Latest / Bloomberg Intelligence / Merck to Acquire Terns Pharmaceuticals in $6.7 Billion Deal

Transcript

Merck to Acquire Terns Pharmaceuticals in $6.7 Billion Deal · Bloomberg Intelligence

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
0:10
Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
0:14
Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg
0:17
Speaker 1: Business App. Listen on demand wherever you get your podcasts,
0:21
Speaker 1: or watch us live on YouTube.
0:24
Speaker 2: We need to talk about the M and A deal
0:26
Speaker 2: that has come out in New York this morning. MRK
0:29
Speaker 2: to buy Turns Pharmaceuticals for six point seven billion dollars
0:34
Speaker 2: to grow in the blood cancer space. Michelle Davis is
0:37
Speaker 2: our senior deals reporter here in New York and is covering.
0:40
Speaker 3: This story for us.
0:41
Speaker 2: Feel like we should call it M and A Wednesday
0:43
Speaker 2: now because the deals no longer happen on Monday anymore.
0:46
Speaker 4: You know.
0:46
Speaker 5: It's because we have a deal show now, so of
0:48
Speaker 5: course that's why they're happening on Wednesday. But yeah, big
0:52
Speaker 5: deal for Merk today. It makes a lot of sense
0:54
Speaker 5: that they're doing this because they they're best selling drug,
0:57
Speaker 5: kay Truda, which contributed half of their last year thirty
1:00
Speaker 5: one billion dollars, is also the world's best selling drug
1:03
Speaker 5: is going off patent, so they really need to do
1:06
Speaker 5: M and A to replenish their pipeline turns is not.
1:09
Speaker 5: Its drug is not yet approved, but analysts are saying
1:13
Speaker 5: that in a few years, assuming it does get approval,
1:16
Speaker 5: it could have peak sales of several billion dollars. And
1:18
Speaker 5: so Mark, for Merk, it's a bet that at the
1:21
Speaker 5: end of the decade, around the same time that k
1:22
Speaker 5: Trude is going off patent, they will have this drug,
1:26
Speaker 5: you know, coming in to kind of help fill some
1:28
Speaker 5: of that hole.
1:29
Speaker 6: Mark.
1:30
Speaker 7: What are they saying about their M and A appetite?
1:33
Speaker 7: I guess because we you know, we joke that the
1:37
Speaker 7: pharmaceutical industry is such a deal heavy industry, pharm of biotech,
1:41
Speaker 7: that kind of thing.
1:42
Speaker 6: What's Merk saying? Because they do have that key true
1:44
Speaker 6: to risk exactly.
1:45
Speaker 5: So Mark has been one of the most aggressive when
1:47
Speaker 5: it comes to M and A. Earlier this year at
1:49
Speaker 5: the JPMorgan Healthcare Conference, the CEO Rob Davis said that
1:53
Speaker 5: he wants to do several deals in the tens of
1:55
Speaker 5: billion dollar range, and so that means we'll probably see
1:59
Speaker 5: more from them. Also interesting to note that Merk's stock
2:03
Speaker 5: is up today on the news, and normally in M
2:05
Speaker 5: and A the buyer's stock tends to go down on
2:08
Speaker 5: an announcement, but the fact that you know, shares their
2:10
Speaker 5: up means investors are applauding this and they you know,
2:12
Speaker 5: want merk To to keep doing stuff like this.
2:15
Speaker 2: So the deals worth six point seven billion dollars. It's
2:18
Speaker 2: a fifty three dollars a share in cash, which is
2:21
Speaker 2: a six percent premium to turns last clothes. There are
2:24
Speaker 2: some analysts out there who say that maybe Mark is
2:27
Speaker 2: not spending enough here and this invites other companies to
2:31
Speaker 2: come in and make their own bid for turn pharmaceuticals
2:33
Speaker 2: as well.
2:35
Speaker 5: You know, we will see if that happens. There were
2:37
Speaker 5: some bidding wars in pharma last year, with the Metzera
2:40
Speaker 5: deal being you know, one of the most notable ones
2:43
Speaker 5: that said the stock turns. The stock has increased like
2:47
Speaker 5: fifty percent since January on basically no news. So there
2:51
Speaker 5: could be an argument that maybe there was some built
2:52
Speaker 5: in you know, m and a speculation already into the
2:56
Speaker 5: already built baked into the price. But you know, you know, no,
3:00
Speaker 5: there are other pharma companies out there who are also
3:02
Speaker 5: trying to replenish their pipeline, so it wouldn't be unprecedented.
3:06
Speaker 7: Of course, which bankers were on this deal they don't have.
3:08
Speaker 7: They didn't list the Acquirer Advisor, but the financial target,
3:12
Speaker 7: Centerview Partners and Jefferies, so unusual or not unusual, which is.
3:16
Speaker 6: More boutiqui more boutiqui.
3:18
Speaker 5: Yeah, Centerview has I mean, they're generally on most of
3:20
Speaker 5: these on the cell side, and Jeffries has been doing
3:23
Speaker 5: a lot more on the sell side too.
3:24
Speaker 7: Yeah. The boutiques, like we used to call them boutiques,
3:26
Speaker 7: but in M and A they're not really boutiques anymore,
3:28
Speaker 7: are they?
3:28
Speaker 3: Exactly?
3:29
Speaker 7: They think they've really made a commitment doing real pgat
3:31
Speaker 7: and all those guys. Is there any regulatory risk when
3:34
Speaker 7: these healthcare deals get done? Or is it just a
3:37
Speaker 7: big mark buying a little biotech thing and nobody really cares?
3:40
Speaker 6: How's that work? Not as much.
3:42
Speaker 5: I mean, the last time we saw something kind of
3:45
Speaker 5: splashy get attention was when Amjen tried to buy Horizon
3:48
Speaker 5: and that FDC tried to block that deal. They ended
3:51
Speaker 5: up settling and the deal went through anyway. But in
3:54
Speaker 5: something like this where you know, turns of drug isn't
3:57
Speaker 5: even approved and it's biggest competitor is owned by Novardes,
4:01
Speaker 5: you know, the competing kind of compound. It seems unlikely.
4:05
Speaker 2: So given what Mark has done, in the fact that
4:08
Speaker 2: investors like the deals that it's made so far, I'm
4:12
Speaker 2: guessing we're going to expect to see more acquisitions from
4:14
Speaker 2: Mark in the coming weeks and months.
4:16
Speaker 3: That's probably yeah. Definitely stay with us.
4:20
Speaker 2: More from Bloomberg Intelligence coming up after this.
4:26
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
4:30
Speaker 1: weekdays at ten am. He's done on Apple, Cocklay and
4:33
Speaker 1: Android Auto with the Bloomberg Business app. Listen on demand
4:36
Speaker 1: wherever you get your podcasts, or watch us live on YouTube.
4:41
Speaker 7: Let's talk a little media here. Interesting story on the
4:43
Speaker 7: Bloomberg terminal. Walt Disney Chief executive officer Josh Tomorrow has
4:47
Speaker 7: seen two billion dollar technology bets, Falter one of them
4:51
Speaker 7: and raveling entirely just days into his new job. Let's
4:54
Speaker 7: see what this means for the Walt Disney Company. We've
4:56
Speaker 7: got some other media stuff to talk about, and we
4:58
Speaker 7: turned to Keitha Rugana, and she is the media analyst
5:01
Speaker 7: for Bloomberg Intelligence.
5:03
Speaker 6: Keitha, there's news out regarding Disney.
5:05
Speaker 7: Can you talk to us about a couple of these
5:07
Speaker 7: deals that seemingly are falling apart here.
5:10
Speaker 3: Yeah, this is a big deal, Paul.
5:12
Speaker 8: I mean, you know, Josh Tomorrow obviously took the helm
5:14
Speaker 8: at Disney just a week ago, and we're seeing this
5:17
Speaker 8: Open Ai Sora deal that you know, Disney had kind
5:21
Speaker 8: of inked about three months ago. And basically the deal
5:25
Speaker 8: here was that this would be a three year licensing
5:27
Speaker 8: agreement where Disney would make a one billion dollar equity
5:30
Speaker 8: investment into Open Ai and Sora would be allowed to
5:34
Speaker 8: use about two hundred of Disney's characters to kind of
5:36
Speaker 8: create all of these short form videos which you know,
5:40
Speaker 8: users could basically engage with on the Disney Plus platform.
5:43
Speaker 8: You know, this was kind of I think Disney's way
5:45
Speaker 8: of playing offense defense with you know, the whole rise
5:48
Speaker 8: in Ai and kind of if you can't beat them,
5:51
Speaker 8: join them, kind of really joining the bandwagon and saying, yes,
5:54
Speaker 8: we have a stake here with AI. So this falling
5:57
Speaker 8: apart definitely kind of leaves Disney definitely they were blindsided.
6:03
Speaker 7: Uh.
6:03
Speaker 8: They they've they've been kind of trying to do different
6:06
Speaker 8: things in terms of really monetizing their ip creating like
6:09
Speaker 8: this really uh this this franchise fandom if you will, right,
6:14
Speaker 8: really digging deep into it. That's what Josh Tomorrow has
6:16
Speaker 8: spoken both with this opening ideal as well as the
6:19
Speaker 8: Epic Games deal that was a deal that actually Josh
6:21
Speaker 8: Tomorrow had kind of broken. And just over the past
6:24
Speaker 8: few days we've kind of seen you know, a lot
6:26
Speaker 8: of news with Epic Games too, and so this really
6:29
Speaker 8: kind of now raises the stakes for them to kind
6:31
Speaker 8: of find out, you know, hoom else they can partner
6:34
Speaker 8: with to kind of deepen that that fan engagement.
6:37
Speaker 2: Okay, so he's got his work cut out for him.
6:39
Speaker 2: Certainly makes for a busy first week on the job. Gita.
6:43
Speaker 2: We also want to talk to you about what's going
6:45
Speaker 2: on with Netflix. It's bolstering its live streaming, live streaming
6:49
Speaker 2: mega events. There was the BTS Comeback Show, which I
6:53
Speaker 2: guess the live show didn't attract as many people as
6:56
Speaker 2: people as thought, you know, actually attending the net, but
6:59
Speaker 2: the actual streaming of it was a monster hit, wasn't it.
7:04
Speaker 8: It was a monster hits. Carlor, You're absolutely right, over
7:06
Speaker 8: eighteen million viewers worldwide. And this is again we come
7:10
Speaker 8: back to the basic buzzword with in media right now,
7:13
Speaker 8: which is engagement. What are all the different ways that
7:17
Speaker 8: you can build engagement and you know, again the open
7:19
Speaker 8: AI saw a deal with Disney was again a way
7:22
Speaker 8: for Disney to build that engagement with their fans. Netflix
7:25
Speaker 8: kind of chasing all of these different types of content,
7:28
Speaker 8: you know, whether it is sports, whether it is this
7:30
Speaker 8: live event the bts come back to, or again trying
7:33
Speaker 8: to deepen that engagement, trying to deepen their connection with
7:36
Speaker 8: fans as you have more and more sources of you know,
7:40
Speaker 8: video basically competing for time spent. Again, huge, You're absolutely right,
7:46
Speaker 8: huge event for Netflix really shows how they can kind
7:50
Speaker 8: of go after all of these different genres and build
7:54
Speaker 8: that scale, build that appointment television kind of buzz and
8:00
Speaker 8: and you know, really get a good ROI on their
8:02
Speaker 8: investment there by the way, they're increasing their content spending
8:05
Speaker 8: four events like this this year by two billion dollars.
8:08
Speaker 8: That's a pretty sizable step up. So we're looking at them,
8:11
Speaker 8: you know, spending about twenty billion dollars scarlet this year
8:14
Speaker 8: on content.
8:15
Speaker 5: Wow.
8:16
Speaker 7: All right, Githa, it's opening day for my New York Yankees.
8:19
Speaker 7: They'll be opening up out in San Francisco this evening
8:22
Speaker 7: eight pm Eastern.
8:23
Speaker 6: First pitch. I'm not going to be a good game.
8:25
Speaker 7: Yep. I'm not going to ESPN and watch this I'm
8:28
Speaker 7: not even going to the Yankees' own network. Yes, I'm
8:31
Speaker 7: going to Netflix to watch this game tonight.
8:34
Speaker 3: Where are we in this world?
8:35
Speaker 7: Where are we in this world? Talk to us about
8:37
Speaker 7: you know, Netflix has set out we're never getting into sports.
8:40
Speaker 7: Well that's gone by the wayside. What do you think
8:42
Speaker 7: There's sports strategy is?
8:45
Speaker 8: So their sports strategy, Paul, I mean, this is a
8:47
Speaker 8: really important point. The sports strategy has been very very calculated,
8:50
Speaker 8: very very measured. At a time when we've seen other
8:53
Speaker 8: media companies like you know, Disney and Amazon and YouTube
8:56
Speaker 8: kind of spend billions and billions of dollars on sports rights,
9:00
Speaker 8: Netflix has taken a far more cautious approach, but an
9:03
Speaker 8: approach that has really served them well. So they started
9:06
Speaker 8: out with this five hundred million dollar deal for you know,
9:08
Speaker 8: WWE content. They went out after some NFL Christmas Day games.
9:12
Speaker 8: But this World Baseball Classic was actually their first big
9:15
Speaker 8: foray into world live sports, you know, an event in Japan,
9:19
Speaker 8: and it has really served them well. So you just
9:21
Speaker 8: look at the ROI on that event. They spent about
9:23
Speaker 8: one hundred million dollars for you know, forty seven games
9:26
Speaker 8: and they got something like thirty one million global viewers.
9:29
Speaker 8: Really a huge, huge viewing record for them, and again
9:33
Speaker 8: just shows how you know, by making really calculated bets
9:37
Speaker 8: again you can kind of build that buzz and for them,
9:40
Speaker 8: really build that critical engagement metric.
9:43
Speaker 2: Yeah, that is pretty incredible, and I guess part of
9:46
Speaker 2: it is also to build up the Netflix brand outside
9:48
Speaker 2: of the US, where sports rights have gotten to the
9:50
Speaker 2: point where it's prohibitive, but you look at the rest
9:52
Speaker 2: of the world and it's it's a little bit more doable.
9:56
Speaker 8: Absolutely So if you're just looking this year at sports right,
9:59
Speaker 8: scarlet companies are spending about over forty billion dollars just
10:04
Speaker 8: this year across the board for US sports rights, and
10:06
Speaker 8: we're only looking at that going up further and further.
10:09
Speaker 8: As you know, the NFL looks to high, high kits fees,
10:11
Speaker 8: the NBA looks to highkits fees.
10:13
Speaker 3: So yes, they do.
10:14
Speaker 8: They are making this really smart move by diversifying going
10:18
Speaker 8: across the board, and it's paying off. That's what's so
10:21
Speaker 8: great about it.
10:22
Speaker 5: To me.
10:23
Speaker 7: The defining moment will be when Netflix takes a Sunday
10:28
Speaker 7: package from the NFL, the NFL and Githa. I think
10:34
Speaker 7: that's that day is coming. What do you think?
10:37
Speaker 8: I also think it is coming. So they've already kind
10:39
Speaker 8: of dabbled with that, Paul. You know, they've done the
10:41
Speaker 8: Christmas Day Games again. They had some of the highest
10:44
Speaker 8: viewerships ever for the Christmas Day Games, something like thirty
10:46
Speaker 8: five million viewers.
10:48
Speaker 6: Yeah.
10:48
Speaker 8: Anyway, So I also think that they are definitely, you know,
10:54
Speaker 8: probably going to go for a digital package. I mean,
10:55
Speaker 8: I mean, the NFL wants to go there. They know
10:58
Speaker 8: that majority of the viewership is migrating to streaming and
11:02
Speaker 8: it would be stupid for them not to kind of
11:04
Speaker 8: sell a digital package. So I definitely think it's going
11:07
Speaker 8: to happen sooner rather than later.
11:10
Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
11:16
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
11:20
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
11:23
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
11:26
Speaker 1: you get your podcasts, or watch us live on YouTube.
11:30
Speaker 7: Chewey forecast is sales for the year that beat analyst expectations,
11:36
Speaker 7: stocks a pretty bigger ten twelve percent. Here today that's
11:38
Speaker 7: good news. Here, let's break it down with Diana prost Opine,
11:41
Speaker 7: Consumer staples analyst Bloomberg Intelligence. She joins us live here
11:44
Speaker 7: in our Bloomberg Interactive Broker studio. So, Chewy, what did
11:47
Speaker 7: you learn on their earnings call?
11:49
Speaker 9: Yeah, I mean they have been doing pretty well both
11:52
Speaker 9: on the top line and profitability. There's no complaints from investors,
11:58
Speaker 9: or at least they shouldn't be for eat quarter.
12:00
Speaker 6: So I'm just looking at the stock here.
12:03
Speaker 7: The stock's up again about twelve percent today, but it
12:05
Speaker 7: is down twenty percent year to date and then about
12:07
Speaker 7: twenty percent over the trailing twelve months. What's the investment
12:09
Speaker 7: call here for Chewy? What are the growth drivers top
12:13
Speaker 7: line for this company?
12:15
Speaker 9: Yes, so it's their ability to grab consumers. Once you
12:20
Speaker 9: enter I guess the Chewy you know environment, it's difficult
12:24
Speaker 9: for you to leave. They have about eighty eighty four
12:28
Speaker 9: percent of their revenue comes from authorship, so it's pretty
12:32
Speaker 9: much you set it up.
12:33
Speaker 3: It's subscription based pretty much.
12:35
Speaker 9: So you set it up and every so often you
12:38
Speaker 9: get your goodies at your doorsteps.
12:41
Speaker 7: So did they compete against the Amazons of the world,
12:44
Speaker 7: the Walmarts of the world, the pets dot com they do.
12:48
Speaker 9: Yeah, so you know, they have about a third of
12:51
Speaker 9: the e commerce you know, market share in the United States.
12:57
Speaker 9: They compete with Amazon as around the same.
13:01
Speaker 7: Well, there are not many companies out there that can
13:02
Speaker 7: say they have a third of a market where you
13:05
Speaker 7: compete against an Amazon and a Walmart and things.
13:07
Speaker 3: Like that exactly.
13:08
Speaker 9: And the thing with Chew is that they have expanded
13:11
Speaker 9: beyond merchandise, beyond food and now you can get your
13:15
Speaker 9: you know, your pharmacy, you can get you know, your
13:18
Speaker 9: vet needs. They actually have vet locations, eighteen vet locations.
13:23
Speaker 3: They're starting to do that.
13:25
Speaker 9: They see that that engages customers more.
13:28
Speaker 3: So that is, you know, an upside for them.
13:31
Speaker 6: So how is that business?
13:33
Speaker 7: I have no idea because it's all kinds of pet
13:36
Speaker 7: food in general, then stuff like toys and all that
13:38
Speaker 7: kind of stuff.
13:39
Speaker 6: What's the terriff situation for those that kind of stuff.
13:42
Speaker 9: So it seems that they have been able to navigate
13:45
Speaker 9: that obviously, you know, some of the pressure they pass
13:49
Speaker 9: that through consumers. They're seeing a net sales per active consumer,
13:55
Speaker 9: which is kind of like you know, they're pricing grow
13:58
Speaker 9: in the low single digits.
14:00
Speaker 3: So they are comfortable with that.
14:03
Speaker 9: You know, the scale and the price on the product
14:06
Speaker 9: mix that they have allows them to kind of like
14:09
Speaker 9: get the hit on the margin without you know, showing
14:11
Speaker 9: it to us.
14:13
Speaker 7: This was a obviously a COVID stock that just like
14:16
Speaker 7: like a peloton a little bit. But this has obviously
14:18
Speaker 7: done much better post How do people view this? Is
14:21
Speaker 7: this a kind of a consumer staple kind of name?
14:26
Speaker 7: How do you think about that?
14:27
Speaker 9: I would say it's a it's a you know, it's
14:31
Speaker 9: a retailer, you know, the way that I will see it.
14:35
Speaker 9: You know, going back to the you know, pandemic and
14:39
Speaker 9: COVID they actually had obviously this was a very favorite
14:42
Speaker 9: stock because everybody was at home. And then you know,
14:46
Speaker 9: the cohorts that were acquired during the pandemic they kind
14:50
Speaker 9: of reduced and that was kind of like a story
14:52
Speaker 9: of twenty twenty four. It was difficult for them to
14:55
Speaker 9: grow consumers because you know, the cohort was so massive
15:00
Speaker 9: that it was pretty much the you know, they couldn't
15:04
Speaker 9: keep up with you know, they couldn't keep a lot
15:05
Speaker 9: of those consumers. But that has turned around and they
15:09
Speaker 9: are seeing you know, significant growth. We actually expect that
15:13
Speaker 9: most of the growth in sales is probably going to
15:15
Speaker 9: come from active consumers rather than pricing.
15:18
Speaker 7: I mean, I look at you know, I know nothing
15:20
Speaker 7: about this business, but I look at the first place
15:22
Speaker 7: I look for when I look at p and LS
15:23
Speaker 7: at free cash flow. Great free cash flow here, I
15:26
Speaker 7: mek got seven hundred million dollars in for calendar or
15:28
Speaker 7: twenty six, maybe eight to fifty projected for calendar or
15:30
Speaker 7: twenty seven.
15:31
Speaker 3: What do they do with the free cash flow they
15:32
Speaker 3: invested in the business.
15:33
Speaker 9: They're growing scale, obviously, they're opening vets. That is something
15:39
Speaker 9: that they haven't pretty much experienced. They're actually in, you know,
15:43
Speaker 9: investing outside of the United States. You know, they're trying
15:46
Speaker 9: to get into Canada. They're given some of that back
15:51
Speaker 9: and share repurchases, but we don't necessarily expect it to
15:54
Speaker 9: be significant.
15:56
Speaker 3: You know, in twenty twenty six, what's.
15:57
Speaker 7: The big what's the margin analysis you guys do as
16:01
Speaker 7: analysts and investors, where's the leverage in the income statement
16:06
Speaker 7: that maybe improve margins because there's a retailer type margins.
16:09
Speaker 6: Yeah, what can they do? Really?
16:12
Speaker 9: I mean there are actually it seems that you know,
16:16
Speaker 9: they're working a lot with leverage, operating leverage. You know,
16:21
Speaker 9: in their distribution centers they seem to be you know,
16:24
Speaker 9: they are automated, so that has been building scale, you know,
16:28
Speaker 9: trying to get consumers to buy more premium brands. They
16:32
Speaker 9: have private label which they wanted to grow it to
16:36
Speaker 9: like the main teens. That is going to add about
16:39
Speaker 9: five hundred basis points to gross margin and you know,
16:43
Speaker 9: other non merchandise revenue, so that is usually higher profit
16:48
Speaker 9: than merchandise.
16:50
Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.
16:57
Speaker 1: You're listening to the Bloomberg Intelligence Plot. Catch us live
17:01
Speaker 1: weekdays at ten am. He's done on Applecarclay, and Android
17:04
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
17:08
Speaker 1: you get your podcasts, or watch us live on YouTube.
17:11
Speaker 2: All right, let's check in with Justin Priden right now.
17:14
Speaker 2: He is vice president of consulting Services at Revenue Management Solutions,
17:18
Speaker 2: and he's also an attendee at the Bloomberg Intelligence Farm,
17:21
Speaker 2: Food and Fuel conference where they are talking about rising costs,
17:25
Speaker 2: especially fertilizer costs, what that means for agriculture, and what
17:29
Speaker 2: that means down the line for food operators, restaurant trends. Justin,
17:34
Speaker 2: thank you so much for joining us. Tell me about
17:37
Speaker 2: what you've discussed at this conference and how you think
17:40
Speaker 2: about what that means for restaurant menus and the restaurant industry.
17:46
Speaker 4: Paul Scarlett, thank you so much for having me, and again,
17:49
Speaker 4: the conference has been wonderful about talking about some of
17:52
Speaker 4: those input pieces that's really fundamental to restaurants and what
17:56
Speaker 4: their costs they're seeing in the bottom line when it
17:58
Speaker 4: comes to the products on their menus. At Revenue Management Solutions,
18:01
Speaker 4: we're always working to keep our clients ahead of the
18:03
Speaker 4: curve and be proactive when it comes to those cost
18:06
Speaker 4: inputs that they can meet the guests where they're at
18:09
Speaker 4: when it comes to what items are on the menu,
18:10
Speaker 4: their prices and all these pieces, and a lot of
18:13
Speaker 4: the topics that have been really important at this conference
18:16
Speaker 4: is what these what the downstream effects are going to
18:19
Speaker 4: or what the initial effects here are going to cause
18:22
Speaker 4: for those menus when it comes to costs and what
18:24
Speaker 4: comes to operators are going to be reacting to in
18:27
Speaker 4: that food and beverage industry.
18:29
Speaker 7: All right, here's the term I dislike slash hate the
18:32
Speaker 7: most in the food business over the last six months,
18:34
Speaker 7: and that is protein. When did they start using protein
18:37
Speaker 7: as opposed to just saying, hey, do you want chicken
18:39
Speaker 7: on your salad?
18:40
Speaker 2: It sounds better?
18:41
Speaker 6: I don't know, So talk to us about that, I mean,
18:45
Speaker 6: justin protein.
18:46
Speaker 7: Tell us why it's become an issue or a topic
18:49
Speaker 7: within the restaurant and food industry and how we should
18:52
Speaker 7: think about it.
18:53
Speaker 4: Paul, I hear you there, and it's so fun as
18:55
Speaker 4: a restaurant or originally myself, just calling it protein and
18:59
Speaker 4: going there just doesn't sounds good, right. It's not something
19:01
Speaker 4: that you think about when you're on the menu and
19:03
Speaker 4: think about, hey, I really feel like a protein section today.
19:07
Speaker 4: But really it's become a major piece, and it's always
19:11
Speaker 4: been a major piece of menus. I mean we see
19:13
Speaker 4: right now roughly about eighty five percent just of menu
19:15
Speaker 4: items making up that just the core chicken, beef, ork
19:19
Speaker 4: type of items. So it's always been there. But the
19:21
Speaker 4: real focus on it right now is a is you're
19:23
Speaker 4: starting to see a lot of trends focus on protein
19:26
Speaker 4: rich or a lot of protein within the diet. These
19:30
Speaker 4: are becoming even more important to consumers. Some of the
19:32
Speaker 4: generational shift too, you're starting to see is that it's
19:35
Speaker 4: even more important to the millennials who are in the
19:38
Speaker 4: market now and really becoming some of the chief spenders
19:40
Speaker 4: from now and moving forward, really looking for protein as
19:44
Speaker 4: a deciding factor and how they're choosing restaurants and how
19:46
Speaker 4: they're choosing their items. Also, just some trends with gop
19:50
Speaker 4: one and what you're seeing in dietary trends is really
19:52
Speaker 4: focused back on protein being a core of that decision process.
19:57
Speaker 4: For guests on menus, I think a recent survey we
19:59
Speaker 4: saw again three top reasons. It's good for my health,
20:02
Speaker 4: it's satisfying, and it's something that I need as part
20:04
Speaker 4: of my active lifestyle. And that just keeps increasing as
20:07
Speaker 4: we ask guests out there for menus and just what
20:10
Speaker 4: we're seeing as items come to menus.
20:13
Speaker 2: Justin I want to ask you about some trendy food
20:16
Speaker 2: that has become like kind of the thing that everyone wants.
20:19
Speaker 2: It's certainly showing up all over social media, whether it's
20:22
Speaker 2: Macha out of Japan or Asia overall, Ube out of
20:25
Speaker 2: the Philippines. Do buy chocolate, that's a big thing.
20:28
Speaker 6: Well, you're way ahead of me on this.
20:29
Speaker 3: Well, I mean this is.
20:30
Speaker 2: What's all over Instagram. And these things photograph really well,
20:33
Speaker 2: and they also lead to increased demand from consumers, and
20:37
Speaker 2: restaurants are kind of meeting this demand by incorporating it
20:40
Speaker 2: into their menus. Is this something that restaurants do with
20:44
Speaker 2: an eye to like just do it for a couple
20:46
Speaker 2: of weeks before going back to their normal menu, or
20:50
Speaker 2: is it something that they incorporate permanently.
20:53
Speaker 4: Well, I think you're seeing more and more of those
20:55
Speaker 4: trendy types of pieces to mendew if you want to
20:57
Speaker 4: call them trendy, but they're also following a lot of
20:59
Speaker 4: that global taste and that unique taste piece to cause
21:03
Speaker 4: buzz around items and a buzzer bus of the menu
21:06
Speaker 4: to be able to bring folks in again. Right now,
21:09
Speaker 4: as you're starting to see affordability as a total thing
21:11
Speaker 4: for guest visits and transactions being more of a fight
21:13
Speaker 4: for share as guests are coming in not necessarily maybe
21:16
Speaker 4: new occasions utilizing what's there, what's really current, what's good,
21:21
Speaker 4: those short term promotions, the social media aspects and the
21:24
Speaker 4: photographing let the camera eat first type of principle of
21:28
Speaker 4: being able to take sea food that's really exciting. You're
21:31
Speaker 4: seeing that get leveraged a lot as global cuisine as
21:35
Speaker 4: some of those trends are really there and again resonating
21:37
Speaker 4: with millennials, but again across all folks. As whether it's
21:41
Speaker 4: a mainstam menus, there's a real balance. I think you're
21:43
Speaker 4: seeing more of that short term type of menu options
21:45
Speaker 4: come in promotions and then whether that has staying power
21:49
Speaker 4: or how that balance is with what you might consider
21:51
Speaker 4: the core of the menu, the things that you're known for,
21:54
Speaker 4: what you come in for. So it's that balance of
21:57
Speaker 4: getting the folks coming in for excitement and for the
21:59
Speaker 4: things that they know and always look.
22:01
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
22:06
Speaker 1: and anywhere else you get your podcasts. Listen live each
22:09
Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com,
22:13
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
22:17
Speaker 1: You can also watch us live every weekday on YouTube
22:21
Speaker 1: and always on the Bloomberg terminal.