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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business app. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Lost in all the SpaceX discussion is that they made

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Speaker 2: it sixty billion dollar mm A trade today and it's like,

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Speaker 2: you don't even talk about it.

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Speaker 3: Well, partly because they had indicated before their IPO that

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Speaker 3: this was something that they acquired the rights for, so

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Speaker 3: now they've just kind of pulled the trigger on it.

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Speaker 4: All right, let's talk to somebody.

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Speaker 2: It's his job to know what's going on with the stuff.

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Speaker 2: Seth Fiegerman, Bloomberg AI team leader. I didn't know we

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Speaker 2: had an AI team leader, but we do, and it's.

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Speaker 5: Set That's awesome.

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Speaker 6: What is Cursor and why did SpaceX buy it?

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Speaker 4: Sure? Cursor is one of the leading startups that focuses

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Speaker 4: on AI codings, basically building AI tools that streamline process

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Speaker 4: of writing and debugging COG. You know, it's one of

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Speaker 4: the fastest growing startups in terms of the revenue run rate,

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Speaker 4: but it also faces a lot of competition with the

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Speaker 4: likes of Open AI and Anthropic, but it has historically

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Speaker 4: been quite beloved by coder's in Silicon Valley. I should

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Speaker 4: say historically this is really, you know, a three or

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Speaker 4: four year old company that just got bought for sixty

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Speaker 4: billion dollars. So quick turnaround, quick turnaround.

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Speaker 3: Indeed, So what does owning Cursor allow SpaceX to do

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Speaker 3: that it couldn't do before?

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Speaker 4: Yeah, I mean it's important to step back and think that,

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Speaker 4: you know, SpaceX merged with or require Elon Musk's AI

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Speaker 4: venture XAI, and since then has tried to position itself

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Speaker 4: as not just a rocket play but an AI play.

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Speaker 4: But today they really haven't made too much of a

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Speaker 4: dent in the AI landscape, and coging has really been

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Speaker 4: the most lucrative early market for these AI tools. Are

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Speaker 4: certain irony there. They're kind of disrupting their own folks

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Speaker 4: in their own backyard. But I think the bet here

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Speaker 4: is that bring Cursor in there, bring their talent in there,

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Speaker 4: and you can help supercharge SpaceX's own efforts to build

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Speaker 4: a more viable, credible AI product.

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Speaker 2: All right, I'm asking for all Cursor shareholders shared. Did

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Speaker 2: I sell my company for one hundred and thirty five

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Speaker 2: dollars stock or stock today. Do we know the terms?

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Speaker 4: I'm not sure we know at the moment, but the

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Speaker 4: deals should close in the third quarter.

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Speaker 2: I like the sixty billion dollars valuation one hundred and

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Speaker 2: thirty five dollars stock. Yeah, so I get the upside.

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Speaker 3: Well, let's see how good Cursor was at negotiating all this, Okay,

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Speaker 3: I mean.

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Speaker 2: Do we know how how M and A might figure

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Speaker 2: into their growth strategies?

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Speaker 3: Good question? Yeah.

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Speaker 4: Again, I think like they're trying to position themselves as

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Speaker 4: more of an AI company, and I think they're doing

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Speaker 4: that along two problems. One is three deals like this one,

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Speaker 4: and I would be shocked this is the last time

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Speaker 4: that we see them pursue an AI company to build

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Speaker 4: a real, credible and hoas product. The others through these

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Speaker 4: infrastructure tie ups that they're doing with the likes of

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Speaker 4: Anthropic and Google kind of using the chips and data

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Speaker 4: centers that they already have to make money while they

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Speaker 4: figure out how to build a credible AI product.

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Speaker 3: SpaceX is using cash an stock to buy Cursor. If

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Speaker 3: they're going to be buying more com companies, are we

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Speaker 3: going to see SpaceX. Taking on debt as well, you know,

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Speaker 3: selling bonds for instance, possible.

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Speaker 4: But again I think the fact that I just when

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Speaker 4: Public gives it a leg up on arrivals like Opening

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Speaker 4: I and Anthropic, as they compete not just for talent

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Speaker 4: but for acquisitions like this one, they have something they

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Speaker 4: can offer that other companies can't.

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Speaker 2: All right, you're you're the AI, dude. Where are we

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Speaker 2: on that spectrum of let's spend money, spend money, spend

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Speaker 2: money too. Now let's really see what we're getting in

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Speaker 2: return for that money.

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Speaker 4: I think we're still I think we're still in the

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Speaker 4: spend money spends going. But I will say what we

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Speaker 4: are starting to see is companies Opening Eye, Anthropic are

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Speaker 4: thinking about how much they're charging for this stuff across

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Speaker 4: across different spectrums. That includes sort of getting rid of

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Speaker 4: this all you can eat model where we just kind

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Speaker 4: of charge you a flat fee and then you kind

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Speaker 4: of use as much a as you want. Now they're

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Speaker 4: starting to charge based on the usage that you do,

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Speaker 4: or maybe they'll charge more money for premium subscriptions. So

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Speaker 4: where are we on?

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Speaker 2: So Anthropic and Opening Eye have also filed confidentially for

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Speaker 2: fish public ofference do we have any sense it's the

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Speaker 2: timing frives of those two.

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Speaker 4: Deals, you know, the most reason that we've reporters that

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Speaker 4: both were targeting the fall. Now, I should say that

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Speaker 4: could be fluid, but the fact that SpaceX is doing

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Speaker 4: so well right now in its early days, but the

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Speaker 4: fact that they're doing so well probably does open up

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Speaker 4: an opportunity for those companies to go public then or sooner.

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Speaker 4: You know, it's always a vibes thing on some level,

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Speaker 4: and this kind of creates a positive moment to try

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Speaker 4: to bring it to market sooner.

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Speaker 3: I go back to that idea that open AI's S

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Speaker 3: one filing indicated that it wasn't necessarily in a rush

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Speaker 3: to go public either. You know, it said that there

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Speaker 3: are things I could do as a private company.

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Speaker 7: That.

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Speaker 4: Yeah, I think that they probably were a bit more

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Speaker 4: explicit on that than Anthropic was. So it's certainly possible

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Speaker 4: that open ai pushes this. We don't have updated reporting

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Speaker 4: on that timetable yet, but they certainly indicated that perhaps

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Speaker 4: they could still do financing on the private market as

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Speaker 4: opposed to in the tap of the public market. But

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Speaker 4: at the end of the day, all these companies, including SpaceX,

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Speaker 4: are spending tens, if not hundreds of billions of dollars

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Speaker 4: on chips and data centers and talent. You need capital

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Speaker 4: for that, and public market is a good place for that.

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Speaker 8: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: One of my favorite functions on the Bloomberg terminal is

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Speaker 2: rich go uric h. It's the best accounting for the

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Speaker 2: wealth of the wealthiest folks out there. The methodology is outstanding,

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Speaker 2: the data's outstanding. Elon Musk is number one, one point three.

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Speaker 2: Let's go exact here, one point two seven three trillion dollars.

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Speaker 6: Number one.

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Speaker 2: Number two is Larry Page of three hundred and thirteen billions,

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Speaker 2: which just.

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Speaker 8: So outpaces everyone else. It's laughable.

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Speaker 2: You're today He's up six hundred and fifty billion dollars.

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Speaker 2: That's representing the public markup and value of SpaceX here.

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Speaker 2: So the question is a trillionaire, I mean, what are

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Speaker 2: we doing here? What's the impact here Gutha mcconda, he

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Speaker 2: thinks about this stuff. He's a lecturer at the Yale

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Speaker 2: School of Management and he's the Blomberg Opinion contributor Waltham.

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Speaker 2: When you think Elon, you think about that wealth and

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Speaker 2: again number two is three hundred billion and he's at

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Speaker 2: one point three trillion. Put that in perspective, how do

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Speaker 2: you think about that?

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Speaker 9: I mean, just just imagine being the second wealthiest wealthiest

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Speaker 9: man in the world and thinking, Wow, I'm a trillion

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Speaker 9: dollars behind.

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Speaker 6: You got to feel for them, You got to feel

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Speaker 6: for him. Really, it seems seems awful.

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Speaker 10: So what does it mean for policy?

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Speaker 2: What does it mean for influence?

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Speaker 6: I don't know.

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Speaker 2: The numbers here are getting just you know, extraordinary.

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Speaker 9: Yeah, And I think we have to layer in that

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Speaker 9: the big difference between the Gargan Show and wealth of

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Speaker 9: today's sort of wealthiest people lens the equivalent one hundred

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Speaker 9: years ago in the Gilded Age, when you had people

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Speaker 9: with about the same level of GDP is. Back then,

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Speaker 9: there were profound normative constraints about you could you could

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Speaker 9: not be seen to use your wealth to just sort

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Speaker 9: of like drown the political system. However, much political influence

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Speaker 9: they had, there were limitations about what you could do

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Speaker 9: when you were sort of expected to give my I

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Speaker 9: need to charity and things like that. All of those

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Speaker 9: things have apparently fallen by the wayside. So the easiest

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Speaker 9: way to think about the level of Elon Musk's political power,

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Speaker 9: even apart from his work with the administration, is in

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Speaker 9: Ohio the most expensive Senate race of all time. The

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Speaker 9: two campaigns combined spent about one hundred and fifteen million.

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Speaker 6: Dollars, So that's a lot of money.

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Speaker 9: So that is about less than one percent of a

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Speaker 9: day to day random fluctuation in Elon Musk's network, so

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Speaker 9: he can buy he can spend more money than two

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Speaker 9: senate campaigns combined, and the most the powerful, most expensive

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Speaker 9: Senate campaign in history. About as casually as you or

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Speaker 9: I buy a cup of coffee or soda. If you

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Speaker 9: are a politician and you and you're thinking about what

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Speaker 9: political stances you should take or how you should shape

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Speaker 9: government baction, if that's not top of your mind, you

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Speaker 9: should get out of the business.

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Speaker 3: Okay, Well, you've given us a lot to think about here.

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Speaker 3: And one thing that I did like about your column

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Speaker 3: is that you point out these megabillionaires. And I think

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Speaker 3: according to Rich God, there's maybe like twenty odd people

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Speaker 3: who have who are worth.

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Speaker 8: At least one hundred billion dollars.

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Speaker 3: So let's just call them the mega billionaires in one trillionaire.

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Speaker 3: They run companies, they own companies, and those companies employ

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Speaker 3: a lot of people, and a lot of those people

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Speaker 3: reach out to you for advice, and as you put it,

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Speaker 3: the conversation always goes like this. These are people who

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Speaker 3: have accomplished a lot of things, and they're very successful

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Speaker 3: what they do, but right now they're struggling in this

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Speaker 3: company that they work for.

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Speaker 8: Why is that? And what do you tell them?

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Speaker 9: Because when you operated this stratosphere of wealth and power

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Speaker 9: and influence, we should stop thinking about you like a

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Speaker 9: private citizen. You're a king and you're surrounded by a court,

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Speaker 9: and there are people around you whose only desire in life,

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Speaker 9: whose only goal in life is to please you.

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Speaker 6: That's being a court here.

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Speaker 9: So you know, I talk to people who you know,

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Speaker 9: they've been army special forces or very senior executives, and

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Speaker 9: they go to these companies and they're like, nothing makes sense.

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Speaker 9: I have been trained to succeed, but I don't even

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Speaker 9: know what success means. And I said, that's right, because

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Speaker 9: you've always been trained success means winning a war or

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Speaker 9: making a profit. Success means keeping the king happy, that's

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Speaker 9: what it means. And that's a completely different way of

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Speaker 9: looking at the world. And so now you have these people.

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Speaker 9: They have the power and resources of a nation state.

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Speaker 9: In fact, most of the nation states in the world

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Speaker 9: don't have the resources of someone like Elon Musk, you know,

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Speaker 9: and it changes everything.

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Speaker 2: You know, I was thinking, Gotham, just when you're speaking here, well,

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Speaker 2: he's got to answer to a shareholders. And then I'm like, no,

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Speaker 2: he doesn't because he's got the super voting stock.

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Speaker 10: So there goes that argument.

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Speaker 8: Nominally he might, but in practice, in reality, he doesn't.

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Speaker 9: So go, yeah, that's right and in a real sense,

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Speaker 9: So like there's this wonderful term post economic right, if

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Speaker 9: Elon Musk fails to answer the shareholders and they sell

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Speaker 9: the stock and his net worth goes down by seventy

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Speaker 9: five percent, he'll still have three hundred billion dollars.

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Speaker 6: I'm sure he'll be okay.

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Speaker 3: Yeah, I mean, although for those who are keeping score

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Speaker 3: that that's not okay with them. I mean, so you

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Speaker 3: don't get to that level without keeping score.

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Speaker 6: So I think that's completely right.

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Speaker 9: You keep you know, keeping score, and it is striking

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Speaker 9: right that like that, it seems like the one thing

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Speaker 9: that they can't buy is enough. But let me put

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Speaker 9: it differently. At that level, I think keeping score isn't

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Speaker 9: just about the number on the Bloomberg Billionaires list.

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Speaker 6: It's about power.

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Speaker 9: Right, you have transcended with the things where the things

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Speaker 9: you can where you can buy material things. What you

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Speaker 9: can buy are governments or immunity from the law, or

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Speaker 9: just the fulfillment of your every whim, no matter what it.

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Speaker 6: Is, that what that might be.

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Speaker 9: And at that point, the amounts of money that you

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Speaker 9: have can translate to power in ways that we just

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Speaker 9: haven't seen in democratic societies before.

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Speaker 2: Is there any I'm not to say there's a problem,

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Speaker 2: so I'm not going to asay for a solution, but

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Speaker 2: is there any way that you think society may change

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Speaker 2: or bend or try to deal with some of this

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Speaker 2: newfound extraordinary wealth and influence?

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Speaker 9: There is because we've done this before, right, the United

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Speaker 9: States has dealt with people of this kind of wealth

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Speaker 9: and power relative to society, not in ansolute terms. Before

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Speaker 9: Theodore Roosevelt did that with JP Morgan, and you know,

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Speaker 9: the anti trust people did that with John D.

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Speaker 6: Rockefeller. And there are two big lessons that we should

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Speaker 6: take away from that.

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Speaker 9: Right One is that however powerful, wealthy and powerful these

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Speaker 9: people are, when the government, backed by the people, decides

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Speaker 9: to go and say do things, the government is still

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Speaker 9: the government. And in a democratic republic like the United States,

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Speaker 9: the people still rule, not individual wealthy, not in certain

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Speaker 9: individual oligarchists. But the second thing to remember is that

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Speaker 9: over the long term, that outcome was much better for

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Speaker 9: the wealthy people than the fulfillment.

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Speaker 6: Of their whims.

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Speaker 9: Right, would you rather live in a state like Russia

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Speaker 9: that bends to the whims of you know, whatever the wealth,

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Speaker 9: the wealth the handful of wealthiest people who around the state.

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Speaker 9: Would you rather live in the United States? The answers,

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Speaker 9: you would rather live in the United States. It hard,

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Speaker 9: as it is to might to hear. Right constraints can

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Speaker 9: be good for you, even if you're a trillion error.

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Speaker 9: And democratic constraints aren't just good for the whole society,

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Speaker 9: They'll end up being good for the wealthiest members of

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Speaker 9: it too.

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Speaker 3: Gotam, have you gotten any feedback on writing this column?

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Speaker 3: I'm wondering if any readers have reached out to you

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Speaker 3: and what they've said.

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Speaker 9: More than any other column I've written for Bloomberg Actually,

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Speaker 9: and so far, I would say of people who have

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Speaker 9: reached out to me directly, the result the response has

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Speaker 9: been sort of enormously positive.

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Speaker 6: Of people who responded.

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Speaker 9: On Twitter who seem to be big fans of Elon Muss,

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Speaker 9: let's just say that they were not so positive.

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Speaker 8: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Stuck ale of retail Here, we just got through a

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Speaker 2: lot of the earnings from the retailers. They was kind

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Speaker 2: of bringing up the rear their different calendars. Here, Bloomberg Intelligence,

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Speaker 2: take it a survey. I'm looking at Prime Day deals

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Speaker 2: and there's a lot to talk about there. I want

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Speaker 2: to talk about how AI influences how we shop.

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Speaker 6: Who do we talk to about that?

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Speaker 10: We talked to put them goil.

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Speaker 2: She covers all all the e commerce and the retailers

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Speaker 2: for Bloomberg Intelligence.

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Speaker 7: Put them.

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Speaker 2: I know you have a new survey out here. What

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Speaker 2: did you find here? What you're looking to find?

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Speaker 7: People are still interested in deals in shopping Amazon's Prime Day,

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Speaker 7: which comes earlier this year. It comes in June versus

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Speaker 7: July last year, so part of two Q not three

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Speaker 7: Q in terms of their financials. I think what we

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Speaker 7: found just confirmed what we believed, which is that more

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Speaker 7: than every deals matter today, especially in the face of

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Speaker 7: rising inflation where you have tariffs and higher gas prices,

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Speaker 7: consumers are looking to find ways to stretch their dollars,

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Speaker 7: and more and more are looking to shop on Prime

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Speaker 7: Day than last year.

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Speaker 3: This is a dumb question, but I'm going to ask

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Speaker 3: it anyway. It's called Prime Day, and Amazon has that

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Speaker 3: Prime loyalty program.

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Speaker 8: But do people who shop Prime Day?

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Speaker 3: Are they all Prime Members or is there a significant

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Speaker 3: number that actually has not signed on to the program

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Speaker 3: yet And we'll do so because of these offers.

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Speaker 7: No dumb question, but the answer is Prime Day is

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Speaker 7: for Prime Members, so to take advantage of the deals,

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Speaker 7: you have to be a Prime Member. So Amazon does

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Speaker 7: have over two hundred million Prime members around the world

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Speaker 7: that will be taking advantage of these deals. But it

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Speaker 7: is also a time where many people sign up for

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Speaker 7: deals that don't have the membership. Some of them sign

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Speaker 7: up to take advantage of the deals and cancel, and

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Speaker 7: many of them do stay on. In fact, in our survey,

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Speaker 7: that was one of the questions we asked is do

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Speaker 7: you have a Prime membership? And if not, are you

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Speaker 7: planning to get one? And the answer was very consistent

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Speaker 7: with last year that there is a select group of

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Speaker 7: respondents that plan to get the Prime membership and hold

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Speaker 7: it indefinitely, just growing that Prime member base, which is

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Speaker 7: always a key win for Amazon.

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Speaker 2: All Right, yesterday I pulled to John Tucker. I said,

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Speaker 2: you know what, I need a powerwasher for my back patio.

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Speaker 8: So it sounds like you could borrow that from him.

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Speaker 2: I could probably borrow from John Tarker. So instead of

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Speaker 2: going to Google, I just went into Amazon dot com

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Speaker 2: search bar, power washer, boom. A lot of stuff comes up,

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Speaker 2: a lot of good descriptions.

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Speaker 10: I found on Boom.

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Speaker 2: Didn't even go to search. And it's coming tomorrow.

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Speaker 10: For those that care.

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Speaker 5: You didn't want to wait for Prime Day now, I'm

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Speaker 5: not just I don't know. I want to ride away.

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Speaker 5: AI punam. How are people using AI for shopping? How

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Speaker 5: are retailers using AI?

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Speaker 7: Yeah? I think Amazon is furthest along when you think

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Speaker 7: about how a retailer is using AI. You know what

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Speaker 7: you just explained about the search bar. I think what

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Speaker 7: many people still don't know is the Amazon search bar

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Speaker 7: is no longer just in search bar. It's an AI

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Speaker 7: powered agent led tool, which means if you don't have

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Speaker 7: to no longer go in the search bar like you

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Speaker 7: did and say powerwasher, you can say I'm looking to

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Speaker 7: clean the bricks or the paper outside of my house,

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Speaker 7: and I want the strongest powersher, and it will provide

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Speaker 7: you with an answer. Not only that when you get

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Speaker 7: to it, you can go ahead and say what was

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Speaker 7: the cheapest price that this power washer sold in the

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Speaker 7: last three months six months? And it will give you

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Speaker 7: a price chart. Then you can go ahead and further say, okay,

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Speaker 7: when this power washer drops to this price, go ahead

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Speaker 7: and purchase and long behold. If it drops at that

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Speaker 7: price next week, you'll have it at your door without

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Speaker 7: you having to go back. Well, that's really really further along.

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Speaker 2: I thought I was like doing really well, Yes, it's

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Speaker 2: just going into Amazon search, But apparently put them says

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Speaker 2: I could do a lot better.

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Speaker 3: Yeah, you could make it work for you as opposed

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Speaker 3: to doing the legwork yourself. Given all of this put them,

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Speaker 3: how are competitors responding.

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Speaker 8: We've seen how Prime Day and you know the fact

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Speaker 8: that it's an.

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Speaker 3: Annual sales extravaganza has really forced other companies, like the

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Speaker 3: targets of the world, like Walmart, to come up with

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Speaker 3: their own kind of sales extravagant in the middle of summer.

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Speaker 7: Yeah, and it won't be any different this year. So

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Speaker 7: as soon as Amazon launches it's Prime Day dates, what

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Speaker 7: happens is the larger retailers and some of the smaller

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Speaker 7: ones just follow right to make sure that they can

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Speaker 7: capture some of that walletchhare. To remember, this Prime Day

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Speaker 7: comes before the July fourth sales, so it's actually a

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Speaker 7: move to pull sales forward even more than it has

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Speaker 7: been ever in the past. And we do expect online

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Speaker 7: sales across the board, not just for Amazon, but even

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Speaker 7: the Walmart's, the target's best spies of the world to

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Speaker 7: feature deals to try to lower that customer spend because

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Speaker 7: it's a time when consumers are prepared to stretch their

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Speaker 7: wallets to take advantage of the deals put iman.

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Speaker 2: You mentioned Walmart, and I'm just amazed. Every quarter whenever

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Speaker 2: they report earnings, I go right to their digital sales,

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Speaker 2: and every quarter they don't disappoint it. You know, teens

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Speaker 2: twenty five percent growth in digital Walmart's they go toe

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Speaker 2: to toe with Amazon, don't they?

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Speaker 7: Absolutely? I mean, Walmart's done an amazing job at at

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Speaker 7: capturing the online shopper. You know, if I speaking to

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Speaker 7: you five years ago, they were very, very small when

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Speaker 7: it came to the online presence that they haven't today

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Speaker 7: they're approaching over roughly two hundred billion dollars and almost

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Speaker 7: online sales, So quite a move since then. When you

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Speaker 7: compare it to Amazon, you know, we're expecting Amazon to

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Speaker 7: get to a trillion dollars and GMB, so still you know,

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Speaker 7: Amazon is further along on a global basis, but Walmart

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Speaker 7: is catching up fast for sure.

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Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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00:18:32,680 --> 00:18:36,040
Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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00:18:36,160 --> 00:18:39,239
Speaker 1: with the Bloomberg Business app. Listen on demand wherever you

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00:18:39,280 --> 00:18:42,680
Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: One of the M and E trades today, Young Brands

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Speaker 2: selling its Pizza Hut division for two point seven billion

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Speaker 2: dollars to focus on it's KFC and Taco Bell chains.

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Speaker 2: I'm in on all three of those.

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Speaker 6: Those are all good with me.

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Speaker 2: Michael Halen he joined us here, a senior restaurant of

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Speaker 2: food service analysts for Bloomberg Intelligence. Michael, just about this transaction.

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Speaker 2: What's Yu'm doing here?

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Speaker 11: Yeah, And it's been expected they've since last fall they

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Speaker 11: had announced that they were looking for strategic options here

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Speaker 11: for Pizza Hut, which has been struggling for years, right,

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Speaker 11: and so we think it's a great deal for them,

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Speaker 11: you know, and it allows their very talented management team

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Speaker 11: to focus on their two real growth brands, Taco Bell,

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Speaker 11: which is a monster, it's the gold standard and QSR

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Speaker 11: best marketing program, phenomenal seam source sales for years now,

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Speaker 11: probably since I've been you know, an analyst of probably

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Speaker 11: about fifteen plus years, great seam sore sales. And KFC,

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Speaker 11: which is phenomenal overseas, strong net unit growth overseas and

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Speaker 11: starting to turn around here in the United States in

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Speaker 11: the last couple of quarters. So you know, with the

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Speaker 11: cash it's going to be about two point three billion

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Speaker 11: after tax.

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Speaker 10: Are going to for that right now into into.

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Speaker 11: Share buybacks to offset some of the operating profit loss

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Speaker 11: that they're going to have here.

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Speaker 10: And you know, we think it's it's a good deal.

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Speaker 11: It's it's going to have a much higher operating profit

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Speaker 11: and net unit growth, faster revenue growth than all of

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Speaker 11: that is, you know, turning into a higher multiple. Is

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Speaker 11: what we're seeing in the market today.

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Speaker 2: Stocks up two point three percent today on this news,

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Speaker 2: up about almost five percent year to date and up

440
00:20:27,680 --> 00:20:31,560
Speaker 2: about eleven percent of the trailing twelve months. KFC and

441
00:20:31,640 --> 00:20:34,600
Speaker 2: Taco Bell, do you think they're going to maybe think

442
00:20:34,600 --> 00:20:37,119
Speaker 2: about growing va acquisition? Is there something for them to

443
00:20:37,119 --> 00:20:39,200
Speaker 2: go out and buy? Is that part of their strategy

444
00:20:39,200 --> 00:20:39,640
Speaker 2: their DNA?

445
00:20:39,920 --> 00:20:42,719
Speaker 10: You know, we could be you know, it has historically.

446
00:20:42,800 --> 00:20:45,600
Speaker 11: They purchased Habit Burger a few years ago, but it

447
00:20:45,640 --> 00:20:49,520
Speaker 11: was just really too small to make a big difference

448
00:20:49,560 --> 00:20:52,679
Speaker 11: in the in the top and bottom line. But that

449
00:20:52,760 --> 00:20:56,159
Speaker 11: could be an option. You know, Chris Turner, he was

450
00:20:56,240 --> 00:20:59,879
Speaker 11: the prior CFO, is the new CEO, and he's more

451
00:21:00,960 --> 00:21:03,560
Speaker 11: you know, the company was run pretty conservatively under their

452
00:21:03,560 --> 00:21:08,920
Speaker 11: prior CEO, you know, good solid company, you know, but

453
00:21:08,960 --> 00:21:11,320
Speaker 11: not very exciting. And so you know, as you can

454
00:21:11,320 --> 00:21:14,639
Speaker 11: see with this deal, uh Turner hasn't wasted any time

455
00:21:14,760 --> 00:21:18,479
Speaker 11: and he's being more aggressive with the moves that they're making,

456
00:21:18,520 --> 00:21:20,720
Speaker 11: and so I could see I could see.

457
00:21:20,600 --> 00:21:23,399
Speaker 10: M and A being an option going forward.

458
00:21:23,800 --> 00:21:28,320
Speaker 2: So what was the problem with this Pizza Hut? Was

459
00:21:28,359 --> 00:21:31,840
Speaker 2: it simply Dominoes? What was kind of the problem?

460
00:21:31,880 --> 00:21:34,200
Speaker 11: Dominoes was a big part of it because since two

461
00:21:34,280 --> 00:21:37,320
Speaker 11: thousand and nine, and in two thousand and nine Pizza

462
00:21:37,400 --> 00:21:41,520
Speaker 11: Hut was number one in the country, Dominoes has taken.

463
00:21:41,280 --> 00:21:43,560
Speaker 10: Share year after year after year, So that's been a

464
00:21:43,560 --> 00:21:44,320
Speaker 10: big part of it.

465
00:21:44,880 --> 00:21:47,120
Speaker 11: Papa John's had some good years in there too where

466
00:21:47,119 --> 00:21:48,160
Speaker 11: they were taking some share.

467
00:21:48,240 --> 00:21:51,199
Speaker 10: So that's a big part of it. But you know,

468
00:21:51,280 --> 00:21:54,160
Speaker 10: I'd say a big issue is like food.

469
00:21:53,920 --> 00:21:56,560
Speaker 11: Quality and the real estate, right, Like they have these

470
00:21:56,600 --> 00:21:59,560
Speaker 11: really big boxes that cost a lot of money. These

471
00:21:59,600 --> 00:22:01,720
Speaker 11: franchise are paying big rents, and when you don't have

472
00:22:01,800 --> 00:22:05,199
Speaker 11: people coming into the restaurants anymore, because in addition to

473
00:22:05,240 --> 00:22:09,080
Speaker 11: the Dominoes and Papa John's competition, you had more competition

474
00:22:09,119 --> 00:22:12,399
Speaker 11: at sit down restaurants, higher qualities, sit down pizza joints

475
00:22:12,440 --> 00:22:16,280
Speaker 11: cropping up locally, you know, and it just starts this

476
00:22:16,400 --> 00:22:19,880
Speaker 11: downward spiral that that that you know, people aren't coming in,

477
00:22:19,920 --> 00:22:22,440
Speaker 11: so the franchises aren't going to spend money on improving

478
00:22:22,920 --> 00:22:25,440
Speaker 11: you know, the look and the feel of the restaurants.

479
00:22:27,680 --> 00:22:30,960
Speaker 11: You know, restaurants fall into disrepair. And so it's kind

480
00:22:30,960 --> 00:22:34,440
Speaker 11: of been been this spiral here in the US anyway

481
00:22:34,480 --> 00:22:38,399
Speaker 11: that that's you know, been going off for quite I've.

482
00:22:38,240 --> 00:22:39,840
Speaker 2: Been telling the story today. Back in the eighties and

483
00:22:39,880 --> 00:22:42,600
Speaker 2: college in Richard, Virginia, it was our savior. It was

484
00:22:42,640 --> 00:22:43,720
Speaker 2: our go to place.

485
00:22:44,680 --> 00:22:46,399
Speaker 10: But that was a long time ago. Listen, of the

486
00:22:46,440 --> 00:22:48,119
Speaker 10: breadsticks were phenomenal.

487
00:22:47,760 --> 00:22:51,880
Speaker 2: Exactly, all right. So all the restaurant companies that you cover,

488
00:22:51,920 --> 00:22:52,880
Speaker 2: you cover them all.

489
00:22:53,200 --> 00:22:54,639
Speaker 6: What's the theme you're.

490
00:22:54,520 --> 00:22:56,280
Speaker 2: Hearing from your restaurant companies about kind of how the

491
00:22:56,320 --> 00:22:57,400
Speaker 2: consumer's doing out there.

492
00:22:58,920 --> 00:23:01,760
Speaker 11: The theme is that they're holding in right. And I

493
00:23:01,840 --> 00:23:03,800
Speaker 11: think part of that was the tax refund checks.

494
00:23:03,880 --> 00:23:04,080
Speaker 6: You know.

495
00:23:04,480 --> 00:23:06,440
Speaker 11: You know, as you probably know, I was pretty bullish

496
00:23:06,520 --> 00:23:09,360
Speaker 11: coming into this year because inflation was close to two percent,

497
00:23:10,000 --> 00:23:14,400
Speaker 11: we had these refund checks coming. We're less much less

498
00:23:14,440 --> 00:23:17,720
Speaker 11: bullish now based on the inflation that we're seeing, you know,

499
00:23:17,840 --> 00:23:19,560
Speaker 11: like I said, a lot of them are talking about

500
00:23:20,440 --> 00:23:21,600
Speaker 11: kind of holding in.

501
00:23:23,080 --> 00:23:23,359
Speaker 6: Beef.

502
00:23:23,400 --> 00:23:25,840
Speaker 11: Inflation continues to be an issue, So some of those

503
00:23:25,960 --> 00:23:29,919
Speaker 11: chains are kind of worried there, you know what they're saying.

504
00:23:30,160 --> 00:23:32,480
Speaker 11: I'm paying closer attention what they're doing, and what we're

505
00:23:32,520 --> 00:23:36,479
Speaker 11: seeing is the most aggressive discounting we've seen in this

506
00:23:36,560 --> 00:23:39,800
Speaker 11: business for a while, and that's that's really worrisome.

507
00:23:40,400 --> 00:23:45,080
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

508
00:23:45,280 --> 00:23:49,240
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509
00:23:49,440 --> 00:23:52,720
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510
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511
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512
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