Tacos and Robots

Summary

Barron's Streetwise – "Tacos and Robots" (March 13, 2026)

Host: Jack Howe
Guests: Chris Turner (CEO, Yum Brands), Zornitsa Todorova (Head of Thematic Research, Barclays), Jackson Cantrell (Producer)
Main Theme: The trillion-dollar future of robotics and AI, and the surprising resilience and growth of Taco Bell under Yum Brands.

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Episode Overview

This episode explores the intersection of two seemingly disparate worlds: the explosive financial and technological growth in robotics and artificial intelligence, and the continuing market strength of fast-food giant Taco Bell. Jack Howe dives into what’s driving record-breaking growth at Yum Brands, unpacks the coming “robot economy,” and examines how China is taking a commanding early lead in the humanoid robot race. The episode is peppered with wit, memorable moments, and trending absurdities in both tech and tacos.

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Key Discussion Points & Insights

Nvidia and the AI Economy (00:42–13:12)

• Nvidia’s GTC (GPU Technology Conference) Event

  • Wall Street’s bullish stance: 93% of 70 analysts rate Nvidia a “Buy,” predicting a 45% stock upside.
  • Despite monstrous growth (22,000% over a decade), projections see Nvidia’s free cash flow rising to $178 billion this fiscal year – surpassing records set by oil giants like Saudi Aramco.
  • Jack highlights Wall Street’s current debate: “Why is Nvidia trading at a discount if growth is so fierce?” (12:58)
  • Future spending is focused on AI infrastructure. E.g., Amazon’s capex for 2026 is expected to hit $190 billion, mainly driven by investment in AI and Nvidia chips.

• Training vs. Inference in AI Chips

  • Training (building models) vs. inference (using models): Shift toward inference means cost, not just performance, becomes key.
  • “Last year, Nvidia paid about $20 billion to license Groq’s technology and acquire its talent.” (11:53)
  • The importance of purpose-built inference chips and Nvidia’s efforts to differentiate against competitors.

• Anticipation for Future Announcements

  • Investors are watching GTC for decisions on supply chain resilience, future product announcements (including Groq LPUs), and the durability of AI infrastructure spending.

Notable Quote

"If Nvidia meets the consensus, it will become the most prosperous company ever. And yes, that does include the monopolies of antiquity like Standard Oil or Dutch East India if we adjust for inflation. In fact, those are nowhere close."
— Jack Howe (06:05)

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Taco Bell & Yum Brands: Fast Food’s Unlikely Growth Story (14:14–22:44)

• What’s Driving Taco Bell’s Growth?

  • Chris Turner attributes Taco Bell’s 7% same-store sales growth to:
    1. A “buzzy and culturally relevant brand”
    2. “Craveable” and innovative menu items
    3. Highly convenient omnichannel experience (drive-thru, delivery, restaurant pick-up)
    4. Persistent focus on value menus
       (15:53–16:39)

• Franchise Model and Economics

  • Franchisees report “tremendous profitability—24% range operating profit for company-owned stores,” with strong incentives to keep innovating and expanding.
    (17:02)

• KFC’s Success Abroad & The Challenge of China

  • 90% of KFC’s business is now international, with a new restaurant opening globally every three hours.
  • Since 2016, Yum China operates as a standalone New York-listed company; Yum Brands’ exposure is now largely royalty-based.
    (18:49)

• Pizza Hut’s Uncertain Future

  • Sluggish relative growth leads Yum to “explore strategic options” for Pizza Hut, possibly including a sale or restructuring.
    (20:56)

• Responding to Weight Loss Drugs Trend

  • Turner emphasizes versatility: numerous lower-calorie and vegetarian options. Yum’s approach includes continual consumer research on emerging trends like GLP-1 weight-loss medications. (21:40)

Notable Quotes

“If you look at the company restaurants that we operate, the operating profit on those company-owned Taco Bells is in the 24% range. So just tremendous profitability while delivering that value to consumers.”
— Chris Turner (17:02)

"We open a new KFC somewhere in the world every three hours."
— Chris Turner (19:21)

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The Trillion-Dollar Robot Economy (22:44–37:53)

• Four Key Robotics Sectors

  • Zornitsa Todorova breaks down the projected trillion-dollar “robot economy” for 2035 into:
    1. Autonomous vehicles (biggest growth, $500 billion projected)
    2. Humanoid robots
    3. Autonomous drones
    4. Advanced industrial automation
       (25:53)

• Current Humanoid Robot Adoption & Challenges

  • 15,000 humanoid robots currently in use, compared to only a few hundred in 2024—most in industrial settings for repetitive tasks.
    (27:29)
  • Key constraint is “brawn”—scaling up complex, miniaturized hardware more than software. “If the hands are very dexterous, this is a game changer.”
    (28:55, 30:44)

• China’s Dominance in Robotics

  • Over 85% of 2025 humanoid robot installations will be in China. Cost advantages stem from a near-perfectly vertically integrated supply chain and government prioritization.
  • Europe has a competitive niche in high-precision “brawn” components, especially from Germany.
    (32:10–34:40)

• Workforce Impact and Social Change

  • Todorova predicts a more benign transition than “AI doomsday” narratives: labor market mismatches (not just layoffs) will help robots fill essential, hard-to-hire roles.
    (36:11)

Notable Quotes

"Most of them—like 80 to 90%—have been deployed in manufacturing and logistics and warehousing. And at the moment what they're doing is...simple, repetitive and very tedious tasks."
— Zornitsa Todorova (27:29)

“China accounted for more than 85% [of humanoid robot installations], compared with just 13% in the U.S.... There is substantial government support for the robotics industry in China. This has been declared a national priority.”
— Zornitsa Todorova (32:46–33:10)

"The challenge is, how do we scale production? ... You can think about a humanoid robot as a car in miniature."
— Zornitsa Todorova (30:44)

“New workers want flexible jobs that are value creating...14% of them see themselves ever working in manufacturing. And I think this is a big problem because the world around us is manufactured.”
— Zornitsa Todorova (37:05)

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Memorable Moments & Lighthearted Segments

• Tech Conference Banter (02:13–08:07)

  • Jack jokes about Nvidia CEO Jensen Huang’s trademark leather jacket and likens the GTC conference to a “Russian doll” of acronyms within acronyms.

• Absurd Taco Bell Creations (38:03–39:17)

  • Jackson Cantrell reads People Magazine’s list of “most outrageous Taco Bell menu items”—from the French Toast Chalupa to the infamous KitKat Chocoladilla.

    “Number one: the KitKat Chocoladilla.”
    — Jackson Cantrell (39:00)

• Generational Humor on Robotics (24:14–25:07)

  • Jack quips, “What do I have kids for?” when discussing paying $50,000+ to automate his blinds and lights before robotics become mainstream.

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Timestamps for Important Segments

• 00:42 – Opening, Nvidia and AI market context
• 02:13 – Nvidia event anticipation and Wall Street expectations
• 06:05 – Nvidia’s financials vs. historical corporate behemoths
• 09:03 – AI chips: from training to inference and new tech (Groq, LPUs)
• 13:12 – Transition to Tacos & robots
• 14:14 – Taco Bell’s business model and growth strategy
• 18:49 – KFC’s global expansion and risk management in China
• 20:56 – Pizza Hut strategy and possible changes
• 21:40 – Managing food trends: weight loss drugs
• 22:44 – Humanoid robots: forecast, adoption, and bottlenecks
• 32:10 – China's edge in the robotics race
• 36:11 – Social & workforce impacts of robot adoption
• 38:03 – The “most outrageous Taco Bell menu items” list

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Conclusion

Jack Howe masterfully blends the high-stakes race in robotics with the consumer sizzle of Taco Bell branding, showcasing how even the most old-school franchises are harnessing brand innovation and market research. Meanwhile, Zornitsa Todorova’s insights demystify the coming robot economy, emphasizing China’s scale, Europe’s manufacturing muscle, and a nuanced forecast on tech’s impact on labor markets.

Memorable, accessible, and full of quirky moments—this is the Wall Street you’ve never heard before.

Transcript

[Morningstar Announcer]

Data is everywhere. But is it ready for consumption? Morningstar developed the language of global investment data so you have the right ingredients to help you shine. Morningstar, where data speaks.

[Zornitsa Todorova]

We estimate about 15,000 humanoid robots were deployed in real world jobs. Compared that to 2024, when we just saw a couple of hundred.

[Chris Turner]

The four things that Taco Bell does, they have a. An incredibly buzzy and culturally relevant brand. Second, they have the most craveable menu in the industry.

[Jack Howe]

Hello and welcome to the Baron Streetwise podcast. I'm Jack Howe and the voice you just heard, well, voice says the first was Zornitsa Todorova. She leads thematic research at Barclays and. And she has a fascinating report out on what she calls the trillion dollar robot economy. And Chris Turner is the fairly new CEO of Yum Brands. That includes Taco Bell and KFC and for the moment, Pizza Hut. Taco Bell had 7% same store sales growth last quarter. It's growing like a young chain. In a moment we'll hear about why. What do robots and tacos have to do with each other? Nothing that I can think of. I enjoy awkward topic transitions. If you didn't know that about me before, now you know. I'll also say just a few words about Nvidia's biggest event of the year. Coming up in the week ahead. Listening in is our audio producer, Jackson Cantrell. Hi, Jackson.

[Jackson Cantrell]

Hey, Jack.

[Jack Howe]

We spoke last week in this podcast about the war in Iran and the price of oil and the potential effect in the stock market. If you're wondering why we're talking about AI and not Iran, you can go back and listen to that episode. If you were wondering then why we were talking about Iran and not AI, well, I'll touch on it in a moment. And if you've been crying out for taco coverage, you're in for a treat.

[Jackson Cantrell]

Everyone gets what they want.

[Jack Howe]

Jackson, do you watch, you know how people used to tune in like it was a TV show to watch Steve Jobs and the yearly presentation of Apple's new gadgets. There was a while there, right? It was a big show.

[Jackson Cantrell]

Oh, yeah.

[Jack Howe]

Do you watch Nvidia's Jensen Wong that way?

[Jackson Cantrell]

I can't say I do. I just. I know he wears a leather jacket.

[Jack Howe]

He does? Yeah. It's like a. It's a biker jacket. It's a good look. I wrote in Barron's this past week, if he goes full trench coat like Neo from the Matrix, it's probably a sign to take profits. But we'll see.

[Jackson Cantrell]

Yeah, I, I think the problem with Apple is now they do like four or five of them every year. And I can't figure out like what's the real one. And it seems like every iPhone kind of like the same as last year.

[Unidentified Guest]

I haven't watched the Apple ones in years.

[Jack Howe]

I mean, I don't watch them like I used to. It doesn't seem that exciting. The Nvidia ones. It's not quite like a gadget you can hold in your hand and see. You just have. It's kind of like chip architecture. So you gotta be, I think, that kind of person or have that kind of interest to really get into it. Let me touch on just a few things to expect or look out for in the Nvidia presentation. First of all, it's called gtc. It's a weird name I think because GTC is an acronym that stands for GPU Technology Conference, but that has an acronym in it. It's like a. It's like one of those Russian dolls of acronyms inside acronyms. And GPU stands for Graphics Processing Unit. And that's a weird name for a conference that's really all about artificial intelligence. But it does make sense. I'll explain why. The view on Wall street and it's a nearly unanimous view. Of the 70 analysts who cover Nvidia stock, 93% say to buy it. And the average price target implies 45% upside for the stock. So just about everyone is aligned on this. They say that Nvidia stock price is depressed, but also if you look at it, it's up 22,000% in a decade. And it's weird to talk about something that's up 22,000% as being depressed. We've talked about some weakness for AI stocks, but let's not overstate the case for Nvidia. There was one point in early February where it was down 8% for this year. More recently it was down only 1%. It's not so much that the stock is sold off, it's really that these rip roaring price gains have just paused for a little while. But meanwhile, the free cash flow for the company's current fiscal year, which runs through next January, that's expected to increase by 85% to $178 billion. I have to tell you a few things, several things really about those numbers. I know sometimes numbers that big just kind of wash over us. $178 billion sounds good. Let me tell you how good it is. First of all, that growth rate would represent an acceleration from last year's growth. Nvidia is growing faster, not slower. Second, the $178 billion. If you look at the low estimate and the high estimate, the difference is $98 billion. That suggests an enormous amount of uncertainty. But also we the overall consensus has been rising for months. So forecasters are sweetening their math as new evidence comes in. New evidence like Nvidia's late February quarterly report. Okay, let's talk about just how much money that is. Back in 2022, when Russia invaded Ukraine, the oil price spiked, kind of like it has recently. That year, Saudi Aramco, that's the oil monopoly of Saudi Arabia. It generated close to $150 billion in free cash.

[Unidentified Guest]

That's still a record.

[Jack Howe]

This year, Aramco won't likely come close to that figure, partly because the Iran war has complicated its path to market. So if Nvidia meets the consensus, it will become the most prosperous company ever. And yes, that does include the monopolies of antiquity like Standard Oil or Dutch East India if we adjust for inflation. In fact, those are nowhere close. And if you believe the estimates, that record $178 billion won't last for long because next year Nvidia is expected to smash through it hitting $233 billion. Where is all this money coming from? I'll give you an example. Amazon this year is expected to burn $10 billion in cash. That's totally by choice up until 2023. For the few years leading up to that, Amazon was investing somewhere between 50 and 60 billion dollars a year. It was building out its logistics network and spending on cloud computing. But this year's spending is pegged not at 50 to 60 billion, but at 190 billion. And the increase has everything to do with AI infrastructure, including Nvidia chips. So a big part of the debate around Nvidia stock involves how long Amazon and others will continue to spend so much. Barclays this past week predicted that industry wide capex will peak in 2028 at about a trillion dollars and as it puts it, come down modestly thereafter. It says that consensus 2028 estimates for hyperscalers like Amazon are too low by a combined $300 billion. So you can start to see why these Wall street banks argue that Nvidia is too cheap. If we're looking at profits rather than free cash flow, the story is very similar. But investors like to look at price earnings ratios. Okay, Nvidia trades at 17 times its next fiscal year's projected earnings. And that's a discount to the S&P 500. So why is Nvidia trading at a discount. It's if the growth is so fierce, that's the bull case, the bear case, I suppose. Or maybe it's cautious case on the part of investors. They've just never seen numbers like this. They wonder if Nvidia can really hit these targets. They wonder if this level of spending is sustainable. So that's what they'll be looking to gather clues about at GTC in the coming week. They'll want to know about the supply outlook for critical components, things like wafers and memory and optics. They'll want to hear about the effect of the Iran war, power costs and on demand from sovereign customers. But mostly they'll want details on future products. I should do some light stretching here, Jackson, because I'm about to get into the subject of AI computing, which is a little heavy. I think I got this.

[Jackson Cantrell]

Just say Jevons Paradox a couple of times and you'll sound smart.

[Jack Howe]

Are you pronouncing that right, Javon? Is that a brand of acid washed jeans from the 80s? I think I owned a pair back during my Sinbad look.

[Jackson Cantrell]

We should have AI spin that up and that'll be the new cover of this podcast.

[Jack Howe]

So AI chip spending in recent years has focused on building and optimizing models, and that's called training. In coming years, it's going to shift more towards putting those models to work and making money from them. And that's called inference. Training favors highly parallel processing. It's a lot like the processing used to render video game graphics, which explain why Nvidia, a company whose chips powered 3D shoot em ups like Unreal Tournament back in 1999, came to dominate AI profits. It's why the name of that conference has an acronym that stands for another acronym that stands for graphics in part. So as recently as 2019, CPUs central processing units. Those are the chips that, like intel, is best known for. Those made up the overwhelming majority of data center compute spending. 87% GPUs the graphics chips used now for AI, along with other AI accelerators, those made up just 13%. That was 2019. Now that has totally flipped. Last year the AI chips accounted for 88% of compute spending at data centers. When you're doing AI training and building your models, cost is kind of an afterthought. But when it comes to inference, you want to get your business model working and cost there is key. And the computing needs for inference are more mixed than they are for training. Basically, when you type a question into your favorite AI chatbot, it turns it into tokens representing words or parts of words or punctuation, and it processes all of those tokens at once. That's a step called pre fill, and it favors the highly parallel computing of GPUs. But the answers come a token at a time. It's a little like speaking where each word builds on the last. That step is called decode, and CPUs can excel at that kind of sequential computing. That's one reason they're becoming more important in AI. But what you'd really like to have are purpose built chips that can handle decode cheaply and efficiently without, for example, the need for pricey off chip memory. There's a privately held company called Grok that specializes in just such chips, called LPUs, or language processing Units. And last year Nvidia paid about $20 billion to license Groq's technology and acquire its talent. So in the week ahead, look for Nvidia to Discuss how Grok LPUs will help Nvidia broaden and customize its future chip portfolio to address training and pre fill and decode. That could help the company hold market share with hyperscalers that can produce their own chips. UBS is bullish on Nvidia stock. It calls a breakout of the stock based on some thesis altering commentary at GTC hard to see. But it also calls the contrast between its rapturous Nvidia earnings estimates and the stock's discount valuation quote seemingly unsustainable. GTC will kick off on Monday with a keynote addressed by Nvidia co founder Jensen Huang. He of course, has been on the podcast. Is there a statute of limitations that runs out the amount of time I can mention that, Jackson. Or I could just keep saying it forever.

[Jackson Cantrell]

I think you can say it forever.

[Jack Howe]

Maybe Jensen's address will shed some light on whether Wall street has it right that investors are too cautious or investors have it right that it's time for a pause. And it's not time for a pause here because we're going to talk about

[Unidentified Guest]

which is it Jackson, Tacos or robots?

[Jack Howe]

Robots first, right?

[Jackson Cantrell]

It's robots first. I'm looking at this Nvidia lineup for Is it Wednesday? Thursday, March 6?

[Jack Howe]

SCED. It's first the agenda.

[Jackson Cantrell]

Agenda, yes. I'm looking at the what's catching your eye? I'm just realizing how out of my depth I am here. I don't understand any of this. There's the Release of the Nemotron 3 Super Hyber Mamba Transformer Moe for agents.

[Jack Howe]

Yes. Where are your safety Goggles for that one.

[Jackson Cantrell]

This one's about Nvidia GeForce RTX which powers the world's fastest GPUs and enjoys beautiful ray tracing AI powered DLSS in your own living room.

[Jack Howe]

That's actually. You're going to think I'm making this up. It's a foot massager.

[Unidentified Guest]

It's a really high end foot massager.

[Jack Howe]

Let's get to my recent conversations and you know what? Let's go tacos first. Let's get crazy.

[Jackson Cantrell]

All right, we can do that.

[Jack Howe]

Yum brands, they have a new CEO since last year, Chris Turner. This is not a turnaround CEO. This is a company that's doing well.

[Jackson Cantrell]

You don't hire Chris Turner if you want to do a turnaround.

[Unidentified Guest]

Too on the nose. Yeah, it's a good point. It's probably in his contract.

[Jack Howe]

I wanted to know a few things about Yum. Why is Taco Bell suddenly doing so well in the us? I remember this chain from when I was a young man. This is a place you could get stuffed for like two or three bucks. It's popular today with young people and I'm not sure that's the reason I wanted to hear about that. I wanted to hear about KFC's growth overseas. And Yum is exploring its options for Pizza Hut. This is at a time when a couple of Wall street banks have recently sounded some very bullish notes on Domino's. So I just wonder what's happening with Pizza Hut. Let's get to our conversation.

[Unidentified Guest]

Let's talk tacos. To start the Taco Bell. This was. I'm a 53 year old man. When I was in college, this is a place where you could get stuff for $0.59 on their value menu. So you could walk in the door with $2 in your pocket and get full. If you had $3, you could get stuffed.

[Jack Howe]

But the other day my teenage daughter asked me.

[Unidentified Guest]

She wants to go to Taco Bell. She's a Chipotle regular and lately I hear if she's interested in Taco Bell. How do you make this brand relevant to young people today? How's she hearing about you?

[Chris Turner]

I think Taco Bell does four things incredibly well and that's why they're winning. Last year they had 7% same store sales growth in the US on the full year basis. That's many points ahead of the category. They took a lot of share.

[Unidentified Guest]

That's like a young chain.

[Jack Howe]

That's not like a however many decades

[Chris Turner]

old chain it is. But the four things that Taco Bell does, they have A an incredibly buzzy and culturally relevant brand through our marketing. Second, they have the most craveable menu in the industry. You and I crave those classic favorites. We have an incredible catalog of favorites we can bring back. But we are also always bringing new innovation to market. Third, we have the most convenient experience in qsr, Taco Bell. It's an easy experience through the drive thru or to get delivered or to pick up in the restauran. And then fourth, always Taco Bell stands for value. And you can get incredible value whether it's in one of our lux cravings meals or on the lux value menu.

[Unidentified Guest]

She's definitely not going for the value because I'm paying.

[Jack Howe]

You run a franchise model and you

[Unidentified Guest]

have people out there who run your Taco Bell locations for you and you collect royalties. What's the pitch for someone who comes to you, comes to talk to you, Interested in that? What do the economics look like for them? What does that job look like? Why is someone eager to become a,

[Jack Howe]

a Taco Bell entrepreneur?

[Chris Turner]

The Taco Bell economics are tremendous. If you look at the company restaurants that we operate, the operating profit on those company owned Taco Bells Is in the 24% range. So just tremendous profitability while delivering that value to consumers. For our franchise partners, they do an excellent job. Of course they deploy their capital to build these restaurants. They've gotten strong returns over the years and of course they're aligned with us on continuing to drive growth in the system. It's a very logical plan where we're adding more and more use occasions for consumers to connect with us. So a consumer who's looking for a little more elevated product, for example, could buy the Cantina chicken product which is a tremendous set of items that we have that have an elevated slow roasted chicken product, more vegetables. If consumers want to buy more beverages from us, that's a big growth area in the restaurant space right now. We have expanded our beverage lineup in restaurants to include things like Refrescas. We've also launched Live Moss Cafe. We now have more than 30 live MAS cafes open. And that's where we renovate the front of house to provide a bar where we can do customized crafted beverages for our consumers. So lots of growth plans ahead for us and our franchise partners to continue to build this business.

[Unidentified Guest]

Tell me now about chicken, about, about kfc. I understand this is the, this is

[Jack Howe]

the fast grower overseas.

[Unidentified Guest]

Tell me what the trajectory is there,

[Jack Howe]

how you're growing there and also touch on as an American, when I hear about companies that are expanding in China. I always think to myself, sometimes we have trade tensions, political tensions, so forth. How does a company that's expanding in China stay safe from those kind of things?

[Chris Turner]

Yeah, if you think about the KFC business, it's our largest brand. Almost 90% of the business is outside the US and so it is a incredibly global business. Operates in more than 150 markets. And KFC is known for unit development. So opening new restaurants. I always say that if you're a consumer on the planet, you're not a vegetarian. You've probably had fried chicken and you probably loved it. And of course, KFC has the best fried chicken in the business. And the brand is so extensible in any market around the globe. In fact, we open a new KFC somewhere in the world every three hours. The China business is a big part of kfc. We have a tremendous business there. It's been growing for many years. Back in 2016, Yum had a change to its business model. We call it the Yum Transformation. A big part of that was spinning the China business out. Yum used to own many of those restaurants in China. We spun that out to be its own standalone company called Yum China. Listed on the New York Stock Exchange. They are our largest partner. We collect a royalty. It's one of the lowest royalty rates in the world there. So we still have exposure to that market and exposure to the tremendous growth there. But there's now an amazing leadership team at Yum China that drives that business. They have tremendous focus on it and they, of course, are focused on continuing to drive growth in that vibrant market.

[Unidentified Guest]

You're exploring your options for Pizza Hut. What are your thoughts about Pizza Hut and why are you looking at these

[Jack Howe]

different choices for what to do with it?

[Chris Turner]

The Pizza Hut brand is a wonderful brand. I love the Pizza Hut brand. My, I'm married to my high school sweetheart. We had our first date in a Pizza Hut restaurant back in the early 90s. So I have a long connection to the Pizza Hut brand.

[Morningstar Announcer]

Data is everywhere. When orchestrated properly, it sings. At Morningstar, we analyze and enrich data, making it actionable and powerful for you. Morningstar, where data speaks.

[Chris Turner]

The reason we're exploring strategic options is because it has been growing more slowly than the rest of the portfolio. We think it needs to be put on a different trajectory. Part of that will be exploring, hey, would it be better for some of that work to be done outside of Yum with another capital partner? There may be elements of the transformation plan that are better done outside of the public spotlight. But it's all in the interest of what's right for the brand, what's right for our franchise partners, and what's right for Yum shareholders.

[Jack Howe]

Whenever I talk with a food CEO, I'm always on the lookout for these

[Unidentified Guest]

weight loss meds, the shots that people

[Jack Howe]

are taking, and they don't feel as hungry and they don't eat as much. Do you folks talk about that?

[Unidentified Guest]

Is that relevant for you or it's

[Jack Howe]

just not a factor at this point?

[Chris Turner]

You know, anything that is affecting consumers is relevant for us. In fact, about a decade ago, Yum acquired a company called Collider. We still keep it separate, rated a bit inside of Yum. But it is a consumer insights engine. A team of experts there who are constantly staying in touch with the consumer. Anytime we see something on the horizon that might affect consumer behavior, they go and research it. We've been researching the weight loss drugs that you mentioned for multiple years now. And you know, our view is we want to provide consumers the choices and options that they seek. If you think about a business like the Taco Bell business, you have the veggie cravings menu. If you want to get vegetarian versions of the Taco Bell items, you just hit a button on the app and you've got them. Taco Bell has lots of snackable items, so someone who wants to build a meal with smaller items can do that with great value on the Taco Bell menu. Chicken, of course, is a preferred protein today. Consumers around the globe. So all of that helps to provide a broad range of options. And that's just one piece of what helps us continue to grow and continue to be incredibly resilient.

[Jack Howe]

Thank you, Chris. Let's take a quick break. Welcome back. And hear from Zornitsa at Barclays about robots. Welcome back. I'm fascinated by this topic of humanoid robots. The fact that, like Tesla, for example, is so all in that it doesn't even talk about selling cars anymore. It's all robo cars and humanoid robots. Like, like the, the private ownership of, you know, two arms, two legs, C3PO type robots. I have a hard time imagining it, but that's what, that's what people say.

[Jackson Cantrell]

Do you ever watch the videos that the Chinese government puts out on their, like, robot demos?

[Jack Howe]

Yeah, they're way, they're way ahead, right?

[Jackson Cantrell]

I mean, they have kids doing kung fu against robots. I don't know if you saw the recent one.

[Jack Howe]

I would start with the robots doing kung fu against each other. Leave the children out of it. But okay, I'm not Trying to tell China how to do robots. I just think like, I'm a little over half a century old, so I wonder when I'm in my golden years if I'm gonna have a robot helper around the house like, like we used to see in science fiction movies. There was a guy who came to the house, what was it, five years ago, he wanted to automate my lights and my blinds. And he said it was like, I

[Unidentified Guest]

think it was $50,000 or $70,000, something like that, so that I could push

[Jack Howe]

a button and that would make the lights go on and off and the blind.

[Unidentified Guest]

And I thought to myself, what do

[Jack Howe]

I have kids for?

[Unidentified Guest]

Sooner than spent $50,000, I'll ask my boy to go turn off the lights, right?

[Jack Howe]

But now maybe one day I'll have a robot who can do that for me. That is, I'm sure, not the best and highest use case for these things. I'm not a futurist, but let me introduce you to someone who can talk about our robot future. Zornitsa Todorova is the head of thematic research at Barclays. She's done a lot of research recently on robots, not just humanoid robots, but self driving cars and factory robots and so on. And I wanted to hear more about what's coming and how quickly and how it might change society and how far ahead China is and what are our chances of catching up. Let's get to that conversation. I asked Zornitsa how she got into robots.

[Zornitsa Todorova]

I actually trained to become a logistics engineer to arrange containers in a container ship. Sounds horribly boring, but it's actually very, very tricky to do that so that like the weight is balanced. Then I moved into finance and people were very disappointed with me. And then I went into academia. And then people said, oh, you should stay in academia, don't go to the private sector. And I did. And yeah, I, I'm, I'm happy with my choice.

[Unidentified Guest]

We're happy you're here to explain to us the robot revolution that's coming. I saw a forecast for a trillion dollar robot economy by 2035. That's not that far from now. I mean, I'll still be wearing the same clothes by 2035 and we'll have a trillion dollar robot economy. What shape is that going to take? What kind of robots are we talking about and what will that look like?

[Zornitsa Todorova]

So that trillion dollar estimate spans actually four key robotics categories. So it's autonomous vehicles, humanoid robots, autonomous drones, and advanced industrial automation. So I could see how autonomous vehicles are going to lead the trend and lead the shift. And in fact, nearly half of the growth that we project for 2035 comes from from autonomous vehicles. So that's about $500 billion. I think that intuitively it makes a lot of sense because autonomous vehicles have been around for nearly a decade now. The technology is more mature, but more importantly, there is a lot of data that these systems can use for their AI models. And that's a very different story when I compare where this technology is to where humanoid robots are at the moment. So I think for humanoid robots we, the growth potential is enormous, but I think it's just going to take us a bit longer until the technology is mature enough to be really useful. And the challenge at the moment is, somewhat paradoxically, lack of data.

[Unidentified Guest]

The forecast for humanoid robots in particular are all over the map. I see that they're going to be standing next to us tomorrow in our homes versus no, it's not going to happen. It's decades away. And so that that has to be. And by the way, when we say humanoid robot, we mean something that has the form of a human being. Like for people my age in Star wars, you have C3PO and R2D2. We're talking about a C3PO. We're talking about arms and legs, not the little guy on the wheels. Is it a sure thing that we're going to reach a time, let's say, in the next couple of decades where we have these humanoid assistants in our homes? I mean, is that, are we on an inevitable path toward that?

[Zornitsa Todorova]

I think so. We estimate about 15,000 humanoid robots were deployed in real world jobs. And now that might not sound very impressive and doesn't move the needle too much. But compared that to 2024, when we just saw a couple of hundred. So the rate of change is really exponential. And out of these 15,000 humanoid robots, most of them like 80 to 90% of them have been deployed in manufacturing and logistics and warehousing. And at the moment what they're doing is what I call simple, repetitive and very tedious tasks. So these are very well organized, very well structured tasks like lifting boxes off of the assembly line or sorting packages in a distribution center. And I think as the technology matures, as it gets better, as the humanoid robots are able to read context better, I think we'll see them engaged in more complex tasks. And ultimately maybe that's for the 2000-40s is when we see them in our homes assisting us with the laundry, helping us clean the house, do the dishes.

[Unidentified Guest]

20:40 Is that what you said, that's when they'll be helping us in our homes.

[Zornitsa Todorova]

20, 40.

[Unidentified Guest]

I know that this is the smallest part for now of the robot economy,

[Jack Howe]

but it has to be the one

[Unidentified Guest]

that people are most fascinated with. I mean, tell me about just one or two kind of, gee whiz, things that you've seen where you looked at a robot that someone's made or maybe it's a test unit and you said, wow, I didn't know that we were this far along yet.

[Jack Howe]

This is really fascinating.

[Unidentified Guest]

What have you been impressed with that you've seen out there that robots can do?

[Zornitsa Todorova]

Now, when I think about this technology, I think the most complicated part of the robot is how do you design robotic hands that resemble the dexterity that we have in humans? Because we are extremely efficient, we are very dexterous, we know exactly what we have to do, we have this inborn intelligence. But for humanoid robot, it's a very different story because you need to teach that machine every single thing. So from where I stand, I'm not as impressed with robots doing backflips. Look, I think this is very impressive for sure, but I don't think it helps us that much in our daily life and it doesn't make them useful in commercial settings. But if the hands are very dexterous, then this is a game changer. And I think some of the new models that come out of, out of China, that come out of the U.S. i think these are really, really impressive because they have almost human level dexterity. And this means that you can, you can put them to work on assembly lines and they can do really very complicated tasks for which until now you've just needed humans. And if we are able to tackle that part of the challenge, I think a humanoid robot is actually a very effective proposition to solve many of our troubles.

[Jack Howe]

My son just asked me, why, why

[Unidentified Guest]

are the robots going to be shaped like humans? Why wouldn't they have eight arms instead of two? I said, I don't know. I think you got to save something for an upsell. Like after they buy the two arm unit, you can add more arms for an extra charge probably. I don't know. I want to ask you about these four pillars. You have this fascinating report that you put out on the future robot economy. And the pillars that you mention, you call them brains, brawn, batteries and enablers. Is there one of these right now? That's the constraint. I gather that they all have to work together for this future robot economy to come to fruition. Where are the bottlenecks Right now.

[Zornitsa Todorova]

So I would say that the bottleneck right now is maybe in the brawn category, because I hear a lot of people say, speak about brains, and that's important, right? We need the semis, we need the right kind of compute. The software stack needs to be designed appropriately. The sensors matter. But I think it's really the brawn where I see the biggest challenges right now. And the challenge is, how do we scale production? Because Braun is basically all these physical tiny components like screws and bolts and actuators that make the connection between the software and the physical world. Because when a robot is deployed on a factory floor, it's much more about the laws of physics and mechanics than it is about software. And so figuring that out is very important. We estimate actually that about 50% of the unit build cost for humanoid robots is associated with the broad component. And I think the interesting part is that we don't need to reinvent that from scratch. There are many companies that are producing components right now, and they actually sit very tightly embedded in the automotive supply chain. So at a high level, you can think about a humanoid robot as a car in a miniature. You need the same type of physical components, you need the same level of complexity and the large number of suppliers that need to work together. But it's just everything is tinier and slightly more complex. But kind of the building blocks are there.

[Jack Howe]

Let's talk about China.

[Unidentified Guest]

You can buy an entire exchange traded funds or mutual funds that are filled with robot, humanoid, robot specific manufacturers. There's a whole big economy. They're focused on developing these humanoid robots. You write here that of the 15,000 new humanoid robot installations in 2025, China accounted for more than 85%, compared with just 13% in the U.S. that's from your report. And then one other figure here about industrial robot adoption. This is From, I think 2024, basically,

[Jack Howe]

China was 10 times, almost 10 times the number of installations is in the

[Unidentified Guest]

U.S. it seems like they're very far ahead of us in the development of these robots, and in particular the humanoid robots. Tell me more about how the competitive landscape there looks and the chances or possibility that the US could catch up in the years or decades ahead.

[Zornitsa Todorova]

Right. So I think there are two things here. So the first aspect is they are nearly vertically integrated supply chain, which allows them to produce robots at a much lower price tag compared to their competitors. They own the raw materials, starting from critical rare earths to the some of the physical components to the batteries. And that allows them to produce these robots at a very low at a very low price. The other part is that there is substantial government support for the robotics industry in China. This has been declared a national priority and they're heavily investing for the future, which on the face of it might seem very surprising because labor costs in China are not as high compared to, let's say, the US or the EU, but their population is aging very rapidly. So in 20 years time, it could be that they might not have enough workers to work in manufacturing. I think that there's no denying that China leads by a wide margin, but this doesn't mean that there's no space for other companies outside of China to lead. And I think I see somewhat surprisingly, an opportunity for the EU here because of the industrial heritage. So if I go back to my example before, with the brawn, 50% of the unit production cost of humanoid robots is associated with the brawn component. Europe is really the manufacturing hub when it comes to these high precision actuators. So these are the components that enable the robot to move. So nearly 15% of the global supply comes out of Germany.

[Unidentified Guest]

I was going to say it's always Germany. That sounds like something Germany's real good at.

[Zornitsa Todorova]

They are really good at it because there's just a lot of overlap between the automotive sector and the robotics because you need the same kind of suppliers, the same kind of components. I think there is an opportunity for Europe to lean on that industrial past, industrial heritage rooted in the automotive DNA and to repurpose that for robotics going forward. So it's still early days. We'll have to give it a couple of years to see how this plays out. But I think it will be very, very hard to catch up with China.

[Unidentified Guest]

Help me think through the societal changes

[Jack Howe]

and impacts that are coming.

[Unidentified Guest]

You probably heard in the past week or two about this report that went around Wall street from this outfit called Citrini Research. Somebody had done a sort of a fictional look back from two years from now, 2028, and they were writing at a time where there was massive layoffs in unemployment and the stock market had crashed and house prices were falling, and it had all been caused by artificial intelligence replacing white collar work. And I think that there's a lot of people think, okay, I might be coming for that knowledge work, but you know, I, I work with my hands and so, you know, I've got to be safe. But then when we enter a world where we have physical AI with robots that are doing these things, boy, it seems like there's an awful lot of jobs that can be done by machines and computers that are now done by people. Is that concerning to you that we might have something like this paper was talking about massive unemployment and big disruption in investment markets or you think it'll be a more benign path than that?

[Zornitsa Todorova]

I think it will be much more benign than what this report claims. And I would actually phrase the question somewhat differently. Yes, it's true, but you know, AI is disruptive and there will be winners and there will be losers for sure. But there are also other jobs at the moment for which many companies and many sectors are struggling to hire just because workers preferences are also changing and that's not always necessarily due to pay. My favorite example here is looking at where the young, the new workers that are entering the labor force right now want to work. And I read a very interesting survey a couple of weeks ago which said that about 60% of Gen Z workers want to be social media influencers. Now take this with a grain of salt, right?

[Unidentified Guest]

But somebody has to be left to be influenced by all the influencers, right? I mean we can't all be influencing each other, but. All right, go ahead.

[Zornitsa Todorova]

Yeah. What I wanted to say is that I think it shows you the direction of travel that the young workers want to be in flexible jobs that are value creating, that are interesting, that are flexible. So 60% want to be social media influencers. Now 14% of them see themselves ever working in manufacturing. And I think this is a big problem because the world around us is manufactured. So we would need these jobs going forward more than ever. But the new workers, they don't want to do them. And I think that this creates a bit of a structural mismatch between the supply of labor and demand of labor. And I think that humanoid robots and physical AI in general could be a solution to, to this problem. I'm not saying it's not going to be disruptive, but I think that the discussion is much, much, much broader than that.

[Jack Howe]

Thank you Zernica from Barclays and thank you Chris from Yum. And thank you all for listening. Jackson, did we miss anything? Anything we need to add?

[Jackson Cantrell]

Yeah, I'm looking at a list by People magazine titled the most outrageous Taco Bell menu items of all time.

[Jack Howe]

Give me numbers 3, 2 and 1. Let's go in order of ascending craziness.

[Jackson Cantrell]

Well, there's the French toast chalupa, which is a little strange. That's number three. It's, it looks like a taco where the taco is French toast and it's filled with bacon and eggs.

[Jack Howe]

I feel like that's not crazy if you do it in your own kitchen. Go.

[Unidentified Guest]

Go ahead.

Number.

[Jack Howe]

Number two. It's.

[Jackson Cantrell]

It's also. This is a combo one. It's the Naked Chicken Chalupa and Naked Chicken Chips. And it's just a.

[Jack Howe]

It's just a crazy name, right?

[Jackson Cantrell]

The tortilla is just chicken, and the tortilla chips are just chicken. Like thin. It's chicken and chicken in a. In chips. Yeah, yeah. You're putting chicken in a chicken fried chicken shell.

[Jack Howe]

Okay. I don't know why naked has had to get involved there, but okay.

[Jackson Cantrell]

Number one, the KitKat Chocoladilla.

[Unidentified Guest]

You took it way too far.

[Jackson Cantrell]

It's the innovation team. They're not afraid to take some swings, and I respect them for that.

[Jack Howe]

If you have a question you'd like played and answered on the podcast, send it in. It could be in a future episode. Just use the voice memo app on your phone and send it to Jack Howe. That's h o u g h ehrens.com and you can subscribe to the podcast and Apple Podcast, Spotify or wherever you listen to podcasts. If you listen on Apple, write us a review. If you have a taco idea, you're probably better off sending that to Chris at yum. Don't do KitKats. They've tried it. See you next week.

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