like

597
00:27:06,040 --> 00:27:06,480
Speaker 2: find the.

598
00:27:06,440 --> 00:27:09,439
Speaker 4: Board and no, he had a it could be a

599
00:27:09,520 --> 00:27:12,720
Speaker 4: certain staffer, get it to all the board members and

600
00:27:12,760 --> 00:27:15,000
Speaker 4: he was shown the door. This broke the old man.

601
00:27:15,320 --> 00:27:19,120
Speaker 4: And you see the quality decline, you know, centralized procurement.

602
00:27:19,240 --> 00:27:21,920
Speaker 4: Like you, I don't want to romanticize the Hall of

603
00:27:21,960 --> 00:27:23,720
Speaker 4: Peanut pepper or like this kind of stuff, but you

604
00:27:23,800 --> 00:27:26,360
Speaker 4: are cutting corners at some point when you're doing these

605
00:27:26,480 --> 00:27:28,239
Speaker 4: like not everything can be frozen and taste just as

606
00:27:28,240 --> 00:27:29,920
Speaker 4: good as a fresh thing. It's like a good example,

607
00:27:29,920 --> 00:27:32,919
Speaker 4: it's actually a tomato, like a good summer tomato. Like

608
00:27:32,920 --> 00:27:34,919
Speaker 4: there's no reason iohy can't get a good summer tomato.

609
00:27:34,920 --> 00:27:36,560
Speaker 4: It's so easy to grow a tomato there. But they're

610
00:27:36,600 --> 00:27:39,840
Speaker 4: all the same blah tomato grown who knows where. And

611
00:27:39,880 --> 00:27:42,840
Speaker 4: that's kind of that kind of story. And part of

612
00:27:42,840 --> 00:27:46,360
Speaker 4: it the argument I'm making there is part of regulation.

613
00:27:46,440 --> 00:27:48,320
Speaker 4: Guard rails, whatever you want to call them, is almost

614
00:27:48,400 --> 00:27:51,560
Speaker 4: prevent companies from themselves to stop a race to the bottom.

615
00:27:51,680 --> 00:27:55,640
Speaker 3: It's interesting this idea that the restaurants can't distinguish themselves

616
00:27:55,680 --> 00:27:57,879
Speaker 3: to the same degree because of the sort of decline

617
00:27:58,000 --> 00:28:00,320
Speaker 3: in quality. And it strikes me. We did in upsisode

618
00:28:01,119 --> 00:28:04,280
Speaker 3: with some guys who actually opened up a pizza restaurant

619
00:28:04,320 --> 00:28:07,720
Speaker 3: right around the corner from Bloomberg, and in that case

620
00:28:07,760 --> 00:28:11,159
Speaker 3: we were talking about the delivery apps, and the idea is, like,

621
00:28:11,200 --> 00:28:16,359
Speaker 3: you know, one point in theory service delivery, et cetera,

622
00:28:16,680 --> 00:28:19,119
Speaker 3: might have been a restaurant's calling card, right, we have

623
00:28:19,320 --> 00:28:22,240
Speaker 3: really good we really know you, et cetera, And we have.

624
00:28:22,320 --> 00:28:25,240
Speaker 2: We'll get to your house and fifteen minutes or the

625
00:28:25,240 --> 00:28:26,040
Speaker 2: pizza is free.

626
00:28:26,080 --> 00:28:28,919
Speaker 3: But then everyone in theory. It's like this game theory

627
00:28:29,040 --> 00:28:32,480
Speaker 3: thing where everyone feels compelled to Okay, we're going to

628
00:28:32,520 --> 00:28:36,760
Speaker 3: distribute through the well known delivery apps that everyone has

629
00:28:36,800 --> 00:28:40,160
Speaker 3: heard about. And that's great, and on some level it

630
00:28:40,240 --> 00:28:43,560
Speaker 3: makes markets more efficient perhaps although they've gotten so expensive.

631
00:28:43,640 --> 00:28:45,960
Speaker 3: I think it's for me, it's more efficient often to

632
00:28:46,040 --> 00:28:47,960
Speaker 3: just go pick it up. But that's besides the point.

633
00:28:48,240 --> 00:28:52,080
Speaker 3: But the long term effect is essentially this sort of

634
00:28:52,600 --> 00:28:55,880
Speaker 3: elimination of the specialness of the place. And so maybe

635
00:28:55,920 --> 00:28:58,280
Speaker 3: there is more efficient, maybe the food is cheaper, maybe

636
00:28:58,280 --> 00:29:00,320
Speaker 3: it does get too faster, maybe even gets too faster

637
00:29:00,400 --> 00:29:03,360
Speaker 3: and hotter, et cetera. But this idea that we have

638
00:29:03,440 --> 00:29:06,320
Speaker 3: this sort of textured economy with this sort of flora

639
00:29:06,320 --> 00:29:10,000
Speaker 3: and fauna of businesses that are distinct, that of texture

640
00:29:10,160 --> 00:29:14,000
Speaker 3: sort of disappears once they plug into these giant platforms.

641
00:29:14,320 --> 00:29:16,600
Speaker 4: You just made a great neo brandeis argument.

642
00:29:16,680 --> 00:29:17,120
Speaker 3: Oh great.

643
00:29:17,400 --> 00:29:19,080
Speaker 4: I mean this might not shock anyone. I'm a neo

644
00:29:19,080 --> 00:29:23,160
Speaker 4: brandised person. But that is my critique of the crant

645
00:29:23,200 --> 00:29:25,680
Speaker 4: I trust framework is not everything can be put into Excel.

646
00:29:26,720 --> 00:29:29,360
Speaker 4: How many hogs when persons shown, it's a question society

647
00:29:29,400 --> 00:29:31,479
Speaker 4: is has to wrestle with and I make that kind

648
00:29:31,480 --> 00:29:34,240
Speaker 4: of point in this chapter was at my wedding, I'm

649
00:29:34,280 --> 00:29:37,760
Speaker 4: part check and we start col watches, which colatches and

650
00:29:37,800 --> 00:29:39,720
Speaker 4: I are very different than the ones in Houston. Houston,

651
00:29:39,720 --> 00:29:42,000
Speaker 4: they put meat in them, but like you can't buy

652
00:29:42,040 --> 00:29:45,959
Speaker 4: col watches from Cisco. It's like the local little things

653
00:29:46,000 --> 00:29:48,320
Speaker 4: make a place of place, and you're losing this the

654
00:29:48,360 --> 00:29:51,040
Speaker 4: homogenization of the American food system. Everything's kind of the same.

655
00:29:51,080 --> 00:29:54,440
Speaker 4: It's kind of blah. And that's what's it's hard to art.

656
00:29:54,520 --> 00:29:57,040
Speaker 4: You can't. That's what's the thing that's missing. That's why

657
00:29:57,880 --> 00:30:01,320
Speaker 4: it is a little it does seem, frankly a little

658
00:30:01,320 --> 00:30:04,600
Speaker 4: hard to quantify this effect that everybody feel. I think

659
00:30:04,600 --> 00:30:06,479
Speaker 4: of two little examples is my mom had her own

660
00:30:06,480 --> 00:30:08,480
Speaker 4: coffee store and then she went worked at Starbucks. And

661
00:30:08,480 --> 00:30:11,280
Speaker 4: what drove her the nuts the most, or something called planograms.

662
00:30:11,680 --> 00:30:13,560
Speaker 4: She was told where to put every single thing on

663
00:30:13,600 --> 00:30:15,560
Speaker 4: the shelf. And my mom worked next to a General

664
00:30:15,560 --> 00:30:17,479
Speaker 4: Mills plan She knew that audience and she knew how

665
00:30:17,480 --> 00:30:19,920
Speaker 4: to merchandise, but they didn't trust her. It's like the

666
00:30:20,000 --> 00:30:21,040
Speaker 4: lack of trust and employee.

667
00:30:21,080 --> 00:30:23,600
Speaker 3: We learned about planograms. Oh yeah, that's right with the

668
00:30:23,640 --> 00:30:24,479
Speaker 3: Celsia CEO.

669
00:30:26,000 --> 00:30:28,640
Speaker 4: Yeah, that was a good episode. Yeah.

670
00:30:28,720 --> 00:30:32,360
Speaker 2: I have since walked into CVS's looking at the shelf

671
00:30:32,400 --> 00:30:34,440
Speaker 2: space very very differently, and I'll just too.

672
00:30:34,560 --> 00:30:36,120
Speaker 4: Oh, I'll just add on. The thing keep in mind

673
00:30:36,200 --> 00:30:38,480
Speaker 4: is no one gets rid. No one opens a restaurant

674
00:30:38,520 --> 00:30:41,040
Speaker 4: to get rich. Everyone. It's a really really hard industry.

675
00:30:41,400 --> 00:30:43,520
Speaker 4: You're willing to sacrifice incomes because you do because what

676
00:30:43,560 --> 00:30:46,280
Speaker 4: you love, and you just you feel that pride in

677
00:30:46,320 --> 00:30:48,920
Speaker 4: local places and they're just running, they're running up hill

678
00:30:48,960 --> 00:30:51,040
Speaker 4: more and more based on because of these structures.

679
00:30:51,360 --> 00:30:53,920
Speaker 2: You know, you mentioned frozen berries earlier, and I know

680
00:30:54,360 --> 00:30:59,080
Speaker 2: Barry Barons are in your book. Do the dominant companies

681
00:30:59,160 --> 00:31:02,120
Speaker 2: like a Cisco or a Berry Baron, do they kind

682
00:31:02,160 --> 00:31:05,240
Speaker 2: of like feed on each other? You think, like does

683
00:31:05,280 --> 00:31:09,520
Speaker 2: Cisco naturally lean towards producers who are making stuff in

684
00:31:09,640 --> 00:31:10,640
Speaker 2: huge volumes?

685
00:31:10,840 --> 00:31:12,880
Speaker 4: I mean, I think it goes back to Walmart. I

686
00:31:12,920 --> 00:31:14,960
Speaker 4: mean part of it was people in negotiating power when

687
00:31:14,960 --> 00:31:17,200
Speaker 4: they negotiate deals with these companies. So you've got to

688
00:31:17,240 --> 00:31:19,719
Speaker 4: get big, so you have some volume so you can negotiate,

689
00:31:20,440 --> 00:31:22,720
Speaker 4: Like I think of I go back to Walmart just

690
00:31:22,760 --> 00:31:25,440
Speaker 4: because I think of Walmart as the closest thing America's

691
00:31:25,440 --> 00:31:27,960
Speaker 4: ever had to Soviet unions out Paula Buro. That's the

692
00:31:27,960 --> 00:31:29,760
Speaker 4: weirdest chapter people have reached out to me about. Is

693
00:31:29,760 --> 00:31:32,480
Speaker 4: all the suppliers, like you don't negotiate with Walmart. Walmart

694
00:31:32,520 --> 00:31:34,840
Speaker 4: dictates to you. I think with Cisco, is they're just

695
00:31:34,920 --> 00:31:35,480
Speaker 4: so big.

696
00:31:35,520 --> 00:31:37,720
Speaker 3: These are centrally planned internal economies.

697
00:31:37,760 --> 00:31:40,720
Speaker 4: Yeah, absolutely, and it's I think the best example of

698
00:31:40,800 --> 00:31:43,800
Speaker 4: the bad qualities. Actually, the produce system in America partly

699
00:31:43,880 --> 00:31:45,680
Speaker 4: is because of the farm bell we subsidize corn, we

700
00:31:45,680 --> 00:31:49,280
Speaker 4: don't subsidize carrots, So our protoce system went offshore, you know,

701
00:31:49,360 --> 00:31:52,120
Speaker 4: because you can exploit labor and exploit environmental stuff, so

702
00:31:52,160 --> 00:31:55,240
Speaker 4: that green pepper's coming from who knows where, traveling long

703
00:31:55,320 --> 00:31:58,720
Speaker 4: things and so. And it's also designed for durability, not

704
00:31:58,760 --> 00:32:00,560
Speaker 4: for taste. And you're seeing the play out in your

705
00:32:00,560 --> 00:32:02,560
Speaker 4: local restaurants where just the foods kind of.

706
00:32:03,400 --> 00:32:07,160
Speaker 3: It's interesting you used the phrase earlier saving companies from themselves.

707
00:32:07,440 --> 00:32:10,760
Speaker 3: I think even the companies seem to be aware of this.

708
00:32:10,880 --> 00:32:13,680
Speaker 3: And you mentioned Starbucks is a great example because I

709
00:32:13,680 --> 00:32:15,360
Speaker 3: forget what's the name of the Starbucks founder.

710
00:32:15,440 --> 00:32:17,640
Speaker 4: He could everyone it's not Howard Schultz. That's who we

711
00:32:17,640 --> 00:32:18,040
Speaker 4: think it is.

712
00:32:18,160 --> 00:32:21,240
Speaker 3: Oh well, Howard Schultz. Every every few years his name

713
00:32:21,320 --> 00:32:24,760
Speaker 3: is back in the headlines, and he himself seems to

714
00:32:24,960 --> 00:32:29,040
Speaker 3: rue the fact that this company, which early on sort

715
00:32:29,040 --> 00:32:31,320
Speaker 3: of had a local coffee shop vibe which I think

716
00:32:31,360 --> 00:32:35,040
Speaker 3: he really liked, has not been able to sustain that

717
00:32:35,520 --> 00:32:39,360
Speaker 3: in part because of, yeah, the required programs, and he

718
00:32:39,360 --> 00:32:41,360
Speaker 3: complains about that. Everyone's like, we got to get back

719
00:32:41,360 --> 00:32:43,440
Speaker 3: to feeling like a real Italian coffee shop. It never

720
00:32:43,520 --> 00:32:44,240
Speaker 3: seems to happen.

721
00:32:44,360 --> 00:32:47,320
Speaker 2: Well, one of the Ben and Jerry's founders just quit

722
00:32:47,400 --> 00:32:50,360
Speaker 2: as well because Ben and Jerry's was bought by Unilever.

723
00:32:50,920 --> 00:32:53,480
Speaker 4: So the funding each chapter, I realized, there's they all

724
00:32:53,480 --> 00:32:55,560
Speaker 4: had these like niche Every commodity is different in America,

725
00:32:55,880 --> 00:32:58,600
Speaker 4: and the like Therey's actually to be the most complex commodity.

726
00:32:59,640 --> 00:33:02,200
Speaker 4: The whole Harry regulation America's written in the nineteen before we

727
00:33:02,200 --> 00:33:04,640
Speaker 4: had refrigeration, So it makes no sense. The joke and

728
00:33:04,680 --> 00:33:06,840
Speaker 4: dairy is only five people understand the dairy program and

729
00:33:06,880 --> 00:33:09,520
Speaker 4: four are dead. And I was kid it seen with

730
00:33:09,520 --> 00:33:11,400
Speaker 4: this dairy guy in Wisconsin last week. And there's a

731
00:33:11,440 --> 00:33:14,320
Speaker 4: glut right now in the butterfat market be engineered, soybeans

732
00:33:14,360 --> 00:33:16,360
Speaker 4: increased the butterfat. And the rumor right now in the

733
00:33:16,400 --> 00:33:18,840
Speaker 4: street too is are feeding palm oyld the cows.

734
00:33:19,120 --> 00:33:21,520
Speaker 3: Oh wow, speaking of dry you know when we did

735
00:33:21,520 --> 00:33:24,600
Speaker 3: that episode with Mike Frohman recently and you mentioned that

736
00:33:24,760 --> 00:33:26,960
Speaker 3: you asked him what was the bigg surprise? He learned

737
00:33:26,960 --> 00:33:28,920
Speaker 3: as US trade repert He's like, oh, there's five hundred

738
00:33:28,960 --> 00:33:30,920
Speaker 3: different things you could do with a dairy molecule, and

739
00:33:30,960 --> 00:33:34,360
Speaker 3: because of trade rules. Anyway, by the way, just following up,

740
00:33:34,560 --> 00:33:37,560
Speaker 3: I am currently in a touch with someone from the

741
00:33:37,560 --> 00:33:41,520
Speaker 3: Big New Zealand Dairy cooperative Fonterra from Big Dairy, I

742
00:33:41,520 --> 00:33:44,680
Speaker 3: am working on finding the dairy molecule specialist for that episode.

743
00:33:44,760 --> 00:33:46,960
Speaker 2: Oh well, that's very exciting. Maybe we'll end up doing

744
00:33:47,000 --> 00:33:49,960
Speaker 2: a three part milk series. Yeah, I'm sure we better

745
00:33:50,040 --> 00:33:53,880
Speaker 2: hurry it up since it's almost October. Okay, is there

746
00:33:53,920 --> 00:33:56,320
Speaker 2: anything that can be done about this? Like now that

747
00:33:56,680 --> 00:34:00,040
Speaker 2: a Cisco has rolled up all these different companies and

748
00:34:00,360 --> 00:34:03,480
Speaker 2: substantial market share, although as we were discussing, we can

749
00:34:03,480 --> 00:34:08,920
Speaker 2: debate what that actually means. Is there like what swings

750
00:34:09,000 --> 00:34:10,560
Speaker 2: that dominance the other way?

751
00:34:11,320 --> 00:34:14,799
Speaker 4: Yeah? I mean to Joe's and just I just want

752
00:34:14,840 --> 00:34:16,800
Speaker 4: to add on to Joe's point earlier about the companies

753
00:34:18,440 --> 00:34:20,040
Speaker 4: not wanting to have to do this, but if they

754
00:34:20,040 --> 00:34:22,480
Speaker 4: don't engage this beat, like the system design right now

755
00:34:22,560 --> 00:34:24,360
Speaker 4: is they have to do this behavior. And I actually

756
00:34:24,360 --> 00:34:26,759
Speaker 4: think about that with farmers now in America. The farm

757
00:34:26,760 --> 00:34:28,600
Speaker 4: building right now is designed to maximize corns. You have

758
00:34:28,640 --> 00:34:30,760
Speaker 4: to overplant corn even though it's bad for the environment,

759
00:34:30,800 --> 00:34:32,919
Speaker 4: else you go broke. So everyone's behaving this way because

760
00:34:32,920 --> 00:34:36,080
Speaker 4: we're in a Las Fair era. What to do about it?

761
00:34:36,320 --> 00:34:38,359
Speaker 4: And that's kind of why I profiled this woman named

762
00:34:38,360 --> 00:34:41,800
Speaker 4: Ellen in that chapter. She I think people crave heroes

763
00:34:41,840 --> 00:34:45,080
Speaker 4: right now. No one's really articulating hope on whatever your

764
00:34:45,080 --> 00:34:49,080
Speaker 4: local party is, what is a positive food system? And

765
00:34:49,120 --> 00:34:53,560
Speaker 4: Ellen Ellen's fascinating where she's a farmer's two kids. She

766
00:34:53,600 --> 00:34:55,480
Speaker 4: opened her own restaurant and then she opened her own

767
00:34:55,520 --> 00:34:58,640
Speaker 4: like Cisco, because the problem she has with Cisco didn't

768
00:34:58,640 --> 00:35:00,880
Speaker 4: want to take her product and sell to restaurants on

769
00:35:00,920 --> 00:35:04,359
Speaker 4: Almahon to mooin, So she created a nonprofit Got it Up.

770
00:35:04,400 --> 00:35:07,120
Speaker 4: They would basically pull different farmers in Western Iowa to

771
00:35:07,160 --> 00:35:09,840
Speaker 4: sell into these It was using and they're also doing school,

772
00:35:09,840 --> 00:35:11,160
Speaker 4: so that was a big one, but then they got

773
00:35:11,440 --> 00:35:13,680
Speaker 4: hard hit by the Doge cuts. That to me is

774
00:35:13,719 --> 00:35:16,120
Speaker 4: like maybe one possible thing is maybe extension. You have

775
00:35:16,200 --> 00:35:19,080
Speaker 4: extension all across the world America. Maybe they can kind

776
00:35:19,080 --> 00:35:21,080
Speaker 4: of get into that help this kind of procurement.

777
00:35:21,200 --> 00:35:24,240
Speaker 2: Yeah, maybe you don't try to compete against Cisco on volume,

778
00:35:24,400 --> 00:35:27,080
Speaker 2: but you go like hyper localized hyperlocal.

779
00:35:27,160 --> 00:35:30,480
Speaker 4: But also something we got a rein in Cisco. I mean,

780
00:35:30,600 --> 00:35:33,560
Speaker 4: looking at the black box of the pricing strategy would

781
00:35:33,560 --> 00:35:36,280
Speaker 4: be huge. But also I think we should put merger

782
00:35:36,560 --> 00:35:39,279
Speaker 4: acquisition freezes on these large entities. At some point it's

783
00:35:39,280 --> 00:35:41,479
Speaker 4: like you can't buy anymore, like you've hit your cap.

784
00:35:41,920 --> 00:35:47,080
Speaker 3: It's interesting, tracy. Like the other great homogenizing effect, of

785
00:35:47,160 --> 00:35:51,439
Speaker 3: course on society is big digital platforms, right Instagram, et cetera.

786
00:35:51,480 --> 00:35:54,200
Speaker 3: And everyone feels that they have to constrain whatever they do,

787
00:35:54,280 --> 00:35:57,239
Speaker 3: whether it's a restaurant or media company, et cetera, in

788
00:35:57,400 --> 00:36:01,120
Speaker 3: order to serve the elgo guy that is sort of

789
00:36:01,160 --> 00:36:05,520
Speaker 3: capricious and unpredictable in some way. And it feels like

790
00:36:05,640 --> 00:36:08,440
Speaker 3: the story, whether we're talking about the physical world or

791
00:36:08,520 --> 00:36:13,080
Speaker 3: the digital world, is that scale has this homogenizing effect,

792
00:36:13,239 --> 00:36:16,000
Speaker 3: which nobody really likes these conditions.

793
00:36:16,200 --> 00:36:18,719
Speaker 2: Yeah, I think that's right. But also there are these

794
00:36:18,760 --> 00:36:25,240
Speaker 2: like hidden tears of scale, viz. These middleman companies. All right, well, Austin,

795
00:36:25,360 --> 00:36:27,280
Speaker 2: thank you so much for coming back on Odd Blots.

796
00:36:27,360 --> 00:36:30,799
Speaker 2: Congrats on the new chapter, and I'm sure a lot

797
00:36:30,800 --> 00:36:32,759
Speaker 2: of people will be looking forward to picking up the

798
00:36:32,800 --> 00:36:33,439
Speaker 2: revised book.

799
00:36:33,760 --> 00:36:47,680
Speaker 4: Thank you so much for having me on again. Joe.

800
00:36:47,680 --> 00:36:48,719
Speaker 2: That was really enjoyable.

801
00:36:48,880 --> 00:36:49,240
Speaker 3: Yeah.

802
00:36:49,320 --> 00:36:51,600
Speaker 2: I always love talking about food. Although I haven't had

803
00:36:51,680 --> 00:36:54,000
Speaker 2: lunch today, so I knew that. I'm a little bit

804
00:36:54,520 --> 00:36:56,560
Speaker 2: Can we go to Olive Garden in Times Square?

805
00:36:56,640 --> 00:36:58,960
Speaker 3: Let's do it right soon, I'll go. I'm happy to

806
00:36:59,000 --> 00:36:59,560
Speaker 3: go there soon.

807
00:36:59,640 --> 00:37:02,279
Speaker 2: Okay, I actually would like to go.

808
00:37:02,600 --> 00:37:05,759
Speaker 3: Yeah, it's got great views. It's actually really fun and

809
00:37:05,800 --> 00:37:06,720
Speaker 3: it's got great views.

810
00:37:06,760 --> 00:37:10,680
Speaker 2: Oh you've been to that specifically one? Oh, I didn't realize. Okay,

811
00:37:11,040 --> 00:37:13,359
Speaker 2: so there's a lot to pick out from that. I

812
00:37:13,440 --> 00:37:17,280
Speaker 2: know you're on the side of cheap and plentiful food,

813
00:37:17,640 --> 00:37:23,080
Speaker 2: but perhaps perhaps I guess the homogeneity of the offering,

814
00:37:23,160 --> 00:37:24,200
Speaker 2: maybe that concerns you.

815
00:37:24,520 --> 00:37:28,319
Speaker 3: It definitely concerns me. And this idea that no, and

816
00:37:28,600 --> 00:37:33,319
Speaker 3: this idea that restaurants if they you know, so much

817
00:37:33,360 --> 00:37:36,759
Speaker 3: of the preparation is done off site, et cetera for

818
00:37:36,840 --> 00:37:40,000
Speaker 3: curious things that you eat, and so what is the

819
00:37:40,040 --> 00:37:43,800
Speaker 3: restaurant anymore? And so this is a thing where scale

820
00:37:43,880 --> 00:37:46,960
Speaker 3: is great and cheapness is great, and I'm all for this,

821
00:37:47,080 --> 00:37:48,880
Speaker 3: And I think food should be a lot cheaper than

822
00:37:48,920 --> 00:37:50,800
Speaker 3: it is, because we've had a lot of food inflation

823
00:37:50,920 --> 00:37:53,440
Speaker 3: in this country and I think it's very worrisome, and

824
00:37:53,480 --> 00:37:55,800
Speaker 3: so food should be a lot cheaper and more efficient,

825
00:37:55,840 --> 00:37:58,440
Speaker 3: et cetera than it is. But when we think about

826
00:37:58,520 --> 00:38:01,400
Speaker 3: the things that sort of make us a society. Nice,

827
00:38:01,719 --> 00:38:04,799
Speaker 3: If if a restaurant is really just a sort of

828
00:38:05,239 --> 00:38:09,640
Speaker 3: Cisco microwave, yeah, or Cisco man, right, a giant microwave

829
00:38:09,960 --> 00:38:13,600
Speaker 3: that can connects a Cisco manufactur distribution system to a

830
00:38:13,600 --> 00:38:16,600
Speaker 3: Grubhub delivery system, what world are we living in?

831
00:38:16,760 --> 00:38:18,600
Speaker 2: Yeah? And I think it gets back to the flora

832
00:38:18,640 --> 00:38:21,239
Speaker 2: and fauna point that you were making. So maybe you

833
00:38:21,320 --> 00:38:25,800
Speaker 2: could have you know, uh, food that's cheap and maybe

834
00:38:25,840 --> 00:38:29,600
Speaker 2: not of the highest quality, but it is plentiful and inexpensive.

835
00:38:29,719 --> 00:38:33,200
Speaker 2: But then you should have you know, more local options.

836
00:38:33,280 --> 00:38:35,480
Speaker 3: We brought me those really nice tomatoes yes, so thank

837
00:38:35,520 --> 00:38:36,000
Speaker 3: you for those.

838
00:38:36,120 --> 00:38:38,480
Speaker 2: You're welcome. So I'm doing my part.

839
00:38:38,960 --> 00:38:41,880
Speaker 3: But I do not think that is a scalable solution

840
00:38:42,040 --> 00:38:44,719
Speaker 3: for most people. No, And I grew up hating tomatoes

841
00:38:44,760 --> 00:38:47,120
Speaker 3: because I thought that they were all really bland because

842
00:38:47,120 --> 00:38:48,000
Speaker 3: I only got them.

843
00:38:47,880 --> 00:38:52,080
Speaker 2: In the supermarkets. Yeah, it is phenomenal. How different a

844
00:38:52,160 --> 00:38:55,800
Speaker 2: supermarket tomato taste from a homegrown one? Anyway, shall we

845
00:38:55,880 --> 00:38:56,279
Speaker 2: leave it there?

846
00:38:56,320 --> 00:38:57,040
Speaker 3: Let's leave it there.

847
00:38:57,200 --> 00:38:59,680
Speaker 2: This has been another episode of the All Thoughts podcast.

848
00:38:59,760 --> 00:39:02,560
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway.

849
00:39:02,760 --> 00:39:05,400
Speaker 3: And I'm joll Wisenthal. You can follow me at the Stalwart.

850
00:39:05,560 --> 00:39:08,759
Speaker 3: Follow our guest Austin Ferk, He's at Austin Ferk, and

851
00:39:08,840 --> 00:39:11,399
Speaker 3: check out the new edition of his book Bearings, which

852
00:39:11,400 --> 00:39:14,480
Speaker 3: has a whole chapter about Cisco. Follow our producers Carmen

853
00:39:14,560 --> 00:39:17,319
Speaker 3: Rodriguez at Carman armand Dash E Bennett at dashbod at

854
00:39:17,360 --> 00:39:20,480
Speaker 3: Calebrooks at Kilbrooks. For more odd Loots content, go to

855
00:39:20,480 --> 00:39:23,400
Speaker 3: Bloomberg dot com. Slash od Lots have a daily newsletter

856
00:39:23,440 --> 00:39:25,759
Speaker 3: and all of our episodes, and you can chat about

857
00:39:25,800 --> 00:39:28,320
Speaker 3: all of these topics. Twenty four seven in our discord

858
00:39:28,640 --> 00:39:30,600
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859
00:39:30,239 --> 00:39:33,000
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860
00:39:33,080 --> 00:39:35,719
Speaker 2: us to dig into Dary, then please leave us a

861
00:39:35,760 --> 00:39:39,239
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862
00:39:39,280 --> 00:39:42,040
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863
00:39:42,040 --> 00:39:44,960
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865
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