Morning Brew Daily - Anxious Shoppers Love Dollar General & Meta Inks Nuclear Deal

Episode Date: June 4, 2025

Episode 597: Neal and Toby talk about Meta’s mega nuclear deal with Constellation Energy as it seeks to power its AI demand. Then, Dollar General impresses Wall Street with a strong Q1 that has shoppers from all over looking for value amid rising costs. Also, the fast-food chicken wars reaches a new chapter with the return of the McDonald’s snack wrap and a restaurant that’s heating up: Dave’s Hot Chicken. Plus, a British AI startup filed for bankruptcy after it was allegedly falsifying business to inflate its sales.  Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. LinkedIn will even give you a $100 credit on your next campaign so you can try it yourself. Go to LinkedIn.com/MBD  Terms and conditions apply. Only on LinkedIn Ads. Listen to Morning Brew Daily Here: https://www.swap.fm/l/mbd-note  Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - MBD Trivia Night  02:45 - Dollar General Stock Up  07:00 - Meta Goes Nuclear 11:00 - Builder.AI Collapse 16:15 - Snack Wrap Returns 20:00 - Headlines Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash U.S. slash brew AI. That's pwc.com slash us slash brew AI. Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howell. Today McDonald's is bringing back the snack wrap, but this time around it's got some competition.

Then Dollar General is not just surviving, but thriving in the face of economic uncertainty. It's Wednesday, June 4th. Let's ride. What a time was had at MBD trivia last night here in New York City. Thanks to the more than 100 of you who came and played along. I feel like so many memories and friendships were made just in the span of two hours.

There was this guy who drove in from Fairfield, Connecticut, just to hang, the father-daughter duo who was visiting all the way from Arizona, and the time everyone loudly booed Toby for one of his Toby's trends questions. Just super cool to see the community you've created around this podcast. I think you're confusing those booze with the abject despair. your diabolical Neil's numbers category instilled in everyone. But yes, we certainly want to do more trivia going forward and appreciate everyone who came out. Maybe some virtual Zoom trivias in our future too, so all you outside the city can show us how smart you are. And also, maybe boo my questions.

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Just go to LinkedIn.com slash MBD. That's LinkedIn.com slash MBD. Terms and conditions apply. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the unreal college deal,

everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last ends June 30th, terms at AKA.m.m.m.m.com slash college PC. If you want to purchase some shares of Dollar General, you're going to need a few more dollars after the stock jumped more than 10% yesterday following some better than expected earnings in a sunny Outlook. Dollar General sales come primarily from households with an income of less than $30,000 a year, but when times get tough, the brand also starts to attract more middle and higher income

customers. Customer traffic actually dipped, but average transaction amount rose 2.7% in Q1, showing that customers were selling out more when they did drop in. Its ability to attract value-conscious shoppers is why this business falls in the camp of companies who do well during times of economic uncertainty. It sets up its tent neck to the likes of Campbell's who reported earnings on Monday, showing a jump in food sales as people opt for microwave chicken noodle dinners rather than going out. Costco and Walmart are two other businesses who also forecasted strong quarters ahead in the face of adverse conditions.

Now, of course, a lot of Dollar General's sunny forecast is also tied to some optimism that it can dodge some tariff-related costs by pressuring suppliers, finding cheaper alternatives, and shifting production. So, Neil, it needs to thread this needle between attracting customers who are searching for deals. So, Neil, it needs to thread this needle between attracting customers who are searching for deals to dodge tariff-related price likes, while also figuring out how to keep their own prices down as well. Such an interesting snapshot of where we are in the economy right now. Dollar General's first quarter had the highest percentage increase in trade in customers in four years.

That's what the CEO said. And trading customers are new customers, those medium, middle and higher. income customers who don't typically shop at Dollar General. They may shop at Target or Walmart or other retailers, but they started to shop at Dollar General at the highest rate in four years because of what's going on in the economy. Maybe they're scared of tariffs or inflation or whatever it is. They're starting to shop at Dollar General.

And that's very good for Dollar General because those people have higher incomes. They spend more per trip and they just spend more overall than Dollar General's existing customers. So this is an absolute, we talk a lot about companies facing headwinds. This is a huge tailwind for a company like Dollar General. Yeah, Dollar General actually reminds me of this quote from another chief executive of Sam's Club, which we actually spoke about on this show. Chris Nichols, the executive of Sam's Club said, through good times we do well and through times that are tough, we do even better.

And it feels like Dollar General is another business that falls into that camp. It's standing out in the retail industry that has been taking a lot of hits. If you look around at Macy's Best Buy, they have all. all said that they've cut their profit outlooks due to the hit from tariffs, but Dollar General actually joins the likes of Costco and Walmart who raised their outlooks and said, like, hey, we're actually going to thrive in this environment. That being said, though, there are some assumptions that they're making that led to that higher forecast.

They're assuming that they're going to face just 30 percent tariffs on goods imported through China from China through mid-August, which is semi a big if because if those tariff pause that Trump has announced actually goes back up to the untenable, 145% tariffs, that throws everything back into chaos again. So they do have to do a little bit of navigating and be nimble as this tariff environment continues to evolve. And let's give the management team some credit because sure they, you know, are going to benefit from what's going on externally in the economy, but they have been undergoing some serious renovations at their stores. They've remodeled over 1,000. They've opened 156 new ones as

part of this something called Project Renovate. And they're trying to make these stores just more nice to go into and they plan on sort of flipping over and remodeling 20% of its fleet each year. They have 20,000 locations. So you can do the math. It's going to take a while, but they are making their stores just a more pleasant experience to go into. And that had been a big criticism of dollar stores in general. One reason why you're not attracting higher income shoppers is because they don't want to go in. So if you remodel stores, make them nicer and also Dollar General partnered with DoorDash. and they said that this partnership of delivery from Dollar General to higher income shoppers is another reason why they saw this cohort shop more at Dollar General.

Let's move on. Another day, another win for nuclear after META agreed to a 20-year deal to purchase power from an Illinois plant managed by Constellation Energy. Meta is a hungry, hungry hippo when it comes to fueling its AI ambitions, having tripled its electricity consumption from 2019 to 2023. Constellation is happy to step up. to the plate, giving new life to a Clinton-based plant that was actually slated to close back in 2017 after years of losses. A state credit program stepped in to keep it afloat through 2027,

and now META is set to take the reins once that support ends, enabling it to expand output at the site by 30 megawatts. Meta isn't alone in its push to boost nuclear power sourcing. The deal comes just eight months after Microsoft inked a similar agreement to purchase energy from Pennsylvania's infamous three-mile island plant. Amazon and Google have also invested in small-scale nuclear projects. And just two weeks ago, Trump signed an executive order aiming to quadruple the country's nuclear power capacity over the next 25 years. Neil, nuclear has positioned itself as a reliable, climate-friendly way to meet the gargantuan

power demands from big tech giants, leading to this big grounds of support. Let's just take a step back. It is crazy to think that you asking a chatbot for tech. tips for your trip to Paris would result in Facebook, Facebook company, essentially buying a nuclear power plant in Illinois. And that's because you're right. These are hungry, hungry hippos, these chatbots, all of this AI industry is gobbling up power like we've never seen before.

There's projections out that say AI data centers will consume 12% of all American energy output by 28, just three years from now. It was 4% in 2023. one of the biggest limitations for these companies in pursuing their AI ambitions, which they've bet the farm on, is the availability of power. So we've seen extremely strange bedfellows here between tech companies who used to do social media and nuclear power plants in the rural Midwest coming together. And it seems to be a mutually beneficial partnership.

Yeah, you look at what analysts are saying. A Bank of American analyst recently wrote in a note to clients last week, that power remains the biggest constraint on big tech's AI. ambitions. He said deployment of data centers with a reliable access to high power is as much of a bottleneck and AI deployments as access to chips and systems. We talk so much about Nvidia and the fight for GPUs to train these models, but you also need electricity to power those models, which is where you see this massive push coming from. You're also seeing it on the government side as well. I mean, I spoke about Trump's bill that he just recently signed, an executive order that he

recently signed, but last year, 25 states also passed legislation to advance in support nuclear energy. There was the big plant that opened in Georgia last year as well. So there definitely is this groundswell of support around a nuclear as a power source. And I just want to clarify that meta isn't going to use the nuclear power from this particular plant in Illinois to flow to directly to its data centers. What it's doing is a bit of clever carbon accounting because thanks to the increased power demand that these tech companies used, right now, these data centers are powered by, mostly powered by natural gas plants, and they want to show shareholders that they are being more emissions-friendly nuclear power is zero emissions. So what they're saying is

we're going to be a customer of these nuclear power plants in order to offset the emissions that we're creating through these, you know, through these other data centers that are powered by more emissions-producing power. So it's somewhat a carbon accounting. This power isn't going to go from the nuclear plant to META's servers, but it is just a way so they can offset their emissions. The AI startup world just experienced its biggest ever crash. Builder AI, a Microsoft-backed company once valued at $1.5 billion,

collapsed in spectacular fashion this month, unable to pay its 1,000 employees and is preparing to file for bankruptcy. And now, prosecutors are on the hunt for potential fraud. Builder AI was founded in 2016 by Sachin Dev Dougal, a tech entrepreneur who promised to make building smartphone apps as easy as ordering a pizza, no code required. The company raised more than $450 million from heavyweights including Microsoft, Qatar's sovereign wealth fund and venture capitalists such as Insight Partners. Dougal took the position, Chief Wizard, and was treated as such on the international circuit, as recently as last year, he was named an EY world entrepreneur of the year and hosted events

with celebrities at Davos. But even as Dougal hobnobbed with the A-list in ski chateaus, cracks were beginning to form in builder AI's promise. In 2019, it was accused by a former employee of being essentially nothing more than a smoke-in-mirrors operation. Media reports found that when it was seeking emergency cash last year, it gave lenders a revenue forecast that was over four times its actual sales, $220 million versus the actual $50 million. And the knockout blow came a few months ago when a creditor pulled cash from its bank account after realizing they'd been duped. Dougal was pushed out and a new CEO was hired to save the business.

But that proved difficult when the new guy learned that the company had, quote, $0 to its name. Toby, this is extremely embarrassing for the AI industry and all those investors. But in hindsight, when you're dealing with a guy who calls himself Chief Wizard, you should maybe be a little skeptical. The LinkedIn says Chief Wizard, yes, you probably should run. I do think that this is just one of the cautionary tales that has emerged from this funding push that have flown into AI companies.

A lot of the reported capabilities of this AI app building service ended up being humans. There were 700 engineers based in India that were supporting a lot of the so-called automated app manufacturing. And then also another bit of financial chicanery that was going on here is. is that Builder AI was kind of trading revenue with this social media startup in India called Versa. They were billing each other for roughly the same amounts of money from 2021 to 2024,

but then not actually providing the products or services that were supposed to be delivered if you were billing that amount. It's the old, I send you $1 million, you send me $1 million. Congrats, we just both grew our revenue by a million dollars each. So you create this illusion of growth to try to attract more venture capital dollars, which the well was running dry for them.

So just a lot of different things going on underneath the service here that led to the collapse of this once-buzzy AI startup. And it is a huge setback for the UK AI startup environment because the UK has trailed the U.S. Everyone has trailed the U.S. in terms of building AI unicorns. Since 2019, U.S. AI startups have raised $84 billion. U.K. AI startups have raised $3 billion. So there's that huge gap. And builder was responsible for so much of that $3 billion for the UK, just a big setback for a country that is trying to catch up to the US be at the forefront of this technology

and their buzzy start. This was the biggest start AI startup in the UK and possibly around Europe. It just collapsed in spectacular fashion. I just feel bad, too, because, I mean, you go back to a few years ago, the former PM, the PM at the time Rishi Sunak was pitching London as the global hub of AI regulation. there was this big, buzzy presentation about how they wanted to attract AI talent, but also be the forefront in regulating that AI talent. But then also A16Z made a big deal about opening a London office over there.

They busted out this big outpost, and then they closed it recently in January, less than a year after they opened it. So you're right, the hits just keep coming for the London and UK tech scene at large. All right, we're going to take a quick break and come back and talk about chicken. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179, like the next grill three-burner gas grill. Or get $50 off a select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot.

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you can go see the game live. Don't just dream about the trip. Book it with Priceline. Download the Priceline app or visitpriceline.com. Actual prices may vary, limited time offer. Remember the fast food chicken sandwich wars? They are back, but swap out the bun for a flour tortilla. The great chicken wrap battle of 2025 heated up in a big way yesterday,

with McDonald's announcing that its legendary snack wrap will return to U.S. locations on July 10th. The cult favorite rap has been nixed in American McDonald's stores since 2016 because it took too long to make, sparking a nine-year, ultimately successful protest by its fans to bring it back. but it's going to have competition. On Monday, Popeyes announced its own chicken wrap coming in three different flavors, trolling McDonald's during its reveal. Meanwhile, Wendy's and Burger King have all sold chicken wraps since 2023, so we've got ourselves a swaddled poultry rumpus

reaching every corner of the fast food industry. And it's no coincidence that chicken is once again volunteering as tribute to spur growth. Fast food chicken sales are almost twice the size of beef and are growing more quickly, not just in the U.S., but all across the world. And restaurants that have focused solely on chicken are growing at a much faster rate than their rivals. Chick-fil-A, for instance, has quadrupled sales in the past decade. Toby, I know you can handicap horse races, but now we need you to handicap the chicken wrap contenders. I mean, I'm not going to lie, looking at the Popeye's chicken wrap, it looks a little tough to beat.

It's got that crispy fried chicken on the outside. McDonald's, I mean, has been the prince that was promised for so. long now, but in its absence, just totally fumbled the bag here and let all these new entrants come in and horn in on their territory. Fans never forgot that OG snack wrap, though. I mean, there's a change.org petition to bring back the item that has almost 19,000 signatures that people were still signing just two months ago. So it has been this cult classic thing. I'm a little nervous for McDonald's, honestly, because how can you possibly live up to all the hype and all the, you know, longing for this product that has been off menus for a while now,

especially when you have to go toe to toe with Popeyes who, quite frankly, laps McDonald's crispy chicken sandwich with their own sandwich. So I would be a little nervous about McDonald's. You help create this hype cycle. Now you've got to live up to it. Meanwhile, you can't ignore the upswell in fast food chicken more broadly. There was a deal on Monday. Roar Capital, P.E. firm that just bought Subway,

that just took Subway Private, bought a majority. steak in Dave's Hot Chicken for an valuation of $1 billion. Dave's Hot Chicken, which I had not heard about, started in 2017 in a Los Angeles parking lot. Sales were up 57% last year to top $600 million that just got bought out for $1 billion. They focused on these very large chicken tenders with varieties of dipping sauces and various spice levels. Now, this company is an absolute juggernaut. They're growing by hundreds of locations every year. It seems like Any fast food company that leans into chicken can do absolutely no wrong right now. Yeah, 1A is chicken, but I would actually say one B to that is the fact that it's Dave's hot chicken

because spiciness in hot levels, they're doing Nashville-style hot chicken, I think is also driving a lot of younger consumers as well. We've talked about this on the show, how younger people are flocking to spicier meals in general now. So I think that they literally, in the Venn diagram of things that are popular right now, you have chicken and you have spicy stuff, and Dave's hot chickens falls squarely in the middle of that, which is why I was valued at this pretty staggering number for a quick serve or a fast food restaurant chain. Let's sprint to the finish with some final headlines. The bromance between Elon Musk and Donald Trump appears to be going off the rails a little bit after Musk roasted the

president's big tax in spending bill yesterday on X. Musk started his tirade by saying, I'm sorry, but I just can't stand it anymore before going full scorched earth saying this massive outrageous pork-filled congressional spending bill is a disgusting abomination. So who knows how he really felt? The outburst was likely fueled by a couple of things. The legislation in its current form cuts the electric vehicle tax credit that helps sell Tesla's. But also according to follow-up post from Musk, he's most against it because it, quote, massively increases the already gigantic budget deficit burning American citizens with what he called crushingly unsustainable debt. So Neil, trouble in paradise after Trump's one time hype man has just turned on his big,

beautiful bill. An absolute bombshell because Elon Musk was the biggest political donor of the 2024 election cycle, and now we don't know what's going to happen going forward. He said he would pull back from politics, but now he has vowed to try to get out all the people who supported this bill. House Speaker Mike Johnson was asked about it. He spoke with Musk on Monday. He suggested that it was because of the EV tax credit going away, which was $7,500 for customers of electric vehicles like Tesla. We don't know exactly why Musk is appalled by this bill, but it does add $2.7 trillion

through the deficit. Also, through 2034, just brings into stark relief that this bill is not yet done at all. It passed the House. And now it has to go through the same. Senate, and there are a number of Republicans who oppose this bill who agree with Musk, like Senator Rand Paul, who said, we are not cutting enough from the original text of this bill. So this, you know, it just brings into relief that the fact that this thing has a long way to go to passage. And, you know, Elon Musk just kind of dropped a bomb on everyone there. It is a wildfire season in Canada once more, triggering mass evacuations from Manitoba to

Alberta and leading to degraded air quality in parts of the U.S. as well. Health alerts have been issued in Iowa, Minnesota, Wisconsin, and Michigan, as well as parts of the Northeast as the smoke drifts into U.S. territory. Drought conditions have led to over 200 fires burning as of yesterday, with over 100 already out of control affecting nearly 2.5 million acres. In terms of area burn for this time a year, according to Axios, that is second to only the record 2023 wildfire season, which turned skies Blade Runner Orange and parts of New York City. Neil, the Canadian Climate Institute noted that wildfires are getting bigger, hotter, and more frequent in Canada, with this year's wildfire season already shaping up to be

one of the most intense on record. Yeah, there are now 205 fires burning across Canada. 103 of them are burning out of control. Many people have been evacuated, and there's a possibility that the smoke from the wildfires from Canada filtering into the United States could, mix with the sandstorm that we've talked about yesterday coming from the Sahara in the Gulf coast. These two factors coming in to just create absolutely horrible air quality conditions. It's unclear whether they're going to meet up later this week. But we do know that,

at least in the northern part of the United States, there's going to be a lot of air quality issues coming today, coming later this evening. So just be careful out there. And we hope everyone in Canada is doing okay as well. Moving on to some lighter stuff, the man who pledged to never give you up or let you down, just hit a historic music milestone. Rick Astley's song, Never Gonna Give You Up, has now passed one billion streams on Spotify, 38 years after the song debuted in 1987. While it was a hit in its own right back in the 80s, the song found a second life in the 2000s as a bait and switch prank known as Rick Rolling, where you click a link thinking it's going to take you to content you actually want to see, only to be directed

to the never going to give you up YouTube page with that iconic drum fill. intro. We don't have the rights to the song on this podcast, so we can't Rick roll you now. But congrats to Rick on this achievement, one of the great love anthems of our age. The history of this is just so steeped in internet lore as well. Part of the reason why it became such a big thing was back in March of 2007. This feels like a copy and pace of modern times. The trailer for the highly anticipated Grand Theft Auto 4 game was released on Rockstar Games' website, but the viewership was so high that it actually caused the site to crash. So a lot of users started pitching in and hosting their own websites.

They're saying like, hey, come click this link, watch this video. But then another cohort of internet users said, wouldn't it be funny if we just started doing this Rick rolling thing that we pretend that it's one link and it's actually links to Rick Astley's song here? So this bait and switch is tied back to a rock star game, Grand Theft Auto trailer, which is something we're still talking about to this day. but also after millions upon millions and now billions of views and streams, how much money has Rick Rowling actually created for its star performer? As of 2010, Rick Astley said, it hasn't been much. It's been $12 actually. And part of that is because he didn't write the song so he only gets the performer share of the recording copyright. So that's not exactly the figure that you'd expect for such a popular song. That was back in 2010. So maybe it's doubled. Maybe he's made 20. 24 bucks since then, but he's not necessarily raking in the dough from this very funny internet prank.

I have an idea. He should re-record the song, Rick's version, own all of his masters, write it again, and then maybe he'll make a little more money than $24. He has said that he doesn't have any hard feelings or any big feelings towards Rick willing. He says, I think it's bizarre and funny. My main consideration is that my daughter doesn't get embarrassed about it. So he's a family man. Dad of the year right there. All right. Finally, if you're looking for something to watch on TV tonight, there are plenty of high stakes sports. going on. The Stanley Cup finals begin tonight with a rematch of last year. The Edmonton Oilers versus the Florida Panthers. The Panthers will try to go back to back while the Oilers aimed

to become the first Canadian team to lift the cup since 1993. And the Women's College World Series begins with Kane 1 of a Best Out of Three Series between Lone Star State rivals, Texas Tech and Texas. The softball games have been so fun to watch these past few days. Yeah, excited for NHL. Rematches are always pretty fun. Also, the different tax laws are at work here. with the Florida Panthers having no state income tax versus the Edmonton and no oilers with a healthy doth of income tax. So that's a little bit of a tax showdown as well. And then the Sooners, this is kind of crazy, not playing in the national championship for the first time since 2018. And a big part of the reason why they lost is that Texas Tech signed this absolute

juggernaut of a pitcher, Nigerie Kennedy. She signed an NIL deal worth more than a million dollars to go to the Red Raiders, and she literally pitched every single pitch to send a team to the championship series. That hasn't been done since 2019, so that is NIL money. Very well sped if you're a Texas tech fan, and sorry, Sooners, I'm sure you'll be back shortly. That is all the time we have. Thanks so much for starting your morning with us and have a wonderful Wednesday. What kind of week are you having? Does it feel like it's already Wednesday, or is it only Wednesday? It's only Wednesday. If you have any thoughts, I agree with you. you have any thoughts on today's episode, send an email with questions, comments, or feedback to

Morning Brew Daily at MorningBrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Loo is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and makeup was so sad to miss you all at Trivia. They just had a conflict. Devin Emery is our president and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage on April 30th, the powerful vocals of Demi Lovato on May 17th, and the signature Southern Country Rock of Eric Church on July 19th. Tickets on sale now at Yamavatheater.com, only at Yamava Resort and Casino,

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