Musk Offers Loft Promises After $1 Trillion Tesla Payday

Summary

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Bloomberg Intelligence Podcast Episode Summary

Episode: Musk Offers Loft Promises After $1 Trillion Tesla Payday
Date: November 7, 2025
Hosts: Scarlet Fu & Paul Sweeney

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Episode Overview

This episode dives deep into two major business stories:

1. Tesla shareholders’ approval of Elon Musk’s $1 trillion pay package and the bold technological promises Musk made following this historic vote.
2. Market reaction to the delayed release of Grand Theft Auto 6 and its implications for Take-Two Interactive and the broader gaming industry.
   Additionally, the show features a segment analyzing Wendy’s latest earnings results and strategic direction amid consumer pressures and industry headwinds.

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Segment 1: Tesla’s $1 Trillion Pay Package & Lofty Promises

(Main discussion: 01:55 – 09:29)

Key Points & Insights

• Shareholder Approval: Tesla shareholders overwhelmingly (over 75%) approved Elon Musk’s historic compensation plan, tying his payout to sharply ambitious financial and operational targets.
  • Notable Quote: “With over 75% voting in favor, approved. All right, that’s a good day for Elon Musk.” – Brandon Earhart, Tesla General Counsel [01:59]
• Musk's Vision: At the shareholder meeting, Musk projected ambitious outcomes for Tesla, such as achieving an $8.5 trillion market cap and $400 billion in EBITDA over ten years.
  • His focus extended well beyond cars, envisioning a future with humanoid robots performing precision surgery and assisting in off-planet colonization.
  • Notable Quote: “You know, he was talking a lot about what the future looks like... It almost feels like I’m watching like a Star Trek episode.” – Stephen Mann, Bloomberg Intelligence [02:42]
• Robotics and Autonomy: While recognizing the technical challenges to humanoid robotics, the discussion highlighted Musk’s push for Tesla to design and manufacture its own chips, specifically for autonomy, potentially challenging Nvidia and TSMC.
  • Quote: “He’s currently designing his own chips for Autonomy, but he also wants to build his own fab... That’s really a direct competition to companies like Nvidia.” – Stephen Mann [04:04]
• Shareholder Math: The pay package would require Tesla to create about $7 trillion in new market capitalization.
  • Quote: “If he wants to take a billion of it, that’s fine with me—I’ll take the rest. I think that’s what shareholders were saying.” – Podcast Host 2 [05:04]
  • Clarification: Much of Musk’s compensation would be in stock, not cash, consolidated to solidify his control and incentive to deliver.
• Tesla’s Business Focus: While Tesla’s car business is still “important,” much of the company’s longer-term strategy pivots toward building a platform for “physical AI”—using cars and robots as vectors for artificial intelligence in the real world.
  • Quote: “He’s actually creating AI through cars, mobile devices, cars, and robots. For him to proliferate autonomy, physical AI, he still needs to produce cars.” – Stephen Mann [06:00]
• Consideration of Spinning Out or Diversifying: Discussion of investor perceptions—Tesla as “Elon Inc.”—and speculation about whether core operations could be spun off to allow other “Elon” ventures to flourish under the Tesla umbrella.
  • Proposal for Tesla to invest in X AI, Musk’s independent AI venture, was discussed. There is potential for significant technological synergy, especially as Tesla vehicles may come equipped with X AI’s Grok chatbot.
  • Quote: “A lot of the stuff he talked about last night about autonomy, Optimus robot... and how those robots can be used in Mars, they're all connected, all AI is connected.” – Stephen Mann [07:38]
• Competition with China: A listener question prompted a comparison between Tesla’s robotics ambitions and advances made by Chinese startups, with a frank admission that “the Chinese are very, very far ahead” in some robotics domains.
  • Quote: “It’ll be interesting to see...They’ll be a formidable competitor.” – Stephen Mann [08:49]

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Segment 2: Grand Theft Auto 6 Delay and Take-Two’s Prospects

(Main discussion: 11:21 – 19:49)

Key Points & Insights

• GTA 6 Delay: Take-Two Interactive's highly anticipated Grand Theft Auto 6 saw its launch delayed again—from May 2026 to November 2026—causing the stock to fall nearly 9%.
  • Quote: “GTA 6... has been priced in into Take-Two’s shares... so obviously valuations were going to be a bit sensitive to any sort of downside risk.” – Nathan Nadeau, Bloomberg Intelligence [12:17]
• Rationale for the Delay: Developers want additional time to “polish the game.” Despite repeated delays, anticipation remains extremely high; previous titles are still among the industry’s best-sellers.
  • Quote: “Grand Theft Auto is easily the top five selling games franchise of all time globally. So this game has quite a bit of a cult following.” – Nathan Nadeau [13:44]
• Market Impact: Video games now generate approximately $180 billion in annual sales, surpassing film and other entertainment industries in size.
  • Quote: “The overall video game market is inching towards like US$180 billion in sales last year. And...that is actually bigger than films and other easily other entertainment forms.” – Nathan Nadeau [15:09]
• Dependence on Blockbusters: Although Take-Two owns several franchises (Red Dead Redemption, sports titles), Grand Theft Auto is by far the heavyweight, with millions playing even the previous iteration monthly. It is integral to Take-Two's financial performance and outlook.
  • Quote: “But it is certainly going to be the biggest, biggest game launch next year... and generates a lot more to bottom line.” [16:19]
• Consolidation and Buyout Rumors: As EA nears privatization, Take-Two may become the last major independent US game publisher, making it an attractive buyout candidate. The conversation touches on industry consolidation and the value of legacy IP in a fiercely competitive landscape.

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Segment 3: Wendy’s – Navigating Headwinds in Fast Food

(Main discussion: 22:11 – 27:59)

Key Points & Insights

• Current State: Wendy’s reported “better than feared” Q3 results amid concerns for lower-income consumer segments.
  • Quote: “Wendy’s has been known for great food, but their food has suffered... mainly because the previous management team... lit this company on fire and then headed for the exits like George Costanza in Seinfeld...” – Mike Halen, Bloomberg Intelligence [22:45]
• Operational Challenges: An overabundance of limited time offers (LTOs) created operational complexity and eroded food quality and customer satisfaction.
• Franchise System Under Pressure: With more than 95% of Wendy’s stores franchised, poor margins—due to declining sales and higher beef costs—are leading to a planned 5% closure rate among franchise locations.
  • Quote: “...they’re going to be closing, you know, roughly 5% of their store base in the coming quarters.” [24:13]
• Turnaround Strategies: Focus on fewer limited-time offers, better marketing (including consulting from ex-Taco Bell/Yum! CEO Greg Creed), and improving training/operations are part of the turnaround. These moves are expected to lift performance in 2026.
• Industry Dynamics: Burger market is saturated and has grown faster than population, leading to healthy rationalization as weaker stores close.
  • Quote: “To me, this is a part of the restaurant business that’s oversupplied and... closing some chains... is going to improve results in the future.” – Mike Halen [25:56]
• Valuation Opportunity: Wendy’s stock is trading well below historical valuation ranges, potentially presenting upside if the turnaround succeeds.
  • Quote: “It’s trading at 10 times 2026 EPS... Historically these names trade at 15 to 30 times.” – Mike Halen [27:23]

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Notable Quotes & Memorable Moments

• On Musk’s Vision:
  “It almost feels like I’m watching like a Star Trek episode.”
  — Stephen Mann [02:42]

• On Competition:
  “Chinese are very, very far ahead...They’ll be a formidable competitor.”
  — Stephen Mann [08:49]

• On Fast Food Management Missteps:
  “...lit this company on fire and then headed for the exits like George Costanza in Seinfeld...”
  — Mike Halen [22:45]

• On Video Game Market Size:
  “The overall video game market is inching towards like US$180 billion in sales last year. And...that is actually bigger than films...”
  — Nathan Nadeau [15:09]

• On Valuation:
  “If he wants to take a billion of it, that’s fine with me—I’ll take the rest.”
  — Podcast Host 2, referring to Musk’s pay package [05:04]

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Timestamps for Key Segments

• Tesla & Elon Musk Pay Package: 01:55 – 09:29
• Grand Theft Auto 6 & Take-Two Interactive: 11:21 – 19:49
• Wendy’s Earnings and Fast Food Industry: 22:11 – 27:59

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Summary

This episode offers a multi-pronged, data-driven look at high-stakes moves in three sectors:

• Tesla’s ambitions and risk/reward calculus after greenlighting Musk’s largest-ever pay plan, with an eye to the future of AI, robotics, and cross-pollination with other Musk ventures.
• The power and volatility of blockbuster gaming franchises, with Take-Two’s fortunes hitched to Grand Theft Auto 6, and how market expectations and industry consolidation are shaping the gaming landscape.
• A candid diagnosis of Wendy’s operational issues and turnaround plans, set against the backdrop of saturated burger markets and evolving consumer pressures.

Listeners come away with a nuanced understanding of the bold bets, technological frontiers, and market realities shaping these major companies as of late 2025.

Transcript

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[Podcast Host 2]

Tesla shareholders approved Elon Musk one trillion dollar pay package. And we had some comments from Tesla general counsel Brandon Earhart. Let's take a listen. Sixth and finally, on the 2025 CEO Performance Award to our founder and CEO Elon Musk. With over 75% voting in favor, approved. All right, that's a good day for Elon Musk. That was Tesla general counsel Brandon Earhart. To see what this means for the company for the stock, let's check with Stephen Mann. He's global autos and industrials research channels for Bloomberg Intelligence. So, Steve, a good day for Elon Musk. What does it mean for the company here to get this pay package through?

[Stephen Mann]

Yeah, he, he did seem pretty upbeat last night at the shareholder meeting. You know, he was, I mean, he was talking a lot about what the future looks like. It Almost feel like I'm watching like a Star Trek episode. When he talked about robots. I think it's, it's a, it's a big relief for the company as well as the shareholders. Looks like a lot of shareholders, given that about 75% voted for the pay package, I think now the company and he can actually start focusing on delivering those metrics, which is, you know, eight and a half trillion dollar market cap in 10 years, you know, 400 billion EBITDA during that time. So there's a lot of things he needs to do.

[Podcast Host 1]

So those are the very specific financial metrics that he needs to achieve if he wants to get paid what shareholders have approved. But in terms of actually getting there, Musk made some big promises. Humanoid robots will be doing a lot of beyond human precision surgery, for instance. And robots will play a big role in setting up bases on the moon and in Mars. What if the, which of the predictions did he make sound reasonable at this point?

[Stephen Mann]

I mean, robotics is an evolution. I think there is still a lot of technical challenges to make the humanoid work just as well as a human. So we're, no, we think humanoid robots are actually a little bit ways off. But what was really interesting and kind of, you know, caught my attention was that he wanted to build. Well, he's currently designing his own chips for Autonomy, but he also wants to build his own fab for Autonomy. And that's really a direct competition to companies like Nvidia and some of the fab companies like tsmc. Now his, his chips are a little bit different. It's a special purpose chip where Nvidia's AI chips are made to accommodate many AI applications. This is specifically for Autonomy, like robots and cars.

[Podcast Host 2]

All right. The math I do is in order for Mr. Musk to achieve his full trillion dollars in comp, the market cap would have to get to like 8.5 trillion. It's at 1.5 trillion now. So that's incremental $7 trillion in market cap he thinks he can create. And if he wants to take a billion of it, that's fine with me, I'll take the rest. And that's, I think that's kind of what shareholders were saying with 70% of them, 75% of them are a trillion, you mean? Yeah, for a trillion. So I mean, you know, if he's going to make incremental 6, you know, $7 trillion for shareholders, he can have a trillion as far as he says.

[Stephen Mann]

But look like, remember, he's not taking the cash. A lot of it is Just his stock. Right. At the end of the day he just want a greater control over the company. 25 control of the company. But he has to deliver.

[Podcast Host 2]

Yeah, has to deliver. So how do we think about this, even the car business now, Steve? It's almost an afterthought for this entire story. How do you, how are investors thinking about kind of what is the core business today?

[Stephen Mann]

Look, I think you're right. A lot of people think cars, but I actually have a different view. What he's really trying to achieve is physical, I know, quite different than what, you know, what Google is doing or ChatGPT is doing. He's actually, you know, creating AI through cars, mobile devices, cars and robots. So you know, for him to proliferate, proliferate autonomy, physical AI, he still needs to produce cars.

[Podcast Host 2]

Right.

[Stephen Mann]

I don't think he's going to license the full self driving to any other automakers, any. So for him to proliferate autonomy, he does have to produce cars. And then that's why he's also very focused on, you know, improving the design of the Optimus robot so he can actually, you know, build more and sell more to the market. Yeah, cars is important still.

[Podcast Host 1]

That's the understanding. Cars are still important.

[Podcast Host 2]

I'm almost like spin out the car business and just have, that will happen and just have the rest of it is kind of this is the movie, this is Elon Inc. If you want to buy into all the stuff about Elon, then here's your your way.

[Podcast Host 1]

I'm so glad you bring that up because there was also proposal 7 that was voted on at the shareholders meeting, Steve, where it was a non binding request for the board to authorize an investment in X AI, which is essentially Elon Musk's side gig. Right. The company that holds X as well as the Grok chat bot that gives the board the option to invest the Tesla's money into X AI. What does that tell us about where Tesla is headed as a company?

[Stephen Mann]

It's an interesting proposal and they, they are going to still take some time to think about that. But it's all interrelated. A lot of the stuff that he talked about last night about autonomy, optimism, optimus robot from Tesla and how those robots can be used in Mars. They're all connected, all AI is connected. So you know what, you know, does it make sense for it to, for Tesla to invest in xia? Yeah, I think there's a lot of technology that can actually be shared between the different AI platforms. And you know, right. Currently, if you know Tesla vehicles do come with Groq, which is part of xai. So you know, if, if vehicles are autonomous, you know, Brock would and other assistant would be very useful in a vehicle for the passenger.

[Podcast Host 1]

We have a listener question coming in. Ryan from New York City asks what's the likelihood Tesla can compete on the global level versus Chinese robot companies? Is it maybe it's the leader in the U.S. but where does it stand versus those in Asia?

[Stephen Mann]

Oh, you know, we actually publish a report on human on robots, but specifically on auto manufacturing. What we've learned is that Chinese are very, very far ahead. They have a number of startups working on humanoid robotics trying to improve dexterity, trying to improve the technology stack. It'll be interesting to see and I think some people have written up the Chinese. But the fact that they have a lot of investment and a lot of startups looking at this, they'll be a formidable competitor.

[Podcast Host 2]

Stay with us. More from Bloomberg Intelligence coming up after this.

[Baillie Gifford Representative]

What is actual investing? We believe that it's a real world task to deliver thoughtful capital deployment. It's not about speculating over the short term. We it's about understanding the long term opportunities for companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world. Then we back them to give those ideas time to flourish. Baillie Gifford Actual investors Find out [e-mail].

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[Podcast Host 2]

Are you a gamer by any chance?

[Podcast Host 1]

No, but my children are and that irritates me to no end, does it?

[Podcast Host 2]

So are they like, are they. Do they on their phone?

[Podcast Host 1]

On their phone usually.

[Podcast Host 2]

Okay, so this Grand Theft Auto thing for people, it's. I guess it's a piece of news, right?

[Podcast Host 1]

Yeah, no, it's a big deal because this is something they've been working on for a long time and this is the sixth part of the franchise, the sixth iteration of it. And it's supposed to take place in Miami, but a fictional version of Miami and it's supposed to be like the hot game when it eventually comes out. That's the issue. We don't know whether they're going to meet their deadline and they've delayed it twice.

[Podcast Host 2]

All right, let's talk to somebody who knows this stuff for a living. I guess that's the best we can do here. Nathan Nadeau, technology research analyst for Bloomberg Intelligence. He joins us here. Grand Theft Auto Postponed Again, take two. The stock is down almost 9% on this news here. Nathan, what do you make of it?

[Nathan Nadeau]

Yeah, so that's a good point on the GTA or Grand Theft Auto 6 iteration being a big factor actually in today's sell off. And I think GTA 6, let's call it in short, has been the prospects of it rather has been priced in into take 20 shares. And last I checked, you know, take two is trading at about 60% premium to the only other big US publishers, Electronic Arts, and that's a 60% premium and even higher compared to an average of about 10 peers. And so, you know, valuations and expectations were high up until that point. So obviously valuations were going to be a bit sensitive to any sort of downside risk. And as we're, as we have seen today is the delay of GTA 6. But I don't think this second delay officially is necessarily going to do any more impact than the first delay because the first delay actually skipped the holiday season this time around. It pulls the launch timing closer to the holiday season and actually a season that usually see a lot more activity on the player side.

[Podcast Host 1]

Okay, yeah, to your point, the original release date was back in fall 2025, then it was delayed until May 2026 and now it's been delayed by another six months to November 2026. Nathan, I'm going to ask the Dumb question. If they delayed it twice, they might delay it again. Why are they delaying this game? What's proving, what's proving to be difficult or problematic about this?

[Nathan Nadeau]

Yeah, so according to the words by the company themselves, they want to give the publisher, the developers rather a bit more time to polish the game like the gta, you know, gta to take a step back. Grand Theft Auto is easily the top five selling games franchise of all time globally. So this game has quite a bit of a cult following. You know, it has sold more than 450 million units. Right. And so I think it doesn't make a big difference whether it's delayed, you know, in this round of delay because you know, this game, regardless of when it is launched, is going to, it's going to bring back those core lawyer fan base. And we're talking about 15 to 20 millions of people playing GTA 5, the current version every month. So, you know, that, that, that proves my point. And also like, you know, you know, launching in November, which is the high sales season for any sort of video games or any sort of products rather is actually a better timing and it might work in GTA 6 favor in the end, I think.

[Podcast Host 2]

All right, Nathan, in your world of online gaming, can you size out how big this business is? Because I think a lot of people don't have a good idea of just how big.

[Podcast Host 1]

I feel like it's bigger than Hollywood.

[Nathan Nadeau]

Yes.

[Podcast Host 1]

Right.

[Podcast Host 2]

So how movie business exactly? How big is it and kind of what's the growth parameters for this industry?

[Nathan Nadeau]

Yeah, so you know, the overall video game market is inching towards like US$180 billion in sales last year. And you know, that is actually bigger than films and you know, other easily other entertainment forms and gta. You know, if we assume that, if we assume that the GTA 6 sells about 35 to 45 million units, that's about 2 to 3 billion US dollars in upfront revenue to the company. And that's just one game.

[Podcast Host 1]

Men aged 18 to 49.

[Podcast Host 2]

Oh my God. It's just the advertiser's dream is, I guess.

[Nathan Nadeau]

Yeah, yeah.

[Podcast Host 2]

I mean I. This pong count?

[Podcast Host 1]

No, no, sorry. No one's monetizing off pong anymore. Nathan, do you know what pong is?

[Nathan Nadeau]

Yeah. Do you mean like age cohort? No.

[Podcast Host 1]

Okay, we're showing our age now.

[Podcast Host 2]

All right, so Nathan, for Take two, what's the. Is it, is that just really a play on Grand Theft Auto? Is it that dependent on that game?

[Nathan Nadeau]

Yeah, so Take two actually has a few other big Franchises under its belt like Red Dead Redemption for example. And Take Two is also big in sports game, whether that's football. And so GTA is certainly the biggest game. But it's not the only pieces of the parcel in terms of how it is driving Take Two top line as well as bottom line. But it is certainly going to be the biggest, biggest game launch next year. And that's coming from Take two. And given the game is actually in house, meaning it generates a lot more to bottom line than games that are based on third party intellectual property where a royalty payment is involved. So you know, we can expect similar a significant boost to take to profit as well next year. And actually the company is expecting to, you know, generate positive free cash flow again because they're currently running on negative.

[Podcast Host 1]

Okay, I have a question here because usually when we talk about Take Two, I look at how the other video game publishers are performing and right away I thought oh check EA is barely moving. But that's also because EA is going to be bought out by private equity is take to a candidate for a buyout.

[Nathan Nadeau]

So Take two is certainly a good candidate and it is actually the, it would only be, it would be the only surviving US game publisher of scale if Take Two, if the EA do actually completes and goes through and is expecting that deal to close in the April to June period next year. And EA is a good candidate because it has a robust sport franchises. And obviously Grand Theft Auto is a game that has survived more than two decades and it continue to attract sports millions of players actually you know, about 15 and a half million of players every month. So you know, with, with attention increasingly being scarce, you know, games that continue to perform well actually are games that were published six year or earlier. So there's actually not a lot of room for brand new games to grow in this market. In fact, Newzoo actually mentioned that for brand new titles only 8% of the gameplay hours are up for grab. So you know, that just says like well established franchises with a cop following certainly has its value. And we actually saw Tencent's investment in Ubisoft, you know, a French game company. And Tencent obviously needs no introduction is a tech giant in China and certainly a giant in gaming. Yeah, they invested about you know, a few billion euros to take a course quarter of a subsidiary subsidiary of Ubisoft that actually owns a quarter of Ubisoft. Three most valuable franchises. If you like Ninjas, Assassins, we talk about Assassin Creed here, we're talking about Tom Clancy and a few shooter shooter games. So there's definitely a general direction of companies with resources eyeing companies with great IP if those two do not currently exist together. And we certainly see that EA deals coming through kind of plays into the Saudi ambitions for esports and Saudi Prince, which is, you know, the chair of the Sober and Wealth Fund there is actually an avid gamer himself and which I suspect is one of the factors behind why EA is a good fit for the deal because EA has the most popular soccer game out there. Well, I say soccer because I'm in Europe right now. I need to differentiate from football.

[Podcast Host 2]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Nathan Nadeau]

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[Podcast Host 2]

Wendy's. I guess the way Bloomberg News is reporting it, they reported better than feared Q3Q results. So there's some concern out there about the consumer, particular on the lower end of the consumer and how that's impacting various industries, including the food industry, the restaurant business. And so we want to get the latest on what's happening out there in the world of food and restaurants. We go to Mike Halen. He covers the restaurants for Bloomberg Intelligence. Mike, talk to us about Wendy's. What did they say on their call? What did you learn with their results? And by the way, I'm a big fan of the Baconator.

[Mike Halen]

Yeah, Baconator is great. Chicken's great. You know, historically Wendy's has been known for great food, but their food has suffered over, especially in the last year or two, mainly because the previous management team, who I said in a previous interview, lit this company on fire and then headed for the exes like George Costanza in Seinfeld, knocking over women and children on the way. And you know, what they did was just flood the system with LTOs. And it didn't give people flood assistance with what? Limited time offers LTOs. And every two weeks there was a new offer, a new value meal, a new food item, and it didn't give them ability to market it correctly. And people would come in and thinking they were going to be able to get one item and they'd have to switch to something else. Right. And it led to complexity in the store, poor operations, which led to poor food quality, poor customer service down the line. You know, so this company had a tough quarter. It's going to have a tough fourth quarter as well. But a lot of it is self inflicted. They did speak about, you know, their expectation for low income consumers to, to continue to be pressured in these next two quarters.

[Podcast Host 2]

So I know for McDonald's, the vast, vast majority of their stores are franchise. Is that, is that the case for Wendy's as well?

[Mike Halen]

Yeah, that's the case for Wendy's. One of the things that they mentioned on the call is that they're going to be closing, you know, roughly 5% of their store base in the coming quarters.

[Podcast Host 2]

Because.

[Mike Halen]

Excuse me, because franchisees have not been performing very well, right. Sales have cratered. And when there's a lot of operating leverage in this model when you're a franchisee, so when your sales decline, your margins decline even faster. So you know they're going to be closing a bunch of stores. But we think that could actually accelerate the turnaround. Right. So as they close underperforming stores. This should boost sales at the surrounding locations. And management has a pretty good plan. You know, there's not a whole lot of. They still don't have a permanent CEO and there's not a lot of restaurant experience at the top. The interim CEO was the cfo, who was, who came from outside of the restaurant industry. But we think he's pushing the right buttons. I think hiring Greg Creed, who was the previous CEO of Taco Bell and then Yum Brands, arguably the qsr goat to do some consulting I think is a really good move. I think that's really going to help their marketing. And it's a great brand that has a lot of things it can market from the past, like where's the beef? You know, and they're, they're doing a lot less ltos and they're going to work on fixing the operations. They're spending money on training, doing things that we think can really make a difference in 2026.

[Podcast Host 2]

You know, the, the hamburger business has changed a lot since I was a kid when it was basically, you know, McDonald's, you know, burger King. Then Wendy's came along. That was kind of it. Now you've got all these, I don't know what you guys call them, specialty burgers, like Smash Burger, five guys, all that kind of stuff. Shake Shack. How's the burger business these days?

[Mike Halen]

Man, people love burgers. But you're right, it is a saturated market with all of those burger better chains. You know, I think it's good for the overall industry that Wendy's is closing some stores. Jack in a Box is going to be closing some stores. Right? Like to me, this is, this is a part of the restaurant business that's oversupplied and it's been growing faster than population growth. And so to see some chains start to close some stores, you know, we think that's healthy and we think it's going to improve results in the future.

[Podcast Host 2]

How's the burger business been impacted by the cost of beef? I've been reading that, you know, beef costs have been elevated for a while now. So how are they dealing with that?

[Mike Halen]

Beef costs are a killer, especially if you're not able to drive, you know, traffic into your restaurants. So for Wendy's franchisees, it's been absolutely crushing for them, right? They're more than 95% franchise. So the, the corporation is going to take a hit on the franchise, 5% of stores or so that it owns. But most of the inflation and the margin compression is going to come on the franchisee side. And they're the ones that are struggling and they're the ones that are going to be closing stores.

[Podcast Host 2]

Where's the best value in your universe of restaurants? Mike?

[Mike Halen]

You're talking about the stocks.

[Podcast Host 2]

Yeah.

[Mike Halen]

Well, this one is interesting. Right now it's trading at 10 times 20, 26 EPS, right? And historically these, these names trade at 15 to 30 times because being a franchise chain, you know, you have very, it's very easy to predict your earnings and your cash flow, right? And they're insulated against inflate against inflation. So historically 15 to 20. So we think at some point when, you know, ahead of the sales inflection that we think is likely in the first quarter, that investors could look more closely at this need.

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