The Best One Yet - ☕ “Back to Coffee” — Starbucks’ CEO’s plan. Sorority House-flation. In-N-Out’s French strategy.

Episode Date: September 12, 2024

$17M Sorority Houses get blow dry bar renovations… and it explains the housing industry.Starbucks’ brand new CEO just revealed his turnaround plan in a letter… so we read it.In-N-Out Burger opened in France, Mexico, and Japan… and it’s all for “legal” reasons.$SBUX $MCD $SPYOur tasty In-N-Out video on instagram and tiktok:https://www.instagram.com/reel/CniRLffJvzw/?igsh=MTc4MmM1YmI2Ng==—-----------------------------------------------------GET ON THE POD: Submit a shoutout or fact: https://tboypod.com/shoutouts FOR MORE NICK & JACK: Newsletter: https://tboypod.com/newsletter Connect with Nick: https://www.linkedin.com/in/nicolas-martell/ Connect with Jack: https://www.linkedin.com/in/jack-crivici-kramer/ SOCIALS:Instagram: https://www.instagram.com/tboypod TikTok: https://www.tiktok.com/@tboypodYouTube: https://www.youtube.com/@tboypod Anything else: https://tboypod.com/  Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. It's Thursday, the new Friday, September 12. And today's pod is the best one yet. This is a T-Boy. The top three pop business news stories you need to know today. Well, Jack, tomorrow, we're actually dropping a special episode for the Yetis. We should let them know. We're dropping a T-Boy Hotline episode, our Q&A monthly-ish show. And we've got two huge guests for tomorrow's show, don't we? Corporate Natalie and Corporate Ross from the demoted podcast. Two huge business. influencers. They are basically our new business besties, aren't they, man? But that's tomorrow's show. Today's show is the best one yet. Yes, it is. And our three fantastic stories, what do we got for the besties? For our first story, Rush is wrapping up in sorority houses across the country right now. So Jack and I are looking at a $17 million sorority house in Alabama, because that house explains our housing market. For our second story, Starbucks's brand new CEO just went full FD on. He did.

Starbucks revealed his plan for the first 100 days. The turnaround plan for Starbucks is an open letter, so Jack and I read that letter. And our third and final story is about In-N-Out Burger. They just opened a location in France and Australia and Mexico and In-N-Out Burger in Japan, Nick. But In-N-Out is going abroad for a very surprising reason. Legal reasons. They legally have to go abroad. But, Yeties, before we hit that wonderful mix of stories.

What a fantastic mix of stories for the new Friday. I feel like it is the real Friday. I'll be honest, Jack. But Nick, you know, I've looked at our recent episodes. We haven't covered an IPO much recently. Good point, Jack. Well, I checked the data, and there are actually half as many companies going public

with IPOs this year as average years. But we just noticed another really important financial event is coming up soon. Jack and I just discovered a huge public offering about to hit Wall Street. Get ready for an IBO. An initial baby offering. That's right, Yendies. A baby is coming, an initial baby offering. Jack, let's jump in T-boy style. Here's the news.

Alex and I are expecting our third baby. Jack's family is launching another product, and that product is a baby. Nick, I just published the IBO paperwork, and we should jump in T-boy style. Jack, let's talk the numbers. The due date? February 28th. Okay, so the IBO is happening in Q1. The gender?

We don't know. You know, I asked the bankers, and apparently the gender is non-public material information, so I couldn't even get it, Jack. So, Yetis, we still got a couple fiscal quarters until this new baby comes. Besties, in the meantime, Jack's baby is going to be a T-boy. The best onesie yet. If you know, you know, Jack, congratulations. I'm so pumped for you guys. And Yeties, it's in our three beautiful stories. Fifteen years before this song, two boys from the Northeast met in the dawn.

They had an idea to cause a cultural storm. It's the best one yet, but the best is an norm. Jack Nick, that's it. I don't even think they need to practice. 50% that's a fat tip. Tea Boy City on your at list. If you know, you know, because we're ready to go. We can't wait no more, so just start the show.

Start the show. First, a quick word from our sponsor. Our first story. The University of Alabama just gave a sorority a loan to build a $17 million $1 sorority house. But wild sorority houses actually explain our bigger housing market. Jack, grab your big and grab your little because it's time for initiation. Are you saying that from experience?

I had a couple manny petties in my day, Jack. Yeties, at the University of Alabama is the Delta Zeta sorority house. The Delta Zates, Jack. Talk to us about where the Delta Zeta sorority lives, man. They live in a 40,000 square foot brand new home. It's got a grand staircase. and a crystal chandelier that looks like it's out of the Titanic. And the closets, oh, the closets.

But Jack, what's the price of this 40,000 square foot Delta Zeta-Bama sorority mansion? $17 million. $17 million. And at 40,000 square feet, it's one of the biggest residencies in the entire state of Alabama. No, interestingly, it's not just the size that's shocking about this $17 million sorority. It's the architecture of this sorority. It looks like it was designed by Nancy Myers and lived in. by Richie Rich's sister.

Richie Rachel. Yeties, the Wall Street Journal, looked at the biggest sorority houses in America, and that's where we got this data. The sisters, they're enjoying a building boom right now. Because it turns out, over the last 10 years, sororities have been in their investment era.

It's actually a top trend in higher academia, sorority construction booms. There's a sorority construction boom. Like, there's been a spike in Greek enrollment that has led to a spike in dues that the sororities receive. So a wash in money, they've used their extra revenue to upgrade their facilities. Sororities are adding blow dry bars, gold leaf molding, a pom-pom room just to hold the pom-poms.

From one campus to another, it's an arms race for sorority house amenities. Now, here's what Jack and I found shocking about this sorority construction boom. It's not just the revenue, it's also the debt. Because the universities are financing the construction of these sororities. The college administrations are extending loans to sorority. houses to get bigger and bigger 10, 12, 15 million dollars. Here's why the universities are doing it. They already use their huge football teams for recruiting purposes.

They figure, why can't sororities be a recruiting tool too? I mean, Jacob, Gamma Fy's house went viral for its lovely facade on TikTok and the dance videos that go along with it. Then school applications tend to jump as well. That's why big state universities across the South are demolishing their old sorority buildings and building brand new ones for $10 million plus. Jack, you see the Trideltz over a Texas A&M just bought a $15 million house for their Tridealt sorority.

You said Tridelt so casually. You know, if you're one of us, you get it, Jack. Oh, and by the way, Basties, it's not just the blow dry bars with 67 power outlets that are driving up the price of these sorority houses. A sorority house must be ADA compliant with elevators to handle people with disabilities. And now sorority houses that renovate their kitchens have to make those kitchens commercially qualified kitchens. It's expensive. Because these sorority houses have their own dining hall in the building.

But at the end of the day, despite these expensive commercial renovations, these sorority houses still look cottage core with hints of coastal chic. They're stunning. Southern and feminine is the mystique that they go for, apparently. And you have an entire fridge just dedicated to Franzia. So Jack, what's the takeaway for all our buddies living? in the Tridelt's $15 million sorority mansion. Sorority McMansions are another data point on housing inflation. Yeti's funny timing about this story. Yesterday, we also got the inflation report, with inflation

coming in at 2.5%, which is its lowest level in three years. That's not bad. But guess why inflation is still higher than the Fed's 2% target? What's the reason, Jack? Housing. Housing. Yet his shelter, which is rent or mortgage payments, actually makes up, get this, a whopping one-third of the inflation calculation. And the inflation for shelter is still 5%. The average American is paying 5% more for shelter than they did last year. Which is double the inflation rate of the rest of the economy. So if you remove rent and mortgages from inflation, then prices would only be up by 1.5%. And when Jack and I see that, we realize we don't have an inflation problem.

we have a housing cost problem and that's what's driving inflation. And the surging prices, costs, and values of sorority houses actually visually captures this trend. So the one solution to make all housing more affordable, rent or buy, is more houses. Build baby build.

This is another story that leads us to the same conclusion. We need more houses, even more lovely sorority houses. For our second story, Starbucks's new CEO, Brian Nicol, is treating his new job like he's the president of America. Here's his plan for the first 100 days to fix Starbucks. A man, a plan, a canal, Panama.

That's a famous newspaper headline about Teddy Roosevelt. A man, a plan, a barista, Starbucks? That's our headline about Brian Nicol, the new Starbucks CEO. Brian Nickel, or B-Nicks, as we call him. It's his first week on the job as the new Starbucks. CEO and everyone was waiting, what is Brian going to do first? He told us what he's going to do in an open letter about his plan for the first 100 days. Now, Yeti's Jack and I should sprinkle on some context here.

Brian has already turned around two food and beverage companies, Taco Bell and Chipotle. And by the way, Jack, Chipotle is my second best performing stock in my portfolio. I think thanks to B-Nix. But to turn around Starbucks, this man first had to recognize that there was a problem. Because Besties, Wall Street has been spinning. now Starbucks stock for three straight years now. Starbucks stock is down 40% over that three-year period. It's decaffeinated. Investors are like, I'd like to speak to a manager. So Brian's new goal is overall to refocus on coffee. Starbucks is going to refocus on coffee, which means, Jack, we're probably

not getting another cake pop anytime soon from Starbucks. I saw one of those right by the cashier. They're great. But yet, this is what Jack and I did on your behalf. We jumped into the new Starbucks letter from their new CEO about changing the company. His plan is to get back to Starbucks, and we summarize the three ways he's going to do it. The three ways to turn around Starbucks, here they are. First is latte logistics. Starbucks must shorten the wait time, because 10% of Starbucks orders now take over 15 minutes. 10%. People start their day with Starbucks, and they can't afford to start their day with a delay. Ruins the rest of the day. The second big change, it's got to be to eliminate cup chaos. They're going to distinguish on the

the counter between to-go coffee service and for-here coffee service. And there's actually something that Brian did at Chipotle, by the way, because people who are waiting 10 minutes for their coffee glare at the people who pop in and just grab their order when it's ready. At least I do. When I've been waiting for 10 minutes and then some to-go guys in and out in two seconds. I know that look you give him, Jack. It's not a nice look. It's my RBS, dude. Yeah, it is. And the third big change he's got to make at Starbucks is the barista. boost. Empower the baristas. Because the baristas are the ones who have to implement his entire plan. So Starbucks has to now give them the technology, the career path, and the compensation so that the

baristas on the front lines love their jobs. If you'll love your job, the customers will probably love the product. So yet he's added all up. And that is the first 100-day plan of the new Starbucks CEO outlined in his new letter. But all of that is focused just on the U.S. business. On day 101, One, that's when he'll turn his attention to international. And honestly, Jack, international? That may actually be the most challenging. That's the part that may scald his tongue. Manager.

So Jack, what's the takeaway for our buddy B-Nickle over at Starbucks? Those who bet big on China are losing. Yeties, in 2022, Starbucks opened its location number 6,000 in China. And now they plan to have 9,000 by 2025. It's insane. huge. Starbucks is opening a new location in China every nine hours. We repeat, a new Starbucks is in China every nine hours. Why are they investing so much over there? Because the story for the past two decades for Western companies has been, you gotta open in China. They got a billion people there

who are entering the middle class. But according to the data, that story looks like it's changed. Last month, Starbucks announced that their sales in China shrank by 14%. Wow. The middle class is ditching American brands over in China. And here is the interesting thing we discovered. Just about every major U.S. company operating in China is now facing that same slowdown as Starbucks. Look at these iconic brands. Nike, Tesla, Starbucks? Their stocks are all at multi-year lows as their giant China investments are not paying off. So Jack and I, we admire Brian Nichols' 100-day presidential plan to turn around Starbucks in America. But the biggest challenge will be Starbucks China. because U.S. companies who bet big on China are losing.

Now a quick word from our sponsor. For our third and final story, In-N-Out Burger, they have been launching pop-up restaurants across the world out of nowhere. But this is not international expansion. No, it's not. It's legal expansion.

Yes, it is. We'll explain. West we will. Now, Bessie is a funny thing, but when Jack and I moved to California five years ago, we didn't really move to California until we'd eat in at In-N-Out Burger. The double-double wild style or animal style, I forget what it's called, that's basically getting christened in California.

Because In-N-N-Out has got a cult following as a burger chain. They're only in the West Coast from like California and Texas. That's about it. And everywhere in between those two states. Yeah, they're family-owned, they're a private company, and so their financials are not well-known. But we do know that they generate $5 million per location per year, which is twice what McDonald's does. And about three times more than five guys. In fact, Jack, we did a story on In-N-Out Burger a couple years ago. We published a video on social media about the secrets to In-N-Out

success. It was one of our top-performing social videos of all time. It's why In-N-Out burgers are the most profitable of patties, I think, and we broke down the restaurant, unit economics, all that good stuff. We'll link to that video in the show notes. But in the meantime, given that In-N-Out is a family run, geographically limited home body of a chain with only 400 locations. We were surprised to see this. In-N-Out Burger has opened up a location in Paris, and it's sold out from burgers in the first hour. And it's strange because In-N-Out Burger is like the opposite of French cuisine, isn't it, Jack? It's greasy.

It's smashed. And it's got American cheese on it, which the French don't even consider cheese. It's an insult to the Champsalee say, you go up to a Parisian and say you want to want a food animal style? Not possible! Oh, they're going to slap you, and then they're going to tell you it's not possible. It's not just France where In-N-Out is stamping their passport. In-N-Out Burger has also opened pop-up locations in Australia, in Germany, in Japan, in England,

and in China and other countries, too. What? The fast food chain that won't cross the Mississippi River will cross the Atlantic and Pacific oceans instead? That got Jack and I more curious, and we discovered the reason for this In-N-Out Burger expansion, which is wild. setting up pop-up shops abroad for legal purposes. They're doing it for the lawyers. Get this, Besties. In-and-Out Burger opens pop-up restaurants worldwide to stop copyright infringement.

For example, in Mexico, there's a burger chain called In-N-Out Burger, just spelled differently. And in Australia, there's a burger chain called Down-N-Out Burger, which obviously also is spelled just slightly differently. These are knock-offs, trying to capitalize on customer awareness of the In-N-Out brand. These are double-double-dupes, is what these are, Jack. They're serving the same-looking burgers, in the same-looking restaurants, but with slightly different signs on the wall. And the people at corporate, they hate this.

In-N-Out Burger wants to stop them, but they can't enforce their trademarks in those countries unless they're doing business in those countries. And so that is why In-N-Out burgers' international pop-ups aren't for marketing. They're actually for a legal strategy. They're putting a pop-up in France so they can sue copycats. in France. Sorry, Franz. You are not getting a double-double burger with a neapolitan shake anytime soon. That pop-up shop's probably going to close because the lawyers got their cease and desista. I'm not even sure if legally we're allowed to talk about this, Jack. Oh, Jack, by the way,

the In-N-Oat burger down in Mexico, after In-N-N-Out did their pop-up there, that chain had to rebrand, and now they're called Sophie's burgers. So rebranding. You don't want to deal with In-N-Out's lawyers. So, Jack, what's the takeaway for our buddies over at In-N-Out legal? in and out should lean into the lookalikes. We think you shouldn't fear the fakes. Now, yet is, I was just talking to Jack about this class from business school that was kind of counterintuitive, but it was about how the fashion industry is okay with knockoffs. The argument is that dupes and counterfeits and copy products, they're actually good for the business. There are a few reasons why. The first reason is that they create a prestige effect by having copycats. It signals that the

real thing is even more legit. And frankly, it's kind of flattering to be emulated. And second, these copycats test out a new market for you. If knockoffs are selling like hotcakes down in Mexico, maybe you should expand your business down to Mexico. There's clearly a demand there. So instead of cracking down in countries where In-N-Out Burger doesn't operate anyway, maybe In-N-Out Burger should just leave the look-alikes alone. Tell legal to stand down. Because like fashion, In-N-Out Burger should lean into the look-alike. And an outburger shouldn't fear the fakes. Jack, could you whip up the takeaways for us for the real Friday?

Sorry, the new Friday. It feels like the real Friday. Across the South, big universities are building $10 million sorority houses, partly to boost recruitment to the university. Sorority McMansions, they're the most visual data point yet of America's housing inflation. For our second story, Starbucks's new CEO, Brian Nicol, has a turnaround plan for the U.S. The international fix will be more challenging. Because American companies that bet big on China are losing.

And our third and final story is In-N-Out Burger. They recently set up pop-up locations in a bunch of foreign countries. But they're doing it to sue the dupes, although we think a brand should not fear the fakes. But yeties, this pod's not over yet. Here's what else you need to know today. First, the presidential debate was watched by 58 million people, which is 6 million more than watched the first debate between Biden and Trump. Markets reacted yesterday by selling Bitcoin and also selling Trump's media stock.

And second, Campbell's Soup just made its biggest change since Bisk. Campbell Soup is changing their name to Campbell. Snacks is a huge part of their business. It's the part that's growing. It's 50% of their business, in fact. So this 155-year-old company is dropping soup from the name. And finally, Firefest 2 is on the books. It's happening.

Get your calendars out. It's been announced. I wouldn't say it's happening. You never know. I mean, the first one didn't happen. That's true. Billy McFarlane, the creator of the infamous flop concert seven years ago, just said he's doing another one and he's got ideas.

I know what you're thinking. Isn't he in jail? Not anymore. He was in for four years. And he had to pay back investors $26 million. Yeah, the only things they got to figure out for Firefest 2 are where and when and who and how. That's it. Now, time for the best fact yet.

This one sent in by Freddie because tomorrow is Friday the 13th. Get this. Friday the 13th. Like scary day, right? It's scary. It's freaky. It's a perfect day to launch a slasher movie, like a movie where there's some murder or killing everyone.

But interestingly, there have been 12 Friday the 13th slasher films, although a 13th film has never materialized. It's like Hollywood's afraid to be the 13th slasher film released on Friday the 13th. Now, the date Friday the 13th actually comes 1.72 times every year, so you kind of get almost two opportunities at it. But the spookiest Friday the 13th are ones that happen in October, And that comes next in 2028. And in case everything we're saying is scaring you, then you have a fear of Friday the 13th,

which is actually got a medical term. Let me try this. Parascavedectophobia. That is the medical term for fear of Friday the 13th. So to everyone without that have a fantastic Thursday. To everyone who does have the phobia, we were really sorry. We should have done a trigger warning. Can't believe this phobia exists.

Yeties, you looked fantastic this week. And remember tomorrow, Jack and I are whipping up our special hotline show with corporate Natalie and corporate Ross. Check it out. And we'll be back with our regular programming on Monday. We're talking about work life, FERC life, all of your corporate questions. We're going to answer them on tomorrow's show. H-Y-H-T-V-O-I. If you know, you know, and we'll see you tomorrow. And before we go, a happy birthday to Yeti Jason Chimeris in Brooklyn, New York, who is at our live show in the city, Jack.

And Jason, we can't wait to see it the next one. Happy 30th birthday. Tomorrow Leos in San Antonio, Texas. And Jack, she got engaged and she got a new job all in the same year, on the Big Three-O. Happy ninth birthday to Alex Zepka in Pensacola, Florida. And Cothia Ney is turning 25 years old in Fort Worth, Texas. Happy birthday for the Big 25. Happy birthday to Adam Adelkoff in Stamford, Connecticut.

This New York Giants fan is looking for a win this Sunday, and so am I. And Ray Larnie in Andover, Mass, just outside Boston, is celebrating a big retirement day. And happy birthday to Michael Nardelli, who's becoming a teenager in Las Vegas, Nevada. And Linda Clark turned in a nice 32 years old in San Diego, and she just named a wedding venue, which is such a good feeling.

Congratulations to Lucy, who just had a naming ceremony in Greenwich, Connecticut. And Gary and Beth Climmon are celebrating 39 lovely years together in Livingston, New Jersey. And congratulations to Nick Lississarrow and Bo Ashley Brindley, who just got a new puppy in Astoria Queens. Second puppy, three weeks old, adopted, and looking fantastic. City dogs are the best.

You've got to watch Secret Life of Pets. It takes place in New York. If you know, you know. And finally, a shout out to Chinchillin, Tarek, and C. Marino established in 1992. These three left some hilarious comments on our Spotify. I mean, Marina said you guys are the best. Love waking up to your good vibes and great topics.

Tarique said the first story is what was needed after that debate, H-Y-H-H-T-B-L-Y-W. And Chinchilling wrote in all caps, which was delightful. Yeties, thank you for leaving those fantastic comments. We love reading them, and we love whipping up the takeaways for you. This is Jack, nickel and stock of Chipotle and Nike.