The Best One Yet - “A nasty Dunkin styrofoam cup” — Dunkin’s gas station makeover. Sunrun’s solar-powered merger. Under Armour’s $475M botched acquisition.

Episode Date: July 8, 2020

Dunkin’s boldest move yet is cutting out 450 gas station locations because it wants to upscale its brand (fancy coffee). Sunrun is merging the #1 and #2 solar companies because the industry needs a leader. And Under Armour is trying to sell the fitness app it splurged half-a-billion dollars on 5 years ago (it did nothing with it).Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. And this is Snacks. Daily, it is Wednesday, July 8th. Nick, I'm glad you started off the podcast because these stories are T-boy. You're welcome. Snackers, Jack Turner is reminiscing about a summer we spent in Burlington, Vermont. The only thing we consumed, whatever came off a George Foreman grill.

And Buenos Isano, great burritos in Burritos in Burlington, College Street. Cilantro for days. Jack, what's in this T-B-O-I? We got the best. Somewhere in your head, there is a memory of a nasty Dunkin' Donuts, styrofoam cup jammed between two different slurpy machines. That's because our first story is about Duncan, which wants to crush the ugly aspects of its brand legacy by eliminating gas station Duncanettes. Duncanettes. Can we call them Duncanettes? They don't want us to call them Duncanettes.

Our second story, Sun Run has been sunbumbing since COVID-19 started. So the number one and number two home solar panel companies are doing a little merging jack, UVA 3. Third and final story, Jack. Under Armour is trying to undo its 2015 acquisition of my first. fitness pal. Five years into that acquisition, it's gone nowhere. Under Armour has gone zero point zero miles at a pace of zero miles per million dollars spent. Get on the scale. Get off the scale. Now, Snaggers, before we jump into those three wonderful stories that you won't see anywhere else, there are three things that Elon Musk hates. Jack, can you remind us of the first, grammatically observant baby names? Not a fan, doesn't work. He doesn't like those. Second, Jeff Bezos,

creeping into his business with electric self-driving. cars, which he did recently. Feels like Bezos zucking Tesla. The third thing Elon Musk hates is investors who short Tesla stock. That is right. Snackers shorters, we're talking short sellers. They're betting that Tesla stock will go down, not up. They're shorters. They don't buy the stock, they sell the stock and rejoice when the stock price falls. Well, last week, Tesla became the most valuable car company in the world when shares shot past $1,100. And the pandemonium continues this week as Tesla has rocketed up to $1,400 a share. Translation for short sellers, short sellers lost a whole lot of money. So Elon Musk is gloating. Yes. Because gloating is something he loves to do. He's

honoring hater investors with Tesla's latest product. It's not a car. It's shorts. Literally short shorts. They'd wear. Yes. These are red short shorts available for sale on Tesla.com. Tesla's sonum, they're so short. They're questionably between like the brief and box Sirs reach. Now, on one side of these shorts, it says Tesla. On the other side, it says sexy, but replace the letter E with the number three. Strategic move, because the S stands for Model S, the 3 stands for Model 3, the X stands for Model X, and the Y stands for Model Y. The price of these things, $69.420. That's right, 69.420. You do a double take because it's that immature. Now, it sounds like a middle school AOL screening. They've hired the content writers who got fired from

Netflix for not being good enough. Right. So clearly Elon Musk likes long walks on the beach. Not bad. Someone interested in a long-term relationship. Who wouldn't? And burning his enemies in unsubtle public humiliation. Let's hit our three stories. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. It's snacks about to hear food. It's air candy. They don't reflect the views of the robberhood family. It's all informational just so you know. We're not recommending any securities. It's not a research report or investment advice. offer or sale of a security. Right.

Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Duncan is strategically closing gas station locations. This is the fancification of Duncan, and it just hit a bold new level. Jack, you drive down 93 from hockey practice. What are you going to see on the left side of the road? Weymouth.

Yeah. Newton. Uh-huh. Revere. Okay, keep going. Swamp Scott. Okay, Roxbury, maybe Quincy? Gloucester.

Then you're going to stop for gas while you're on the way. You're going to walk out with a 64-ounce cold concocted coffee cocktail with copious shots of camel and cream. Deborah, this guy wants two pubs. I got him. Pump, pump. Snaggers, Duncan is closing. It's 450 mini locations that existed right inside a Speedway gas station. And that means for the first time in years, decades, or eons, there will be more store closures than store openings for Duncan this year.

That's right. 2021 will have fewer Duncan locations than 2020 day. Now, Duncan's still going to have some locations that are located at gas stations, but not going to be like this old Speedwayway. No. They insist on having their own space, their own bathrooms. That's what they want. And their own, like, condiment station. They don't want to share with the gas station, if you know what I mean.

They're not like a three-year-old sibling who is no control of their lives. They want their own space, their own room. Now, this sheds light on Duncan's new focused, which is quote-unquote, next generation restaurant design. That's right. This fascinated Jack me because the next in the generation, those are proper nouns. Those are capitalized. Yeah. Capital N, capital G, somebody at Duncan works at Webster's Dictionary. They definitely hired like multiple marketing consulting firms to come up with that term. Now, next generation restaurant design means 100% upscale. And that's because Duncan's recognized that there are five things coffee drinkers have to have these days. Jack,

what are the five keys? Espresso. Yes. Ice coffee. Check. Sandwiches. Check. A loyalty program so that your sixth copy is free after you pay full price for five. Fancy and then fifth and final. The ability to order a coffee on your phone so that you can just pick up and go. You gotta have those five if you're gonna survive in coffee these days. That is why Duncan just splurged $120 million on new brewing systems. Yeah. Because espresso doesn't work with that old drip coffee machine. You got in your kitchen. You gotta get the espresso machines that are like, they look like 19th century trains. You're like cranking one lever here, cranking on the...

another lever there. Like Tony like burned his hand the other day. You're losing staff members. These machines are insane. The machine that makes the whipped frothy milk sounds like the dog from Sandlot. You know what I mean? It's an aggressive thing. It's not comfortable when you're actually in the shop ordering.

So Nick, I got to ask, of those five crucial recipes that will make the next generation Dunkin restaurants. Yes. How many of them did the Speedway Dunkinettes have? Jack, we're going to add this up. Carry the three out of four. zero, zero. I'm no elementary school teacher, but zero out of five is zero percent. So, Jack, what's the takeaway for our buddies over at Duncan? Brand perception is reality. Snackers, the big question here,

was this financially motivated? Let's check. Jack, what was the financial impact of closing these 450 Duncan stores within Speedway gas stations? Minimal. That's according to a Duncan spokesperson. The impact on the finances was minimal. Turns out Speedway Duncan Donuts were like, than 1% of Duncan's overall sales. But guess what? They were much more than 1% of your perception of Duncan's brand. That's our estimate, because when you'd go buy a Speedway, maybe you wouldn't stop in the Duncan, but you'd see this Duncan brand like stuck in the back next to those bags of random

nuts and like the nitro energy drinks aisle. For Duncan to achieve next generation upscale status, it doesn't just need those five things we mentioned. It's going upmarket with every inch of the brand you perceive. Including when you quickly run to the bathroom during a road trip. For our second story, Under Armour is doing the opposite of what Lulu Lemon did last week. It's trying to sell its tech product. Sell.

Which is called My Fitness Pal. Yeah. It's been busy protecting this house. By selling away its tech gadgets so it can keep its house. But Under Armour, Underarm, we respect. We love you. We love that you're in Baltimore, a great city with like wallballed across options everywhere you turn. It's beautiful.

It's not just Booze's barbecue in Baltimore. And we're glad that Under Armour is spreading the HQ wealth to another city. On the other hand, Jack and I couldn't pass on another opportunity to point out there is something wildly wrong going on with Under Armour right now. Under Armour acquired an app called My Fitness Pal for $475 million back in 2015. And just two years prior, it had acquired Map My Ride, another fitness app for $150 million, big spending. They should have acquired Map My Bench because, you know, know your customer, they're all bench pressing. Then they could have come out with new features like, measure my pecks and spot my squat my squat. Under Armour wanted to become a complete fitness company, not just a company selling shorts and t-shirt

that you wear to the gym. So the folks over at Under Armour got real hot and bothered by, can we say hot and bothered, by the way? Is that okay? I said, okay. So they got hot and bothered by My Fitness Pal. Got really excited about this new weight loss app they acquired, which basically tracks what you're eating. Right. So Cheetos, 253 calories. Carrots, six calories. You type it in, it keeps track. Things were getting ambiguous with like avocados, because it would ask, is it a big avocado, small? You had to do some like existential reflection on that one. Okay, so it has a food tracker app. Then on the other side, it has a fitness tracking app called Map My Ride and Map My Run. So you'd go for a run after lunch. The app knew you ran three miles. And then it would say, hey, you burn 300 calories. You're 175 pound male. Not bad. We'll compare that to the food intake. Boom. Cheetos are gone because you're meant for that run. An easy oversimplification of how your body actually works. Now the problem here, Under Armour didn't

become a fitness company. They were a apparel company that also happened to own some random fitness A couple key issues that Jack and I identified here, the apps remained separate, but shouldn't they have merged? Yeah, you have a food tracking app and a fitness tracking app. Why don't you merge them and call it Under Armour Health? The second issue here, the apps didn't actually recommend apparel based on our activities. Shouldn't they have been doing that? Hey, user number 6-4-3-2-1. You ran six miles just now. You're a long-distance runner. Do you want to trial Under Armour's long-distance apparel in shoes? The great hope from Under Armour was that the apps would drive sales for apparel, and that Under Armour apparel would then drive use of the apps, and you'd have this beautiful what people

like to jargonly say flywheel effect. Right. That's called Synergy, and it's what every acquisition hopes to achieve. But instead, the apps and Under Armour remained like socially distant before that was even a thing. Under Armour never harmonized the acquisition by merging them into a beautiful symphony. Jack and I have said this 100 times. Pull out your Beethoven lyrics. You've got to harmonize this thing if you're going to make an acquisition successful. So now Under Armour is trying to sell money. fitness pal, according to reporting from the information. And we're guessing it's also going to try to sell Map My Run and Map My Ride as well. But Snackers, here's the wild thing if you look at the numbers. These are actually pretty solid standalone businesses. I mean, check how much revenue is bringing

in by these apps. They brought in 136 million in revenues through advertising on the apps and through premium subscriptions last year. So solid standalone businesses, but compared to Under Armour, just 3% of the overall revenue at Under Armour. We're guessing Under Armour's going to take a loss on this because they won't be able to sell them for the same amount that they paid for them for years ago. So, Jack, what's the takeaway for our buddies? Look and sweat over at Under Armour. Big acquisitions have big opportunity costs. Snackers, Under Armour splurge $625 million on those two apps in 2013 and 2015.

Rewind to 2015. Imagine what Under Armour could have done instead with the $625 million besides buying these two apps, which I think even they would admit were failures. Maybe they could have launched it. their own athleisure line poured that money into cutting off Lulu Lemon's growth before Lulu Lemon became Lulu Lemon. Or back in 2015, they could have acquired an athleisure startup, like Outdoor Voices, and then grown the hell out of that company through their stores. Or they could have recognized the real future of Fitness Tech and acquired Peloton,

which was only worth $100 million back then. Wow. I can't believe they could have done that, but they actually could have. When making an acquisition, companies have to consider what they also could have done with the money instead. Now Lulu Lemon just made a similar-sized acquisition of a company called Mirror, and we hope that they asked the same questions before pulling the trigger. For our third and final story, we've got like the biggest solar merger we've ever seen. Sun Run and Vivent Solar are emerging. The number one and the number two solar rooftop companies in America are now one publicly traded company. And the ticker symbol of the new, lovely,

$4 billion company is run. It's just run. It's run. It's run. Nick and I looked at into it. Sun had already been taken by Sonoco, the gas station chain. And yes, we were extremely disappointed. They could have gone with UVA or UVB or PV to bring out some photovoltaics, if you know what I'm talking about. Way more opportunities, hopefully combined, they can get a little bit more creative. But in the meantime, the big question, Jack, how does home solar work? We're not going into the chemistry of the photovoltaics, but we will talk about home solar economics. That's right. The business model here is, you know, you're paying $100 a month for electricity that annoys you every month. But with solar panels, you end up spending $0 on electricity. Now, the one catch is you have to pay for those solar panels and install them.

True. But honestly, lots of companies are offering to install them for you for $0 down and you can finance them. Come on down to Bob's solar panels and we'll set you up when you walk off the lot, Jack. So with the financing, let's say you'll pay like $80 a month, but eliminate the $100. electricity bill, the result about savings of $20 a month. Basically, you add all this up, you're replacing one big bill with another smaller bill. Now, the bonus here is the brag points to your buddies who own Prius is because you're replacing dirty electricity with renewable clean energy. Not too shabby. Now, the states with the most expensive electricity and the best incentives are the ones with the highest solar adoption.

It also helps if you have a lot of sun. Gotta have a lot of sun. All of our snackers in Minnesota Jack have turned off the podcast at this. point. No. Cloudy states aren't great for solar. So Texas, Florida, Arizona, and California, they're like big solar states. Yeah. And Sun Run did their last big product launch down in Hawaii, even though it feels like there's a lot of volcanic activity there. Yeah, ash gets in the way of rays. You want to pick your days correctly. Now, the key here, Snackers, is that COVID has been like a solar eclipse for the solar industry. It's literally

been blocking the sun when it comes to solar money. The pandemic has caused like self-sophiles, efficiency to be sexy. Honey, where's the wrench? That's right. I'm fixing stuff. Right. So if you're like in a doomsday mode and you want to have everything that you need to survive, solar electricity sounds pretty marketable right now. Jack's like walking around with a hammer these days. He's just like putting stuff on walls. I am. It's true. I'm like Tim the Tollman Taylor. But the problem is COVID has shut down economies. So sales visits and installations have been put on pause for months. Those are key. those drive the industry. We'll get to that in the takeaway snackers. In the meantime, both stocks of these solar companies soar 20% on the news that they're getting together for a merger. Separate,

they were barely hanging on, Nick. So true. But together, they're going to be saving $90 million a year in redundant and counterproductive activities. Instead of both companies having to, like, post Facebook ads to generate some business, just one of them will have to do that now. Instead of both companies having to pay accountants and lawyers, just one has to. So Jack, what's the takeaway for our buddies over in solar? Solar industry has a customer acquisition problem. Snackers, even if you don't care about saving a polar bear, solar can save you money. And despite the economic argument, only 2% of homes are using solar electricity in the United States. A key part of that huge problem is that this is a hugely fragmented market. There are 10,000 solar

companies that will do this for you in the United States. Meanwhile, they're only like four startups doing food delivery these days. Now, nobody knows how to drive sales because the market is so fragmented. Yeah, Tesla, which owns Solar City, a competitor to these guys, is best known for generating sales directly from its website. Sun Run, the company involved in this story, sets up a booth in the Home Depot and is like, excuse me, sir, would you like to talk about the sun? And then Vivette is literally sending salespeople on the ground, a door to door, to door,

going around saying, like, you know, that's a nice roof you got there, sir. What is the roof doing for you lately, though? What is the roof doing for you? So we're thinking... Like morke in the roof there. Consolidation from like 10,000 solar companies to 9,998 could help a national brand name emerge in the solar industry. And that could drive customer acquisition and bring solar mainstream.

Jack, can you whip up the takeaways for us over there? Duncan's brand perception is probably harmed by the two pumps of hazelnut get blasted into every coffee. But Duncan is crushing the gas station part of your brand perception. Second story, Jack? Second story, Under Armour is trying to sell the apps it acquired in 2013 and 2015. The opportunity costs of those failed acquisitions were huge. America's number one and number two, home solar companies are merging. Together, maybe they can figure out how to scale home solar in the U.S.

Now, time for our snack fact of the day. Send in by Nikki Bogoposkaya in New York City. Now, Nick, we've heard about the 19th Amendment to the Constitution of the United States of America. Can you tell me what it did? know it well. You don't round up. You just say it straight like it is. It gave women the right to vote. That was back in 1920. But the first place in the country, Nick, that allowed women the right to vote was the great state of Wyoming. 1869, a Wyoming was just a territory, but a legislature there of all men granted women the right to vote. Louisa Swain was the first woman to actually cast her ballot in the United States of America back in the then territory of Wyoming.

That means Wyoming became the first government in the world to give women equal rights when it came to voting. Just want to underline something in the world. That was not a mistake by Nick. No. Wyoming was the first government in the world to grant women equal rights. Also the first to, I think, stick a bison on their state flag, which also is just cool. That's definitely true. Definitely true. Now before we go, quick birthday shout out to Serge EFab from Manhattan, New York. And then Leona Boot, a fellow podcast host, Happy Birthday in Montreal, Quebec. Josh Miltier from Pittsburgh, Pennsylvania. Happy birthday. I heard they call Pittsburgh the Bridge City.

And then Sandra Mendoza graduating from Texas State with a finance degree, congratulations. Snackers, when you see your buddies who aren't snacking, ask them HYHYSD. And then question why they're your buddies if they're not snacking. Have you had your snacks daily? We'll see you tomorrow. If you know, you know. This is Nick and both Jack and I own shares of Lulu Lemon. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who

are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, Inc. or any of its subsidiaries or affiliates. The podcast is for informational purposes only, is not intended to serve as a recommendation to buy or sell any security, and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC member FINRA SIPC.