Impossible To Get Labor Post-Stimulus: FAT Brands CEO

Burger and Buffalo's Cafe. I say, there used to be a Johnny Rockets on Third and like fifty six, UM, and I would go there and get double bacon cheeseburger with that Apple would smoked bacon and a peanut butter milkshake, which I would I would kill someone for one of those right now. But uh, what's changed about the business? Um? And he since since I've been down there. I'm I'm in Berlin the last five years, so I haven't been back in the States and I don't even think that, um,

that restaurant on Third Avenue is open anymore. So what's what's Johnny Rockets, What's fatburger like now, well, you know, thanks for having me. The Johnny Rockets brand, we bought it six months ago and about three five restaurants a hundred and seventy five of those are international. They're all over the place, all over Europe, all over Latin and South America. UM and you know we have like a hundred of them down there, so they're they're everywhere today,

growing rapidly. Uh. We don't have one in in Manhattan today, but hopefully we'll have another one there soon. Uh. And you know, businesses growing alright, So give us a just give us a we're thirteen fourteen months andy into this pandemic. Give us a kind of a big four the pandemic and kind of where we are now, how has a pandemic impacted your businesses? You've got we've been we've been fortunate and that most of our brands have met or

exceeded their their levels. Now they've recovered the burger brand Stapper Elevation Burger, which is an organic grass fed burger chain on the East Coast, and Johnny Rockets recovering nicely allowed delivery and to go business. So they were really fortunate to be able to take advantage of that market. Um, they're probably at normal. There are a lot of special venues that aren't quite open yet, like amusement park, steam parks,

things like that everywhere where. Johnny Rackett's new movie Theaters has a lot of locations on the Hurricane Growing Wings, Buffalo's Cafe. Those are casual dining restaurants with full bars and outdoor dining rooms and all that. They're like a hundred and seventeen percent of normal. So they're just recovering

like crazy. And part of that is because during the pandemic, when outdoor dining was allowed, delivery and to go raised awareness, and then when customers allowed to come back to the dining rooms, you have all this additional delivery business that customers didn't really know about before, and so now they're over acent of normal. So doing very well. They're a little bit of trouble in the Midwest with our steakhouse unit Ponderosa and Bonanza where a lot of closures for

a long period of time. Probably lost some stores there, but it's a small percentage of our total seven hundred restaurants. So we've been very fortunate. When you say organic and grass fed, my mouth immediately starts to water and I jumped on the Fat Burger website site. I see you have an x x x L Triple King burger that's one and a half pounds. Um, I would attempt it. I'm not sure if I can. We have a contest if you eat that burger, the Triple X Challenge, or

it used to be called the Triple King Challenge. If you can eat that burger, you get a T shirt and a certificate. But oftentimes we see guys and girls go into the restaurant, and the girls always win because they're much smarter and they're not eating French fries and drinking too much soda while they're trying to get that thing down, and they're very methodical about it. So it's definitely a contest burger. Well, as the Grateful Dead said,

the women are smarter. Um. What I noticed is there's not a lot of fake meat here on Fat Burger. On the Johnny Rockets menu, I do see, Um, you know a garden burger, a black bean burger. What do you think about the fake meat trend? I don't know. Fake meat is a pejorative term, but you know what I mean, right, Um, more and more baste proteins exactly. So we we have plant based proteins across all of

our brands today. That's the Impossible Burger UH domestically UM and it's to beyond Burger in some international markets because of distribution. But the Possible Borger is a great product. M. Plant based proteins are here to stay. Brands need to

adapt them. And basically, you take that that patty that tastes like beef and bleeds like beef, and you add the toppings that come with your burger, whether it's an Elevation product or a Fat Burger product or Johnny Rockets product, and it's gonna taste like Johnny Rockets burger, a fatburger, you know, it's just got a different element of the patty. But plant based proteins are here, they're not going away.

They make up a segment of the market where it's much better than the ordinary you know, garden Burger or Boca Patty Burger, which we have also. But you know, if you want the flavor of beef, then you're gonna enough to go to a plant based protein sen And it's it's really because people don't want to eat the red meat. It's not because they're the healthiest product in the market. Because they're not. It's just a delicious product on the cost side. And he talked us about employees

and the ability to attract and retain employees. These days, there's so much talk out there that the stimulus is impacting that two words for you, total nightmare. The labor market in the labor market in the restaurant industry right now has been decimated by the stimulus package and unemployment benefits, and it's impossible to get people to come back to work and to get new hires, new general managers, new employees in the restaurants that are under construction to be built.

And this is not something that we experienced nine months ago in the first round of PPP loans and stimulus checks went out. We really didn't see this problem. But now we have people hanging around the hoop to get their check and spend their money instead of coming back to work, and it's it's just been a problem now. Obviously it's going to wear off fairly soon when unemployment

benefits drop off in the stimulus checks are spent. Right now, it's been very difficult and it's driven up food prices as well because the same problem exists at the processing plants and for the distribution centers. So we have shortages all over the country because the like Cisco and US Foods and all the big broadline distributors have run out of drivers. All right, that's I think we've heard that around the business and you Weader Horn, CEO Fat Brands,

thank you so much for joining us. We appreciate your thoughts on the restaurant industry. Let's get the latest, shall we, on some of the leading geopolitical issues that are out there right now in the news. When we do that, we always like to turn to Admiral James Trevites. He's a calumnist for Bloomberg Opinion, retired US Navy admiral and a former military commander of NATO, and Admiral Strevitis is always kind with his time when we want to talk

some of these big geopolitical issues. Admiral, thanks so much for joining us here. I'd love to start on the Ukraine because that seems to be the most topical here. We have Russia massing troops on the border there. What do you think is going on and what do you think the US response should be, if any? We should first start with recognizing that Russia actually invaded Ukraine and carved a significant chunk out of their territory, the Peninsula

of Crimea strategically important in the Black Sea. Russia has continued to service and support rebel groups in southeastern Ukraine, so there's a lot of bad history there. And now over the last two to three weeks we've seen reports vary, but between twenty thousand and I saw numbers. I has eighty thousand troops. This is a significant force. So the

reason for it, I think is threefold. One is Putin is rattling a saber at the United States because he knows that there are going to be some significant sanctions coming against his regime for the activities on cyber in our election, and above all the solar windsack Number two, Putin is playing to his home crowd, if you will, all politics are local in the end, He's trying to um, if you will, show the the strength and the power

of Russia, how they can drive events. And then, third and finally, he is seeking to uh distract from the imprisonment and the poisoning of Alexander Navalny his political opponents. So he's got a shopping list of things he wants to do. He's got eighty thousand troops on the border. Let's say I think the chances are still low that he will actually conduct an invasion, but he is certainly seeking to demonstrate that he can make things very difficult for the United States in the West if he desires

to well. And Biden's been pretty bold when talking to President Putin. I don't think it's unfair to say that, Um. Donald Trump seemingly adored the Russian leader, and you know, Biden comes right out of the gate kicking calling him a murderer. Um. On the other hand, Admiral, it does seem as though a lot of these geopolitical hotspots, a lot of these bad actors are are are showing strength right when this new administration comes into office. Is am

I seeing it the wrong way? Or do the Russians and the Chinese just feel more comfortable doing these kind of things with Democrats in office. I don't know if it's more comfortable, but there's certainly a long history on both sides, Republican and Democrat, of having to experience testing when you take over. And so when President Trump took over, we saw Kim Jong unt launch ballistic missiles. UM when the President Biden takes over. As you just saw, we

see Ukraine. But the other one, and you're absolutely right, is Taiwan. We've seen the Chinese fly fighters into the ear defense zone of Taiwan, highest number UH since Taiwan started recording these kind of incidents. China has a carrier strike group operating just off the coast of Taiwan right now. So I think it's very true to say that every administration gets tested early. The question is how do you respond.

And in my most recent Bloomberg opinion piece which came out this morning, um, my prescription is you've got to stare, Putin down. He is a killer, and if you give in to him, if you appease him, there's no future in that process. So I think we've got to take a fairly strong stance across that Ukrainian border, not with armed US military troops parachuting in there, but giving more weapons to Ukraine, providing them training, allowing them partnership agreements

with NATO. They're not members of NATO, but they've been a close ally or a close partner of NATO over the years. So there's a lot we can do to demonstrate to Putin that there will be a significant cost to add to him. Admiral, this brings up an issue. UM. You know, I was kind of excited to see a positive headline ari e NATO cooperation this morning at the meeting in Brussels. They're gonna put another five the US gonna put another five hundred troops here in Germany where

I am in Berlin. On the other hand, I have been uh stationed here for the last five years and just shocked to see that. Um. The Chancellor, who otherwise is considered you know, a leader of the G twenty, is so determined to get a pipeline up to Russia, essentially a pipeline that funnels cash to Vladimir Putin in exchange for his natural gas. And now it looks like Germans are also looking to get the Russian vaccine. Um

is it important where you buy your commodities? I mean, uh, aren't we funding a really problematic regime here we are? And um, as I was saying just today in an interview with a German newspaper, they were asking the same questions. UM, let's add another controversy, which is Germany apparently is determined to use Walkway to build their five gene networks. And as I said to the German reporter, you know, life

is full of choices for people and for alliances. And yes, it is important to the long term relationship with the US and Germany that Germany stands with the United States against these authoritarian regimes, both Russia and China. All right, let's move from hotspots on the planet Earth to space. You also have another column, Oul. You've been prolific talking about Russia and China teaming up a new space race. What's the latest there and what's the ramifications for the US. Well,

the big news here is not just space. It is the way Russia and China are drawing closer and closer and closer together. They're aligning themselves diplomatically, economically, militarily. Largest exercise military exercise conducted since the end of the Cold War was up on this buryan border between Russia and China, about a year ago. Um. This latest thing is that Russia and China have come together and announced they will

create an outpost on the move, a lunar outpost. This is a big deal because, um, it has not only commercial economic implications, but it also has real military potential in both of these nations. As I talked about in that Bluebird opinion piece, both of them are really using

their space programs in a highly militarized way. So we had to be quite concerned watching these two nations, both authoritarian regimes, both of whom we have difficult relationships with, drawing closer and closer together in space and in other areas. Admiral thanks very much for joining us. Always great to get your take on these issues. Admiral James Traviti's former

Supreme Allied Commander of NATO. He is uh now, of course, retired from the U. S. Navy and a Bloomberg opinion columnist as well as an executive consultant at the Carlisle Group UM, and has a number of other interests. He's got a book out four, a novel of the Next World War. I've read the beginning and I only put it down because I had to come to work. I actually thought about calling in sick and just reading reading the rest of the book. It's so good, and I'm

really into that kind of stuff. So great to have General uh, sorry, Admiral James Travities on um talking about the geo political hotspots around the world, our listic deference as Johnson and Johnson and News this morning, we do that with one of our favorite voices and all things pharmaceutical. That's Sam Fazelli. He's a senior pharma analyst for Bloomberg Intelligence based out of London. He also manages Bloomberg Intelligence for all of Europe, so we appreciate getting some of

his valuable time. Sam, thanks so much for joining us here. You know, when I look at the numbers being reported, six cases out of almost seven million, you know a lot of observers would say that's a pretty good result. Why are we pausing this thing? And it's so important to get shots into arms. I'd love to get your thoughts, yes,

Hyphol Sorry, um. I think it's absolutely the right thing for the CDC and the FDA to have done because number one, this this events, this issue takes sometimes up to two weeks after the dose to rear its ugly head unfortunately, so it's very possible that the numbers will continue to rise, possibly to ten or fifteen. Who knows. I can tell you that'd b Astra Zeneca. We're looking at something in the region of one in a hundred thousand depending on the age of the people who have

been vaccinated. So if that's the case, then we would expect to see more more here, and that I think is why the CDC is done and the FDA have done what they've done. And of course the US does not need the g NJ vaccine to get the majority of its people vaccinated. And that's it. It's still a bummer, uh, Sam, because I was just just last night made final plans to fly back to New York to get the J and J vaccine UM since it's proving very difficult to

get it here in Germany. That won't be the case. Now, I would still um take it, uh. And it seems to me correct me if I'm wrong. The problems that we've seen with blood clots and astras enka and the problems that we've seen in UH, the J and J vaccine with blood clots seemed to affect females under let's say the age of sixty if you like. Is that

is that a fair assessment? Well, so let's just be careful here though about UM, and that is that it's only six cases in the US, so that's not an enough number of people to make that decision in the UK where they've had the most cases, and in Europe, when you look at the reported incidents divided by the number of people of the different sexes that have been vaccinated UM, it doesn't have a Unfortunately, it doesn't distinguish it in men and women based in the UK. Maybe

something different in the US, but I doubt it. All right, Sam, you mentioned that, and when you are talking much earlier this morning, you kind of you made the comment to me that again, we have plenty of supply here from five and MODERNA, but I think about Europe, and I think about other parts of the world that may be relying more on a single dose shot like the Johnson and Johnson. This could be a problematic. Now yeah, yeah, So both the European Union and the UK I think

will be fine. It might be a bit slower than than expected in terms of or anticipated in terms of Bionte Moderna shots, and then so of course we'll have novo vax um. But the rest of the world is where the problem starts, because they have mostly either the J and J statonical vaccine or the vaccine um Russia or China. Don't forget the Russian vaccine is also ana virus, and I would be amazed if that doesn't have the same side effects, which of course will be incredible to

have if it doesn't. But then you have the China vaccines that so far, what we've seen published and not thought has been published, they're not that effective. So you have a problem involving there. Yeah. UM, I just want to cover a couple of headlines, bad headlines we're seeing come across the ticker right now. First off, New York City suspending its home bound senior vaccine drive due to

the J and J pause. UM. Even if the J J pauses the right thing to do, it's unfortunate that they have to stop this effort to go around and vaccinate the people who need it most. Also, the US is saying what they see with the J and J vaccine is similar to the astro vaccine. I guess as far as the data that they have, UM, they are saying it's unclear if there's any link between blood clots and birth control pills. And this goes back to the

female issue SAM that we were talking about. UM they're saying they don't have any evidence to support that, but clearly there's that speculation out there. Yeah, but the European Unions already answered that question. Two two cases of this odd v I T T. It's called vaccine induced thrombosis with frombocytopenia. That's a mouthful, this v I T T two twenty two cases and there is no obvious link. So we we have the answer. We don't need to

go and ask any more questions on that one. And what you get with these things with flights with conceptive pills, just the clotting. You don't get that frombocytopenia, that loss of blood plate lists that normally causes bleeding. It's very rare to have a bleeding issue and a clotting issue at the same time. Right, that's the problem here, all right, Sam, thank you so much for joining us once again. We turn to you often when there's news on the vaccines

and this pandemic. Um. We appreciate you taking the time. Santa Celli, he's a senior pharmaceutical analysts for Bloomberg Intelligence, one of the absolute best for decades in the city of London doing that, and he's also the manager of all of Bloomberg Intelligence for Europe. Getting the latest yere on this, Johnson and Johnson vaccine setback here the now, the CDC and FDA, we're seeing headlines that they expected delay to be quote in a matter of days. Uh

So hopefully that is the way it turns out. Now, I want to get over to David Garanty, chief market strategist laid Law and Company, to talk to us about, um, his expectations on the markets and tech. And David, I always feel like I'm talking to someone famous when we have you on, so I'm really psyched to get uh some time with you. Um what do you think about the coin base? I p oh, it's gonna be what a hundred billion dollar valuation, bigger than the exchange on

which it's going to be listed. Is this a whole lot of yape or is this a growth industry? Well, I mean coin Base certainly, and thank you Paul for your kind words. But you know, coin Base, if we're looking at it, certainly has been serving very much as a gatekeeper relative to the cryptocurrency market as a whole. Uh, you know, given what they've got in terms of an account based at fifty eight million accounts and arguably for an asset class, has certainly seen very strong performance over

the last twelve months. You know, they are probably the pre eminent exchange to go to. Certainly there are a business in which obviously a lot of other exchanges in other types of asset classes would like to be involved. Um, we don't necessarily see cryptocurrencies, you know, going away much as we saw back in two thousand and seventeen, because now we see measures coming into place that the cryptocurrency

market in its own way as being institutionalized. Now. That said, we can say cryptos got better traction now, um, but we also say, look at the valuation that you're paying for coin base, you know, less than two billion dollars in revenue last year, a hundred billion dollar likely evaluation. You know, it's pretty rich evaluation. Anytime you see something going out at more than fifty times revenues, um, you know, will they be able to grow into this valuation remains

to be seen. But yeah, you're you're paying a lot to oh this name. Alright. So but if I'm an investor here and all I hear is bitcoin this, bitcoin that, but I see it going up every day, I feel like I've missed it. Is this the way for me to maybe get exposure and maybe this is my crypto play written large by getting into this coin basis, I

mean I would agree to it. And it's not just a matter of getting Bitcoin exposure, but it's also getting exposure to the other cryptocurrencies that are listed, whether we're looking at the likes of ethereum, whether we're looking at the likes of light coin, UH tether or others. So from that standpoint, it's it's a little bit of picks and shovel type of play, if you will. And UH in an important part of the infrastructure for the overall

of the currency ecosystem. So yes, in that name, it is going to be a marquee holding for investors looking at the sector. Hey you UH, do you do you have a price target on the smp because I'm looking at your note and it says will earnings growth drive the SMPI towards Are we going to hit that that level this year or are you thinking just sometime in the future. I mean, in our view, the trends are

kind of moving in that direction. And really here at the doorstep of first quarter earning season, we just have to go back and look at what kind of out performance we've had over the second quarter, third quarter fourth quarter earning seasons, and there we've seen out performance versus Wall Street expectations of about you know, we think that we're probably maybe not necessarily at out of performance in the first quarter earning season, but we think that nine percent,

you know, it isn't necessarily out of rather reach. You know, if we can move and have a positive estimate revision up in terms of SMP five earnings estimates twenty two, if we can hold you know, the pe multiple valuation constant, yeah,

that'll get us. Now, the question in terms of valuation multiples is you know, what's going on relative to the tenure And we saw the tenure cap out March first one, and I think that basically the big surprise in terms of strategist expectations has been the fact that the dollar,

ince than a weakening, is actually strengthened. And the strength of the dollar has been important because it now allows foreign investors, whether it's Europeans, whether it's Japanese with insurance companies or others, uh to you know, buy into US treasury is on a currency hedged basis and and certainly earned positive spread over what they can get back in

their own home markets. So our view here is dollars strength leads to creator foreign demand for US fixed income, which helps to slow down the rate of interest rates rising from here, and an interest rate rises are moderating. That arguably can work well for equities as long as earnings growth comes through and valuation levels hold. I know it's a lot to ask, but that's kind of how

the mechanics work. Yeah, I'd love to talk to you a little bit about the chip shortage that we're seeing in the technology space, because it's not just a technology issue. It's rippling out to other parts of the economy, most notably I think the auto industry has been calling it out here for several quarters. How bad is it and

what do you think the solution is? Well, you know, certainly the dislocations that took place because things were shut down for the period of time that they were in you know what I mean said, you've got a little imbalances that are built up in the supply chain. If we're looking at the lead times people have to have right now, I think the numbers of about sixteen weeks depending upon the category of semiconductors, um you know, orders to delivery, but in some cases it's far worse. It's

not just the auto industry. If we were to look at network routers, um, you know, there are indications that order times have stretched out as far as a year. Uh and for the rollout of broadband capacity. UM. You know, routers obviously are very critical element here and so we're seeing um, you know, points of constraint developed across the

wider economy and not just in the auto sector. And certainly, you know, what was interesting about the Biden administration summit with CEOs where they were talking about, you know, allocating fifty billion dollars of fiscal support towards easing semiconductor shortages and putting more capacity here in the US, is that you know, there is competition, whether it's amongst the auto industry or other sectors who are trying to secure these

chips supplies. In the process, you know, we have to look on a more medium to long term solution that can put in place the capacity domestically arguably or at least closer by is going to happen. David, five to ten years, are we making the super high tech chips

at home? I'd say, you know, t SMC putting twelve billion dollars to work in their five nanometer manufat away for plant in Phoenix, Arizona is important in that regard, and yeah, five to ten years we're going to have that fab online as well as potentially a number of others. Obviously Intel made their own announcement I think last week,

uh twenty billion dollars. So yeah, this we're moving in that direction, and we need to move in that direction because China certainly indicated they want to be more self sufficient. They'll take their first call on that asset. All right, David, thank you so much for joining us. We appreciate that as always. David Garretty, chief market strategist for laid Long Companies, also our president at bt block Key is our what do I go to guys for all things technology. Thanks

for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller on Sweeney. I'm on Twitter at pt Sweeney where the podcast. You can always catch us worldwide at Bloomberg Radio