The Best One Yet - 🌯 “The $50 Billion Burrito” — Olympics’ money. Chipotle’s 2 lives. The Opioid $26B settlement.

Episode Date: July 23, 2021

The Olympics kick off today in Tokyo, so we’re looking at who actually wins the Olympics. Chipotle stock just hit a record high because it just discovered it’s actually 2 different restaurants. And we just got the 2nd biggest settlement in US history - $26B for the opioid epidemic. And yet the painkiller stocks rose?$CMG $ABC $JNJ $MCK $CAHGot a SnackFact? Tweet it @RobinhoodSnacks @JackKramer @NickOfNewYorkWant a shoutout on the pod? Fill out this form:https://forms.gle/KhUAo31xmkSdeynD9Got a SnackFact for the pod? We got a form for that too:https://docs.google.com/forms/d/e/1FAIpQLSe64VKtvMNDPGSncHDRF07W34cPMDO3N8Y4DpmNP_kweC58tw/viewformLearn 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 Friday. It's a real Friday, July 23rd. The Dow inched up to another record high yesterday. So much for the narrative changed, Jack. One narrative that's never changing.

This is the best one yet, baby. TV-O-I. For our first story, the Olympics opening ceremony happens today in Tokyo, Japan. So we're looking at who actually wins the Olympics. Not who you think. For our second story, Chipotle stock, just searched 13% to an all-time high. Because Chipotle just realized they have two different Chipotle restaurants. This is weird.

It's Dr. Jekyll and Mr. Hyde in one company. It's really more like a hide-hide situation. Yeah, they're both good. For our third and final story, $26 billion. That's how much four major drug companies are paying to settle the opioid lawsuits. But weird thing, their stocks didn't fall yesterday. They rose. Snackers, before we hit those three great stories.

I love this mix before the weekend. Wish we did this on Saturday. The sound of a child laughing is one of the great joys of humanity. So Snackers, just shh for a second, take a pause and listen around you. You might notice that the children around you are laughing with an unusual accent. Weird. Are your baby's first words, bonkers, dodgy, or bloke? Does your eight-year-old daughter dress like Dame Judy Dench?

If she does, then these children may have a case of Peppa Pig Syndrome. That's right. Peppa Pig, the epic, iconic British children's cartoon. Peppa Pig never gets old. Peppa Pig is the second most watched children's show on planet Earth. Who's that behind? Peppa Pig. Snackers, over the past year, according to the Wall Street Journal,

American children have been binging on Peppa Pig while at home. Parents are on Zoom. The kids are watching Peppa. Infants are now spending the whole day with the English Peppa Pig, not American SpongeBob. And the result is kind of a... unsurprising if you think about it. Yankee children have picked up the same vocab and accent as Winston Churchill and Mary Poppins.

Jack, you got like tweens showing up at the dinner table, demand in Shepherds Pie. That's what they want. Snackers, kids are talking Father Christmas like they were living in Charles Dickens novel. They're even being polite to their good old dear mum and dear dad with a you. They're taking off their trainers before they enter the house. So Snackers, here's what Jack and I are thinking. If you see a kid demand a play date at Piccadilly Circus, that's Peppa Pigson. If your kindergartner spells the word color with an OU for some weird reason, that's Peppa Pig syndrome.

And Jack, if you catch your kid with a pint of Carlsberg, well, that may be Peppa Pig syndrome. I don't know, though. Not necessarily. It feels like more of a long-term discussion got to have with that kid. Let's it at three stars. 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 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 about security. Right. Snacks is digestible.

Business news for you. Robberhood Financial, LLC, member Fenra slash SIPC. For our first story, today, Tokyo and its economy are celebrating the opening ceremony of the 2020 Olympic Games. Except it's not 2020. No, it's not. Tokyo's not celebrating. That's a great point. And this isn't just because of the pandemic.

That's a key clarifier. By the way, Jack, I'm just here for like the rhythmic speedwalking. Oh, I thought you were going to say you're here for the, you know, you aren't sharp or flat at all. I actually thought that was great. NBC isn't the sponsor of this podcast. I wouldn't continue doing it, but I thought you did a great job with us. Snackers Sue Bird and Eddie Alvarez, one point guard and one second basement. They're going to carry the flag in today's opening ceremony.

Not too shabby because they're rep in 613 American Olympic and Paralympic athletes. Maybe a few snackers in there. Those 613 will compete before zero fans. No fans and no $800 million of ticket revenue as we expected. And also no expected $2 billion in spending by tourists at Japan's hotels and restaurants. Because when you go to the Olympics, you're really just going to eat things. Even if the Tokyo Olympics had fans present though, they probably would, would have lost money. The Tokyo Olympic Jack are basically like a soft bank portfolio company.

That's why you're trying to tell me. For Japan, for the city of Tokyo, for the Japanese people, they're losing money on this. It's the we work of sporting events. Now, Tokyo said back in 2013, when they were bidding for these games, that it would cost $7.4 billion to the Japanese people. Jack got the whiteboard here. Turns out that was optimistic. Very. Yeah. Japan's government just audited the Olympics, it turns out the actual cost is nearly three times that $20 billion. One second here, Jack. I found another cost at the bottom. It's two and a half billion extra dollars for COVID measures. Yeah, like the washing and the Purell. But even if COVID and the pandemic hadn't happened, these games were on pace for triple their budget. But here's what Jack

and I find fascinating about the Olympic Snackers. That situation, it's actually typical. Every Olympics 1960 has run over budget by more than double on average. So the costs are born by the taxpayers, which are huge. And the economic benefits are less clear. Okay, so we know what you're thinking next. Not great for the people or the governments. So are the Olympics for the corporations? No. Ooh, interesting. Tell more. Seventy-nine percent of the IOC's revenues come from TV rights. And the TV rights are a global bonanza. You want to be friends with the TV rights. which is owned by Comcast, publicly trained.

Is pushing people hard to join Peacock because only NBC can broadcast the Olympics in America. Bob Costas is sitting there, chewing on something. I feel like he's always chewing. No fans? No problem.

Bob Costas and Mike Tariko, yeah, both went to Syracuse. Orange all over the place. And the NBC guys are expecting $2.2 billion in ad sales just for the Olympics, which is 20% higher than the Rio 2016 games.

On the other hand, you got a different situation going over at Toyota. Yeah, Toyota is a Japanese company. And they canceled their domestic advertising plans, which we're going to be huge because the Japanese people do not approve of these games. 83% of them. So, Jack, what's the takeaway for our buddies over in every city across the world? Voters don't want to build Olympic stadiums anymore because they're a waste of money. Jack, 2016, Rio Games. Remember that pool with the green water, like kind of by Copacabana Beach?

I thought I needed a new TV. Turns out Brazil just needed some chlorine. Yeah, that pool is now totally unused. It's actually gone from green to orange, which technically, I'm no poolologist, but that seems worse. And that's typical. Snackers, we love the Olympics, but some great journalism and some scholars at universities, they've showed us that the money doesn't add up for the people. Here's the reality.

The cost of hosting the Olympics. is not worth it economically. Now, there's a big unless. Yes. We want to tell you about. The lovely city of Los Angeles. It's not worth hosting the Olympics unless you already have all the facilities

you need to host the games. L.A. was the only profitable Olympics ever. Even going back to Greece a long time ago. That was in 1984 when L.A. was profitable. But now they're prepping for their third Olympic games in 2028. Because LA already has the stadiums, the hotels, the beaches, the infrastructure. Once voters see the insane cost of like building an Olympic village, we're seeing cities pull out of the process.

Because building new stadiums just for one set of games, apparently isn't worth it. Snackers, before we hit our second story, we realized today's snack fact is best served as a trivia question. And the snack fact slash trivia question is, Which American University has hosted an Olympics opening ceremony, a baseball, World Series and a Super Bowl. Is it USC? Is it Georgia Tech?

Is it the University of Missouri or is it UCLA? USC, Georgia Tech, University of Missouri or UCLA. Take our quiz on Twitter or Instagram. We whipped them up at Robin Hood Snacks. The answer's coming at the end of this pod. If you're really impatient. For our second story, Chipotle just hit an all-time high because it's actually two restaurants in one restaurant.

Two different formats. Yes. Two different customer bases. Weird. Same guac. Yeah. Two different profit streams. Okay.

By the way, Jack, this could be a snack fact. We're like giving it a lot of press here. Back in 2005, McDonald's actually owned 90% of Chipotle. 90% of Chipotle today would be worth $45 billion. Funny thing that. McDonald's sold all of that in 2006. If they hadn't sold all of it, I don't think Chipotle would be as successful. as it is today. It would have been your classic quack block situation.

Awkward situation for Ronald, though, because Chipotle just hit a $50 billion valuation. I'm not sure if FOMO or seller's remorse is the right way to describe. They're like looking at their ex on Facebook and they're like, oh no. Donald's like, was it me? Was it the maker? In the meantime, and that's because Chipotle stock just searched 13% to that all-time high. The reason is impressive. Chipotle jacked up prices by 30% per burrito because of rising costs of their inputs. And yet, despite higher prices, sales jumped last quarter. So guac is always extra, but now it's like extra, extra, extra.

Give me tortilla or give me death? Am I going to, I don't know, do I get the guac or do I pay the mortgage? Now, this is what the CEO said that Nick and I found fascinating. This is wild. Chipotle has evolved into two different sizable businesses with two different. different customer bases. We noticed that in the earnings call. One business is the dining rooms and the other Chipotle business is digital sales. Chipotle announced that in the second quarter, in-app ordering generated more sales than in-store ordering did for the first time.

Jack, that is a huge change. So right now, you basically have one billion of sales coming from orders placed in the app ahead of time and one billion from sales right in the restaurant. But here is the weird thing about that, Snackers. Only 50. 15% of Chipotle customers do both those activities, like order on the app or eat in the store. The other 85% of Chipotle customers, they're living in separate worlds. Yeah. They're just doing one or the other. So one of them is the dining room business.

Right. Right. This is like, I mean, Jack, this is our buddy Timmy. This is, they don't have a car. They're living in the city Monday to Friday going at Chipotle for lunch. Right. And they're not going alone. They're meeting a buddy for lunch to break up the work day.

There might even be there with coworkers. And this dining room Chipotle eater, they go in and get like assembly line inspiration. They don't know what they're going to order when they walk up to that Chipotle. They're like, do I get a bowl or do I get a burrito? Do I get a salad or do you get a bowl? Then they micromanage. They're like, I just want a half a dollop of the cream.

No more, no less. If there's more or less, I'm setting it back. Now, that's the dining room order. But then there's this other customer for Chipotle who's the digital customer. The digital Chipotle customer probably has a car, probably lives in the suburbs, and probably uses drive-through because they're grabbing dinner on the way home from work and eating at home. Now, funny thing about the way this person orders, Jack, is they're not like the dining room, Chipotle people.

They have a consistent order. They open their Chipotle app and they just click reorder. Yeah. The same thing I ordered last time. A burrito for me, tacos for my significant other. So, Jack, you got a weird situation here. Two completely different customers, two completely different ways of ordering. Not a weird situation.

a great situation because they're both profitable for Chipotle. So, Jack, what's the takeaway for our buddies over Chipotle? The recipe for restaurants, let your app segment your customers. Snackers, now that Chipotle knows which locations are digital and which are dining room, they can tailor those restaurants to serve the specific customer. Simple example, let's say a Chipotle gets most of their business from the app, a suburban one. People are probably eating at home using their own silverware.

So that Chipotle doesn't need as much plastic silverware. Less obvious example, Jack, maybe they can employ completely different marketing teams and different menu strategies depending if it's an urban Chipotle or like a suburban Chippole. We all know that salad greens are freshest when eaten right away. Delicious. So Chipotle can push salads at restaurants that have dine in customers, not drive-through customers. Snackers, we're expecting chains like Burger King, Wendy, Sweet Green to try to segment their customers the same way, given this Chipotle knowledge. The app will reveal who is dining out

digitally and who is dining in. For our third and final story, we just got the second biggest legal settlement in United States history yesterday. Opioid companies are paying $26 billion, and yet their stocks rose on the news. Okay, so Jack, we're in the middle of a pandemic, but people aren't talking about the fact we're also in an epidemic. Same time. Yes. The epidemic of opioid overdoses is not over. No, it's as bad as ever, actually, when you look at the numbers. Yeah, the number of opioid overdoses in America jumped to a record 70,000 last year, according to the CDC. Yeah, like we said, the pandemic's bad. There was also an epidemic. Yeah. Pain killers, we're talking about opioids, oxycott, fentanyl, all the same

problem. And honestly, this isn't new because it goes all the way back to 1999. Half a million Americans have died from opioid overdose since then. And all that led to 3,000 separate lawsuits across the United States against the drug makers and the distributors. Yeah, the allegations, the drug distributors turned a blind eye, allowed ludicrous numbers of painkillers. Crazy. Go into like tiny towns. Messed up marketing on this. Johnson and Johnson, who produces opioids, downplayed how addictive they are in their marketing. Okay, so then all those lawsuits, all 3,000 of them got turned into one mega case with big news yesterday. Here's the big news.

Instead of going to trial, these four drug companies settled a lot easier. But settling is expensive. They're paying a whopping $26 billion to end these 3,000 lawsuits. Okay, Jack, we're talking second biggest settlement in the history of the United States ever. The only settlement bigger was when big tobacco settled for their like, decades of misdeeds in the late 90s. The camels, the Marlborough Man, all the market. It always comes down to the marketing stuff. Johnson and Johnson, McKesson, Amerisource Bergen, and Cardinal Health are paying a combined $26 billion. Oh, and Jack, how about everyone over

at the Purdue Company and the Sackler family that, like, invented the painkiller, basically? They're the ringleader of this epidemic, and they're being sued separately. That's a different story. Now, the families in this situation aren't going to actually get money directly from this $26 billion settlement. Yes. The money is going to states and local governments who will provide support for families and victims and vulnerable people to opioids. But another really interesting number here is $2.5 billion out of the $26 billion. Yeah, about 10% of this settlement is paying for the hundreds, maybe thousands of lawyers

and aides who reped those 3,000 lawsuits. It was a two-year lawsuit and the second biggest in history. So, Jack, what's the takeaway for? the pharmaceutical companies. Investors hate surprises, and this was actually zero percent surprise. Yeah, Snackers, the four huge drug companies here are literally paying out billions, again, second biggest settlement in United States history. And yet, most of their stocks rose this week by as much as 5 percent. You would have thought such a huge number, the stocks would have fallen. It was a huge cost, but it wasn't new news to the investors. Jack and I jumped in snack style.

back in October of 2020, Johnson and Johnson predicted this basically. They put aside $5 billion exactly the amount of money they have to pay. In February, the three drug distributors, the other three, they put aside $21 billion, which is exactly how much they had to pay. So exactly the price they're settling on today is exactly what investors expected today. Their lawyers must have known exactly what the settlement was going to end up with. On the other hand, if the drug companies had to pay more than they've had to pay more than they've had predicted or admitted any wrongdoing, then that would have been a different situation. That would have been a surprise.

Yes. But they didn't admit wrongdoing and they didn't pay more than expected. And that's why their stocks actually rose. Investors were relieved that it's over. Jack, can you whip up the takeaways for us before the weekend? Tokyo isn't having fun this Olympics. NBC is. Yeah, voters aren't into paying for Olympics anymore.

For our second story, Chipotle has two different businesses, dine in and digital. App segments the customers. Third and final story, the opioid settlement was finally reached for $26 billion. Investors hate surprises and there was no new news here. Last bit on that. Now the states have to decide whether to accept the settlement. Time for our snack fact of the day, which is actually the answer to the trivia question we asked you eight minutes ago.

This one's from Nick and Jack from San Francisco and Vermont. It's truly. Which American University has hosted an Olympics opening ceremony, a baseball, World Series and a Super Bowl. Jack is a USC, Georgia Tech, University of Missouri, UCLA, or Bowden College. The answer is Southern Cal USC. The L.A. Memorial Coliseum was built in 1932, hosted in 1984, and then we'll host in 2028. They've hosted a World Series, two Super Bowls. Very nice. They will host three Olympics, and guess what? Six presidents have spoken. at the L.A. Memorial Coliseo.

And the Pope and MLK and the Dalai Lama and Nelson Mandela. Wow. D1 lineup. That's Farsity, Inc. That's Farsity Inc. Snackers, you look fantastic today. So are you a dine in Chipotle or a digital Chipotle? I'm part of the 15% that does both. I mean, this is the new first date question, Jack.

Snackers, add it to your Tinder profile. Nick and I will see you on that. We can't wait. H-Y-H-Y-S-D. And before we go, Jack, you want to whip up this birthday for us over here? Happy birthday to our buddy. Timmy. It's our buddy Timmy. Real guy. Happy 60th anniversary

to Omi and Nunno in Massapee for New York. I mean, round up to 100. That's incredible. 60s a lot of years. It's a lot. It's six decades there. Haley from Denver, happy birthday and congrats on the new home. Happy birthday to Chris Costello in Glasgow, Scotland. And Joe Garcia in San Antonio

and Andrea Moore in Ohio. And Nikki, who's snacking or cooking right now in Hudson, Ohio? Happy birthday to Bryce Clark. Our third birthday boy this week from Lake Mills, Wisconsin. Yeah, and then Stephanie Calderon, happy birthday down in Dallas, and Michael Quisnell in Madison, Wisconsin. And Allison Sue in Santa Clara, California. Happy birthday. Happy birthday to George Parks and Atlanta, Georgia. And legendary snacker, Michael Barbary, having a birthday in Vegas.

Jake and Paige are celebrating their anniversary in Maui. And Jack, Chris Newell has his Goose Day anniversary coming up. Anybody else celebrating today, make it a T-boy. Celebrate the wins because it's Friday. This is Jack, Nick on stock of Chipotle. 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. Ooh, interesting. Tell more.