The Best One Yet - “Dunkin’s not a land-lord — it’s a Brand-lord” — Google/Apple’s superhero team-up. States acting like companies. Dunkin’s franchise bet.

Episode Date: April 14, 2020

In the world of fast food, Dunkin’ is 100% focused on a franchise business model — a strength and a weakness in specific economic moments. Rivals Google and Apple are shockingly working together on a new project to end COVID-19 by looking how close you are (literally) to the virus. And we’re seeing how states and cities could go bankrupt because their own business model is kind of like small businesses.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 Tuesday, April 14th. Tuesday, I was going to ask, what day is it, Nick? It's T-Boy Tuesday over here, Jack. I know you're thinking. Markets got off to a slight dip yesterday.

The Dow fell by about 1%, which is not too shabby. Not even close to the best when we had. Each story today, though, that Jack and I whipped up happens to be totally new to snackers. This is like exotic snacks daily because you've never heard any of the stuff we're about to report. You're going to want to be enjoying this in a jungle and Belize, Jack, what is the best one yet starting off with? Not exactly Juggling Belize. No.

Duncan Donuts has got a little secret. It doesn't own any of its restaurant. So we're looking at the uniquely 100% franchise-owned business model. And how that's doing for Duncan in this corona economy. Spoiler alert, get you cool otis. For our second story, Nick, sometimes arch enemies will forget about bad blood and they'll team up to defeat a common enemy. We're thinking the Starks and the Lannisters for

The White Walkers? Can I buy a vowel on that one? Kind of, yeah. Maybe Gryffindor's and Slyth is taking on Voldemort that feels like a throwback. Actually, no, that's not how it went down in Harry Potter. I thought I missed that up. We're talking Apple and Google teaming up to take on the coronavirus. Kumbaya, it's a beautiful thing. Third and final story, Jack. Cities and states are facing a financial swamp because of the COVID-19 crisis. So we're looking at the business models of the 50 nifty United States. Spoiler alert, it's all about cash flow.

from 13 original colonies. I don't know that song. I know Vermont was the 14th state, so it just missed out on those original 13 colonies. Oh, that's because New York State decided to divvy it up and give its own independence. Little thing, fun story. I always tell Jack about that.

Now, before we jump into all these wonderful stories, we've got to wish a happy Tea Boy Tuesday to our legendary snackers. And for this Tea Boy Tuesday, we're talking about panic by. No. It's something that's not healthy. Nope, nope. It's been a bad habit, and it's had a few different phases throughout this coronavirus. Now, Jack and I were looking into this further, Doven Snack style, and notice that the Walmart

CEO is offering up like a play-by-play chronology of what's happened to be panic bot so far at Walmart stores. It's like a hoarderpedia or a hoarder's almanac, if you know. We came up with those terms, Walmart, please don't steal them from ours. So back in week one, early March, when hoarding was just beginning, it was hand sanitizers whose sales at Walmarts spiked by 470%. Then week two in March, it was toilet paper which surged in sales with factory. is running 24-7 just to keep up with your demand. Tissues and paper towels were the real victims of that horn. That brought us to week number three,

when baking yeast sales searched 640% at Walmart nationwide. You're stuck at home. Yep. You might as well do something with that sourdough starter that's been in the back of the pantry for six months. It's a pandemic you can't hate on carbs in a pandemic. And then week four, which was like last week, spiral ham spiked by 413% at Walmart. Basically an Easter holiday blue,

even though the name spiral sounds more like a Disney ride than a meat. If it's not maple glazed, it's not a spiral hair. Now, week number five is where we are right now, and there are early signs that we know what's being hoarded, according to early Walmart sales numbers. Hair clipper sales are up a shocking 166% at Walmart this week, and hair dye is up 23%. Now, apparently, we're supposed to be getting haircuts like every six weeks,

so it doesn't look like we just got a haircut, right, Jack? Is that the rule? Yeah, according to that, though, Nick, we're all overdue, because this thing's been going on for six weeks. And we're trying to look Zoom beautiful out there. It's not easy when you don't have a comb on. If your roots are starting to show, you might want to visit Walmart's Hair Department. Snackers, I feel lied to.

Apparently Jack's not a natural blonde. I'm not one of the last Targaryans. Week six? What's going to happen next week? What is the next anthology of this hoarding pedia? Follow us at Robin Hood Snacks. Tweet us what you think will be week number six's hoarded product.

Join us in the conversation at Robin Hood Snacks on Twitter. 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. The snacks about the hair ain't food. It's air candy. They don't reflect the views of the Robberhood family. It's all informational just so.

We're not recommending any securities. It's not a research report or investment advice. Not an offer or sale of a security. Right. Snacks is digestible. Business news for you. Robahood Financial, LLC. member FINRA slash SIPC

For our first story, Jack, clean off your beard and some Boston cream. Duncan decided not to own any restaurants, not a single one. And the stock just got upgraded by two analysts because it doesn't own any of its restaurants. Hey, Dahlene, get in here. How many pumps of Vanella did the man from Waltham want in that cul-a? Dahlene, this guy wants three pumps. Get Ricky in here. True story, if you go to like the Duncan and

Wellesley, you can literally pour the pump of hazelnut into your mouth directly from Colleen. You got to wear protective goggles before you pump vanilla syrup in those cups. Remember, you got to lift with your legs, not your back, when it comes to anything in a 65-ounce styrofoam cup from that place. Let's get to the news here next. Duncan doesn't own any actual Dunkin locations. That's right. A bunch of entrepreneurs own all of the Dunkin' Donuts restaurants we see in this country. We're talking about franchising. Beautiful Word, the democratization of fast food fortunes, and here is how franchising goes down.

A major food brand like Dunkin' Donuts will offer local business people everything you need to run your own Dunkle Donuts restaurant. What do we got to do to get you in a Dunkin today? You get the recipes, the restaurant manual, the uniforms, the logo, all of it wonderfully bundled up. Picture the kid at Summer Camp whose mom hooked him up with an epic backpack full of like three sleeping bags and all the snacks you could ever want. One fellow camper says I'm hungry. He's like, I got 60 fruit roll-ups. What do you need? What do you need? What do you need? Let's be friends. So then the local entrepreneur hires workers, buys equipment to bake the donuts and runs the local Dunkin Donuts. And all he or she then has to do is pay Duncan royalties and a franchise single fee for the privilege of running with that Duncan brand. You've heard about landlords. Duncan is a brand lord. You pay a monthly rent for the name, logo, and materials for the privilege of operating a Dunkin' Donuts. But this brand lord relationship comes with a few strings attached, which are the rules set by Duncan.

You have to run Duncan the Duncan way. And Duncan's reputation totally depends on that. Duncan coaches up its restaurant owners like there were Little League Baseball players trying to make it to the big list. Little Johnny, you got to keep your eye on the sausage patty. You got to use two hands when you're pumping the hazelnut syrup and respect the styrofoam. Always respect the styrofoam. I miss Little League Baseball. Now, this is so critical and important to Duncan Donuts that they actually mention in the first two sentences of their annual report, the word franchisees.

100% of their 21,000 restaurants are owned by other people. And to use Duncan's terms, the key benefit here is what they call limited capital investment. Duncan just innovates the menu and the marketing. They don't actually do any of the running the business for you. Right. And right now, running those businesses is an unprofitable endeavor because restaurants are losing money during the coronavirus. economy. But with this franchise model, Duncan is not an investor in those restaurants, so it's not taking any of the losses. It just deals with lower royalty revenues because lower sales numbers

are happening. Oh, by the way, Duncan's getting the nice little bonus here when it comes to like your southeastern Vermont Dunkin' Donuts, because technically, that's a small business. And since it's got less than 500 employees, Ipso facto, it's eligible for the small business bailout funds that Congress just passed. So exo, Epo facto, Jack, what's the takeaway for our buddies He's pumping over at Duncan. Franchising means lower risk. That's what Duncan loves, but it also means lower potential reward. Snackers, rule number one of making it big slash money.

With greater risk comes greater potential reward. For the past 10 years, as the economy has done well, Duncan has only been collecting royalty revenues while its stores have been booming. Duncan's not taking profits. Those stay with the franchisee entrepreneurs who are the ones taking the risk. Duncan's thankful that it's not taking risk. right now during this incredibly terrible economic downturn. Oh, and by the way, J.P. Morgan's latest analyst report on them says stocks like McDonald's, Domino's, Wendy's, Duncan. They're all

better off because of heavy franchising. Duncan's just hanging out right outside of Boston thinking about the next like Beyond Breakfast sandwich. For our second story, Google and Apple are teaming up on a COVID-19 tracking tool. We're talking team up. Google and Apple are arch rivals when it comes to smartphones, Nick. You got Android. and iPhone. This is a straight-up Batman, Superman, let's do this together. No one saw this coming kind of move. We have never reported on Apple and Google working together on a project like this. So Friday afternoon, Jack and I are trying to lounge back into not going out of our houses. And notice that Tim Cook, Apple CEO, tweeted something about his rival. This was a shocker. First,

I noticed the picture, because I always noticed the picture first. It basically looks like Apple and Google are a new power couple of sorts. And then here's what Timmy Cook said, great time snacker, by the way. We're working with Sundar Pichai and Google to help health officials harness Bluetooth technology in a way that respects transparency and consent. At exactly the same moment, Google CEO Sundar Pichai, tweets the same exact thing. Boom, the PR teams are high-fiving. They've never corded it's something as beautiful as this. Superman basically threw out a bat signal into the sky and Batman tossed on his blue spandex onesie.

It's a beautiful, beautiful thing. Now, what this thing is is a COVID-19 tracking tool that was. will warn you if you've been close to someone who's infected. Snackers, 99% of planet Earth is divided into one of two categories. Do you use an Android or do you use an iPhone? Jack's not rounded up on that thing. And in May, both app stores will have a new tracking app that lets you disclose if you've tested positive for the coronavirus. And if you voluntarily mention that you tested positive, then the app will notify anybody who has been standing close to you within the past 14 days.

Not a fun push notification to get when you're standing in line at CVS, even if you're five feet away from someone. You'll be scrolling your phone and suddenly something will pop up and say, alert somebody in your presence. Like has COVID-19, you should probably get tested. You're going to have to do the slow, slow walk out of the room. And this whole service is not going to be handing over your precious location data to these big tech giants. No, no, no, no. It's totally anonymized. Just uses the magic of Bluetooth.

Now, there's a lot of ifs that will determine whether this thing actually works. We actually brought it down to just three ifs in this case. Opting in only. That's the whole thing about this. You only participate if you volunteer to participate. And if not enough people in the network opt in, then this thing's pretty much useless. Then we noticed that its value is in sick people actually inputting that information into the app so that you get notified if you've been close to them.

So if there aren't enough COVID-19 tests for people to figure out if they're actually infected, then this thing's pretty much useless. And it's vulnerable to simple misinformation. If too many pathetic trolls lie about being sick, then this whole thing will be become pretty much useless. So Jack, what's the takeaway for our buddies who are like best friends now over at Apple and Google? This app should be subsidized or else not enough people will use it.

Snackers, get this ideal case study we found. In Singapore, they tried exactly this, and just 10 to 15% of the population actually downloaded the similar app. That's why this app shouldn't just be voluntary because not enough people will download and participate for it to be useful. But it also shouldn't be mandatory because there is no practical way to do that in a free country. This app is pretty much a public good.

And as a public good, the app is way more valuable to society, the more people who use it. Instead, the government could do something like give you a tax break for downloading it, but that's kind of boring, not that's sexy. Much more interesting would be if Apple or Google gave you a reason besides just being a good citizen to actually download this. Boom, one Apple movie round for free. you download the COVID-19 tracking app. Or boom, Google offers one month of free YouTube live to anybody who downloads the app and does their part. Either way, we think there's some sexy ways to get people downloading the app. That's critical.

All right. You probably got a good sweat going right now with the Snacks Challenge. We're halfway done with a pod, so snap an insta-pick of yourself, tag us out Robin Hood Snacks, and here's the second half of the pod. In the meantime, we've got to get to our third and final story, because we've got 50 states and some of them could go bankrupt in this economy. Florida, Louisiana, Nevada, we're looking at you. It's not looking good. Which brings us to a core question, what do states really do? Well, they print license plates and they make us wait in line at the DMV.

Love that less. Then they got the state flag. Someone's good to decide the state song. Someone's got to come up with a state bird and a state animal. And then they need to think of some virtuous-sounding Latin phrase to put on the flag. If you don't have a Latin phrase, are you really one of the 50 states? But the biggest place that states actually spend their money is on schools, roads, and the poor. And that final one's all about unemployment and medical.

And that's key. We'll get to that in a minute. And Nick, how do they pay for that? Taxes and fees, Jack. What kind of taxes and fees? It totally depends on the taxes and fees. So we can look at a state's financial health similar to the way we look at a business. Right. States' wallets are getting squeezed right now for pretty much every possible.

side like a wallet could get squeezed on. Costs are up as people are using more emergency health care services. Oh, and they're also using unemployment insurance. Now, revenues are down at the same time because people are buying less overall, they're earning less overall, and they're traveling way less. And that means lower tax revenue. Oh, by the way, if you don't get caught going 78 and a 55 on the Taconic Parkway, that means no speeding tickets, and that's critical revenues for states. And that's a key reason why Florida and Louisiana are heading towards debt, swamps according to Axios reporting. We're talking about tourism taxes, which you have seen snackers. They're usually hidden deep within like hotel airline and Disney World tickets like receipts.

You think you're paying $285 for a flight to New Orleans, but then you're paying a $30 city tourism tax, a $5 nightly stay tax, an $18 visit tax, and a $4 bed tax. That's only what you see. You don't even notice what you don't see, which is kind of scary. Those travel taxes pay a big part of the state budgets in Florida and Louisiana. But right now, those are getting crushed in the Corona economy. Oh, and by the way, Florida and Louisiana, they're also big fans of the sales tax for everything that you buy. Oh, but people are buying less in the coronavirus. Meanwhile, Nevada's got a separate but related issue. They are addicted to gambling taxes. Oh, and by the way, roulette tables, they're kind of empty in the coronavirus. Now, the alternative to all this is states that

fund their budgets through property taxes and income taxes. Those are a lot of. little less vulnerable in the corona economy. But we're not talking about those states. So Jack, what's the takeaway for our buddies who are states maybe struggling potentially in the coronavirus? The 50 states can turn to Wall Street when they need money just like companies do. Snackers, we love talking about the S-1 documents that come out when a company IPOs, basically given the dating profile about what this company's actually like. And guess what? To borrow money, states are going to whip up something very similar and show it to investors. And we're thinking this is going to look like a combination of like tourism brochure meets financial.

financial report. Kind of beautiful. We have 1,000 miles of beautiful beaches. We got world-class tourist attractions and a fully funded state pension program. Jack, where do I sign up? What's the bottom line? Let's go to NOLA. So investors could take a risk and lend to these states that are in trouble, but they'll probably ask for a huge interest rate. Or the states could end up getting bailed out federally with federal funds. Or some of the states could end up going bankrupt. We'll be covering it on snacks, whatever ends up happening. Jack, and you'll whip up the takeaways for us over there. Duncan doesn't own a single Duncan location, the franchisees do. Great during an economic downturn, not as good when the economy's doing well. Google and Apple are teaming up basically

Batman and Superman to slow the spread of COVID-19. Apple and Google should hook you up to if they want you to use this. The third and final story, the 50 states are spending more and making less in the corona economy. They'll be asking to borrow money from Wall Street pretty soon, probably just like companies do. Now time for our snack fact of the day. This one sent in from JJ, who's a project engineer down in balmy, Houston. He says it's bombing. Haven't been a while here. It's a humid heat. JJ, popular name in Houston. Now, in 2020, the oil industry is expected to create 12.7 billion gallons of H2O. We're talking water. Apparently, most oil companies make more water than they do oil. We're talking five barrels of water per one of oil. It turns out those pockets of fluid beneath

the earth's soil, which is where we extract oil, there's a whole bunch of water. there too that we pump up out of the earth. Snackers, remember to go to Robin Hood Snacks today and tweeted us what you think will be the top-ported item for quarantine week number six. Jack, who you got? My top-ported item for week number six? Shorts. Yes. I have no idea it would be like spring and I'd still be in Vermont. You can't always go with the flannel cutoffs. I'm going with flour because I'm whipping up so many of my famous popovers here. I'm running low on this stuff, Jack. I'm just running low. Have a fantastic Tuesday. See you tomorrow. 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 and 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.