Jake Howe
speaker
144 appearances
1 recordings
1 series
first heard Aug 2024
last heard Aug 2024
Jake Howe’s voice in public audio — every appearance, attributed to the second.
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Appearances
I'll break down what went wrong and get your reaction to all this. I know you have some strong feelings on it. Freiburg as well. Earlier this week, Starbucks shares were down 20% year to date compared to the S&P, up 12%. Companies are two straight quarters of declining revenue, the definition of a recession, in fact.
They've had to raise prices massively due to inflation that has annoyed customers. And customers have been irate about the weight which has been caused by two things. One, they have a broken staffing algorithm. That's led to massive understaffing. And then the app has become, the Starbees app is incredibly complex and you can order ridiculous drinks.
Kids are addicted to this. That's what kids call it? Kids are addicted to it. Yeah. And they've added like all these like fruity drinks and stuff that would be like along the Boba lines that have made, have become incredibly popular with millennials and Gen Z.
So anyway, Laxman was the handpicked successor by Howard Schultz, and Schultz helped prep and train Laxman, but he's been super critical of him recently, kind of like the Bob Iger, Bob Chapek relationship we saw play out in 2022 over at Disney. Brian Nicol, the current CEO of Chipotle, is going to take over at the end of August. Investors love this move. Shares jumped 25% on Tuesday.
Brian Nicol, the current CEO of Chipotle. Chipotle?
Anyway, Starbucks jumped 25% on Tuesday, largest day increase, yada, yada. Meanwhile, Chipotle dropped 8%. Nicole is on a heater. When he switches teams, the odds go with him. And Starbucks has a bunch of activist investors who are winning massively as part of putting pressure on this freeberg. Starbucks and Nike, both iconic global brands, both have faltered. What's your take?
Sachs or Chamath, anybody have strong feelings here?
They've done it, but it didn't have uptake. They've already got that, yeah. When you open the app, they have every single syrup comes in sugar-free and regular. So when I go there, now that I'm on GLPs and I've lost all this weight and I drink less, I just get the Nitro cold brew. It's got zero calories or five calories. I might throw a little cold foam on it.
And then my kids, I do... That's not what the kids want. No, I know. And with the kids, it's critical. What I do with my kids is I do low sweet or like one third sweet. I order one giant one. I pour it into three glasses at home with ice and I cut it with water because it is like drinking... an unbelievable amount of sugar. It is nuts. It's like a milkshake, basically.
That's the thing about coffee. Coffee's supposed to have zero calories, and you put a little half and half in it, and you get the fat, and you're good.
I did a little retail. You did a little retail side quest.
Well, I mean, my kids love Starbucks. We are regular consumers. The app is extraordinary. And I think the key issue here is obviously the inputs and inflation. That's a major driver. But wage inflation is a critical piece of this. Here's a chart for you, just in terms of weekly earnings of full-time workers since Q4 2019.
Starbucks started having a lot of labor movements, a lot of unionization, a lot of complaints from the green aprons, and they have massively raised salaries. They were at $15, $16, $17. A lot of people were going into gig work, door dashing, Uber.
And so this competition for entry-rung employees forced Starbucks, and I know this from the Uber experience and then DoorDash, people wanted to set their own schedules, not be like in a shift work. And so- You could make $20 working for Uber and DoorDash. You're making $15 and you have to drag your ass into Starbucks at 5, 6, 7 a.m. and work a shift and not be able to pick up your kids.
That led them to go to like $20, $22 per hour for these baristas. And they continue to raise those rates. They've been very generous with employees. And so I think that's a key piece of it. I think the big story here is going to be automation. I think you're going to see a lot more robotics in these. If you look at, I just had the CEO of what's the salad company that people, sweet greens.
I just had the CEO of sweet greens on this week in startups. And he is all in on automation and they are making salad robots and they've already got two or three stores with them. And his whole concept is it's going to take $3 out of every salad. We have an investment in a company called Cafe X. Nick, you can play a clip of it.
These two machines in FSO have broke a million dollars a year in revenue. They are serving a massive number of them, and they've sold a dozen of these to other people. So I think automation is what's going to come to this. I don't think you can sustain it. And the money has to come out of somewhere. And the two big costs it can come out of is the real estate and the employees.
And I think that's what we're going to see in the very near future is Dunkin'.
You were doing it at Eatsa, right? Were you doing?
So- Explain how that might work and impact a business like that. Unpack a person.
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