Episode 597: Neal and Toby talk about Meta’s mega nuclear deal with Constellation Energy as it seeks to power its AI demand. Then, Dollar General impresses Wall Street with a strong Q1 that has shoppers from all over looking for value amid rising costs. Also, the fast-food chicken wars reaches a new chapter with the return of the McDonald’s snack wrap and a restaurant that’s heating up: Dave’s Hot Chicken. Plus, a British AI startup filed for bankruptcy after it was allegedly falsifying business to inflate its sales. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. LinkedIn will even give you a $100 credit on your next campaign so you can try it yourself. Go to LinkedIn.com/MBD Terms and conditions apply. Only on LinkedIn Ads. Listen to Morning Brew Daily Here: https://www.swap.fm/l/mbd-note Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - MBD Trivia Night 02:45 - Dollar General Stock Up 07:00 - Meta Goes Nuclear 11:00 - Builder.AI Collapse 16:15 - Snack Wrap Returns 20:00 - Headlines Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What exciting event happened at MBD Trivia Night?
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Chapter 2: Why is Dollar General thriving despite economic uncertainty?
Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, McDonald's is bringing back the snack wrap, but this time around, it's got some competition.
Then Dollar General is not just surviving, but thriving in the face of economic uncertainty. It's Wednesday, June 4th. Let's ride. Let's ride.
What a time was had at MBD Trivia last night here in New York City. Thanks to the more than 100 of you who came and played along. I feel like so many memories and friendships were made just in the span of two hours. There was this guy who drove in from Fairfield, Connecticut just to hang. The father-daughter duo who was visiting all the way from Arizona.
And the time everyone loudly booed Toby for one of his Toby's Trends questions. Just super cool to see the community you've created around this podcast.
I think you're confusing those boos with the abject despair, your diabolical Neil's numbers category instilled in everyone. But yes, we certainly want to do more trivia going forward and appreciate everyone who came out. Maybe some virtual Zoom trivias in our future too, so all you outside the city can show us how smart you are. And also, maybe boo my questions.
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Chapter 3: What does Meta's nuclear deal mean for AI power demands?
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LinkedIn will even give you a $100 credit to get started. Just go to LinkedIn.com slash MBD. That's LinkedIn.com slash MBD. Terms and conditions apply. If you want to purchase some shares of Dollar General, you're going to need a few more dollars after the stock jumped more than 10% yesterday following some better than expected earnings and a sunny outlook.
Dollar General sales come primarily from households with an income of less than $30,000 a year, but when times get tough, the brand also starts to attract more middle and higher income customers. Customer traffic actually dipped, but average transaction amount rose 2.7% in Q1, showing that customers were selling out more when they did drop in.
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Chapter 4: What led to the collapse of Builder.AI?
Its ability to attract value-conscious shoppers is why this business falls in the camp of companies who do well during times of economic uncertainty. It sets up its tent neck to the likes of who reported earnings on Monday showing a jump in food sales as people opt for microwave chicken noodle dinners rather than going out.
Chapter 5: What changes are happening in the fast-food chicken industry?
Costco and Walmart are two other businesses who also forecasted strong quarters ahead in the face of adverse conditions. Now, of course, a lot of Dollar General's sunny forecast is also tied to some optimism that it can dodge some tariff-related costs, by pressuring suppliers, finding cheaper alternatives, and shifting production.
So Neil, it needs to thread this needle between attracting customers who are searching for deals to dodge tariff-related price hikes, while also figuring out how to keep their own prices down as well.
Such an interesting snapshot of where we are in the economy right now. Dollar General's first quarter had the highest percentage increase in trade in customers in four years. That's what the CEO said. And trading customers are new customers, those medium, middle and higher income customers who don't typically shop. at Dollar General.
They may shop at Target or Walmart or other retailers, but they started to shop at Dollar General at the highest rate in four years because of what's going on in the economy. Maybe they're scared of tariffs or inflation or whatever it is. They're starting to They're starting to shop at Dollar General. And that's very good for Dollar General because those people have higher incomes.
Chapter 6: What are the latest headlines affecting the economy?
They spend more per trip and they just spend more overall than Dollar General's existing customers. So this is an absolute. We talk a lot about companies facing headwinds. This is a huge tailwind for a company like Dollar General.
Yeah, Dollar General actually reminds me of this quote from another chief executive of Sam's Club, which we actually spoke about on this show. Chris Nichols, the executive of Sam's Club, said, Through good times we do well, and through times that are tough we do even better. And it feels like Dollar General is another business that falls into that camp.
It's standing out in the retail industry that has been taking a lot of hits. If you look around at Macy's, Best Buy, they've all said that they've cut their profit outlooks due to the hit from tariffs. But Dollar General actually joins the likes of Costco and Walmart, who raised their outlooks and said, hey, we're actually going to thrive in this environment.
That being said, though, there are some assumptions that they're making that led to that higher forecast. They're assuming that they're going to face just 30% tariffs on goods imported from China through mid-August, which is semi a big if, because if those tariff pause that Trump has announced actually goes back up to the untenable 145% tariffs that throws everything back into chaos again.
So they do have to do a little bit of navigating and be nimble as this tariff environment continues to evolve.
And let's give the management team some credit because sure, they, you know, are going to benefit from what's going on.
externally in the economy but they have been undergoing some serious renovations at their stores they've remodeled over 1 000 they've opened 156 new ones as part of this something called project renovate and they're trying to make these stores just more uh nice to go into and they plan on sort of flipping over and remodeling 20 of its fleet each year they have 20 000 locations so you can do the math it's going to take a while but they are making their stores just a more pleasant experience
to go into, and that had been a big criticism of dollar stores in general. One reason why you're not attracting higher income shoppers is because they don't want to go in. So if you remodel stores, make them nicer.
And also, Dollar General partnered with DoorDash, and they said that this partnership of delivery from Dollar General to higher income shoppers is another reason why they saw this cohort shop more at Dollar General.
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