The Best One Yet - “WeWork from the Dead” — WeWork’s profitability (?). Domino’s fortressing strategy. JetBlue & American Airlines colludiness.

Episode Date: July 20, 2020

Don’t even think about thinking WeWork is gone — the coworking pioneer claims it’ll be thrivingly “profitable” by this time next year. JetBlue and American Airlines have developed a special corona-relationship that basically feels like collusion. And Domino’s revealed its new chicken wings, cauliflower ambitions, and “fortressing” strategy.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. Welcome back. It is Monday, July 20th. Nick, did I tell you we went camping this weekend? It was actually at a wild horse rank. So River, the profit puppy got to meet like a sales steed giant horse. Jack, we went over this. It's pronounced glamping. Glamping. This happens to be the best one yet. And our first story, straight up TBOI. Domino's. The cheesiest Corona Economy winner, sales rose a record 16% last quarter. And the CEO's 2020 goals in a involve chicken wings, cauliflower, and fortressing? For our second story, everyone wants to go through quarantine with a special someone at their side. So JetBlue and American Airlines are defining a new special relationship. That kind of sounds like collusion. This feels like collusion, Jack. Third and final story, the badly wounded unicorn of the day is WeWork. Yep, you thought the co-working pioneer was dead. Now it's claiming it'll be profitable this time next year. Maybe.

Yeah, kind of. Uh-huh. Adjusted. Potentially. Maybe. Wework never lets the truth get in the way of a good headline. Extra embellishment on that headline, please, WeWork. Now, before we jump into all that good stuff, Snackers, Apple may owe you $25 straight at Tim Cook's wallet. It's part of a $500 million class action settlement meant to resolve dozens and dozens and dozens of cases of Apple messing with you. There also are dozens more of those cases. Now, remember back when Jack, there was this thing called, you know, sports? Uh-huh. And there was this thing called Sports Center Top Ten. I do. So we whipped up. our own Apple not top 10. We're talking Apple low 10. The 10 things Apple has done that have made your

life worse every day, just a little bit. Buna pa, bunna pa, bun. Number 10, they updated the iOS to make your iPhone 6's brain explode. That is not as cool as the other side of the pillow. Number nine, they changed their charging cord again for no reason making you spend 50 bucks to get a new one, aka Donglegate. Number eight, they never told you that simply replacing your battery could extend your phone's life by like 10 years. Which leads to number seven. Then when you went to the store to actually replace your battery, they charged you a service fee to replace it. Number six, this one's infamous. They added a U2 album to your iTunes when you never asked for it. Bono Gate. What's that guy doing behind all those sunglasses? What's hiding in there? Number five, it auto connects your MacBook to Xfinity Wi-Fi everywhere, when you obviously would prefer to connect your home Wi-Fi. It's like connected to my airport Wi-Fi still. Number four, you turn on Bluetooth. It doesn't get a reaction, so you try to click it again. Boom, it's already off, then it's back on, then it's back on again. Number three, they started the trend of products, not just saying where they were made, China,

but also where they were designed. Cooper Tino, California. Apple, that is not a thing. Number two, you're slowly deteriorating headphone and AirPods volume. I swear they used to be louder, Jack. It was definitely like 50% louder when I bought these AirPods. What was that, Jack? I can't hear you. What did you say over there?

And number one, who could forget this one? Donglegate. The other one. Snackers, if you think you've been wronged, we'll tweet out the link to see if you're eligible for this $25 bucks from Apple. At T-Boy Jack, at Nick of New York, or at Robin Hood Snacks. 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 are about to hear ain't food. It's air candy. They don't reflect the views of the Robin Hood 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 Robberhood Financial LLC Member Finra slash SIPC For our first story

Domino sales Jump 16% Because it is the most innovative company In pizza This earnings report Was double crust stuffed with good info

Snackers, how do you like These apples The best sales growth In at least 10 years When it comes to Domino's At least 10 years Because the data only went back back to 2009. It could have been better than the past 20 years. Jack and I have like a stack of

library books who like whip them up and there was like dust coming off of them. Every domino's location sold on average 16% more pizza and soda than they did last year. The pandemic has been very, very good for Ann Arbor based domino snackers. And Domino is invested in delivery before everyone else. And delivery is just what anxious COVID avoiders are looking for. And if you happen to be a carboloader, they happen to have just invested. in a big thing called car side pickup. That's right. If you don't trust delivery and you think they'll get lost on the way to your house and you don't want to risk that, you can go to Domino's, but instead of having castrophobia or getting stuck in a drive-through line, you can do car-side

pickup. They like walk out of the store to your car and they just hand it to you through the window. Yeah, they put the pizza in your trunk if you want. It's kind of nice. Plus, turns out new customers are joining their piece of the pie rewards program at a recordish kind of rate. Understandably so, because six orders with this rewards program, gets you a free pizza. Domino's is looking at the numbers. They notice that those loyalists also order more often and happen to place much larger orders. You want a lot of bang for your buck when it comes to delivery, so you're not just ordering pizza for tonight. You're eating pizza for tomorrow morning's breakfast too. So you're getting enough for leftovers. Monday dinner, Tuesday lunch,

Wednesday sprinkle on honey, and that's a dessert zah. And then Domino's hit us with some unsurprising Midwestern humility. The CEO Rich Allison gave us this lovely quote, our wings needed to improve. So they improved the wing recipe, because shocker, people love wings coming alongside their pizza. But then Rich Allison went kind of like real housewise of Ann Arbor on us and flipped the table. Yeah, got kind of mean. He made a comment, which we think is a sad eye at Taco Bell. We don't launch new products just to create news. Meanwhile, like the folks over at Taco Bell just whipped a like Cheetos, Gummy Bear, HBO Max,

Disney Toledo's tacos sandwich that they're only. going to offer for six months for limited time only. Yeah, tacos's like, for one day only. We will pay you to eat our tacos. We partnered with Alibaba, Tencent, and six European companies to create this thing. But then Domino's hinted at a new product coming later this year. Yeah. Which we think, they haven't announced, but we think it may be cauliflower crust so that

gluten-free nation can get their doms for once. Brussels sprouts are jealous, Jack. Gruppup apparently comes out with like this taste report every year, and there's been a 650% surge in cauliflower crust orders across the delivery app. Trader Joe's has a great cauliflower crust. I swear, it's better than most pizza crust, like regular stuff. It's better than most cauliflower as just a straight-up vegetable. So, Jack, what's the takeaway for our buddies over at the Dom?

Everyone's talking online this, online that, but real estate is the post-COVID battlefield for pizza. Snackers, despite all this wonderful stuff we just told you, the Domino CEO said he is one single focus, fortressing. Instead of spreading out stores and trying to dominate like the entire country, they're going to focus multiple locations clustered in one neighborhood so they can dominate. Yeah, Fortressing sounds kind of counterintuitive, but it leads to faster delivery times. You get to handle more takeout, and most importantly, it crowds out competitors.

Sadly, the rise of bankruptcies that we expect the rest of the year in America is going to lead to a lot of storefronts becoming available for Domino's to move into. Which happens to be perfectly fitting with Domino's Fortressing strategy. Nick and I are huge fans of Burroughs of Barrow-Ranky. mom-and-pop pizza shops, but Wall Street loves the idea of Domino's Street Corner domination. Fortressing is why it stocks at a record high up 33% in a horrible 2020. For our second story, American Airlines is becoming the villain of the coronavirus. It accepted bailouts. It's disregarding social distancing, and it's still might go bankrupt.

You know, no one could have predicted or prepared for the pandemic's particularly devastating devastation on airlines. These stats are wired. April 16th was the worst moment for airlines. Only 3.6% as many passengers were flying as the same time the year before. So we're looking at these numbers. We're like, we totally understand why U.S. Airlines accepted $25 billion of taxpayer money as a bailout just a couple months ago. Nick, nobody was forecasting our business will drop to 3% of normal times. But sadly, those $25 billion of like support pills may have been completely wasted. It's been like three months since the bailout. And on Thursday, latest day that we had data, there was still only 25% as many passengers as normal days.

COVID still out of control, air travel still in dumpster, and the lines at TSA are pretty much the same length as they always have been. Now, American Airlines CEO is dealing with this crisis his company faces in three ways, none of which we admire. No. Jack and I look these up. You're not seeing these in like the 101 help textbook for how to handle this situation. The first thing the American Airlines CEO is doing is he's embracing recklessness. Capital R. Delta other airlines have, like, promise not to

book a middle seat. American Airlines has this vague, like, we'll try not to book the middle seat, but you know they're book in the middle seat if they can, and they'll make money off it. You're like, oh, excuse me, flight attendant, there's someone in my seat. They're like, yeah, they're supposed to be in your seat. You're both in that seat. Second thing the American airline CEO is doing

is borderline collusion. Instead of competing with JetBlue to offer the best flights at the lowest costs? Because competition is like rule number one of American capitalism. Instead, American made a pact to share passengers with JetBlue at New York City's three airports and with Boston. This is getting so incestuously collusion-y that they are merging frequent firepoints, sharing airplanes, and letting you book on either airline from either airline's website.

You know what the goal is here, Nick. It always comes down to raising prices. And then the third and final part of their, like, anti-playbook. They're going to lay off workers as soon as they legally are permitted to. Keywords legally permitted, because the airline bailout forbid airlines from laying off people until, like, October 1st. And that's why American just announced plans to lay off 25,000 people on October 1st. Exactly. And they're not the only ones United is probably going to even cut more workers. Because the air travel industry will likely stay depressed for a while.

By the way, Snackers, if you want to check out American Airlines stock, it peaked at $20 on June 8th, when reopenings kind of looked like they were going kosher. It looked like people might take vacations to Disney World again. Friday, though, they were close to half of that down 58% this year. So Jack, what's the takeaway for our business? buddies over at the airlines. This is the worst risk of a bailout. You spend a ton of taxpayer money with no guarantee it'll actually save jobs. The worst thing is taxpayers paying for corporate ballots and then the layoffs end up happening anyway. People probably won't travel on airplanes

until a majority of people are vaccinated, which could be a year or two. So don't be surprised if the airlines we already bailed out end up going bankrupt as well. Now instead, Nick, we could have let them go bankrupt without giving them billions of dollars of taxpayer money first, which the airline lawyers have a really good experience doing because 66 U.S. airlines have gone bankrupt since just the year 2000. That's right. 66 U.S. airlines have gone bankrupt since 2000. Sorry, Nick, I felt I had to repeat that.

Then airlines formed after those bankruptcies, free of debt burdens and rose like phoenixes from their own ashes. That's kind of the beauty of bankruptcy. You don't have huge debt interest payments because your debt goes away, which lets you lower prices, and offer a better service, like free-checked bags and free Purell for everybody. Instead, though, we bailed out the airlines, which we may come to regret. For our third and final story, this one's while Jack, put back the defibrillator.

WeWork is still alive and, like, it's kind of kicking. It's kind of kicking out there. Back in the fall, Nick and I were getting ready to cover WeWork's IPO, which was supposed to be a $47 billion company, didn't quite work out that way. No, now this company is worth $3 billion. And its first move to try to get back up to $47 billion was to whip out the old hatchet. First, they fired 8,000 employees. It was badly painful.

That's almost three quarters of all we workers. Absolutely unfair and brutal. Second, they started selling off their non-core businesses. Jack, some very interesting properties here on the chop and block. The new chairman of WeWorks's like, why do we have a wave pool company when we're supposed to be like an office-based company? And then everyone in the world was like, yeah, why do you guys have a wave pool company? This doesn't seem to work.

Step three, any leases that you can possibly get out of that are expensive, end those leases to save money. But last week, the chairman of WeWorks sat down with the financial times and gave a wild interview on what he's expecting over the next year. This is what he said. By next year, 2021, we will be basically a profitable venture with an incredible diversity of assets. Jack, can you please pick up your phone for a second and see the calendar invite I just sent you? Oh, here we go. Next year, we work profitability. Great. July 20th, 2021. Jack and I will be there. You'll be listening to this pot. Now, the key word Nick and I noticed in this announcement by WeWork is the word basically. Basically. Basically, basically. He said we will be basically profitable by next year. Nick, I'm basically a billionaire. Jack, this basically feels like when Uber tried to have adjusted profits on us like two months ago. Right. I'm also an adjusted billionaire if you adjust lots of truth. If you adjust and you do it basically, I think they cancel out and it actually happens. So that's an absurd line from WeWork. But to survive, WeWork can't just focused on costs, which has been its main priority

the past few months. They need to grow revenue. Turns out WeWork only has $4 billion in cash left, and they're on pace to get that down to like $2 billion this year. But, Nick, there's kind of a new thing going on, which WeWork could probably capitalize on. And it's called Work From Anywhere. Yeah, not work from home, work from anywhere.

Turns out MasterCard, Citibank, TikTok, Microsoft. They all just signed leases with WeWork just in. June. And they want to use those WeWorks the same way that Facebook, Google, and Amazon are doing it already as like a satellite office. Maybe you work from home. You get tired because you can't book out the kitchen conference room. So you pop into the WeWorks a couple days a week. If you work at Amazon's Detroit office, you're probably working at home like four days a week. And you can come into the office anytime you're feeling confident enough to do that. And WeWorks poured $20 million into renovation. So like you don't have the giant, you know, Jack, the long tables where they cramped 20 guys in startup t-shirts with like next to the ping pong. table, less of that. You don't want every ping pong player to become a super spreader. So they're chopping up that giant space into smaller private spaces where you can control the sanitation. And they claim that demand for these spaces is through the roof literal quote from the interview. No, we got to say about WeWork, it's still a private company because it did an IPO. Yes. So they are not required to be 100% truthful like companies that are public and have publicly

traded stock are. Yeah, like Adam Newman basically stuck exaggeration in slide number 12 of WeWork's pitch deck. So through the roof might mean still in the basement, but rising. It's all relative. Adjusted, basically adjusted. So, Jack, what's the takeaway for our buddies over at WeWork? To become bigger than it was before, WeWork should go bankrupt. WeWork, here is the playbook Jack and I've been working all weekend on. Go bankrupt, re-do leases at new rates, become leader of post-COVID office design economy world. Now, bankruptcy is a bad word because the venture capitalists and the lenders would lose all of their investment that they put into WeWork, but it gives them the chance to start over.

Which leads to step two perfect timing because commercial real estate prices have dropped so you could redo all those original leases. And then this new rework with no baggage could become the pioneer of clean, private office concepts for a post-COVID economy. A whole new world. If burned WeWork investors are willing to try once more, WeWork now has a playbook to rise again, Sons Adam. Jack, can you whip up the takeaways force to start the week? It's like Domino's last 10 years have been in preparation for this COVID moment. Domino's growth will be all about fortressing, aka smother your neighborhood with multiple dominoes.

Second story, American Airlines is making desperate moves to stay alive. We hope it stays alive, or else this whole bailout was just like, was basically for nothing. Third and final story, WeWork has found an opportunity for growth in the COVID world. Closed concept, not shared office spaces. Goodbye 40-foot-long table, like Game of Thrones dinner. Now, time for our snack fact of the day.

This one sent in by Jason Land in lovely Conroe, Texas. How many football players are on the field at a time? It's going to be less than 25 and greater than one. It's right up there in the middle. There are 11 players on the field, which is why Texas A&M University likes to call their fans the 12th man. Funny thing, Jack, because I seem to recall the Seattle Seahawks also like calling themselves the 12th man.

They really do. And it turns out there's a bit of a legal dispute between the two because Texas A&M has the actual trademark for the 12th man. Yeah. So this is a little awkward, but Texas A&M, since it owns the trademark, let Seattle use it by paying them $140,000 over five years. That's right. Texas A&M gets $28,000 a year. Yeah. Side hustling as an international property like lender.

They literally send them a check and like a signed football. It's a wonderful annual gig. Great snack fact. Now, Nick and I want to give a big congratulations to Michael Haslam and Julie Elkin, who just got engaged in Sedona, Arizona. Wonderful photos. Don't know how you got the sun to shine like that. That was incredible. Those rocks are incredibly red, neck.

They're red. They're very, very red, very red. Which also brings us to congratulate Roxy Ackerman, who just got into vet school at UPenn. And happy birthday to Christine from Huntington Beach, California. And Grady Olson in San Mateo, California. And Jed, he's turning 28 in Manchester, Vermont. Great outlet stores. And finally, Sarah Eat in the 33rd birthday and hang in Massachusetts where I think you can boat all the way to Boston.

Snackers, please ask your buddies, H-Y-H-Y-S-D. Then quickly tell them, have you had your snacks daily? We'll see you tomorrow. If you know, you know. By the way, this is Nick and I own shares of Apple. 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, 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.