The Best One Yet - 🌯 “Just a small town girl” – Chipotle’s village strategy. Mobileye’s chauffeur. UPS vs FedEx.

Episode Date: October 27, 2022

Chipotle just revealed that small towns are where it makes the most money (and fyi,, guac is now extra extra). In the first big IPO in months, Mobileye is trying to be your robot chauffeur. And UPS and FedEx are the perfect case study right now in what’s working and what isn’t: Managers.$CMG $MBLY $UPS $INTCFollow The Best One Yet on Instagram, Twitter, and Tiktok: @tboypodAnd now watch us on YoutubeWant a Shoutout on the pod? Fill out this formGot the Best Fact Yet? We got a form for that tooLearn 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, October 27th. And today's pod is the best one yet. It's a T-Boy. We whipped up the best one yet. Jack, what's our first story for the podcast? Chipotle just announced earnings, and we hope you like Journey.

Because Chipotle is a small-town girl living in a lonely world. For our second story, UPS and FedEx are the perfect case study right now on what works and what doesn't work. Managers. It's managers. Our third and final story is Mobile Eye. Mobile Eye. They just became the biggest IPO in months to do one thing and one thing only. Mobile Eye is your robot chauffeur.

But before we hit that fantastic mix... What a wonderful mix, by the way, Jack. I love this mix man. We haven't even more fantastic intro to discuss. Talk to me, Jack. What are we thinking right now? The T-Boy Halloween costume competition continues. It's like March Madness, but for business-themed outfits.

And the Yetis whipped up some slamming salmon suggestions. Jack, the besties, they brought some boogeyman brilliance. All right, to kick it off, Yeti Shannon Amad is going to Halloween this year as the stock market. Basically, she's just going to crash into a bunch of things at the party. At the costume, it involves knee pads. Okay, and then Rita Ramos is going as a ghost kitchen. Put a sheet on her head and then deliver people wings and pizza. But Marillae, she's going as a mattress, mattress, mattress, monster.

Classic costume. That is just an instant classic jack. Now, Mary Bogdan is going as the Kim Possible burger. So Mary's going to dress like Kim Kardashian, but then she's going to be. wrap herself in lettuce. While Michelle Erickson is going as a can of liquid dead. Liquidedad. And Tim Haffernan, who's a Vermonter, I believe, is going as a Spirit Airline Swindler. Basically, he's going to dress as an airplane and then he's going to hand out snacks and then he's going to ask you for some money. Oh, you want to use the bathroom? That'll be another $5.

Oh, Will Shane is just going to wear all green to the Halloween party. Will Shane is the Android message. And then he's going to be left out of every conversation while he's there. Now, Mindy had an idea for a business-themed Halloween couples costume. Okay, here's how it goes down. One of you is going as a Tesla car. The other of you is going as a Tesla charger. And you're connected by a

rope for the entire party. And you're tweeting insane things for the entire party. Or you could just unplug yourself after 20 minutes because you're full. Now, if you live with a bunch of roommates, Scott Lacey has a Halloween costume for you. One of you is a Hobbit. One is a Targaryen. One's

a baby Yoda. And one's a Demiote. meet Gore again. And then you're all going to fight each other. You are the streaming wars. Yetis, those are the runners-up for the T-Boy annual Halloween costume competition. Those costume ideas are the best ones yet. But wait up, wait up, wait up. Jack and I, we think the finalists are going to be even better. Tomorrow, we'll announce the four finalists. And then you'll vote on the number one winner. Until then, let's hit our three stories. 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, Chipotle, just announced way high revenues and a whole bunch more profits. Shocker. Tripoli is now a small town girl living in a lonely world. First of all, Jack, should we just talk about what happens when you get to the end of the line? It's going to say $4 next to guac. Guac was extra.

Now guac is extra, extra. Do you take IOU? It's all good news for Chipotle, because revenues rose 14% last quarter. compared to the year before, because you're paying more for the guac and the carnitas. And you know what? They've hiked prices now three times in the last year. And the only response from Tripoli diners to these higher prices is they're ordering more chicken. Yeah, you're ordering more chicken. You're not getting the premium pork. Get this. Half of orders now at Chipotle are chicken orders. It's the cheapest protein out there.

Oh, and yeties, Jack and I got a budget tip for you. Chicken is now Chipotle's only bowl or burrito that's always under nine. Now, Jack and I were fascinated with that poultry situation, but the more interesting part of the earnings was something different. Something Chipotle's management said 19 times. Something new, and that thing is small towns. Small towns, like lawnmowers, Friday night lights, a bunch of other stuff Nick didn't grow up with. Places where a subway is a sandwich, that means of transportation. Not urban, not suburban, small towns.

Chipotle's new focus is small towns. For example, Chipotle just said a new record for highest sales ever at a new location on opening day. And where was that location, Jack? A small town in Texas. And management just said that certain locations are performing tremendously well. And where are those locations, Jack? Small towns in the Midwest of the U.S. And Chipotle's CFO just said specific locations are barn burners of cash.

Jack, where are those locations? Is that what they said about small towns? That's what they said. Literally on the call, he said that. He said that. Now, this is a shocker because Chipotle is the ultimate urban icon. It invented fast casual for the fast city life. The Eddie's, you pop out of the elevator, you turn the corner around Union Square,

and you get a burrito bowl, bring it back to the desk. You beast that barbacoa in the boardroom. And yet, despite those urban origins, the CEO of Chipotle isn't excited about their new spot in Los Angeles. No, he's not. He's excited about their new spot in Alberta, Canada. Now, that tiny town in the middle of Canada with a brand new Chipotle, it actually does fewer sales than the Chipotle in Los Angeles. That's not surprising.

But what is surprising is that tiny store in Canada, it's more profitable. That tiny store in Canada is a pure profit puppy. Because rent in Canada, wages in Canada, they're a lot lower and people take takeout more. That's a recipe for better economics. Each small town Chipotle location is a cassidy of cash. Chipotle's a small town girl who took the midnight train to Caso Blanco. South Detroit isn't a small town. it's actually not a real place.

Jack, don't stop believing. Hold on to that fajito. What's the takeaway for our buddies over at Chipotle? Before you feed the customer, you got to make them hungry. Yetis, Chipotle's small town strategy, it actually began years ago when Chipotle was just in cities. Four years ago, new CEO Brian Nichol took over, and he started a nationwide ad campaign for Chipotle.

Now, the main goal of this campaign wasn't to make you buy Chipotle. It was to make you aware of Chipotle. Chipotle began their first. first ever TV commercials, including a Super Bowl ad that I do remember. Because Chipotle recognized that most people won't eat what they don't recognize. People won't try it unless they've heard about it. You won't buy that burrito unless you know the brand. And today, Chipotle says they wouldn't be winning in small towns if the country folk there

didn't recognize the Chipotle brand. Because that TV commercial four years ago made them hungry Ted Day. For our second story, strange thing, UPS just announced way better earnings than FedEx. Same business, same market. So why are their stocks totally different? That you're going to have to wait for an our takeaway. In the meantime, UPS, United Parcel Service,

aka Big Brown, step on down. The best brown socks in all of uniformed corporate America. Oh, you couldn't have said it better. Well, the Atlanta-based shipper just grabbed a box cutter and whipped open their third quarter earnings report on us. But first, Santa Watch 2022. Oh, Santa Watch, 2022. Watch 2020, Jack, what's the forecast right now in the stockings?

UPS checked out the North Pole, and they expect fewer packages to be shipped this holiday season than last year. Oh, Timmy, great. Thanks. Another sweater. Now, part of the reasoning behind fewer packages is that you're shopping more in person. Yeah, you're going out. You're hitting the stores. Must be nice. Part of that is the economy. Yeah, that office secret Santa. They're getting a stapler. But, Jack, let's leave the North Pole for a second. Let's head on back to those UPS earnings. Despite the dark Christmas, UPS earnings were really good.

Yeah, UPS earnings were actually really sharp. And it's thanks to pricing. Yeah, the shipper made 9% more revenue for every package that you shipped. If you're sending the classic 12 by 12 by 12 brown cardboard box from Tampa to Tulsa. Classic. This year, the price was 9% more than last year. So UPS shipped fewer boxes, but they charged you 9% more for those boxes. The result was profits rose and the stock price for UPS rose too.

is what Jack and I found fascinating. UPS's earnings were really good, but FedEx's earnings were really bad. Yeah, in September, on this pod, we told you about FedEx's earnings because they rang the recession alarm for the whole economy. And Jack and I noticed, it's not just the earnings that are different because the stocks of the two companies diverged. We looked at the five-year price chart. UPS is up 40% in the past five years. FedEx stock is down by 30% in the same period. And it doesn't make sense because FedEx and UPS are identical. They're synonymous. They should be the same.

They are delivering a commoditized product. They have the same number of employees. They have the same shipping business. They both resent the United States Postal Service. Newman. So why the stock price divergence from these identical companies? It's actually the perfect case study. So, Jack, what's the takeaway for our buddies over at UPS and FedEx?

The difference is the management. Yeties, a series of strategic decisions made by UPS years ago, is paying off today. Key choices by UPS management that FedEx management did not pursue. Yeah, for example, UPS has full-time workers. They've got a more unionized workforce. While FedEx depends on cheaper third-party contracts. So UPS got through the pandemic with fewer labor shortages

thanks to their loyal workforce. Exhibit B. UPS decided to own their own fleet of trucks so they could handle more ground deliveries. FedEx focuses on expensive airplanes and less reliable third-party van. Add up those two decisions. and in 2021, UPS's on time rate for their packages was 95%. But FedEx's on time rate for packages, it was only 85%. In the case study of these identical businesses, one big difference explains the stocks.

The management and the decisions they made. Now, a word about our sponsor, Robin Hood. A lot of Yetis don't realize how much prep work goes into this pot. We spend hours every morning jumping in T-boy style to earnings reports, CEO tweets, breaking news, heaven. Jack and I are toggling tabs like you toggled I-M Convo's in 2004. Having eight tabs open can be stressful. You don't need that, especially when invest.

Robin Hood offers it all in one app. Whether you want to trade options, ETFs, or stocks through Robin Hood Financial, or you want to buy some Bitcoin on Robin Hood Crypto. You can do it all on the Robin Hood app. If you're not investing in Robin Hood yet, to get started, go to robin hood.com slash T-Boy and choose your free stock. That's robinood.com slash TBOY. Limitations apply.

Robin Hood Financial LLC, member SIPC, all investments involved with us. By the way, this podcast is not owned or part of Robin Hood. We are not employees of Robin Hood. For our third and final story, MobileI, a self-driving car company just IPOed. They IPOed, there we go, a new public company, all right? It didn't go well. Ah, that one hurts. It didn't go well because you don't invite people to a party when it is freezing cold outside.

It never works. In the meantime, Mobile Eye. Kind of an intimidating name. It sounds like a knockoff James Bond porno, Jack. I was going to say it sounds CIA-ish. There's something about it that I'm scared about. But Mobile Eye is actually now the first pure play self-driving stock trading on the stock market. Now, we know what you're thinking, Yetis.

MobileI must be a bet on the future because I don't see any self-driving cars around me. Where are these things? That's true and false. It's true because fully self-driving cars are not here yet. But it's false because self-driving cars are not exactly a black and white situation. Self-driving isn't a destination. It's a journey. And it is a gradual journey. For example, driver assist or adaptive cruise control, those are self-driving and those are already here.

Like we said, self-driving is a journey. And that's why Mobile Eye already has 117 million cars installed with MobileE stuff and you didn't know it. Now, we should point out, MobileE isn't building the car. it's building those self-driving elements in the car. But it is trying to become a full-on robo-s chauffeur for all the car companies. Yeah, MobileI will build the sensors, the cameras, the computing brains in the cars. It's like R2D2 met Alfred and just went public on the stock market. But funny thing, Jack and I noticed at Mobilize IPO.

You want to know the reason companies aren't IPO in these days, Jack? Look at what MobileI just did. Yeties, the chip company Intel is actually the company that owned MobileI. but they wanted to raise some cash. So they sold MobileI via this IPO to the public markets. Well, it turns out Intel actually bought MobileI back in 2017 for just $15 billion. And they were hoping to sell it this week at a $50 billion valuation. But Jack, what happened when Intel tried selling MobileI this week in an IPO?

The IPO happened, but at a third of the price that Intel hoped for. Mobilize valuation yesterday was only 17. billion dollars. That is a hugely disappointing IPO and a hugely disappointing return for Intel's five-year investment. And that is why IPOs are down 95% compared to last year. Investors aren't buying IPOing stock. Even if you got a kind of cool name. So Jack, what's the takeaway for our buddies over at Mobile? IPowing in this market is like hosting Coachella in Frozen Siberia. Vesies, you know Coachella, like the elite outdoor music fest for wearing short shorts and feathers. Coachella is held in California in April, which is guaranteed to be comfy weather.

It never rained. Because Coachella's organizers chose an extremely desirable place. That's why people pay big money to see Beyonce. But imagine for a second if they were hosting Coachella, not in California, but in the frozen tundra of the Russian Siberia instead. That cold, that bitter, that unforgiving permafrost, they'd have to give away the dual leap of tickets for you to enjoy that show. That was Mobley this week.

investors would only buy the stock if it was priced at a huge discount. And honestly, if Intel weren't so desperate, they probably could have waited for spring to IPO this company. Because IPOing in this market is like hosting Coachella in Siberia. In this economy? Jack, can you whip up the takeaways for us for the new Friday? Small towns are where Chipotle is enjoying the most profits. Before you feed the customer, you got to make them hungry. For a second store, UPS earnings look great, while FedEx is,

concerning. The difference, it's management and management's key decisions. Our third and final story is MobileI. The stock just IPOed, but at a very low price. IPO in this market, it's like trying to host Coachella in Siberia. Doesn't work. B.Y.O. Parker. Now, time for the best fact yet. This one sent in by Nico Kale from lovely LaGuardia, Italy. Pushing Platt. Here we go. Hey, besties. Nick and Jack give a shout out to National Pasta Day in their Tuesday, October 18th, and mention that bowtie is their favorite pasta shape. I could hear the voice of my Italian mother yelling, Boatai pasta in Italy is called farfale.

It's true. Farfale means butterfly in Italian. It's my favorite shape, too, and it dates back to the 16th century in the northern Italian regions of Emilio Romagna and Lombardia, aka the cities of Bologna and Milan. I'm speaking as an Italian-born Italian citizen living in San Diego, California.

Thanks, Yiddis. Wow. Wow. There we go. I mean... I assume Nico likes to flat. out the farfale before he eats it just like that. Well, then Jack, you would then lose the surface area and the like sauce retention abilities of that shape.

The Olive Garden didn't teach me that. Oh, where was the basic training? Yetis, you look fantastic. And tomorrow, Jack and I are going to whip up the four finalists for the T-Boy Halloween costume competition. Yes, we will. You won't want to miss it. We'll see you tomorrow. Mattress, mattress, mattress. Monster. And before we go, congratulations to Yeti, Jesse Carr, who is celebrating five years of beating cancer in Middletown, New Jersey.

And happy 23rd birthday to Jory Fox in Moorhead, Minnesota. And Austin Peffers, happy birthday down in Tampa. Happy 37th birthday to Maria Eucan and Tang in Lima, Peru. And Judy and Julie, twin sister's same birthday in San Francisco. Happy birthday to Clay Hale in San Jose, California. And Zion Bear is turning one down in San Diego. And happy birthday to Preston Pena, who's probably singing our jingle with Norie right now,

up in Washington Heights. And a shout out to urban gleaners, the food nonprofit in Portland, Oregon that's looking for a new executive director, by the way. Urban gleaners, food for all. And to anyone else who's celebrating something today, make it a T-boy. Celebrate the wins.

This is Jack, Nick and I both own stock of Chipotle and Robin Hood. Now, a word about our sponsor, Robin Hood. A lot of you listen to our show while you're driving. Two hands on the wheel. Keep it 10 and 2. You might be cruising, Chris, no rush. Stay in the right lane. Or you might be Dahlene from Duncan,

dotting from lane to lane. different drivers on the road, they're different investors too. Maybe you're cruising down the long-term lane with stock investing, or maybe you're a more advanced full-speed trader. Well, the Robin Hood app helps put you in the driver seat wherever you're at in your investing journey. If you're not investing on Robin Hood yet, to get started, go to robin hood.com slash T-Boy and choose your free stock. That's Robinhood.com slash T-B-O-Y. Limitations apply. Robin Hood Financial LLC, member SIPC, all investments involve risk. By the way, this podcast is not owned by or part of Robin Hood, and we are not employees of Robin Hood.

Dude, I am sweating over here. Oh, yeah, that's sun right on you. I have... I'm melting. This is Nick and this is... Oh, it's jerk! That was a pretty good. I was good melting.

I do a good wicket witch laugh, but I can't do it because of my sword to... Back to square. I have a feeling there's some connection between the cookie crisp and the Wicked Witch laugh that you're about to drop on us. It's like, what's your Wicked Witch laugh?

Uh-woo! Ooh.