WEBVTT - GLP-1 Drugs May Motivate Restaurant Menu Changes 0:00:21.160 --> 0:00:22.280 Welcome to Chopping It Up. 0:00:22.720 --> 0:00:25.000 I'm your host, Mike Hallon, the senior restaurant and food 0:00:25.000 --> 0:00:28.880 service analyst at Bloomberg Intelligence. Today we're joined by my 0:00:29.000 --> 0:00:33.640 colleague Daniella. Sir Tory Courtina, Bloomberg's restaurant's reporter. Thanks for 0:00:33.720 --> 0:00:34.440 doing us. 0:00:35.000 --> 0:00:36.800 Yeah, I know, anytime. Happy to be here. 0:00:38.280 --> 0:00:38.600 Yeah. 0:00:38.640 --> 0:00:43.120 So, you know, we've talked a few times about productivity 0:00:43.159 --> 0:00:46.680 and efficiency. They become pretty popular topics with all the 0:00:46.680 --> 0:00:49.440 inflation we've seen over the past couple of years, and 0:00:49.479 --> 0:00:51.000 you've done some good work around the topic. 0:00:51.040 --> 0:00:53.200 Can you talk about Popeyes first? 0:00:54.160 --> 0:00:54.360 Yeah? 0:00:54.440 --> 0:00:55.160 No, thanks Mike. 0:00:55.640 --> 0:00:57.400 I think you know, if we get into this, not 0:00:57.440 --> 0:00:59.920 to make a Taylor Swift reference, but it does seem 0:01:00.120 --> 0:01:03.000 like restaurants and are sort of in their productivity era. 0:01:03.680 --> 0:01:05.440 I guess you can't say they were at eras without 0:01:05.480 --> 0:01:08.520 talking about Taylor Slift. But AnyWho, you know, you you 0:01:08.680 --> 0:01:11.640 tracked so well, you know the trajectory of restaurants during 0:01:11.640 --> 0:01:13.759 the pandemic and just how they were struggling to basically 0:01:13.840 --> 0:01:17.360 survive the labor issues and inflation and everything that we saw, 0:01:17.600 --> 0:01:20.600 and it really seems that a lot of them that 0:01:20.959 --> 0:01:23.120 you know, I had a difficult time during the pandemic, 0:01:23.120 --> 0:01:26.080 are turning their attention to that idea of productivity and 0:01:26.120 --> 0:01:29.280 efficiency and how do we just keep people coming back? 0:01:29.319 --> 0:01:32.600 And so I had the chance to you know, visit 0:01:32.680 --> 0:01:35.119 Popeye's other Miami headquarters and my. 0:01:35.040 --> 0:01:39.480 Favorite, my favorite restaurant, QSR restaurant by the way for 0:01:39.600 --> 0:01:42.720 eating not oh really in terms of stock recommendations, it 0:01:42.800 --> 0:01:46.600 was my It was my favorite stock back in the day, 0:01:46.760 --> 0:01:49.600 like twenty thirteen through like twenty sixteen or so, and 0:01:49.640 --> 0:01:50.400 it did pretty well. 0:01:50.400 --> 0:01:52.960 But yeah, I'm a big fan of Popeye's. 0:01:52.560 --> 0:01:53.920 Checking out, big fan of Popeyees. 0:01:54.080 --> 0:01:56.320 Yeah, I was there last weekend when my sonets fans no. 0:01:56.240 --> 0:01:59.680 Way, I do remember dragging my husband to try the 0:01:59.800 --> 0:02:02.120 you know, fried chicken sandwich and that came out. But 0:02:02.240 --> 0:02:04.360 you know, that's a perfect place to start, because really, 0:02:04.400 --> 0:02:07.040 I mean for most of us, you know, unless you 0:02:07.040 --> 0:02:09.320 lived in certain parts of the US, Popeyes entered into 0:02:09.360 --> 0:02:12.919 our consciousness with the fried chicken sandwich. And of course 0:02:12.960 --> 0:02:14.960 it was a big success for them. I mean they 0:02:15.000 --> 0:02:18.040 brought up, brought in a lot of customers that previously 0:02:18.080 --> 0:02:20.560 did not go to Popeyes, right, A lot of people 0:02:20.600 --> 0:02:23.560 tried it. It was viral on the internet. But they 0:02:23.639 --> 0:02:25.560 realized at some point that a lot. 0:02:25.400 --> 0:02:27.160 Of those people just were not coming back. 0:02:28.520 --> 0:02:30.840 So you know, they started sort of scratching their heads 0:02:31.000 --> 0:02:32.840 and trying to figure out what was going on. And 0:02:32.919 --> 0:02:35.440 so earlier this year they came out with a plan 0:02:35.639 --> 0:02:38.840 to just try to crack that, and so I was 0:02:38.919 --> 0:02:41.040 very happy to get sort of like an insight look 0:02:41.120 --> 0:02:43.480 into the plan. I went down to the Miami headquarters 0:02:43.639 --> 0:02:45.959 and really one of the main things that they're doing 0:02:46.280 --> 0:02:49.120 is just ripping up the kitchens, and so. 0:02:49.639 --> 0:02:50.480 I talked to you Sammy C. 0:02:50.600 --> 0:02:53.120 Dicky, who is the president of Popeye's North America, and 0:02:53.160 --> 0:02:54.359 one of the things that he said is like, look, 0:02:54.400 --> 0:02:58.400 we realized that our service just wasn't We needed to 0:02:58.440 --> 0:03:01.440 be right. You know, people were saying that the orders 0:03:01.480 --> 0:03:03.239 weren't coming out perfect, that we were taking a little 0:03:03.240 --> 0:03:05.320 bit longer. And also a lot of people just had 0:03:05.360 --> 0:03:06.320 never seen a Popeyes. 0:03:07.040 --> 0:03:08.079 That was another big part. 0:03:09.200 --> 0:03:11.440 And so, you know, if you do want people to 0:03:11.639 --> 0:03:13.600 think of you as an option, as a daily option, 0:03:13.720 --> 0:03:15.800 like it seems like you do MIC with your son, 0:03:16.639 --> 0:03:18.960 people need to see locations. You know, you can't have 0:03:19.000 --> 0:03:21.200 people driving out of their way ten to twelve minutes 0:03:21.960 --> 0:03:25.160 to try a QSR restaurant. And so one of the 0:03:25.160 --> 0:03:28.360 cool things that they're trying to do is figure out how. 0:03:28.240 --> 0:03:29.600 To make the kitchens more efficient. 0:03:29.800 --> 0:03:31.600 And so if you want, I can get more into that, 0:03:31.639 --> 0:03:33.080 but I don't know how deep you want to hear 0:03:33.120 --> 0:03:33.520 about that. 0:03:33.760 --> 0:03:35.480 Yeah, No, I want to hear about it because it's 0:03:35.520 --> 0:03:38.960 important and it's good. It's interesting because you know, there's 0:03:39.000 --> 0:03:42.360 a lot of attention being paid at Burger King US 0:03:42.400 --> 0:03:45.880 for restaurant brands, right, but right now the biggest growth 0:03:45.920 --> 0:03:50.120 engine in terms of net units is Popeyes, right, And 0:03:50.160 --> 0:03:52.960 so they finally talked a bit about it on this 0:03:53.560 --> 0:03:56.280 last call about improving the operations have Popeyes, but they 0:03:56.280 --> 0:03:59.520 haven't delved too deeply into it. So this is a 0:03:59.520 --> 0:04:01.960 big reason when I got here. I love talking about Popeyes, 0:04:02.000 --> 0:04:03.240 and you have the inside scoop. 0:04:04.040 --> 0:04:07.040 I have the inside information this time around. Yeah. So 0:04:07.120 --> 0:04:10.400 basically one other things that they realize is that, for example, 0:04:10.800 --> 0:04:12.760 their kitchens just were not arranged in a way that 0:04:12.800 --> 0:04:15.400 they really flowed to the drive through and just sort 0:04:15.440 --> 0:04:18.480 of to the handoff points. So you know, when they started, 0:04:18.920 --> 0:04:20.640 you know, with a chicken sandwich, they just kind of 0:04:20.640 --> 0:04:23.520 put the station wherever it fit. And really that's no 0:04:23.640 --> 0:04:28.720 way to really handle making one of your best selling products, right, 0:04:28.880 --> 0:04:30.960 And so it starts there. It starts with just making 0:04:31.040 --> 0:04:34.040 kitchens such as flow better so that when team members 0:04:34.080 --> 0:04:36.599 are assembling the orders, it's just much easier to put 0:04:36.600 --> 0:04:38.719 them together, and then they just sort of flow to 0:04:38.720 --> 0:04:40.480 the drive through, flow to your hands, you know when 0:04:40.520 --> 0:04:43.640 you're in your car or at the counter, and they're 0:04:43.680 --> 0:04:46.080 really looking at a lot of little details. Right. So 0:04:46.160 --> 0:04:49.599 when I went there, there was this kind of kitchen 0:04:49.640 --> 0:04:52.160 set up with these five modules that are all sequentially 0:04:52.279 --> 0:04:55.119 arranged that basically every station has a kind of stuff 0:04:55.160 --> 0:04:56.920 that you would actually need to put together one of 0:04:56.960 --> 0:05:01.080 the orders, and they're implementing things is like you know 0:05:01.200 --> 0:05:03.640 sticker printers. You know, if you go to McDonald's, if 0:05:03.680 --> 0:05:05.480 you go to Starbucks, those are pretty common. I mean 0:05:05.480 --> 0:05:08.600 on your carpet at Starbucks, you have the sticker that 0:05:08.680 --> 0:05:10.479 has your name, it has your order, and so that 0:05:10.520 --> 0:05:13.719 way the baristas can easily see it. Popeye's was not 0:05:13.800 --> 0:05:17.320 doing that, and so you know, the folks in the 0:05:17.400 --> 0:05:20.120 kitchen had to like manually check against a paper receipt 0:05:20.279 --> 0:05:22.960 whether your order was correct. All that stuff just slows 0:05:23.000 --> 0:05:27.039 it down and yeah, and so they're also making sure 0:05:27.040 --> 0:05:29.159 that like once that order is correct, you know, you 0:05:29.200 --> 0:05:31.560 get to a landing zone where they actually check stuff, 0:05:31.600 --> 0:05:34.960 and then they actually do the whole bumping process. You know, 0:05:34.960 --> 0:05:37.120 they hit that button that says order ready and you're 0:05:37.160 --> 0:05:39.920 alerted to it. And again, this is stuff that's pretty 0:05:39.920 --> 0:05:42.839 common at places like McDonald's and even Burger King. But 0:05:43.000 --> 0:05:45.359 you know, I think it's underscores how we started this 0:05:45.400 --> 0:05:48.680 conversation with this idea of Okay, this is the productivity 0:05:48.720 --> 0:05:50.960 and sort of like efficiency era for a lot of 0:05:50.960 --> 0:05:53.600 places that perhaps in the past it was like okay, 0:05:53.680 --> 0:05:57.400 but we're fine, you know, you know, the sandwiches are 0:05:57.440 --> 0:05:59.839 selling and the kitchens are fine, so why should we 0:06:00.040 --> 0:06:02.920 them up? And now restaurants like Popeyes are really looking 0:06:02.920 --> 0:06:04.960 at it and like, okay, we really need to be 0:06:05.400 --> 0:06:07.080 efficient in how we do this. 0:06:07.320 --> 0:06:10.600 Yeah, and it's probably more important for them than anybody 0:06:10.640 --> 0:06:14.240 to get that kind of like basic blocking and tackling right, 0:06:14.320 --> 0:06:18.200 because it's chicken's tough. You know, there's typically a lot 0:06:18.240 --> 0:06:22.080 more waste at a chicken chain. You know, it takes 0:06:22.160 --> 0:06:24.440 fifteen minutes to fry a new batch. When you run 0:06:24.600 --> 0:06:26.560 run out right, and so a lot of times are 0:06:26.600 --> 0:06:30.280 making too much and there's food waste, and it just 0:06:30.320 --> 0:06:33.440 makes it a trickier operation than heating up burger. So 0:06:34.240 --> 0:06:36.840 I think getting that blocking and tackling is going to 0:06:36.880 --> 0:06:37.920 be really important for them. 0:06:38.520 --> 0:06:39.400 But that's one of the things. 0:06:39.440 --> 0:06:43.200 And so for example, one of the processes that they 0:06:43.200 --> 0:06:46.520 are also trying to improve is how they is the batter. 0:06:47.040 --> 0:06:49.240 You know, you know, the way that Tammy explained it 0:06:49.279 --> 0:06:52.479 to me is like, okay, you have to make this batter. 0:06:52.640 --> 0:06:56.320 You have to chill water in ice, and then someone 0:06:56.400 --> 0:06:58.880 will have to take the temperature by hand until it 0:06:58.920 --> 0:07:01.520 got to the perfect and then they would have to 0:07:01.760 --> 0:07:04.520 mix it and they would have to constantly steer it 0:07:04.839 --> 0:07:07.640 so it would clumb, so it wouldn't clump, and then 0:07:07.760 --> 0:07:10.280 you know, they would actually be able to batter the chicken. 0:07:10.400 --> 0:07:12.040 And so they just came up with a machine that 0:07:12.080 --> 0:07:15.880 doesn't right. And so there's just like all these things 0:07:16.000 --> 0:07:18.920 that if you realize if you have a labor model, 0:07:19.280 --> 0:07:22.440 a business model that's more labor heavy, labor reliant in 0:07:22.480 --> 0:07:25.960 a time of you know, still tight labor market, it's 0:07:26.080 --> 0:07:29.080 just tougher and so just kind of automating some of 0:07:29.120 --> 0:07:32.680 that stuff, and it's streamlining how you do it? I 0:07:32.720 --> 0:07:35.440 think you said it, Mike. Actually for my story, like 0:07:35.520 --> 0:07:37.840 operations is not sexy, but it matters a lot. 0:07:38.120 --> 0:07:40.480 Yeah, for sure, no doubt. 0:07:40.520 --> 0:07:43.880 And so you know, talking about streamlining operations, you know, 0:07:43.960 --> 0:07:48.000 we were talking about Starbucks. They've been investing heavily to 0:07:48.080 --> 0:07:51.320 improve their throughput, speed of service, and just basically make 0:07:51.360 --> 0:07:55.600 the baristas and the other employees jobs easier. So I 0:07:55.680 --> 0:07:57.800 was swamped with the earnings last week, but you made 0:07:57.800 --> 0:07:59.440 it to their investor day in New York. 0:07:59.760 --> 0:08:00.760 How are they progressing? 0:08:01.680 --> 0:08:04.360 I did? I did, so, you know, just to kind 0:08:04.360 --> 0:08:06.360 of put it a little bit in context, it's a 0:08:06.440 --> 0:08:09.360 similar story to poplize in the sense that you know, 0:08:09.400 --> 0:08:12.040 Starbucks had that big slump when the pandemic started, but 0:08:12.080 --> 0:08:14.440 then you know they've really recovered pretty quickly, Like their 0:08:14.480 --> 0:08:18.240 demand is pretty strong, but because of everything in the pandemic, 0:08:18.320 --> 0:08:21.280 they just didn't adapt quickly enough, especially to that like 0:08:21.360 --> 0:08:24.600 just massive shift to online orders. I mean, Starbucks has 0:08:24.640 --> 0:08:26.640 always had a bunch of online orders, they were pioneers 0:08:26.640 --> 0:08:28.840 in that space, but it just like really searched in 0:08:28.840 --> 0:08:31.760 a way that made everything more complicated for baristas and 0:08:31.840 --> 0:08:35.640 so about a year ago they announced sort of the 0:08:35.760 --> 0:08:40.200 first iteration of the plan that they implemented to just 0:08:40.240 --> 0:08:44.480 basically help stores run better. You know, they are rolling 0:08:44.480 --> 0:08:47.640 out stuff like new cold foam blenders. 0:08:48.160 --> 0:08:50.280 Cold foam is a super super popular topic. 0:08:50.320 --> 0:08:52.520 If you've ever been to Starbucks lately, you see people 0:08:52.559 --> 0:08:54.840 with their you know, walking out with their beverages and 0:08:54.880 --> 0:08:56.400 there's like the cold foam on top. 0:08:57.600 --> 0:08:59.880 But previously that you have to make it. 0:09:00.040 --> 0:09:04.680 I got full size blender and that competes with preppuccinos, right, 0:09:04.920 --> 0:09:07.480 so it just made it harder. And so that's some 0:09:07.520 --> 0:09:10.920 of the stuff they're doing. They're also rolling out something 0:09:11.040 --> 0:09:16.520 that's basically a thirty second verse French press machine. Basically 0:09:16.559 --> 0:09:18.800 it makes coffee in thirty seconds instead of having to 0:09:19.040 --> 0:09:22.080 make a bunch of you know, batches in the like 0:09:22.280 --> 0:09:26.600 large rewers type stuff, and that generated a lot of waste. 0:09:27.559 --> 0:09:30.240 And another big thing that they unveiled is basically a 0:09:30.240 --> 0:09:33.280 new setup to bring together all the elements to make 0:09:33.440 --> 0:09:37.080 cold drinks. Cold drinks account for like seventy five percent 0:09:37.120 --> 0:09:41.200 of Starbucks orders, unbelievably, and so that also was meant to. 0:09:41.840 --> 0:09:42.320 Help with that. 0:09:42.720 --> 0:09:46.480 So the first two parts, right, the blender and the 0:09:46.559 --> 0:09:48.920 vertica are the the coff Flover Vertica, which is the 0:09:49.040 --> 0:09:51.440 thirty second coffee machine, are the ones that are the 0:09:51.480 --> 0:09:56.400 most advanced. They're also relatively speaking, easier to implement. I mean, 0:09:56.440 --> 0:09:59.760 it's a machine at a store versus you know, the 0:09:59.800 --> 0:10:02.079 side iron system, which is what they call the new setup. 0:10:02.600 --> 0:10:04.360 Is that it's a new setup, so you have to 0:10:04.440 --> 0:10:08.800 you know, retrofit stores and everything. What what I found interesting 0:10:08.880 --> 0:10:12.240 about the latest update that they gave, you know, during 0:10:12.320 --> 0:10:15.640 their what they called Reinvention of Data was on November second, 0:10:16.559 --> 0:10:20.000 was that it seemed like investors were focusing a lot 0:10:20.000 --> 0:10:23.040 on the siren system. It was like, that's the big thing, 0:10:23.160 --> 0:10:25.920 that's what we should be focusing on. But they really 0:10:25.960 --> 0:10:29.199 sort of broadened it out a little bit more and 0:10:29.480 --> 0:10:31.920 they talked about just other things that they have been 0:10:32.000 --> 0:10:35.960 doing to make the stores easier to run, like, for example, 0:10:36.280 --> 0:10:37.920 capping the number of delivery orders. 0:10:38.120 --> 0:10:39.800 Well, we don't like to hear that. We don't like 0:10:39.840 --> 0:10:41.360 to hear anybody capping orders. 0:10:42.679 --> 0:10:43.880 So why is that? Okay? 0:10:44.040 --> 0:10:45.680 Yeah, I now I had get to interview with you, 0:10:45.760 --> 0:10:46.360 Like what right. 0:10:46.320 --> 0:10:48.000 You got to you got to hit those same store 0:10:48.080 --> 0:10:50.600 sales targets right, like you shouldn't you should you know, 0:10:50.640 --> 0:10:55.000 I'd rather see you improve your operations more quickly than 0:10:55.080 --> 0:10:58.280 turned down then you know, orders, especially it those online 0:10:58.360 --> 0:11:01.440 orders so usually pretty pretty good in size, you know. 0:11:01.640 --> 0:11:03.360 But I think I just quickly make a point. You know, 0:11:03.440 --> 0:11:06.120 both of these companies have seen big jumps in average 0:11:06.200 --> 0:11:08.400 unit volume SAAM source sales over the last four or 0:11:08.440 --> 0:11:10.400 five years. And this is part of the reason why 0:11:10.440 --> 0:11:13.400 they need to do these overhauls, is because the boxes 0:11:13.440 --> 0:11:15.640 weren't built to support these levels of sales. 0:11:15.640 --> 0:11:16.760 But please keep. 0:11:16.600 --> 0:11:18.640 Going, no, no, no, exactly, But I mean you make 0:11:18.640 --> 0:11:22.200 a really good point about those miss sales, right because 0:11:22.280 --> 0:11:24.000 at the end of the day, that's the point of 0:11:24.040 --> 0:11:25.880 all of this, you know, it's not just like, oh, 0:11:25.880 --> 0:11:27.959 we're going to be the best run Starbucks are pod 0:11:28.040 --> 0:11:32.160 byas is just if we can serve people faster, then 0:11:32.440 --> 0:11:34.880 people won't see along line and walk away. And so 0:11:34.960 --> 0:11:38.240 it's just that idea of capturing you know, those those 0:11:38.280 --> 0:11:42.600 additional sales. And so in this latest update, one of 0:11:42.720 --> 0:11:44.920 the one of the things that sort of cut my eyes, 0:11:45.000 --> 0:11:48.520 it's just them trying to almost like redirect investors to 0:11:48.600 --> 0:11:50.960 this idea of all the other stuff they're doing, like 0:11:50.960 --> 0:11:53.520 it's not just about the Seren system, which is hard 0:11:53.520 --> 0:11:57.319 to implement because it's probably only going into news stores. 0:11:58.160 --> 0:12:00.000 And I think it's about forty percent of the system 0:12:00.120 --> 0:12:01.680 is going to have it by like twenty twenty six. Right, 0:12:01.800 --> 0:12:04.080 That's that's lower than a lot of people thought. But 0:12:04.520 --> 0:12:07.920 so they announced these other ideas of Okay, we're gonna 0:12:07.960 --> 0:12:10.800 just run our stores better. We're gonna open stores that 0:12:10.880 --> 0:12:14.120 are more specific to the purpose that we want them 0:12:14.200 --> 0:12:14.880 to have. 0:12:15.440 --> 0:12:18.960 Yeah. Yeah, all that's good stuff, and I like that that. 0:12:19.920 --> 0:12:21.720 I liked some of those things that you picked up 0:12:21.760 --> 0:12:25.319 on because it wasn't necessarily my biggest focus. I think 0:12:25.360 --> 0:12:28.120 my biggest focus was that they lowered their long term 0:12:28.160 --> 0:12:32.760 targets without admitting they lowered their long term targets, and 0:12:32.800 --> 0:12:34.920 like no one, everyone gave them a pass on it. 0:12:35.000 --> 0:12:37.840 Everybody loved Starbucks, apparently because they made a lot of 0:12:37.840 --> 0:12:40.800 money I guess over the years investing in it. 0:12:40.880 --> 0:12:42.920 But yeah, that was curious. I mean, that was interesting 0:12:43.080 --> 0:12:44.600 during their Yeah, I mean. 0:12:45.040 --> 0:12:48.200 During the investor day back in late twenty twenty one, 0:12:48.240 --> 0:12:50.720 I guess about two years ago. Now, I found it 0:12:50.800 --> 0:12:55.160 really curious that I'm sorry, not two years ago. It 0:12:55.240 --> 0:12:55.800 was last year. 0:12:56.640 --> 0:12:59.760 I know what time now, I know it flies. 0:13:00.800 --> 0:13:02.960 So they taught they raised. 0:13:02.600 --> 0:13:05.160 Their long term targets, you know, and just EPA, it 0:13:05.200 --> 0:13:09.079 was like five to ten. They increased revenue guidance to 0:13:09.160 --> 0:13:11.520 five to ten, or central sales from five to ten, 0:13:12.280 --> 0:13:15.320 operating come ten to fifteen percent growth a year, and 0:13:15.360 --> 0:13:18.520 then fifteen to twenty percent EPs growth, which we wrote 0:13:18.520 --> 0:13:20.480 at the time was like, why are you doing this 0:13:20.280 --> 0:13:23.320 to the CEO as he's coming in. Usually CEOs like 0:13:23.360 --> 0:13:26.160 to come in and cut all the targets to keep 0:13:26.200 --> 0:13:27.640 Wall Street off his back for like. 0:13:27.640 --> 0:13:28.320 A year, you know. 0:13:29.960 --> 0:13:32.080 Yeah, and then now a year later they cut it 0:13:32.120 --> 0:13:34.480 to like they didn't cut it totally, but they cut 0:13:34.520 --> 0:13:36.640 the top end off, right, So it's like now it's 0:13:36.679 --> 0:13:40.439 like five percent SAMSAR sales and ten percent. 0:13:41.080 --> 0:13:42.480 Yeah revenue growth. 0:13:42.160 --> 0:13:44.880 Plus yes growth. Yeah. So that was where most of 0:13:44.920 --> 0:13:45.719 my focus was. 0:13:46.040 --> 0:13:48.320 Yeah, that's a very good point and sort of the 0:13:49.400 --> 0:13:52.040 what I heard, right, you know, when I was talking 0:13:52.040 --> 0:13:55.120 to investors and analysts ahead of this, is that just 0:13:55.160 --> 0:13:58.000 echoing what you were saying. A lot of people thought 0:13:58.080 --> 0:14:01.680 that the targets were just too to begin with, right, 0:14:02.120 --> 0:14:04.200 the way I was talking to an analyst and the 0:14:04.240 --> 0:14:07.880 way that she explained it was the consumer environment has 0:14:07.920 --> 0:14:10.680 definitely become more worried, to put it that way, since 0:14:10.760 --> 0:14:14.440 last September when they first set those goals. But it's 0:14:14.520 --> 0:14:16.360 hard to say that it's not a sort of specific 0:14:16.480 --> 0:14:20.440 thing when they were the ones that promised those lofty goals, right, 0:14:20.520 --> 0:14:23.240 and so it was sort of that thing of Starbucks 0:14:23.240 --> 0:14:24.880 doesn't have a problem with its brand. People are still 0:14:24.920 --> 0:14:27.640 buying it, but at the same time, in an environment 0:14:27.720 --> 0:14:29.080 like this, you might need to be a little more 0:14:29.080 --> 0:14:32.640 careful about the type of targets you have. And it 0:14:32.800 --> 0:14:35.840 was a little bit, you know, when they announced earnings 0:14:35.840 --> 0:14:38.880 and then they caught that same store soals guidance from 0:14:38.880 --> 0:14:42.320 seven to nine percent, so five to seven the stock 0:14:42.520 --> 0:14:45.840 was going up, right, and that doesn't really happen that often. 0:14:46.400 --> 0:14:48.520 And sort of the explanation that I got is that 0:14:49.560 --> 0:14:53.880 they didn't cut the profitability targets, and it seemed to 0:14:53.880 --> 0:14:57.360 be reassuring for investors that even with slower same store 0:14:57.360 --> 0:15:01.640 sales growth, they could still reach that EPs growth target 0:15:01.880 --> 0:15:04.880 through other things like, for example, that three billion dollar 0:15:06.000 --> 0:15:08.480 just cost saving program. I think he would have been 0:15:08.560 --> 0:15:11.840 a lot worse and not as reassuring if they had 0:15:11.880 --> 0:15:16.200 also caught the profit guidance the guidance, So is that 0:15:16.280 --> 0:15:17.880 is that kind of how you were also seeing it? 0:15:18.120 --> 0:15:19.960 Yeah, I guess, you know, as long as they kept 0:15:20.000 --> 0:15:23.240 the bottom line, the bottom end of that that guidance, 0:15:23.320 --> 0:15:25.400 that seemed to play kid investors off of a very 0:15:25.440 --> 0:15:30.240 strong quarter, right, So you know, the calendar second quarter 0:15:30.400 --> 0:15:33.360 result was pretty weak. We saw a pretty significant slowdown 0:15:33.360 --> 0:15:35.400 in the four year same source of sales trend, and 0:15:35.480 --> 0:15:40.400 so management didn't really address that. And but but like sequentially, 0:15:40.480 --> 0:15:42.480 this was a reacceleration of the same. 0:15:42.320 --> 0:15:42.800 Source of sales. 0:15:42.840 --> 0:15:46.000 So I felt that the quarter was so strong and 0:15:46.040 --> 0:15:49.120 that they kept the low end of the long term guidance. 0:15:49.160 --> 0:15:51.480 I think that seemed to play CAID investors, and they 0:15:51.520 --> 0:15:53.920 kind of gave them a pass because for those reasons 0:15:53.920 --> 0:15:57.120 that you said, they're long term targets, which I'm gonna 0:15:57.120 --> 0:15:59.160 pat myself on the back because we wrote this coming 0:15:59.200 --> 0:16:01.040 out of the Investor a year ago. It's like, these 0:16:01.080 --> 0:16:03.320 targets don't include any slow down the consumer, so they 0:16:03.320 --> 0:16:06.680 don't make any sense to me. So you know, even 0:16:06.720 --> 0:16:08.760 a broken clock is right twice twice a day. 0:16:08.880 --> 0:16:09.360 There we go. 0:16:09.440 --> 0:16:11.400 Yeah, that's got we got excellent point. 0:16:11.400 --> 0:16:13.720 We had that one, right, So so we'll see, so, 0:16:14.240 --> 0:16:17.840 you know, we'll see going forward. Obviously, this is a 0:16:17.880 --> 0:16:20.760 super popular name that everybody likes to talk about very 0:16:20.880 --> 0:16:26.400 very very Yeah, everybody loves their talk, loves their coffee, 0:16:26.440 --> 0:16:28.960 and so you know, you also mentioned to me that 0:16:29.040 --> 0:16:31.600 they hyped up their position as a provider of small 0:16:31.720 --> 0:16:35.120 indulgences amid a slowing economy, So would they have. 0:16:35.040 --> 0:16:38.320 To say, yeah, So I think this just like it's 0:16:38.360 --> 0:16:41.640 a really good example of these theme that we've seen 0:16:41.680 --> 0:16:45.720 more broadly, people are caughting back on just big expenses, 0:16:45.880 --> 0:16:49.400 like for example, appliances, right, I mean, part of it 0:16:49.440 --> 0:16:51.760 is just a bunch of us, but appliance is during COVID, 0:16:51.800 --> 0:16:53.840 how many more washers do you need? And then also 0:16:54.000 --> 0:16:57.320 just that idea of you know, wallets are pressured, but 0:16:57.320 --> 0:17:01.160 at the same time, people are still willing to splurge 0:17:01.240 --> 0:17:05.000 on what we have called small intelligences. Right. So you 0:17:05.040 --> 0:17:07.720 know a lot of the beverage companies are doing great, 0:17:07.800 --> 0:17:11.240 right that that doesn't really cost you that much. People 0:17:11.280 --> 0:17:14.760 are also traveling, right, so they have this idea of like, well, 0:17:14.840 --> 0:17:17.280 I mean, I might as well spend on something that 0:17:17.359 --> 0:17:20.320 I really enjoy and especially with international travel, like we've seen, 0:17:20.640 --> 0:17:23.000 you know, a fair bid of strength there, and then 0:17:23.000 --> 0:17:26.040 we have something like Starbucks. So Mike, something that has 0:17:26.080 --> 0:17:28.200 really caught my attention, and then I'll bring it back 0:17:28.240 --> 0:17:31.360 to sort of like the financial is. You know, I'm 0:17:31.359 --> 0:17:35.000 a millennial, and for for a long time, the type 0:17:35.000 --> 0:17:38.240 of narrative that I heard, particular un millennials was well, 0:17:38.359 --> 0:17:42.399 if you, you know, stop cheating avocado toast and buying Starbucks, 0:17:42.400 --> 0:17:43.920 you would be able to save up for a down 0:17:43.920 --> 0:17:46.879 payment on a house. Right. That was ridiculous. That was 0:17:46.920 --> 0:17:49.359 a big narrative, Like, that's ridiculous. 0:17:49.800 --> 0:17:52.040 It's like those people that tell you know, you could say, well, yeah, 0:17:52.160 --> 0:17:53.760 I forget, but don't get me started. 0:17:54.119 --> 0:17:56.280 There we go. But that was a big narrative around 0:17:56.359 --> 0:17:59.520 sort of like the way that millennials went around the economy. 0:18:00.080 --> 0:18:02.720 Most more recently, I have seen you know, posts on 0:18:02.720 --> 0:18:05.240 social media that are like, well, even if you spend 0:18:05.320 --> 0:18:08.080 seven dollars a day on your coffee X many days 0:18:08.119 --> 0:18:11.160 a year, that still only amounts to I don't know, 0:18:11.359 --> 0:18:13.720 one thousand dollars, that's still not enough for a down 0:18:13.720 --> 0:18:14.480 payment on a house. 0:18:14.920 --> 0:18:16.359 So just buy the coffee, you know. 0:18:16.400 --> 0:18:19.680 So this idea of indulging, you know, those small indulgences, 0:18:19.720 --> 0:18:21.760 and so just to bring it back to like specific 0:18:21.800 --> 0:18:25.880 Starbucks results, one of the reasons why they're same store 0:18:25.960 --> 0:18:29.919 sales were fairly strong this quarter was more people buying 0:18:29.960 --> 0:18:32.560 more stuff, you know, and so that sort of like 0:18:32.640 --> 0:18:36.639 underscores that idea. And actually their chief marketing officer, Brady Brewer, 0:18:37.040 --> 0:18:40.520 which excellent name for the job, by the way, said 0:18:40.520 --> 0:18:42.719 this during the investor day. He was like, people are 0:18:42.800 --> 0:18:44.800 just not calling back. I mean, they're adding more stuff, 0:18:44.800 --> 0:18:48.159 and you know, you're at this wonky term in the 0:18:48.240 --> 0:18:50.800 restaurant industry, the idea of food attached, right, basically just 0:18:50.800 --> 0:18:53.560 people adding food to their orders. Also a record reporter, 0:18:53.680 --> 0:18:56.120 you know, people are going to Starbucks for their drinks 0:18:56.480 --> 0:19:00.280 and they're also adding sandwiches, crosshounds, whatever it is, holding 0:19:00.320 --> 0:19:02.560 some of the like seasonal items that they have. So 0:19:02.800 --> 0:19:06.200 it's just like a really good example of this kind 0:19:06.240 --> 0:19:07.840 of trend that we seem to be seeing in the 0:19:07.840 --> 0:19:10.520 consumer space of yes, let's cut back on those like 0:19:10.600 --> 0:19:14.000 big outlay expenses, but then also I'm going to get 0:19:14.000 --> 0:19:16.040 my cold phone and my cold crew. 0:19:16.160 --> 0:19:16.359