The Best One Yet - Panera joins the “Game of Scones,” Waste Management’s $5B acquisition, and Gogo inflight Wi-Fi surges 8%

Episode Date: April 16, 2019

House Starbucks or House Dunkin’? Panera kicked the fast-food Breakfast Wars up a notch with its focus on coffee. Waste Management’s $5B acquisition highlights the business future of trash. And Gogo in-flight Wi-Fi’s 8% jump shows the company’s biggest potential and its giant challenge.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 16th. And what did you think of this? This is the best one yet served up for you, snack style today. T-B-O-Y. Now, markets barely bunched. Goldman did poorly. City Bank did well. Markets were in between. Even it out, it's nothing new. But we found three wild, wild stories for you guys. I bet you've never heard stories about any of these three companies. These stories didn't expect these stories. The first is Panera Bread. It is engaging in the Breakfast Game of Thrones Wars. And it just kicked things. up a notch. Who is going to win? Who are you thinking? Like Starbucks, House of Starbucks, House of Duncan, who's going to win this thing? House Panera, for show. Second story is waste management. You dirty dog, you. This trash disposal company just made its biggest acquisition ever. A cool $5 billion, keeping it

clean. Now, by the way, if you've ever produced trash in your life, you're going to care about that. Third and final story is GoGo. The infamous in-flight Wi-Fi company, it finally connected with investors for like the first time yesterday. Except it's still got a like existential question it has to answer. Speaking of existential, we got to talk about Jack Ma, the founder of Alibaba. It's the three big numbers, 996. 996.

996. He was asked by reporters about Alibaba's extreme overtime policy where Chinese workers in the tech industry typically work 72 hours a week. We're talking 9 a.m. to 9 p.m. for six days a week. Jack Ma said 996 is a huge blessing. Whatever that means. It's the best thing that could happen to you because you start two. enjoy your work more and then reap the benefits of it. We're not into this idea. In fact, we want to go

the other end of the spectrum from Jack Maugh. True. The three-day weekend. And if your boss doesn't appreciate you proposing that, tell them it's not a three-day weekend. It's the four most productive days of the week. We got to institutionalize the three-day weekend and combat this 996 miles. Jack Ma's done some incredible things. We're going to push back on this one slightly. Four productive work days. Now, before we hit the rest of our stories, listen to these important words. tuned in the snacks daily. We spoke to the lawyers and we got to get some. It snacks about the hearing food is 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. Nope. 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, Panera just revealed it's brand new. breakfast strategy. The most important meal of the day. It's so true. Jack is very judgmental on this, by the way. Like any great enterprise, I have seasonality. If you do not still cut your own oaths, he is judging you. In the winter, hot oats and hot coffee. In the summer, cold oats, cold coffee. I just put dates and everything and it works. Now, can we talk about the breakfast wars here for a second? We should. McDonald's stepped it up a notch. They just introduced their first

new breakfast sandwich in five years. Do you know what it is? Some sort of triple-stack, double whammy, like three meats, two eggs, and four cheeses. The full serving of calories. It's amazing. And then you've got Shake Shack, Duncan, Taco Bell, Starbucks. They're all in this war. There's a reason they're all focusing on breakfast, and we'll get to that in a second. Now, first, we've got to talk about Panera, which has just revealed, you know, some interesting new items. We want to give some background, though. Panera was a publicly traded company, but it was acquired just a couple years ago for $7.5 billion by a German coffee conglomerate called JAB Holes. They are all over your morning job routine. And the old CEO wasn't really into breakfast. No, he wasn't in a thing. Some people just

darn. He said he didn't care about breakfast because his quote-unquote target demographic was higher quality food for less time sensitive people. I take that as he's a little snobby. He's like, yeah, I want to treat my meals as an art. I don't want to be rushed. People are rushed when eat breakfast. Guess what? Jab bought Panera and now that guy is out. Right. But there's a problem that Panera now faces that JAB is trying to fix. Three quarters of Panera sales occur after 11 a.m. Yeah, so that means, you know, breakfast is actually a pretty big opportunity here. There's a missed opportunity here. They need to capitalize on that 6 a.m. to 11 a.m. to 11 a.m. sweet spot. And then Jack and I went in Snacks Island found a fantastic statistic for you on breakfast. From according to the NPD group, which is a food research company. Great crew.

Breakfast is the only meal on the menu growing in America right now. That's true. Dinner and lunch are kind of just sitting there. Not doing much. But people are spending more on breakfast. So here are the big breakfast changes coming. to Panera, but the reality is, it's all about coffee. Yeah. Let's mention the food first. Yeah, sure. Okay, there's three new breakfast wraps, which are perfect for on the go.

Great. You got like a maple, bacon, egg thing, and an egg white spinach feta thing. Adorable. So that's for people who are in a rush. But the real thing is coffee. Coffee determines your rush. You need that caffeine fix fast. And it's not just coffee.

Panera's referring to this as, quote, unquote, elevated coffee. They're introducing cold brews, new coffee machines, and they've even got this, like, cool tech thing, right? Well, you know, you pour your own coffee. Panera bread, I guess. I'm not a coffee guy. But then you can just flash your phone and get out of there. So if you're super in a rush, you grab a wrap a wrap to go, you grab your coffee, pour it yourself, and pay for it with your phone. That's a good value. And they're calling it Panera tap. So Jack, what's the takeaway for our buddies over in Breakfast Land with Perna? Panera wants your

breakfast spending and coffee is the key to get there. Think of this. Breakfast is the most habit-prone meal of the day. You mix up your dinners, you get egg parm one night, you're going sushi the other. I'll eat dinner at three. I'll eat dinner at six. you dinner at nine. But Jack has oatmeal every day and he judges you if you do not and you're probably somewhat kind of the same way. So since you're so sensitive of the timing of your breakfast, Panera knows if it can

nail coffee, it can win your morning love. And perfect timing because Jab, the company that owns Panera now is a coffee maister. Mick calls it Jab, I call it JAB. Either way, it's a German conglomerate that's bought up all the coffee chain so it knows what it's doing. Pete's Krispy Cream, if they brew something, it probably

owns it. So who is best positioned to win the game of Breakfast Thrones if coffee is the key? Is it Starbucks? Is it Duncan? Chipotle, you want to jump in there? For our second story, paper or plastic jack? Paper, always. Always go with paper. Waste management just made its biggest acquisition ever. Five billion dollars. Now, this is going to be the number one and the number four solid waste companies of the United States coming together. It is beautiful. It deserves a wedding announcement. This story was a dirty job and someone had to do it. We're not going to recycle any jokes for it either. Now, the waste management company is waste management. It's based in Houston. It's acquiring the number four company, Advanced Disposal, based in Florida. So Waste Management shares rose 2%,

advanced disposals jumped 18%. It was a win-win. Beautiful thing. Combined, these companies will serve 23 million waste customers. And then get this, because they cover like almost all of the US and Western Canada, that is 310 landfills. That sounds like a lot of landfills. I thought one or two would be big. I had not know it got that high. There's some fascinating elements of the waste management industry we want to tell you. We jumped into this snack style.

We loved it. The first is waste management industry is really defined by a lot of diversification. The waste management itself has like a million customers. Exactly. If their biggest customer of waste management is only 1% of revenues. So if that customer goes somewhere else, the company will be okay. It's just fine. Let's say you want to begin compost.

Not a big deal. It's not like Samsung where like Apple represents a big part of sales. Exactly. And then the second kind of interesting strength here is how it's recession proof essentially. Even if the economy's down, you're going to be making trash. Pretty much trash, trash, trash, trash, trash. Trash flow is pretty reliable business. Waste management should stick that in their financial statements.

Cash flow, trash flow. Love it. Now, the second key part here is there are some weaknesses in the industry. From a business perspective, this is not scalable. No. A lot of humans collect all. All that trash. They pick up your trash from the sidewalk.

They bring it and compact it into something smaller. They recycle parts and they bring it to a landfill. It's 50,000 really hardworking, incredibly strong humans who are powering waste management. Waste management relies on human labor. And then the other interesting weakness is the competition because there actually is some for waste management. You might be surprised by this. I've never thought about shopping around for a waste management provider.

But you should. Your town probably does. They negotiate for you. or your homeowners association or the company. So waste management actually loses out on some deals. In fact, they lose like 10% of their customers who defect every year. So Jack, what's the takeaway for our buddies over at waste management? Waste management isn't just dirty.

It wants to show off. It can be clean. I thought this was a wild PR move that they just did. They decided to sponsor, I don't know, you know, a PGA golf tournament in Arizona. The waste management Phoenix Open happened in January. Rolls off the tongue. I was like, why is a trash company sponsoring the PGA? tour. Because they could have pulled off the

quote-unquote largest zero-waste event in the world, Jack. Yeah, this event was a huge event. It was four days long. There was a lot of partying, according to Instagram. And the company brags that 100% of the waste produced at that tournament was diverted from a landfill because of composting, reusing, and recycling. Now get this. Waste management's also kicking things up a notch into renewable energy. They're using gas from the landfills that's emitted to then be harness and power electricity.

Wow. Didn't know you had that in your waste management. For our third and final story, this one's wild. Airplane Wi-Fi provider, Go-Go, just searched 8% after giving a sneak peak of its upcoming earnings. Let me clarify the big question out there. This is not Boingo. Or Boingo. I don't know how you pronounce it.

We don't know. Boingo is airports. Go-Go is airplanes. You've seen it on a flight because you've boarded, tried to log in, and one of two things probably happens. Either boom, you get freakishly fast. You're freakishly productive on the plane. You finish an entire manuscript or you're like staring at that wheel that goes around and around

and nothing happens. Yeah. It's ridiculous. So who is GoGo? We'll tell you. We'll start right at the beginning. Right. It's basically everywhere, but it's nowhere.

You feel it, but you don't see it. The company was founded in 1991 by a guy named Jimmy Ray. Great name. In Texas. And the company loves to romanticize the story. Right. He started it at a barbecue joint on a napkin, which is pretty cool. He should have used the napkin for the barbecue, but instead, he invented airplane Wi-Fi.

Pretty nice drop. Now, 17 years later, by 2008, the company had introduced Wi-Fi to an airplane for the first time, sending signals up from the ground from cell towers. And then in 2014, Go-Go took a big leap and started using Internet from satellites, from space, to go right into the airplanes and give you internet. Right. And that's where they are now. They still send Wi-Fi signals from satellites in space to airplanes,

using its number one product, which is called the 2KU satellite Wi-Fi. I like the way that sounds. It could fit on like a tattoo. A thousand planes are so far equipped with 2KU, and a thousand more are on backlog. So, when you jump into this a little further with Go-Go, it looks like a really interesting opportunity. It does. Land is covered in Wi-Fi. Yes, it is. So the sky should be covered in Wi-Fi, too.

Naturally. When I'm at 35,000 feet, I'm expecting the same Wi-Fi. Now, Gogo's doing a pretty good job. It covers half of the world's in-flight Wi-Wi-Fi-E. I mean, and there's a lot more planes that need it. 65% of planes globally don't have any Wi-Fi option. True. And then the CEO of Go-Go said in a recent report that, quote-unquote, passengers expect it in

flight Wi-Fi. True. Aircraft operators want it. This all sounds pretty good. It sounds really good. So, Jack, what's the takeaway for our buddies at Go-Go? Go-go has a giant challenge. It's still proving whether it's business model even works.

Now, technically, Go-Go's never had a profit, and it's lost. are actually growing every year. And think about this deal. It costs an airline $500,000 to equip one plane with this TKU thing. And customers, only 10% on average pay for Wi-Fi in an airplane. So it's still not proven. Do customers really expect Wi-Fi in every flight? Will airlines actually benefit from even providing Wi-Fi?

Now, I got to point this out. On Netflix or Amazon, you can pre-download videos before getting on the plane. Which is an interesting cultural threat. It's a risk to Go-Go. So GoGo still has to prove whether they can operate profit. But if they can, the opportunity is global. Jack, can you whip up the takeaways for us this Tuesday? I am on it.

Panera wants your breakfast and it knows coffee is key. House ShakeShack, by the way, is like the surprise candidate. All right. Waste management. Dirty business, clean company. And their PR moves are delightful. Go-Go is still proving to investors whether it's airplane, Wi-Fi business model even works. But its opportunity is basically every airplane worldwide, which is pretty amazing. Time for the snack fact of the day.

Now, this is not a spoiler alert about Game of Thrones. You can keep listening. Please do. In fact, we had someone tweeted us about that the other day. Yeah, Adam Upturch said he stopped listening to the Snacks podcast because he heard the words Game of Thrones and spoiler. Adam, please keep listening. You're in the clear.

So yesterday, we checked out the podcast store. 11 of the top 100 podcasts on iTunes were Game of Thrones related. Fully Game of Thrones themed. This is sweeping the nation. It is pretty big. Couple other big things happened in markets yesterday. Check out our newsletter to find out more. First, Goldman Sachs reported earnings. Its eye banking situation was pretty rough.

And then Best Buy jumped because its CEO is stepping down and now they've got a new one in charge. Nick, I loved covering waste management, go-go, and Panera. You got to go with the obscure companies. These are obscure companies. We unearthed a little bit, but this is just the beginning. Remember, if you're looking to invest any of these, there is, serious stuff there. You want to be doing more research. Thanks for potting with us today. We'll talk to you tomorrow.

Cannot wait. 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, 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.