The Best One Yet - 🥩 “I’ll try the Tucson T-Bone” — Olive Garden’s steak strategy. Debt Ceiling drama. Ford’s Tesla trick.

Episode Date: May 4, 2023

The Olive Garden’s parent company is spending $715M to buy Ruth’s Chris steakhouse because there are only 2 reasons to do a deal: to diversify or to double-down. The biggest financial story for the next month is the Debt Ceiling, so we’re jumping in TBOY-style to what the drama means. And Ford just revealed the funky framework of the car industry: Pickup trucks are the venture capitalists of electric cars.$RUTH $DRI $F $TSLAWant merch, a shoutout, or got TheBestFactYet? Go to: www.tboypod.comFollow The Best One Yet on Instagram, Twitter, and Tiktok: @tboypodAnd now watch us on YoutubeLearn 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. It's Thursday, the new Friday. May the fourth be with you. And today's pod is the best one yet. Stocks fell yesterday because the Fed made another big announcement. The Fed, they are raising interest rates for the 10th time in a row. And like we said this week, interest rates are the most powerful force in the economy. And like we said yesterday, today's pod is the best one yet. Jack, what's our first story for the show? What do we got, man? The Olive Garden is making its big, biggest acquisition ever. Because on every dinner plate, there are two types of deals. Or our second story, the debt ceiling, just became the biggest business story of this month. So Jack and I are jumping in T-boy style to the old debt ceiling.

And our third and final story is Ford. Ford Motor Company just revealed the funky framework of the car industry. Turns out trucks are the venture capitalists of electric cars. But yeties, before we hit that fantastic mix. A wonderful mix. I love this mix for the new Friday, Jack. Tonight, we got the NBA playoffs. It's Thursday, the new Friday. Tonight, we got ourselves a basketball showdown.

Who we got, Jack? The Golden State Warriors are taking on the L.A. Lakers. Look at the map. We got San Francisco versus Los Angeles. It is a California classic. It's also Steph Curry versus LeBron James. Again. We're talking about the two best basketball players on planet Earth right now, same court.

But there's a wild thing about Steph Curry and LeBron James that you don't know about. Jack and I noticed. It's just a shocker about these two basketball legends. It turns out LeBron and Steph were born in the same state. Ohio. They were born in the same town. Akron. Nick, they were born in the same hospital.

Akron General Medical Center. And according to Steph Curry, are you ready for this? Are you ready for this? Oh, you have built it up, so I better be ready for this one, Jack. They both had the same nurse. We repeat, LeBron James and the... Steph Curry were born by the same nurse. This nurse should be in the basketball hall thing. Jack, we should sprinkle on a little bit more context here. Can you remind us of what are the odds

of being struck by lightning in your lifetime? The odds are one in 79,000. And what are the odds of being bitten by a shark in your lifetime? One in 3.7 million. But Jack, what are the odds of being born by the same nurse? One in 4.2 million. And what are the chances that Two people born to the same nurse in the same hospital in the same city and the same state are both making it to the NBA. And what are the chances of those two people both win four NBA championships? That's less likely than being bit by a New Yorker. These two stars are playing on the same court again once again tonight. But they began their lives in the very same hospital win.

The real champ here, it's not the players. No, it is not. Who is it, Jack? It's just a nurse from Akron. Paging nurse from Ohio. Paging Nurse from Ohio. Let's in our three stories. Fifteen years before this song, two boys from the Northeast met in the dorm.

They had an idea that caused a cultural storm. It's the 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. Our first story, the Olive Garden. They're dropping nearly a billion dollars to buy a steakhouse. What the Olive Garden just reminded us is that there's only two types.

of deals. All right, Jack, let's just say it. Everyone's thinking it. We should just say it. You ready? The best part about steak is, but isn't the steak. It's the sides. It's always the size. It's the size that are priced at like $15 each. You're going to get the cream spinach that contains zero vegetables. That's what you're going to do. There's no spinach in that thing. It's like cream of celery soup. Where's the celery in here? We ordered the cauliflower the cauliflower. It came out caramelized. It was like a creme brulee of cauliflower. What Nick's talking about is the experience at Ruth's Crisp Steak House. Sorry. Ruth's Chris Steakhouse.

Well pronounced. Their stock jumped 34% yesterday. On Word, they're getting acquired by Olive Garden's parent company for $715 million bucks. This is the biggest news for this steakhouse since the lettuce wedge. Yeah, it is. We're talking about Ruth's Chris. Remember, they have one restaurant, but they have two names for that restaurant. Two first names.

They were founded in New Orleans by a guy named Chris, but it got acquired later on by a woman named Ruth. So she called it Ruth's Chris. And they're doing not too shableness. They did half a billion dollars in sales last year. They grew 14%. There we go. You know you're out of Ruth's crisp because the waiters wear the same color tie. Is that a clip on?

It's a good sign when the waiters at a steakhouse have a uniform to uniform. And the competitive advantage of this steakhouse is what they call the sizzle plate. This is a plate. You've seen this sizzle plate. Sorry, you have, you've heard the sizzle plate, right? Correct. Because at Ruth's crisp, they bring you a rabbi on a 500 degree sizzling plate. Don't touch that thing.

That's their proprietary technology. You need to sign a waiver before you dig into the steak on that plate. It leaves a mark on the tablecloth. It's capable of melting a butter knife. The fire marshal is not happy about the sizzle plate. Yeah, it's a code six. So yet he's ears with Jack and I found fascinating about this story. There's like one surprising thing about this deal, isn't there, Jack?

The deal feels kind of redundant. It does feel redundant. It feels like they accidentally ordered the same thing a second time. Okay, let's step back for a second. Here's how Jack and I are seeing this. Darden Restaurants is the $18 billion company that owns Olive Garden. That's the company that's buying the steakhouse. Okay, but then we jumped in T-boy style,

and we noticed that half of their business is already steakhouses. Darden's diet is already very heavy in meat. Like, for example, they already own the Olive Garden. And Jack, you have worked at the Olive Garden, you know that menu front-to-back six ways to Sicily. They have a big steak on the menu. It's called the Tuscan T-Bone. Or as my customers,

used to call it the Tucson Teaboard. Right. So, like, they have a big steak at Olive Garden, but that's not the only steakhouse that is owned by Darden Restaurants. Yeah, Darden Restaurants also owns the Capitol Grill, Longhorn Steakhouse, Seasons Grill, and Bahama Breeze Island Grill. Easy on the protein, Darden. Easy on the grill. Weber's getting jealous. In fact, Jack and I jumped in further T-boy style.

In their last earnings call, the CEO proved that he's a steak CEO by complaining four times. about the price of beef. If you're going to complain about beef on an earnings call, you've got a steak problem already. So Nick and I are wondering, why would a restaurant that is already so heavily concentrated in steakhouses drop $715 million for more steak? And don't tell us it's because we're family. So Jack, what's the takeaway for our buddies over at the Olive Garden? All acquisitions fall into two categories, diversify or double down. Look, Yeties, many times companies make deals to do. diversify their business. They want to buy something that's different. It lowers the risks to the company if you have unrelated businesses, because while one of them is down, the other ones might

still be up. But sometimes companies make deals to double down on their strengths. They want to buy something that's really similar to what they do. Like a steakhouse with steakhouses, buying yet another steakhouse. And that is why Darden CEO said that buying Ruth's Chris Steakhouse supports our winning strategy. He's doubling down on their steakhouse playbook because of it's working. Oh, and Darden stock, it's trading at an all-time high. So they're going to keep doing and keep serving what they're doing and what they're serving. There are two types of deals, to diversify or to double down. And Darden is doubling down. For our second story, Yeties, mark your calendars for June 1st. That's when America is set to default on its debt

for the first time ever. This is the story of the debt ceiling. Unless we pass a bill, but we're not even close to passing that bill yet. No. We are not. Jack, let's jump right into this thing. Let's jump in T-Boystaff. A key way that the United States pays for its stuff is through IOUs. The U.S. federal government, we owe a lot of people a lot of money. But because our nation is so big and our economy is so strong and we have so much wealth, investors don't mind that the U.S. has so much debt, too. So every year since 2001, the United States has spent more money than we've collected in taxes.

We borrow more and more and more trillions of dollars until, we hit a limit. That part is key until we hit a limit. And that limit is actually a limit we set. That limit is the debt ceiling. The debt ceiling. The debt ceiling is set by the United States Congress. Now, Jack, can we sprinkle on a little historical context here? Since 1960, Congress has lifted America's debt ceiling 78 times. And we've lifted it, frankly, kind of pretty bipartisanly, haven't we, Jack? It's a routine thing. We've done it 49 times with a Republican in the White House, and 29 times with a Democrat in the White House. But today, the Republican-controlled House won't raise the debt ceiling for a 79th time.

They're demanding spending cuts or else they won't do it. So that's the history. But in the past week, we just got two big pieces of news about a financial ticking time bomb that is the debt ceiling. First, Treasury Secretary Janet Yellen told us to update our alarm clocks to June 1st. Because apparently, if we don't raise the debt limit by June 1st, then the United States could default on its debt. for the first time ever. June 1st is the new financial D-Day.

All right, so that was the first bit of news. And then we got the second bit of news on the debt ceiling. Last week, Republicans passed a bill to raise the debt limit. Great. There we go. But it also undoes some key Democratic policies. Basically, here's what the Republicans in the House are saying. They're saying, yeah, sure, we'll raise the debt limit.

But we have a few conditions for you to meet first. Yeah, we have several conditions. And Democrats and the president, they dismiss that. Republican bill, they just want to raise the debt limit without any condition. But Republicans are insisting. They're using the threat of a default as leverage to push through their policies and cancel the ones passed by Democrats. Even though Republicans are the minority party in Washington. So Jack, let's add up all that history and those big two pieces of news. And it looks like we got ourselves a debt ceiling standoff. It must be solved by June 1st or

the government defaults on its debt. Yeah, which feels like a takeaway moment. So Jack, what's the take away for our buddies who are all of us in the United States. No one knows what will happen if the U.S. defaults on its debt, but we're pretty sure it wouldn't be good. Yet he's Jagged I. We've actually seen like a whole bunch of defaults and bankrupts in our day. Bedbath and beyond notwithstanding. Ten years ago, it was Greece.

Yes. Further before that, it was Enron. Classic. Last year, Russia defaulted on its debt. True one, yeah, there we go. And Silicon Valley Bank went bankrupt last month. But here's the problem, ladies. All of those, they're minnows compared to the financial whale.

that is the U.S. government. Nick and I were shocked when we found this out. The United States government has more outstanding debt than all of corporate America combined. Sit down, stand up, and sit back down again. Yet he's fortunately, we have never defaulted before. So investors are confident in buying United States bonds. But if the most trusted government on earth that has more debt than all of America's companies combined did default, that could trigger a financial crisis.

It's unprecedented. There's no precedent, baby. we are in uncharted territory. No one knows what would happen if the United States defaults. So let anyone tell you they know what's going to happen if we default. But we're pretty sure it wouldn't be good. No, it wouldn't. For our third and final story, Ford just revealed that it's beating Tesla in profits except for one thing.

Because Ford has replaced venture capital with a pickup truck. All right, Jack, let's whip open some more history books because we've been going deep on history today. Well, you're the Thomas Edison. guy. That was a great book. I did enjoy that book. Menlo Park, New Jersey. Am I right? The original Menlo Park. That's where you make a light bulb, man. That is, Henry Ford was buddies with Thomas Edison. One basically invented the car, the other basically invented electricity. They hung out on vacation in Florida. Apparently it was a lot of fun, a lot of lemonade. A hundred years later, Ford's great-grandson is trying to make Ford's cars Edison Electric. Yes, he is. And why is he

so focused on that right now, Jack? Because Tesla is more valuable and more profitable than Ford is. But for the first time ever, Ford took us over to the garage, whipped open that chassis, and let Jack and I take a look at this thing, and what do we get to see, Jack? That's right, Nick, give me a rag. I got greased on these hands. For the first time ever, Ford just broke out its financial performance into two key specific divisions. One division is their conventional engines, aka the gas guzzlers. The classics. The other division they call model. E, which is their electric cars. The newbies. Well, Ford's most profitable division is the one that sells cars with tailpipes, the ones that you bring to the gas station, the old guys. Yeah, the ones that

take diesel or regular unleaded. I'll fill it up. Thanks. We're talking for its F-150 pickup, the Ford Bronco, and all the other trucks and SUVs. Jack, how did they do last quarter? They notched a nice quarterly profit of $2.6 billion. Yeah, well, you know what? If all those classic gas guzzlers were just Ford, if that was just the company, Ford would be more profitable than Tesla. But that's not the whole company. Ford also has another division that loses a bunch of money and did last quarter too. And that division was why Tesla is actually more profitable than Ford.

Ford's electric car division lost a dollar for every single dollar they made of sales. Ford's electric car division, honestly, it looks more like a Silicon Valley startup. It is losing a lot of money. It is burning through cash. Right. It made 700 million in sales, but it lost it. lost $700 million. Actually, kind of a funny thing. Ford refers to its electric car division as a startup. That's what they call it. Yes, they do. They say it's our startup. If you're working at Ford's electric cars, you're enjoying free kombucha and yoghirts every day. It is just like San Francisco. So, Jack, what's the takeaway for our buddies over at Ford? Pickup trucks are the venture

capital of electric cars. Yeties, here's how venture capital works. Venture capital firms have an abundance of money. And then they give that to companies that lose a lot of money. That's pretty much how it works. But with the help of that venture money, startups can grow and mature and develop and become profitable eventually. Well, the way Jack and I see it, that same venture capital model is playing out right now at Ford within Ford. Ford's truck and SUV division, think of it as the sugar daddy. It's the old traditional business that makes a lot of money and finances the young electric car division. And you know what? It's not just Ford that has one older business financing a young unprofitable business. Netflix's profitable DVD business paid for its new and

unprofitable streaming business. And right now, meta's profitable ad sales are paying for its new unprofitable metaverse. In Ford's case, pickup trucks are the venture capital of electric cars. F-150s are the VCs of EVs. Jack, can you grab a Tucson Tivo? for us and whip up the takeaways. The Olive Garden, the OG lounge, just acquired Ruth's Chris Steakhouse. Yetis, you can diversify or you can double down. And the Olive Garden, they are doubling down. For our second story, the debt ceiling deadline is June 1st.

It's the new Financial D-Day. Honestly, no one knows what will happen if the U.S. defaults, but we're pretty sure it wouldn't be good. And our third and final story, Ford's profitable trucks and SUVs are funding Ford's new an unprofitable electric car division. Or the way Jack and I like to think about it, F-150s are the VCs of EVs. That is so a better way to think about it. It's just nothing better than a good,

consonant alliteration, Jack. I wish you would have thought of that before the final line of the previous story. Just kind of hit me at the end of the take like, now time for the best fact yet. This one sent in by legendary Yeti, St. James from lovely Buffalo Wings, New York. Push and play.

Here we go. What's up, Yeties? So the other day, Nick and Jack asked the question, why is it that Wendy's is the only fast food chain that does not serve round patties? The answer starts with Dave Thomas, where he decided that he didn't want to, quote unquote, cut corners in terms of their meat and the quality of their products, but also because you can fit more patties onto a grill if they're square as opposed to if they're round. So it was both motivationally and metaphorically useful to the staff, but also practically efficient. Yeah, Jack. I mean, Jack, I think the takeaway is it sounds like Ronald McDonald's skip the geometry class. And the motivational speaking class.

Hey, hamburger, it may want to spend some more time with Pythagoras. Yeah, you're wasting a lot of girls' base. If you know, you know. Yetis, you look fantastic today. And if you haven't yet, you can drop down and give us five stars and leave a review. Jack and I love reading your reviews. Good or bad. Drop down and give us five.

We're actually going to start reading a review maybe on this spot, maybe someday soon. So, you know what? We love the one stars too. They're kind of hilarious as well. We actually might read a one star review on the show. Feedback. It's a gift. Nick and I, let's see you tomorrow.

Can't wait. May the fourth be with you. And before we go. a shout out to Yeti, Ivan DeSanko, who's going through their final chemotherapy treatment right now in Connecticut. You got this, Ivan. You got this, Ivan.

And happy birthday to Vinci Wong in Hong Kong. Alfred Darmola, happy birthday celebrating that celebration over in Paris, France. Under the Eiffel Tower, and happy birthday to Steve Ash in Philadelphia, P.A. And Deep T. Paul and Sotchen Sea Watch in San Francisco are a brother and sister who are not twins, but they do have the same birthday.

Just like Twinsdale. And happy four-year anniversary to Jake and Steve Wilhite in Santa Rosa, California. And a shout out to Ryan, who I just ran into in the ferry building. He looks fantastic right now. And happy birthday to Bailey the Labradoodle. Oh, look a boy. Over in lovely Los Angeles. And to anyone else, celebrating something today, make it a team.

Celebrate the wins. What do you say? It's a firehouse. The fire marshal hates the fire marshal. There's something funny fire he said. Dude, it's those specific words that are funny, you know? The ones that you never use. You never talk about a fire marshal.

You never talk about a fire marshal.