Latest / Choppin’ It Up by Bloomberg Intelligence / Shatranj Capital on Ample Mideast Opportunities

Transcript

Shatranj Capital on Ample Mideast Opportunities · Choppin’ It Up by Bloomberg Intelligence

• 0:22
  Speaker 1: Welcome to Chopping It Up.
• 0:23
  Speaker 2: I'm your host, Mike Allen, the senior restaurant and food
• 0:26
  Speaker 2: Service analyst at Bloomberg Intelligence. Today we're joined by Brandon Guthrie,
• 0:31
  Speaker 2: general partner and co founder of CHATRNGE Capital Partners. I'm
• 0:35
  Speaker 2: pumped to finally get you on here. Thanks for doing this, Brandon.
• 0:38
  Speaker 3: Yeah, of course, I'm excited to be here.
• 0:40
  Speaker 2: So what's up man, any recent prs in the squad clean?
• 0:43
  Speaker 2: I saw you on LinkedIn throwing around two hundred and
• 0:46
  Speaker 2: seventy five pounds.
• 0:47
  Speaker 1: That's a lot of weight, my friend. Yeah, that's impressive.
• 0:49
  Speaker 3: That's my PR so hopefully my back and my knees
• 0:53
  Speaker 3: hold out. So no, recently. I think my big lift
• 0:58
  Speaker 3: that I was happy about as I the two hundred
• 1:01
  Speaker 3: club for at least in kg. So that's what four
• 1:03
  Speaker 3: hundred and sixty five pounds on the deadlift. So that's
• 1:08
  Speaker 3: for a desk jockey. That's not so bad. Definitely have
• 1:10
  Speaker 3: some room to improve, dude.
• 1:11
  Speaker 1: That's awesome. Yeah, that's awesome. Yeah. I hurt my back
• 1:16
  Speaker 1: with doing deadlifts. I was doing.
• 1:18
  Speaker 2: CrossFit for for a few years and I bought a
• 1:21
  Speaker 2: reverse hyper changed my life. You might even be able
• 1:23
  Speaker 2: to see I guess can see it, but you could
• 1:25
  Speaker 2: see it in the background. It's a it's a game changer.
• 1:29
  Speaker 2: So when did you start CrossFit?
• 1:31
  Speaker 3: I started CrossFit actually during during COVID, so here in Dubai,
• 1:38
  Speaker 3: the lockdowns were actually really really strict, so you couldn't
• 1:42
  Speaker 3: leave your house for about a month. So rather than
• 1:44
  Speaker 3: going stir crazy, the gym close to us was doing
• 1:47
  Speaker 3: virtual classes, so we signed up for those, and so
• 1:51
  Speaker 3: I just kind of pushed out all the furniture out
• 1:52
  Speaker 3: of the living room and every morning would would beat
• 1:56
  Speaker 3: myself silly doing CrossFit in the living room. And then yeah,
• 1:59
  Speaker 3: when when lockdown ended, I was hooked, so I kept
• 2:02
  Speaker 3: going back. So a lot of different ways to hurt
• 2:05
  Speaker 3: your back during CrossFit though, so that's a good I
• 2:08
  Speaker 3: think that's all they do is to come up with
• 2:10
  Speaker 3: different ways.
• 2:11
  Speaker 1: Yeah, the shoulders ended up getting me.
• 2:14
  Speaker 2: I had bad shoulders from football, and then all the
• 2:16
  Speaker 2: gymnastics stuff and the overhead lifts just.
• 2:18
  Speaker 1: Kind of did me in.
• 2:19
  Speaker 2: But I loved it when I was doing it, man,
• 2:21
  Speaker 2: So yeah, yeah, keep it up, man, Thanks good stuff,
• 2:24
  Speaker 2: thank you. All right, So you have extensive experience in
• 2:27
  Speaker 2: international markets, whyn't you tell the audience about your career
• 2:30
  Speaker 2: background before CHATRANJ.
• 2:33
  Speaker 3: Yeah, of course, So I spent my entire career in
• 2:37
  Speaker 3: essentially international consumer retail. So prior to Chatron's Capital Partners,
• 2:42
  Speaker 3: I was with the head of finance for Wendy's for
• 2:46
  Speaker 3: the Asia, Pacific, Middle East and Africa region, so based
• 2:49
  Speaker 3: here here in Dubai, and I was responsible for all
• 2:52
  Speaker 3: of our markets essentially east of Dubai. So hopefully I'm
• 2:55
  Speaker 3: taking the record for longest distance from them from you
• 2:59
  Speaker 3: guys for the pod cast. Definitely want to hold that
• 3:01
  Speaker 3: for a while. And with that, just gained a really
• 3:08
  Speaker 3: broad international background. Prior to prior to Wendy's and them
• 3:13
  Speaker 3: shipping me out here, I was with L Brands again
• 3:17
  Speaker 3: in their international division with Victoria's Secret and Bath and
• 3:20
  Speaker 3: body Works supporting franchisees in the Middle East, in the UK,
• 3:25
  Speaker 3: and before them, I was with a consumer package good
• 3:28
  Speaker 3: company that also focused on international, but primarily Asia. So
• 3:33
  Speaker 3: my entire career has been focused on international in some
• 3:37
  Speaker 3: format of another and really found my passion specifically in
• 3:42
  Speaker 3: F and B in the food and beverage industry. As
• 3:45
  Speaker 3: a lot of people do you kind of I don't
• 3:47
  Speaker 3: know if you necessarily seek it out, but once you
• 3:49
  Speaker 3: find the industry, it's just it's just too much fun
• 3:52
  Speaker 3: to leave. And so even with Chatrone Capital Partners when
• 3:56
  Speaker 3: we started the fund that ended up being a sector
• 3:59
  Speaker 3: focused private ACA be fund on food and beverage focused
• 4:02
  Speaker 3: here in the GCC in the Middle East. So it's
• 4:07
  Speaker 3: it's just a lot of it's a lot of fun
• 4:09
  Speaker 3: to be in this industry and to work with people. Ultimately,
• 4:13
  Speaker 3: food is just such an intimate thing and you can
• 4:17
  Speaker 3: never take yourself too serious if you're working in restaurants,
• 4:20
  Speaker 3: and so it's always good to remind yourself that, specifically
• 4:23
  Speaker 3: with Wendy's, right, you're serving burger and fries. It's supposed
• 4:25
  Speaker 3: to be fun, and so it's a good reality check
• 4:28
  Speaker 3: and it keeps you waking up and doing something fun
• 4:31
  Speaker 3: every day.
• 4:32
  Speaker 1: Yeah, it's fun and humbling of course. Time. Yeah, and
• 4:35
  Speaker 1: you had mentioned to me in the.
• 4:36
  Speaker 2: Past that a previous podcast of ours, Bob Wright had
• 4:41
  Speaker 2: been the one who had sent you overseas at Wendy's exactly.
• 4:44
  Speaker 3: So in we were in Salt Paula at the time,
• 4:48
  Speaker 3: in the back of the taxi and Bob pitched this
• 4:50
  Speaker 3: crazy idea of me moving my family out to Dubai
• 4:53
  Speaker 3: in the Middle East. So we had a really long
• 4:56
  Speaker 3: taxi ride if you've ever been in Salt Paolo traffic,
• 4:59
  Speaker 3: and so Bob had a lot time to convince me
• 5:00
  Speaker 3: that this was a good idea. No, I wanted to
• 5:03
  Speaker 3: do it. I mean, I was International has been my
• 5:06
  Speaker 3: passion since since I started my career. It was always
• 5:09
  Speaker 3: going to be something I was going to do. And
• 5:11
  Speaker 3: so yeah, when the opportunity came to come out here
• 5:14
  Speaker 3: to Dubai, I was working with Bob, who's very much
• 5:17
  Speaker 3: Assault of the Earth guy, and he was the president
• 5:20
  Speaker 3: of International Chief Operations Officer for Wendy's at the time.
• 5:23
  Speaker 3: And then we made the move and that was ten
• 5:26
  Speaker 3: years ago, so it's been it's been a whirlwind ever since.
• 5:30
  Speaker 1: Very cold.
• 5:31
  Speaker 2: So why don't you tell the audience what Chatran Capital
• 5:34
  Speaker 2: Partners does and what inspired you to start the firm.
• 5:37
  Speaker 3: Yeah, so Chatrnge Capital Partners. It's a sector focused private
• 5:41
  Speaker 3: equity fund. Like I mentioned just a little bit ago.
• 5:43
  Speaker 3: It's the sector that we focus on is food and beverage,
• 5:46
  Speaker 3: specifically QSR and fast casual restaurants, and then geographically we
• 5:51
  Speaker 3: focus on the GCC here in the Middle East, so
• 5:55
  Speaker 3: the GCC being Kingdom of Saudi Arabia, United Arab Memorates, Oman, Kuwait, Bahrain,
• 6:02
  Speaker 3: and Qatar, and then we also look at Turkey and
• 6:06
  Speaker 3: Egypt as kind of secondaries to those markets, but our
• 6:09
  Speaker 3: primary focus being here on the GCC, and we ended
• 6:13
  Speaker 3: up we just saw so much opportunity here in the region.
• 6:17
  Speaker 3: Iconic brands are no stranger to this part of the world,
• 6:21
  Speaker 3: but what is a little bit different is the ability
• 6:24
  Speaker 3: to properly grow those brands and scale them. There's a
• 6:31
  Speaker 3: lot of opportunity with investments happening in Saudi Arabia and
• 6:34
  Speaker 3: obviously here in the United Arab Emirates. And so this
• 6:37
  Speaker 3: was a financial vehicle that we felt that provided a
• 6:40
  Speaker 3: lot of liquidity into a part of the market that
• 6:42
  Speaker 3: was underdeveloped. You know, private equity is a specifically sector focused.
• 6:46
  Speaker 3: Private equity is relatively untapped. And then with us, we
• 6:50
  Speaker 3: took a little bit of a different approach. We took
• 6:52
  Speaker 3: it to as a operations first private equity vehicle. So
• 6:58
  Speaker 3: rather than kind of a bunch of private equity guys
• 7:00
  Speaker 3: coming together and making agnostic investments, we're actually primarily a
• 7:04
  Speaker 3: group of restauranteurs people that have worked in the industry.
• 7:07
  Speaker 3: Our advisors are people that have led global brands across
• 7:12
  Speaker 3: the world, and this was going to be we brought
• 7:15
  Speaker 3: our operations first kind of value creation levers to the
• 7:18
  Speaker 3: fund and then utilize private equity as a vehicle to
• 7:22
  Speaker 3: properly deploy capital quickly and efficiently, which solves some of
• 7:26
  Speaker 3: the problems when you're commercializing markets. So it was really
• 7:29
  Speaker 3: kind of a reverse engineering approach. We saw an opportunity
• 7:31
  Speaker 3: here in the region. We leveraged our experience of how
• 7:34
  Speaker 3: we've seen businesses grow efficiently across the world and establishing
• 7:38
  Speaker 3: restaurant brands and started on that journey. And that was
• 7:41
  Speaker 3: a year and a half ago.
• 7:43
  Speaker 1: Cole, And do you have any updates on the funds
• 7:45
  Speaker 1: first capital race.
• 7:47
  Speaker 3: We're constantly raising capital. We have about one hundred million
• 7:51
  Speaker 3: in pipeline ready to deploy, and so we're just finalizing
• 7:54
  Speaker 3: those investments and hopefully we get working on that sooner
• 7:58
  Speaker 3: rather than later.
• 8:00
  Speaker 1: Good stuff.
• 8:00
  Speaker 2: And and can you talk about maybe some of the
• 8:03
  Speaker 2: you know, the five thousand foot view, what what's kind
• 8:05
  Speaker 2: of created some of the opportunities that you're seeing there
• 8:07
  Speaker 2: in the GCC.
• 8:09
  Speaker 3: Here in the GCC, I think like I said, there's
• 8:11
  Speaker 3: there's never been a You have a couple of large
• 8:14
  Speaker 3: players that have been here for a while, but largely
• 8:18
  Speaker 3: there's there's a lot of money here and there's a
• 8:22
  Speaker 3: lot of family groups or privately owned groups. Private equity
• 8:28
  Speaker 3: is a vehicle and as a as a financial instrument,
• 8:32
  Speaker 3: it hasn't been around for very long, and it's it's
• 8:35
  Speaker 3: really underpenetrated here in the region compared to the West.
• 8:39
  Speaker 3: And so what what's happened is you have people that
• 8:42
  Speaker 3: experience brands, that love brands, either when they're going to
• 8:45
  Speaker 3: school or traveling into into the US or Europe. They
• 8:51
  Speaker 3: they're well capitalized, and they bring those brands back to
• 8:54
  Speaker 3: the region working with franchisors and then it's a part
• 9:00
  Speaker 3: of a family group that it's kind of the sixth
• 9:02
  Speaker 3: arm of their company's expansion. It's and it's just it
• 9:10
  Speaker 3: ends up being not more difficult than they expected, I
• 9:14
  Speaker 3: guess would be a good way to say. And so
• 9:16
  Speaker 3: where in the West, there, like I said, private equity exists,
• 9:20
  Speaker 3: or there's this middle market where you're able to drive
• 9:23
  Speaker 3: some efficiencies and these groups would typically just offload them
• 9:28
  Speaker 3: or shut down. These brands are still very emotional and
• 9:32
  Speaker 3: highly regarded because they're iconic global brands, and so rather
• 9:35
  Speaker 3: than kind of losing face or just shutting them down,
• 9:39
  Speaker 3: typically they just hold on to them. And so similar
• 9:42
  Speaker 3: how you kind of have zombie companies, you kind of
• 9:44
  Speaker 3: end up with some zombie brands. And there's a lot
• 9:47
  Speaker 3: of examples here of major major brands, global brands almost
• 9:52
  Speaker 3: everywhere else in the world that would be successful, that
• 9:56
  Speaker 3: are definitely in default of the development agreements. They've been
• 9:59
  Speaker 3: stagnant for far too long, and you end up getting
• 10:02
  Speaker 3: frustration on both sides of the equation. Frustrations with the
• 10:04
  Speaker 3: franchise ease because they're they're a little bit frustrated with
• 10:07
  Speaker 3: the support potentially they're getting from the franchise oors that
• 10:09
  Speaker 3: don't understand this part of the world, and obviously frustration
• 10:14
  Speaker 3: with the franchise ors that see all the amazing things
• 10:16
  Speaker 3: that are happening here in Saudi Arabia and UAE and
• 10:19
  Speaker 3: all the investment that's happening and the population growth and
• 10:21
  Speaker 3: the strong economy, and then your restaurants aren't moving, and
• 10:25
  Speaker 3: so you end up with kind of frustration on both ends,
• 10:29
  Speaker 3: and that just causes a lot of a lot of friction,
• 10:31
  Speaker 3: and so we our goal is to be the utility
• 10:37
  Speaker 3: that comes in and unsticks that right, that releases that friction.
• 10:41
  Speaker 3: We understand the West, We understand how governance and transparency
• 10:46
  Speaker 3: and all those things need to be established for franchise
• 10:48
  Speaker 3: oors and for investors. But we also understand the franchise's
• 10:53
  Speaker 3: point of view and kind of the boots on the
• 10:54
  Speaker 3: ground perspective, and the restaurant industry. So I think those
• 10:57
  Speaker 3: two those things coupled together create a unique proposition for people.
• 11:02
  Speaker 1: Yeah, for sure, it's interesting.
• 11:04
  Speaker 2: So are you looking to be a franchise or a
• 11:06
  Speaker 2: subfranchise e or is it going to depend on the
• 11:08
  Speaker 2: situation and what sized deals are.
• 11:11
  Speaker 1: You and your partners interested in.
• 11:13
  Speaker 3: Yeah, I think at first, master franchise e is it
• 11:16
  Speaker 3: tends to be the opportunity that exists here. The most
• 11:22
  Speaker 3: most brands that exist here, if we're involved in buyout situations,
• 11:27
  Speaker 3: have master rights for multiple countries. They may be in
• 11:29
  Speaker 3: default of those rights, but they still have the rights.
• 11:31
  Speaker 3: So any buyout acquisition would come with the entire territory
• 11:35
  Speaker 3: most usually the GCC as a whole, maybe some additional
• 11:40
  Speaker 3: shoulder markets, but with a platform company like that there's
• 11:43
  Speaker 3: also opportunity to bring in iconic brands who have yet
• 11:47
  Speaker 3: to make the jump into the region and plug them
• 11:51
  Speaker 3: into an existing portfolio that is leveraging your supply chain
• 11:54
  Speaker 3: efficiencies and some of the challenges that come with establishing
• 11:58
  Speaker 3: a market from zero. You can do that much better
• 12:02
  Speaker 3: in a portfolio company, and then you get the transparency
• 12:05
  Speaker 3: and an EESG that comes with Western back private equity
• 12:09
  Speaker 3: compared to partnering with a local group which will run
• 12:13
  Speaker 3: like a local company and come with some of those
• 12:15
  Speaker 3: frustrations and frictions compared to what people might be used
• 12:19
  Speaker 3: to in doing business in the West.
• 12:22
  Speaker 1: Do you have any deals lined up right now?
• 12:24
  Speaker 3: There? We have about one hundred million I think it's
• 12:27
  Speaker 3: five different groups, about one hundred million, between one hundred,
• 12:29
  Speaker 3: one hundred and fifty million, depending on how many groups
• 12:31
  Speaker 3: we look at of groups that are either through diligence
• 12:34
  Speaker 3: or in process of diligence. So to be honest, it's
• 12:40
  Speaker 3: a little overwhelming. Like I said, there's a strong lack
• 12:45
  Speaker 3: of liquidity in this market, so there's actually quite a
• 12:47
  Speaker 3: bit of room to come in and evaluate different groups,
• 12:51
  Speaker 3: and so there's a lot of people who are wanting
• 12:54
  Speaker 3: to work with us and who want us to take
• 12:56
  Speaker 3: a look at their businesses, and so it's more a
• 12:59
  Speaker 3: matter of getting through all those groups versus having a
• 13:03
  Speaker 3: you know, needing to find deals, which is a good
• 13:05
  Speaker 3: problem to have, but it is a little bit overwhelming.
• 13:08
  Speaker 1: Yeah, high class problem.
• 13:09
  Speaker 3: Ye, I'll take it. I'll take it.
• 13:11
  Speaker 1: Good. Yeah, good stuff. And you had mentioned, you know, fast,
• 13:15
  Speaker 1: casual and quick service. Does casual dining work in that region?
• 13:21
  Speaker 3: A casual dining works, It depends on It's a really
• 13:24
  Speaker 3: diverse region, so I think it's a little It differs
• 13:27
  Speaker 3: a little bit depending on your market. So if you
• 13:30
  Speaker 3: look at UAE, casual dining actually works pretty well generally,
• 13:36
  Speaker 3: at least with the data that I see, sales sales
• 13:38
  Speaker 3: are up, sales are strong with casual dining. In Saudi Arabia,
• 13:43
  Speaker 3: for example, sales are down, they're trending downwards. So it
• 13:49
  Speaker 3: really depends you have different and when you look at
• 13:51
  Speaker 3: the dynamics of that. Your your infrastructure is very different
• 13:54
  Speaker 3: in the UAE compared to a developing infrastructure in Saudi Arabia.
• 13:58
  Speaker 3: Traffic patterns are very different in Saudi compared to to
• 14:02
  Speaker 3: other parts of the world. So I think your casual
• 14:05
  Speaker 3: dining is under pressure, and generally what I see at
• 14:09
  Speaker 3: least is where you have more of an ability to
• 14:11
  Speaker 3: leave the house not get stuck in traffic for a
• 14:13
  Speaker 3: long time. There's actually some interesting cost pressures that I
• 14:19
  Speaker 3: think are favorable to casual dining at the moment if
• 14:22
  Speaker 3: everything lines up like that, compared to Fast Casual or QSR.
• 14:27
  Speaker 3: But ultimately QSR and Fast Casual delivers very well. And
• 14:30
  Speaker 3: so here in this region, delivery has always been really,
• 14:32
  Speaker 3: really big. Even before delivery got big in the US,
• 14:37
  Speaker 3: delivery was thirty or forty percent of sales for restaurants
• 14:41
  Speaker 3: here in the region, and before the aggregators came in,
• 14:44
  Speaker 3: everybody had their own call centers and their own bikes
• 14:47
  Speaker 3: as part of franchise e systems. So delivery is part
• 14:50
  Speaker 3: of this region and it's just something you have.
• 14:53
  Speaker 1: To work through. Yeah, all right.
• 14:56
  Speaker 2: So when I analyze international strategy for the companies that
• 14:59
  Speaker 2: I can cover, I prefer to see franchisors target the
• 15:02
  Speaker 2: best market possible for their brand and then find the
• 15:06
  Speaker 2: best partner. So let me know if I'm off base,
• 15:09
  Speaker 2: because you know, I'm willing to take criticism, you know,
• 15:14
  Speaker 2: Am I thinking about this correctly? And as a franchise e.
• 15:18
  Speaker 2: You know, how are you identifying your targets?
• 15:21
  Speaker 3: Yeah? Yeah, so I think you're one hundred percent thinking
• 15:24
  Speaker 3: about it correctly. Ideally, you I think where brands get
• 15:30
  Speaker 3: into trouble when they begin their international expansion journey is
• 15:37
  Speaker 3: that generally the thing that starts them on that path
• 15:39
  Speaker 3: is is an opportunistic point of view rather than a
• 15:42
  Speaker 3: strategic one. And so you might have a partner that
• 15:45
  Speaker 3: comes in or potential franchise e again with a big
• 15:48
  Speaker 3: check or a lot of interest, and it you just
• 15:50
  Speaker 3: convince the brand that this is the time you need
• 15:52
  Speaker 3: to go international, and so the brand decides to do that. Generally,
• 15:57
  Speaker 3: that's a recipe for disaster because the brand will lack
• 16:03
  Speaker 3: the support that it needs to support that franchise e.
• 16:06
  Speaker 3: They're not necessarily ready to take that jump. And having
• 16:11
  Speaker 3: a strategy, having a plan, having the infrastructure from a
• 16:14
  Speaker 3: people perspective, those things are really really important when you're
• 16:18
  Speaker 3: setting up your first international expansion plan. So there definitely
• 16:22
  Speaker 3: is a place where you need to be taking advantage
• 16:25
  Speaker 3: of opportunistic things that come across, Like if there's a
• 16:28
  Speaker 3: great potential partner who has a strong track record, well
• 16:32
  Speaker 3: capitalized and is wanting to expand your brand. There's cases
• 16:36
  Speaker 3: where you would want to look at that more heavily
• 16:38
  Speaker 3: and maybe leapfrog that market over another one that you
• 16:42
  Speaker 3: had strategically planned. But in my mind, ideally you would
• 16:45
  Speaker 3: tier out your markets and say this is the part
• 16:47
  Speaker 3: of the world, or these are the group of markets
• 16:49
  Speaker 3: that we're looking for, and this is where we think
• 16:51
  Speaker 3: fits best, and then you go try to find the
• 16:53
  Speaker 3: best partners that are in that tier one set of
• 16:56
  Speaker 3: markets and then partner with those and so that order
• 16:59
  Speaker 3: in that tier one sector might change a little bit,
• 17:01
  Speaker 3: but ideally you're not taking somebody from a tier three
• 17:04
  Speaker 3: because an opportunity came up and leapfrogging them up to
• 17:08
  Speaker 3: your tier one sector. And if you don't have a strategy,
• 17:10
  Speaker 3: you're not going to know that, and you just kind
• 17:11
  Speaker 3: of go wherever the windblows and causes quite a bit
• 17:14
  Speaker 3: of problems.
• 17:15
  Speaker 2: Okay, cool, and so yeah, and so how are you
• 17:18
  Speaker 2: identifying as the master franchise, How are you identifying your targets?
• 17:22
  Speaker 2: How are you ranking your potential targets in the marketplace.
• 17:26
  Speaker 3: So we look at I think there's two ways, and
• 17:29
  Speaker 3: we have the benefit at least with private with the fund,
• 17:32
  Speaker 3: So we're looking at potential acquisitions which we're ranking and
• 17:35
  Speaker 3: looking at from in terms of iconic. But then with
• 17:39
  Speaker 3: our experience, and I think we're in a unique position
• 17:41
  Speaker 3: compared to other franchisees and other other funds in the world.
• 17:46
  Speaker 3: With our industry experience, we also get to rank the
• 17:49
  Speaker 3: franchise oors. So we actually have a pretty good idea
• 17:52
  Speaker 3: of what we're looking for when we're evaluating franchise oors.
• 17:56
  Speaker 3: And part of that we you know, we want to
• 17:58
  Speaker 3: fly in and meet the team just like we would
• 18:00
  Speaker 3: with a franchise e when we were on the franchise
• 18:02
  Speaker 3: or side. We want to see what the support is,
• 18:04
  Speaker 3: we want to see what the international infrastructure look like.
• 18:08
  Speaker 3: We want to make sure that they understand the challenges
• 18:11
  Speaker 3: and opportunities that come with international and the people that
• 18:17
  Speaker 3: we're going to be working with. And so I think
• 18:19
  Speaker 3: sitting across the table from the leadership teams of the
• 18:22
  Speaker 3: brands that we're talking to, you get a really good
• 18:25
  Speaker 3: sense for brands that would be a good fit for international,
• 18:29
  Speaker 3: whether they've expanded or not. Sometimes even if they haven't
• 18:32
  Speaker 3: expanded yet, and they have the right leadership team and
• 18:34
  Speaker 3: the right mindset and positioning. It can still be a
• 18:41
  Speaker 3: good fit. But I think more often than not, you
• 18:45
  Speaker 3: see some of those red flags and you say, Okay,
• 18:47
  Speaker 3: this is a great brand, it's working really well in
• 18:49
  Speaker 3: the US. They're not ready for international expansion in our
• 18:52
  Speaker 3: mind and we don't necessarily want to be the first
• 18:55
  Speaker 3: ones to go through that learning curve with them. So
• 18:57
  Speaker 3: obviously they're welcome to expand anywhere they want and potentially
• 19:00
  Speaker 3: even in the same region with somebody else. But ultimately,
• 19:05
  Speaker 3: these are very very long term relationships, specifically with international
• 19:09
  Speaker 3: master franchising. Generally, the master franchise e is investing a
• 19:14
  Speaker 3: significant amount of their capital into developing these markets for
• 19:19
  Speaker 3: the long term, and so you really want to make
• 19:21
  Speaker 3: sure it's it's a good long term partnership and doing
• 19:24
  Speaker 3: all that due diligence upfront is really really important in
• 19:27
  Speaker 3: our eyes. So I think we're uniquely positioned. Not too
• 19:30
  Speaker 3: often I think you get groups like it that are
• 19:33
  Speaker 3: that are franchisees that are doing as much diligence and
• 19:36
  Speaker 3: interviewing of the franchise oors as we do. But ultimately
• 19:40
  Speaker 3: we come from a franchise or background. You know, we're
• 19:43
  Speaker 3: used to doing this with potential partners that we were
• 19:45
  Speaker 3: looking at expanding with as franchisees. It's only fair to
• 19:49
  Speaker 3: do that in reverse.
• 19:50
  Speaker 1: So yeah, yeah, that's great.
• 19:52
  Speaker 2: All right, So several years ago, I'm going to start
• 19:54
  Speaker 2: asking you about some of my question my companies. Now,
• 19:58
  Speaker 2: you know, they don't don't give us a much much
• 20:00
  Speaker 2: information as we'd like about international since I have.
• 20:02
  Speaker 3: You here, that's fair.
• 20:04
  Speaker 2: Several years ago, restaurant brands they tried the supercharger international
• 20:07
  Speaker 2: growth by pairing some big PE groups with with operators.
• 20:13
  Speaker 2: How how is that? You know, what do you think
• 20:15
  Speaker 2: about that model? How is that done over the last
• 20:18
  Speaker 2: handful of years?
• 20:19
  Speaker 3: Yeah, yeah, I think I think the model works well.
• 20:23
  Speaker 3: There's actually there's obviously some some significant benefits that private
• 20:28
  Speaker 3: equity solves as a financial instrument for international expansions, specifically
• 20:34
  Speaker 3: for brands. One of those being, you know, the efficient
• 20:36
  Speaker 3: deployment of capital. So that really solves your scale issue
• 20:40
  Speaker 3: and your scale challenge very effectively. You know, private equity
• 20:43
  Speaker 3: groups are incentivized to deploy capital quickly, efficiently, and generally
• 20:48
  Speaker 3: by definition they're they're well capitalized, so that really solves
• 20:52
  Speaker 3: that issue. When you look at it as an example,
• 20:55
  Speaker 3: you know, I think Burger King got to entered India,
• 20:59
  Speaker 3: you know, the same time as Wendy's. The main difference
• 21:02
  Speaker 3: there was they entered with a joint venture with Everstone Capital,
• 21:07
  Speaker 3: which was a private equity group. Wendy's entered with a
• 21:10
  Speaker 3: franchise with a master franchise e. And so if you
• 21:13
  Speaker 3: look about, you know, three to five years in, you know,
• 21:16
  Speaker 3: Burger King had over two hundred restaurants and growing, Wendy's
• 21:19
  Speaker 3: was still stuck at the five restaurant mark. That's expanded
• 21:23
  Speaker 3: since they've partnered with different people and different partners post COVID,
• 21:27
  Speaker 3: but it still highlights the expansion potential with private equity,
• 21:32
  Speaker 3: you know. On another positive example, you look at what
• 21:35
  Speaker 3: we did, and this is something that I was involved
• 21:37
  Speaker 3: in and led with Wendy's, is we partnered in Japan
• 21:41
  Speaker 3: with a private equity group called Long Reach, led by
• 21:45
  Speaker 3: Mark Chiba and Tomoya Sujimoto, so both excellent, excellent human
• 21:50
  Speaker 3: beings and mentors of mine, and we worked with them
• 21:53
  Speaker 3: to acquire a legacy business called First Kitchen. It was
• 21:56
  Speaker 3: owned by Sun Torri, which is the Mega Ridge conglomerate
• 22:01
  Speaker 3: mostly known for whiskey, and they had created that business
• 22:04
  Speaker 3: First Kitchen to compete with McDonald's, and they had about
• 22:06
  Speaker 3: one hundred and sixty restaurants. McDonald's, though in Japan, has
• 22:10
  Speaker 3: three thousand restaurants, and so this was just an afterthought
• 22:13
  Speaker 3: for them and something they wanted to divest of, and
• 22:16
  Speaker 3: so we worked with private equity to acquire that business
• 22:20
  Speaker 3: and then merge the two brands, not co branded like
• 22:24
  Speaker 3: they're merged Wendy's First Kitchen, so one menu, some products
• 22:29
  Speaker 3: from the first Kitchen line, some products from Wendy's. So
• 22:32
  Speaker 3: it's a bit unique of a situation. And once we
• 22:35
  Speaker 3: finalized that acquisition, we were able to rapidly scale within
• 22:38
  Speaker 3: two or three years to seventy restaurants and growing. And
• 22:42
  Speaker 3: so private equity definitely serves a very very useful purpose
• 22:46
  Speaker 3: for brands expanding internationally and like you said, kind of
• 22:50
  Speaker 3: supercharge the growth. One of the things to watch out for,
• 22:53
  Speaker 3: and just generally it's a thing more involved with communication
• 22:58
  Speaker 3: is private equity kind of by definition has a shorter
• 23:00
  Speaker 3: timeline on whatever they're working with. And there's options now
• 23:04
  Speaker 3: as the industry kind of evolves with food and beverage
• 23:07
  Speaker 3: to maybe roll over into a future fund or hold
• 23:10
  Speaker 3: a little bit longer than they typically would, but ultimately
• 23:12
  Speaker 3: they have a shorter term vision for what their exit
• 23:16
  Speaker 3: is going to look like, whereas hopefully one of the
• 23:20
  Speaker 3: partners generally the brand has a longer term vision and
• 23:24
  Speaker 3: so those that communication is really important on the roles
• 23:28
  Speaker 3: that get played. If both brands end up having a
• 23:31
  Speaker 3: shorter term vision, then you start to run into challenges
• 23:34
  Speaker 3: with perspective and what each group is trying to look
• 23:39
  Speaker 3: for in terms of what they need for their investors
• 23:42
  Speaker 3: or their shareholders. And so knowing what you're working with
• 23:46
  Speaker 3: and why, I think is important. Knowing the exit, knowing
• 23:48
  Speaker 3: the long term vision is really important, but it serves
• 23:51
  Speaker 3: its use for sure.
• 23:52
  Speaker 1: Great.
• 23:54
  Speaker 2: You know, Wendy's has hit some bumps in the road
• 23:56
  Speaker 2: with his international expansion. I think that's part of the
• 23:58
  Speaker 2: reason why they brought in Kirktan to lead the business.
• 24:03
  Speaker 2: What do you hearn about its UK business?
• 24:06
  Speaker 1: You know?
• 24:06
  Speaker 2: I thought it was like interesting that that they decided
• 24:09
  Speaker 2: to go to the UK and operate those stores as
• 24:14
  Speaker 2: opposed to franchising them off the bat.
• 24:16
  Speaker 3: So I have a I have a mentor of mine
• 24:18
  Speaker 3: as somebody I used to work for by the name
• 24:20
  Speaker 3: of John Payne. So he's former former young executive marketing
• 24:27
  Speaker 3: guru extraordinary and he was also the the MD of
• 24:31
  Speaker 3: Wendy's APMEA for a time, so I had the chance
• 24:33
  Speaker 3: before he kind of retired to really learn from him
• 24:37
  Speaker 3: and work with him closely. And he taught me a
• 24:39
  Speaker 3: lot about international and particularly franchise management. And he's he's British,
• 24:43
  Speaker 3: he's from the UK, and so there was there was me,
• 24:46
  Speaker 3: this relatively young American guy working with with John and
• 24:52
  Speaker 3: he would we constantly had us saying divided by a
• 24:56
  Speaker 3: common language, because there were just be times where he
• 24:59
  Speaker 3: would say, John, I understood every word that you said,
• 25:02
  Speaker 3: but I don't know what you're talking about. And he
• 25:04
  Speaker 3: would say the same thing about me. And so I
• 25:06
  Speaker 3: think you run into this issue of context, right, there's
• 25:09
  Speaker 3: so much familiarity between the two, between the two markets,
• 25:13
  Speaker 3: and sometimes I think that gets us into trouble, not
• 25:18
  Speaker 3: just for Wendy's in this example, but any brand looking
• 25:21
  Speaker 3: to make the jump into the UK, because you might
• 25:24
  Speaker 3: make the mistake that it's so similar to your own
• 25:27
  Speaker 3: market that it's kind of a copy past approach, or
• 25:30
  Speaker 3: it's going to be you know, something that you can
• 25:33
  Speaker 3: just run from the US and in reality those little
• 25:36
  Speaker 3: differences end up not being so little. They become even
• 25:39
  Speaker 3: more stark in how a market operates. And so in
• 25:43
  Speaker 3: the instance of the UK, I think there's a lot
• 25:45
  Speaker 3: of that. You don't want to try to run something
• 25:48
  Speaker 3: from the US for any brand. You know, Chick fil A,
• 25:50
  Speaker 3: as an example, tried to enter really got beat up
• 25:53
  Speaker 3: a bit on their first attempt when they were testing
• 25:55
  Speaker 3: out the market. They've gone back. I think they're retooling
• 25:57
  Speaker 3: on how that's going to work, and I've seen something
• 26:00
  Speaker 3: that make me think they're changing their approach, which is great.
• 26:04
  Speaker 3: But for Wendy specifically, I think if I had one
• 26:06
  Speaker 3: critique is and we mentioned getting to scale quickly, it's
• 26:11
  Speaker 3: just not moving. It's not moving fast enough with I
• 26:14
  Speaker 3: think they've been in the market for four or five
• 26:16
  Speaker 3: years now, if you exclude some of the reef kitchens
• 26:19
  Speaker 3: which are kind of delivery only kitchens, I count around
• 26:23
  Speaker 3: twenty restaurants. Really at this time, you should be at
• 26:25
  Speaker 3: seventy restaurants and plus whether that's through franchising or your
• 26:30
  Speaker 3: own restaurants. If you've ventured a market like that, you
• 26:33
  Speaker 3: really need to double down and kind of push through
• 26:37
  Speaker 3: that level of growth, because that's when you're going to
• 26:39
  Speaker 3: see the synergies that happen from you know, four while
• 26:42
  Speaker 3: ebit dot improvement on your supply chain and your food costs.
• 26:46
  Speaker 3: That's when you have a decent marketing ad budget to
• 26:49
  Speaker 3: go after consumers share of mind. And so I think
• 26:52
  Speaker 3: if you get to that twenty restaurant level and you
• 26:54
  Speaker 3: kind of freeze or you go too slow, all those
• 26:57
  Speaker 3: things actually work in reverse against you. Your supply start
• 27:00
  Speaker 3: getting angry because the restaurant counts that you promised them
• 27:04
  Speaker 3: and the discounts that they were giving you because of
• 27:05
  Speaker 3: what it was going to be start coming off. So
• 27:07
  Speaker 3: your food cost actually gets worse and you just got
• 27:10
  Speaker 3: a lot of headwinds that start coming your way. So
• 27:12
  Speaker 3: I would really like to see Wendy's push through that,
• 27:15
  Speaker 3: start franchising a little bit faster or opening more restaurants faster.
• 27:19
  Speaker 3: But that's a challenge in the UK, Like you really
• 27:22
  Speaker 3: need to push through that. It's like a rocket getting
• 27:24
  Speaker 3: out of Earth's gravity. You can't stop at twenty. You
• 27:29
  Speaker 3: can't stop otherwise it just comes back down to Earth.
• 27:32
  Speaker 1: You got it.
• 27:33
  Speaker 3: You got to push through. It might be a little
• 27:35
  Speaker 3: bit painful, but the faster it goes, the better it gets,
• 27:37
  Speaker 3: and you really need to get to that restaurant count
• 27:39
  Speaker 3: of seventy. An example in the UK that I think
• 27:43
  Speaker 3: they did it really well was five guys. You know,
• 27:45
  Speaker 3: they opened really really aggressively. You know, it doesn't it
• 27:50
  Speaker 3: doesn't mean that it was all sunshine and roses and
• 27:53
  Speaker 3: that everything was there wasn't cost pressures along the way,
• 27:58
  Speaker 3: but you know, they got to a really good scale
• 28:00
  Speaker 3: and I think it's and it's a good example of
• 28:03
  Speaker 3: of deploying and growing a market quickly to get to
• 28:07
  Speaker 3: to get to a size where it's going to be
• 28:10
  Speaker 3: feasible to continue to franchise and grow the business.
• 28:13
  Speaker 2: Yeah, Chipotle is a chain that's had you know a
• 28:17
  Speaker 2: few dozen international stores in Europe for years, and they
• 28:22
  Speaker 2: finally made a switch with their strategy partnering with al Shaya.
• 28:27
  Speaker 1: Any thoughts, I mean, I.
• 28:29
  Speaker 3: Think I think it's the right strategy for the region
• 28:33
  Speaker 3: in terms of master franchising the I believe it's their
• 28:37
  Speaker 3: first franchise location anywhere, So a little bit of a
• 28:42
  Speaker 3: concern I would have is just is there the franchising
• 28:45
  Speaker 3: I think anybody in industry knows that franchising itself is
• 28:48
  Speaker 3: its own muscle and skill set, and so I know
• 28:52
  Speaker 3: a lot of different people from the industry that are
• 28:54
  Speaker 3: in Chipotle that have have franchise experience, but having an
• 28:58
  Speaker 3: organization that backs franches is something that's very different than
• 29:02
  Speaker 3: just having people that know what franchising is like or
• 29:05
  Speaker 3: having that experience. So I hope that they're building that
• 29:08
  Speaker 3: out and if that's going to be a strategy going forward, again,
• 29:10
  Speaker 3: I think it is the right strategy to master franchise
• 29:13
  Speaker 3: in a high context market like the Middle East. On
• 29:18
  Speaker 3: the flip side, from the boots on the ground here,
• 29:20
  Speaker 3: there was a little bit of a red flag when
• 29:22
  Speaker 3: the announcement came out that you know, they're partnering with Alshaia,
• 29:26
  Speaker 3: which is a big group, but no restaurant counts announced, no,
• 29:30
  Speaker 3: no strong commitment. It seemed very tentative for something that's
• 29:34
  Speaker 3: iconic and global as Chipotle, so it raised a few questions.
• 29:41
  Speaker 3: So it'll be interesting to see Alshaia as a group
• 29:44
  Speaker 3: one of the major groups out here in the GCC
• 29:47
  Speaker 3: and across MINA as a whole. But what a lot
• 29:52
  Speaker 3: of people don't realize is ninety five percent of their
• 29:54
  Speaker 3: F and B units are actually Starbucks which is under
• 29:57
  Speaker 3: quite a bit of pressure at the moment. The other
• 30:00
  Speaker 3: brands that Alshaya has like Raising Canes, Cheesecake Factory, shake Shack.
• 30:06
  Speaker 3: You know, when it comes to QSRs like like our
• 30:09
  Speaker 3: fast casual, like a Raising Canes, they're they're not there's
• 30:13
  Speaker 3: there's very few. They're they're not growing at the level
• 30:15
  Speaker 3: as we would want them to. I think they have
• 30:17
  Speaker 3: some pricing differences with how the US and the primary
• 30:20
  Speaker 3: brand prices their products. There's more Shakeshacks here than there
• 30:25
  Speaker 3: are Raising Canes, which is crazy to me. So definitely
• 30:28
  Speaker 3: over penetrated on some of the higher end of fast casual,
• 30:32
  Speaker 3: and there's a lot of potential for getting the brand
• 30:35
  Speaker 3: I think a little bit closer to the mark and
• 30:38
  Speaker 3: the home brand and the core concept with with groups
• 30:41
  Speaker 3: like Raising Canes and so with Chipotle, I think TBD,
• 30:45
  Speaker 3: let's see, let's see how it comes out. They I
• 30:47
  Speaker 3: think they announced their first location would be in Dubai
• 30:50
  Speaker 3: and Kuwait, which again Kuwait wouldn't necessarily be where I
• 30:53
  Speaker 3: would launch my first location. I would be looking at
• 30:55
  Speaker 3: UEE in Saudi Arabia transparently, but you know, quait Is
• 31:00
  Speaker 3: is the whole market of Alshaia. So I imagine that has a.
• 31:02
  Speaker 1: Lot to do with it for sure.
• 31:03
  Speaker 2: All Right, so let's get into that a little bit. Starbucks, right,
• 31:07
  Speaker 2: McDonald's and Starbucks were two that really spoke about four
• 31:10
  Speaker 2: Q sales weakness in the Middle East and other countries
• 31:13
  Speaker 2: with large Muslim populations like Indonesia, Malaysia, France due to
• 31:17
  Speaker 2: the Israel Hamas War. I guess two things you know
• 31:22
  Speaker 2: is this mainly is this a bigger problem for McDonald's
• 31:26
  Speaker 2: and Starbucks than it is maybe for young brands and
• 31:29
  Speaker 2: Dominos because of some of the press that and some
• 31:32
  Speaker 2: of the things that happened.
• 31:34
  Speaker 1: And has there been any improvement thus far in one Q?
• 31:38
  Speaker 3: Yeah, so I think yes. For the first answer is yes,
• 31:43
  Speaker 3: I think it is a bigger problem for Starbucks and
• 31:44
  Speaker 3: McDonald's compared to what I see with the with the
• 31:48
  Speaker 3: other brands. Everybody got impacted, and this is something a
• 31:53
  Speaker 3: lot of people don't realize, not just Western brands, Like
• 31:56
  Speaker 3: everybody got impacted by the conflict post doc over seventh.
• 32:01
  Speaker 3: So in general, you saw a big step down in
• 32:03
  Speaker 3: sales in some markets. You saw more of a differentiation
• 32:09
  Speaker 3: between Western brands or American brands and local brands, but
• 32:14
  Speaker 3: overall everybody still took a step down. What we've seen
• 32:18
  Speaker 3: to date is that gap between Western brands and local
• 32:23
  Speaker 3: brands has actually has actually come together. So those trend
• 32:26
  Speaker 3: lines are meeting, are just about to meet, and across
• 32:31
  Speaker 3: those businesses there is a recovery line where you start
• 32:35
  Speaker 3: to see a revision to the mean and potentially a
• 32:37
  Speaker 3: return to standard sales. It's still going to take some time.
• 32:42
  Speaker 3: I think from what I see, assuming the conflict ended today,
• 32:46
  Speaker 3: which you know, God willing it does, you'd see a
• 32:50
  Speaker 3: pretty rapid recovery back to standard sales, maybe even as
• 32:53
  Speaker 3: early as early Q three or mid Q three for
• 32:59
  Speaker 3: McDonald's and Starbuck specifically, though they've been impacted significantly more,
• 33:04
  Speaker 3: they also have a presence that's a little bit more
• 33:06
  Speaker 3: exposed to Egypt and Jordan and Morocco, which those are
• 33:11
  Speaker 3: higher impact markets compared to the to the GCC, so
• 33:14
  Speaker 3: that that we haven't been in the GCC, specifically Saudi Arabia, UAE,
• 33:18
  Speaker 3: we haven't been affected as as significantly as those close
• 33:22
  Speaker 3: those markets that are closer to the conflict. So uh,
• 33:26
  Speaker 3: from what I've seen, I don't think you're going to
• 33:27
  Speaker 3: see a recovery with McDonald's and Starbucks potentially until the
• 33:30
  Speaker 3: end of the year. Just because they took it, they
• 33:32
  Speaker 3: were a bigger step back. But everybody is on a
• 33:36
  Speaker 3: trend line that's recovering. So I think you are starting
• 33:39
  Speaker 3: to see a little bit of potential, you know, outrage
• 33:42
  Speaker 3: fatigue with the consumer. So as long as there's not
• 33:46
  Speaker 3: something that continues to you know, irritate or or make
• 33:51
  Speaker 3: the situation worse, I think you'll see a continued recovery.
• 33:55
  Speaker 2: All right, So let's let's go back to Wendy's real quick,
• 33:59
  Speaker 2: because you had a great post on LinkedIn about dynamic pricing,
• 34:02
  Speaker 2: and Wendy's your thoughts.
• 34:05
  Speaker 3: Not a fan of dynamic pricing for QSR, Yeah, not
• 34:09
  Speaker 3: a fan, And you know, in short, I just don't
• 34:12
  Speaker 3: think it's a great fit for specifically for QSR and
• 34:15
  Speaker 3: fast casual. I think it goes against the DNA of
• 34:18
  Speaker 3: what what our industry in those two areas really stands for.
• 34:23
  Speaker 3: Maybe places for fine dining, you know, where you can
• 34:26
  Speaker 3: implement that. There's some instances where it is implemented. But
• 34:29
  Speaker 3: I find the conversation really interesting, you know, even listening
• 34:32
  Speaker 3: to your to the previous guest on the podcast. I
• 34:34
  Speaker 3: think there's examples that a lot of people give in
• 34:37
  Speaker 3: the industry where it's almost a little bit of gas
• 34:40
  Speaker 3: lighting the consumer saying, well, you know, dynamic pricing is
• 34:44
  Speaker 3: already in place because happy hour and discounts, and I
• 34:48
  Speaker 3: think it's it's just a little bit disingenuous in my mind,
• 34:52
  Speaker 3: because when you're defining dynamic pricing, dynamic pricing is by
• 34:58
  Speaker 3: definition ever changing pricing. So really you're looking at a
• 35:01
  Speaker 3: model that's much more similar to how airlines or airbnbs
• 35:05
  Speaker 3: or hotels operating.
• 35:06
  Speaker 2: That's surge prices, right, but that's that's those industries have
• 35:10
  Speaker 2: a supply demand issue that the restaurants don't.
• 35:14
  Speaker 3: Right exactly right. And where you get to dynamic pricing
• 35:18
  Speaker 3: is where you have discounting strategies plus surge pricing, So
• 35:21
  Speaker 3: those things too together is what we're talking about. Where
• 35:25
  Speaker 3: where it's dynamic pricing, if you're just talking about happy
• 35:27
  Speaker 3: hour or something like that, that really is just a
• 35:29
  Speaker 3: discounting strategy, which is everybody's correct, that has been in
• 35:32
  Speaker 3: place for a long time. But consumers are smart, so
• 35:34
  Speaker 3: they realize that this is this is something different, and
• 35:37
  Speaker 3: as you pointed out, and as a lot of people
• 35:40
  Speaker 3: pointed out the difference between our industry and other industries
• 35:43
  Speaker 3: that are currently implementing dynamic pricing is there's not a
• 35:47
  Speaker 3: supply constraint component, right, so more or less you have
• 35:50
  Speaker 3: infinite supply with restaurants, you know, we're not. We're we
• 35:53
  Speaker 3: go through a lot of work to make sure we
• 35:55
  Speaker 3: don't run out of food and that we can that
• 35:57
  Speaker 3: we can serve consumers. So you don't have that supply constraint.
• 36:02
  Speaker 3: So then really what you're looking at is just you're
• 36:03
  Speaker 3: maximizing the demand constraint and that doesn't make sense to consumers.
• 36:07
  Speaker 3: And so you get to this point where you know,
• 36:10
  Speaker 3: to wax poetic QSRs are meant to be affordable, consistent,
• 36:16
  Speaker 3: and fast. And so if you're losing face and trust
• 36:19
  Speaker 3: with the consumer that you're not affordable or consistent anymore
• 36:23
  Speaker 3: and they've lost that trust, then you really need to
• 36:26
  Speaker 3: change your strategy fast. And so I really don't think
• 36:28
  Speaker 3: the juice is worth the squeeze in the industry. I
• 36:31
  Speaker 3: would recommend and promote to brands that really, rather than
• 36:35
  Speaker 3: trying to justify the reaction or to explain it away,
• 36:39
  Speaker 3: you look at the consumer reaction for what it is.
• 36:42
  Speaker 3: And you modify your strategies based on that. Specifically for
• 36:46
  Speaker 3: QSR and fast catual, I think there's a lot of
• 36:49
  Speaker 3: benefit for people to have consistency to understand what the
• 36:52
  Speaker 3: static price is going to be on the menu. And
• 36:56
  Speaker 3: you know, at the end of the day, we're a
• 36:57
  Speaker 3: price sensitive consumer that you know, people they're going to QSRs,
• 37:01
  Speaker 3: they want to know what the price is. And they've
• 37:04
  Speaker 3: given plenty of opportunities for everybody to raise their prices,
• 37:07
  Speaker 3: you know, that's been built in. I don't I don't
• 37:09
  Speaker 3: think dynamic pricing, especially now, is a good strategy.
• 37:13
  Speaker 2: So especially now, is right, man? I mean we've seen
• 37:15
  Speaker 2: thirty forty percent price increases at some of these chains, yeah,
• 37:20
  Speaker 2: you know, and so yeah, and people are pissed. We
• 37:24
  Speaker 2: see all these articles now cropping up and people complain
• 37:27
  Speaker 2: about the eighteen dollars big Mac meal, the the five guys,
• 37:31
  Speaker 2: you know, twenty four dollars meal or twenty three dollars
• 37:34
  Speaker 2: meal or whatever it was.
• 37:35
  Speaker 1: So yeah, yeah, the timing was tough for sure.
• 37:38
  Speaker 3: Yeah, when when QSR pricing is starting to approach casual
• 37:41
  Speaker 3: dining basket size, that's a bit of a red flag.
• 37:45
  Speaker 3: And like I said, consumers are smart. Everybody needs to
• 37:48
  Speaker 3: realize consumers are smart. I think ultimately, you know, people
• 37:52
  Speaker 3: in the boardroom know this, but I think sometimes it
• 37:54
  Speaker 3: gets forgotten, and you know, you might be able to
• 37:59
  Speaker 3: pull a fast one over one or two times. But
• 38:02
  Speaker 3: like I said, I if I'm in the drive through
• 38:03
  Speaker 3: and I see my price changing all over the place,
• 38:05
  Speaker 3: I'll give a brand one or two shots before I
• 38:07
  Speaker 3: just change. And then with our industry, there's a lot
• 38:10
  Speaker 3: of competition, right, there's a lot of alternatives, So there's
• 38:15
  Speaker 3: a lot of reasons why we're different and why the
• 38:17
  Speaker 3: strategy should be different for QSR compared to airlines or hotels.
• 38:22
  Speaker 2: So yeah, good stuff, man. I really appreciate you for
• 38:26
  Speaker 2: coming on. This was a great discussion.
• 38:29
  Speaker 3: My pleasure.
• 38:30
  Speaker 1: Where can the audience go to find more out about
• 38:32
  Speaker 1: Chatron Capital Parts.
• 38:33
  Speaker 3: So we're very active on LinkedIn, Chatrons Capital Partners. We're
• 38:36
  Speaker 3: also on Chatroncapital dot Com, so lots of ways to
• 38:41
  Speaker 3: get in contact with us. And then me personally always
• 38:43
  Speaker 3: feel to reach out doctor Brandon Guthrie on LinkedIn and
• 38:47
  Speaker 3: then Idaho Boy meets World on Instagram, so little just formal.
• 38:51
  Speaker 2: Yeah, good stuff, man, good luck, and I look forward
• 38:54
  Speaker 2: to you know, continuing to follow the story.
• 38:57
  Speaker 1: And I wish you good luck.
• 38:58
  Speaker 3: Yeah.
• 38:58
  Speaker 1: Perfect, yeah.
• 38:59
  Speaker 2: And I also want to thank the audience for tuning in.
• 39:01
  Speaker 2: If you liked the episode, please share it with your
• 39:03
  Speaker 2: friends and colleagues. Check back soon for a discussion with
• 39:06
  Speaker 2: Jeff Henry, president of the America's at gang Cha Global