Private equity’s appetite for restaurants

Summary

Marketplace Podcast Summary: "Private Equity’s Appetite for Restaurants" Release Date: November 20, 2024

Hosted by Kai Ryssdal, the Marketplace podcast delves into the intersection of business and economics, making complex topics accessible to all listeners. In the November 20th episode, the discussion spans several pivotal themes, including the housing market, private equity investments in the restaurant industry, clean energy politics, global inflation concerns, advancements in autonomous vehicles, and the evolving role of physical buttons in technology.

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1. Housing Market Dynamics

Timestamp: 00:00 – 03:47

The episode opens with an analysis of the current housing market. The U.S. Census Bureau reported a 3% decline in housing starts in October, primarily attributed to hurricanes in the southeastern region. Additionally, housing permits saw an 8% year-over-year decrease, signaling potential slowdowns in construction activities. Despite these challenges, the National Association of Home Builders (NAHB) reported a three-month uptick in their confidence index, indicating optimism among home builders.

Key Insights:

• Construction Costs: Matt Levin highlights how Federal Reserve rate cuts have benefited homebuilders like Justin Wood in Portland by reducing construction loan costs. However, rising long-term mortgage rates have forced builders to offer costly incentives to attract buyers.
• Material Costs: The price of lumber has surged from $380-$390 per thousand board feet to $440, reflecting increased demand and supply chain pressures.
• Labor Concerns: Dan Dunmoyer from the California Building Industry Association expresses worries about new immigration policies potentially driving up labor costs, as immigrants constitute about a quarter of the U.S. construction workforce.

Notable Quote: “The national association of Home Builders says its confidence index has been up three months in a row now.” — Matt Levin [00:24]

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2. Private Equity’s Increasing Investment in Restaurants

Timestamp: 04:38 – 06:21

Kristen Schwab explores the surge of private equity firms investing in the restaurant sector, a trend that has intensified since the pandemic. Blackstone's acquisition of a majority stake in Jersey Mike's exemplifies this movement.

Key Insights:

• Investment Criteria: Private equity firms seek restaurants with strong brand equity, potential for operational efficiencies, and opportunities for expansion, both domestically and internationally. For instance, Tim Powell, a Food Service IP consultant, targets familiar concepts with unique elements, such as a loyal customer base and distinctive ambiance.
• Growth Strategies: Investors often aim to scale successful chains by expanding their geographical footprint or diversifying product offerings, such as packaging sauces for retail sale.
• Distressed Acquisitions: According to Sean Dunlop of Morningstar, struggling restaurant brands offer lucrative opportunities for private equity through the acquisition of hard assets like property.
• Industry Resilience: Andrew Charles from TD Cowen notes that despite high failure rates, the restaurant industry remains attractive due to the consistent demand for dining options, particularly in the fast-casual segment.

Notable Quotes:

• “These mom and pop places can be good bets for investors, but so can bigger businesses with thousands of locations.” — Kristen Schwab [05:02]
• “The restaurant industry is increasingly going towards a model of food as fuel.” — Matt Levin [06:21]

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3. Clean Energy and Political Influences

Timestamp: 06:51 – 11:26

The conversation shifts to the clean energy sector, featuring Gene Gabolis, CEO of World Energy. Gabolis discusses the impact of political shifts on sustainable aviation fuel (SAF) production and the broader clean energy landscape.

Key Insights:

• Political Uncertainty: Gabolis expresses cautious optimism, drawing parallels to the unexpected growth in clean energy during the Trump administration despite political skepticism.
• Government Investment: He emphasizes the importance of both public and private investments in driving economic growth and maintaining competitiveness in the global clean energy market.
• Future Prospects: Gabolis anticipates continued investment in clean energy, irrespective of administration changes, highlighting the sector's resilience and critical role in economic strategy.

Notable Quotes:

• “Once you really peel back the layers on a lot of this public investment in clean energy, what you end up having is economic growth.” — Gene Gabolis [08:16]
• “The work we end up doing has actually more growth in red states than in blue states.” — Gene Gabolis [09:37]

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4. Global Inflation and Economic Pressures

Timestamp: 14:05 – 16:33

Henry Epp discusses the current state of global inflation, noting that while it has largely reached targets set by central banks, several factors could reignite price increases.

Key Insights:

• Supply Chain Issues: Ongoing conflicts in Ukraine and the Middle East pose risks of disrupting energy and agricultural commodities, potentially driving up prices.
• Trade Policies: The incoming Trump administration's potential tariffs could spark trade wars, leading to higher costs for imported goods and affecting the U.S. dollar's strength.
• Climate Change: Increasing frequency of weather-related disasters due to climate change adds to supply-side pressures by increasing reconstruction costs.
• Central Bank Caution: Central bankers remain vigilant to avoid underestimating inflation again, balancing economic growth with price stability.

Notable Quotes:

• “The world's inflation picture is not terrible. There are problems that could push prices up.” — Gene Gabolis [15:04]
• “Declaring victory over inflation only to have it rear its head again, she says. It's not a great look.” — Ann Owen (via Henry Epp) [16:30]

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5. Autonomous Vehicles and Robot Taxis in China

Timestamp: 17:40 – 21:37

Jennifer Pak reports on the advancements and challenges of autonomous vehicle deployment in China, particularly focusing on robot taxis.

Key Insights:

• Operational Zones: Currently, robot taxis in China operate primarily in suburban areas with human safety drivers. Wuhan is leading with partially unmanned taxis in larger parts of the city.
• Driver Sentiments: Traditional taxi drivers like Xiaowei Guo express concerns over job security, while others like Ling Shijun remain optimistic about coexistence with autonomous vehicles.
• Technological Integration: Beijing’s pilot programs enhance robot taxi navigation through infrastructure-equipped roads and traffic signals, improving safety and efficiency.
• User Experience: Despite technological advancements, user experiences highlight areas needing improvement, such as smoothness in driving maneuvers and efficient pickup processes.

Notable Quotes:

• “Robot taxis would not be able to drive in the center of Beijing. They would get stuck in the alleys.” — Matt Levin [19:07]
• “The robotaxi doesn't change lanes very smoothly, so it can make passengers feel sick.” — Matt Levin [21:30]

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6. The Resurgence of Physical Buttons in Technology

Timestamp: 22:50 – 25:55

Rachel Plotnick, an associate professor at Indiana University and author of Power Button: A History of Pleasure, Panic and the Politics of Pushing, discusses the cyclical return of physical buttons in modern technology.

Key Insights:

• Design Trends: While touchscreens and digital controls have minimized physical buttons, there is a notable comeback in devices like washing machines, steering wheels, and even smartphones (e.g., iPhone 16 adding new buttons).
• User Experience: Physical buttons offer tactile feedback and a sense of control, addressing the limitations of purely digital interfaces.
• Social Implications: Buttons symbolize agency and are intertwined with societal dynamics, such as decision-making authority and organizational processes.
• Complexity and Learning: Despite their simplicity, buttons require intuitive design to ensure users understand their functions, especially in critical applications like aviation or gaming.

Notable Quotes:

• “Buttons can be incredibly complex depending on the situation.” — Rachel Plotnick [24:05]
• “Behind every button there are all of these social choices.” — Rachel Plotnick [25:40]

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7. Retail Earnings and Tariff Implications

Timestamp: 25:55 – 27:00

The episode concludes with a brief overview of retail earnings, highlighting robust consumer spending. However, concerns arise as Lowe’s CFO warns that proposed tariffs by the incoming Trump administration could increase product costs, ultimately impacting consumers.

Notable Quote: “The tariffs President elect Trump has promised, and this is a quote, certainly would add to product costs. Remember who pays the tariffs?” — Kai Ryssdal [26:41]

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Conclusion

The November 20th episode of Marketplace offers a comprehensive exploration of varied economic topics, from the nuanced challenges in the housing market and the strategic maneuvers of private equity in the restaurant sector, to the intricate dance between politics and clean energy investments. Additionally, it sheds light on global inflation pressures, technological advancements in autonomous vehicles, and the enduring relevance of physical buttons in our digital age. Through insightful discussions and expert interviews, Marketplace continues to provide listeners with a deep understanding of the forces shaping today’s economy.

Transcript

[Matt Levin]

This Marketplace podcast is supported by Remarkable. Are you still taking notes on paper? Change the way you work with Remarkable Paper Pro, a premium digital notebook with the feel of paper for taking notes, reviewing documents and getting organized. Get the digital tools you need for your workday without any distractions and stay focused. With a unique color display that reflects natural light, it's portable, practical and professional.

[Kai Rysdal]

Get yours [e-mail] on the program today. Housing Robo taxis and hey, what does this button do? From American Public Media, this is Marketplace in Los Angeles. I'm Kyle Rysdal. It is Tuesday today. This one is the 19th of November. Good as always to have you along. Everybody there is. Amid all the hubbub over who's in and who's out of which cabinet appointment, there is some actual economic news with which to familiarize you. And for us today we have chosen housing and it's a mixed bag. Tbh. The Census Bureau informed us today that housing starts slid about 3% in October from a month earlier, mostly due to those hurricanes in the southeast. Before you can start a house, of course you gotta have a permit to start a house and those permits were down nearly 8% over a year. On the glass half full side of things, though, home builders are apparently feeling a bit more, you know, glass half full ish. The national association of Home Builders says its confidence index has been up three months in a row now. Add all that to the well reported realities of not enough houses, many of which are really expensive, and mortgage rates going back up again and what you get is Marketplace's Matt Levin reporting that there is still a whole lot of uncertainty in the new home market for both builders and buyers.

[Matt Levin]

The Federal Reserve's recent rate cuts have helped Portland, Oregon homebuilder Justin Wood. The construction loans he takes out from banks to build townhomes and cottages are cheaper.

[Rachel Plotnick]

We are directly tied to the fed funds rate.

[Matt Levin]

So when we when they come down three quarters of a point, we come.

[Rachel Plotnick]

Down three quarters of a point. You know, it's difference of a few thousand dollars of interest over the course of a year.

[Matt Levin]

The problem for Wood and the entire home building industry is that the mortgage market is tied to interest rates on longer term government debt. And as those rates have gone up the past two months, he's had to keep spending thousands of dollars offering interest rate buy downs and other incentives for new home buyers.

[Rachel Plotnick]

A lot of us were really hoping for that the light of the end.

[Matt Levin]

Of the tunnel for starting to see.

[Rachel Plotnick]

Rates come down for mortgages and if.

[Matt Levin]

Anything they've gone the opposite direction. Economist Rob Dietz at the national association of Homebuilders says the industry broadly expects mortgage rates to settle down in 2025 and for the pace of new construction to pick up. Ironically, though, that means demand for some key housing materials is rising right now.

[Kai Rysdal]

Just a few months ago, the typical.

[Matt Levin]

Price of lumber was around 380, $390.

[Rachel Plotnick]

Per thousand board feet.

[Kristen Schwab]

Right now it's up to 440.

[Rachel Plotnick]

So that's a notable uptick.

[Matt Levin]

Construction worker wages have also gone up this year. Dan Dunmoyer at the California Building Industry association says he's concerned about how the new administration's immigration policies may push labor costs even higher.

[Gene Gabolis]

People saying, well, I have my green card.

[Rachel Plotnick]

I'm able to be here.

[Matt Levin]

I just don't want to deal with the hassle. Maybe part of my family doesn't have.

[Kai Rysdal]

It, so I'm just going to go back to where I come from.

[Matt Levin]

About one in every four construction workers in the US Is an immigrant. I'm Matt Levin for Marketplace Wall street.

[Kai Rysdal]

On this Tuesday, tech did fine. Otherwise unremarkable. We'll have the details when we do the numbers. The corporate news of the day comes to us from the land of cold cuts and condiments. The private equity firm Blackstone says it's bought a majority stake in the sandwich chain Jersey Mike's, the latest in a string of private equity deals in the food service industry since the beginning of the pandemic. Marketplace's Kristen Schwab has more on what's behind those investments in a sector really known for fickle trends and small profit margins.

[Kristen Schwab]

When private equity firms are looking for restaurants to put their money into, they come to people like Tim Powell, a consultant at Food Service ip. He says he looks for familiar restaurant concepts with a unique touch, like a pizza place he scouted in Chicago.

[Kai Rysdal]

It had such a loyal customer base and had old wood paneling and just sort of the lighting that reminded you of like a 60s steakhouse.

[Kristen Schwab]

These mom and pop places can be good bets for investors, but so can bigger businesses with thousands of locations, say.

[Kai Rysdal]

A chain that has good brand equity. But it may not be operating at full efficiency.

[Kristen Schwab]

Investors are looking for room to grow. Maybe the restaurant could expand abroad or bottle its sauces and sell them at big box stores, all with the goal of becoming profitable enough to go public. Now that is the story of private equity investing in success.

[Kai Rysdal]

On the other hand, you see some of these deals with really battered full service brands.

[Kristen Schwab]

Sean Dunlop, an analyst at Morningstar, says struggling businesses, they can be lucrative acquisitions, too.

[Kai Rysdal]

And in that case, you're typically looking.

[Kristen Schwab]

For hard assets that you can sell, like property. This has become a bigger piece of private equity investments as more restaurants file for bankruptcy. Now, you'd think this, the failure rate of restaurants would be enough to scare private equity away. But Andrew Charles, an analyst at TD Cowan, says the industry hasn't actually seen a lot of disruption. In other words, there's no Amazon of food.

[Matt Levin]

I mean, the good news is that people have to eat and they have to eat three times a day.

[Kristen Schwab]

And when they eat out, they increasingly choose fast casual restaurants like Panera or Chipotle, which sparks more investment in fast casual.

[Matt Levin]

The restaurant industry is increasingly going towards a model of food as fuel, which.

[Kristen Schwab]

Is maybe why we eat everything out of bowls these days. I'm Kristen Schwab for Marketplace.

[Kai Rysdal]

Oil and gas executive Chris Reiter as President elect Trump's pick to lead the Department of Energy. The announcement comes as the Biden administration is racing to finalize last minute grants and loans for its clean energy project. Gene Gabolis is the founder and CEO of a biofuels company called World Energy, and he is hoping to be on the receiving end of some of those loans to help his company produce more sustainable aviation fuel. SAF is the shorthand there. He and I first spoke about the business of SAF earlier this year as part of our series breaking ground. Mr. Gobolas, welcome back to the program, sir. Good to have you on.

[Gene Gabolis]

It's good to be here.

[Kai Rysdal]

So as you think about the next four years in the space in which your company operates, how you feeling?

[Gene Gabolis]

Well, how am I feeling? I am feeling ready to be surprised by things going differently than everyone says.

[Kai Rysdal]

Go on.

[Gene Gabolis]

Well, you know, I'm thinking back to 2016 and it was a very similar situation. Republicans controlled House, Senate and the presidency. And a lot of folks in my world were pretty concerned. And it turns out that in the subsequent four years, things went very differently than we would have imagined. And there was a lot of growth in clean energy during Trump 1, and I expect a lot of growth in clean energy and Trump, too.

[Kai Rysdal]

You know, when we talked however many months ago, it was one of the things that we talked about was how government investment in sort of kickstarting sustainable aviation fuel and large parts of what your business does. Government intervention was critical. I don't know whether the president elect will repeal the Inflation Reduction act and all of the other clean energy provisions or whether he'll claw some money back. What's your level of concern about that?

[Gene Gabolis]

Well, look, there's a lot of speculation about what will happen and I don't know more than anyone else knows. But I do know that once you really peel back the layers on a lot of this public investment in clean energy, what you end up having is economic growth. It's got to be seen in the context of global economic competition. And so both public and private investment in clean energy, I fully expect will continue. Now, will we have some big headlines about things that change? Of course we will. But on balance, I think we're going to continue to see ongoing investment.

[Kai Rysdal]

You will, I'm sure, be spending substantially more time in Washington and with your, with your lobbyist associate, Jess, I am.

[Gene Gabolis]

Heading there tomorrow morning.

[Kai Rysdal]

All right. Well, so what are you going to do tomorrow? I mean, you know, without naming names, what are you going to do? Who are you going to talk to?

[Gene Gabolis]

Well, look, it's early days. We're just getting nominees, have a lot of people to meet for the first time. And what we do is not a partisan issue. There's no Republican or Democratic climate. The work we end up doing has actually more growth in red states than in blue states. So this is not as, this is not as much a red state, blue state thing as many people make it out to be.

[Kai Rysdal]

Well, you're right to point out that Republican and conservative states have gotten a healthy chunk of the infrastructure and clean energy investment that President Biden and the Congress put into place. But are you really saying that it's not a political issue?

[Gene Gabolis]

Well, I think it's very much a political issue during election cycles. But, you know, the way people govern is often somewhat different than the way they're running for office. So yeah, of course there are tons of politics wrapped up in this. And what one day is presented as a clean energy technology, the next day it might be an agricultural economic support technology, but it's the same technology with, you know, different slants depending on where the national priorities are.

[Kai Rysdal]

Last thing and then I'll let you go. Mr. Wallace, you've, I'm sure seen the news that the president elect is named Chris Wright, who a straight up fossil fuels guy, to be his secretary of energy. Is he on your call list somewhere?

[Gene Gabolis]

Well, he certainly will be. He's just finding his way around and we're going to have to just find our way around him. But yeah, certainly will be.

[Kai Rysdal]

World Energy is company. Gene Cabolis is the CEO. Mr. Gobolas, thanks for your time, sir. I do appreciate it.

[Gene Gabolis]

It's great to be here.

[Matt Levin]

Thank.

[Rachel Plotnick]

Coming up, we go through these moments where companies want to take all the buttons away and then put all the buttons back.

[Kai Rysdal]

Make up your minds, people. But first, let's do the numbers. Dow Industrials off 120 points today. 3. 10% closed at 43,268. The Nasdaq increased about 195 points 1%, 18987s and P 500 gained 23.4 10% 59 16. There, the Department of Justice asked a judge to force Google to sell off its Chrome Internet browser. That's according to Bloomberg. The DOJ sued parent company Alphabet to curb what it claims is a monopoly on the search engine and browser market. Alphabet Alphabet nonetheless elevated 1 and 6. 10% today. Elsewhere in big tech, Apple ticked up about a 10th percent. Meta climbed 1 and 2. 10%. We heard from Kristen Schwab about the rise of private equity in fast casual restaurants. Chipotle slimmed 1/10 of 1%. Red Ramen Gourmet Burgers slid 6. 10%. You're listening to Marketplace. You turn to Marketplace for up to the minute news, for stories that show you the connections between global events and your personal economy. And you're not alone. Marketplace is the most widely consumed business and economic news program in the country. We're proud to make fact based journalism freely accessible and Marketplace investors make it all possible. Your year end donation today will make a real difference in our nonprofit newsroom and in the lives of millions of Marketplace listeners every single day. So please contribute what you can [e-mail].

[Henry Epp]

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[Matt Levin]

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[Henry Epp]

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[Matt Levin]

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[Henry Epp]

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[Kai Rysdal]

Brokerage Services LLC Member NYSE SIPC this is Marketplace. I'm Kai Rysdal. Inflation is now globally, almost where central bankers want it to be. Almost, but not entirely. Central bankers in Australia and Russia and India have all said that they're worried about it ticking back up. Canada reported its Consumer Price index this morning, 2% on the nose, just a tad hotter than people had been expecting. The UK reports October inflation tomorrow. They, by the way, call it the Consumer Prices Index over there because there's more than one price. It is supposed to come in somewhere north of the 2.6% September. Reading that they had, Marketplace's Henry Epp explains why, despite the progress, central bankers are feeling a bit cautious about the.

[Matt Levin]

Inflation path ahead while the world's inflation picture is not terrible. There are problems that could push prices up. Some are on the supply side, says Jonathan Wellburn, a senior researcher at rand.

[Henry Epp]

Either that's coming through energy pressures, pressures.

[Matt Levin]

From potential conflict scenarios. Take the wars going on in Ukraine and in the Middle east, which could flare up in ways that disrupt energy supplies and agricultural commodities, commodities. There's a global price for energy, you.

[Rachel Plotnick]

Know, a lot of food commodities also.

[Matt Levin]

Globally traded wheat, rice, corn, soybeans. Bill Emmons is a lecturer at Washington University in St. Louis. There's also the potential for the incoming Trump administration to impose tariffs, which could set off trade wars that would make some items more expensive in the US And Emmons says it could also boost the value of the dollar and weaken other countries currencies. And so as their currencies depreciate versus the dollar, then items that they import.

[Gene Gabolis]

That are dollar denominated, like oil, other.

[Rachel Plotnick]

Foodstuffs, would become more expensive.

[Matt Levin]

So potential trade wars, actual wars and oh yeah, the increasing frequency of weather disasters linked to climate change, says Christian Thieu at the University at Buffalo.

[Rachel Plotnick]

The efforts actually to rebuild after these disasters happen actually will increase and then.

[Gene Gabolis]

That will increase costs.

[Matt Levin]

So while central bankers have good reasons to be wary, Ann Owen at Hamilton College says they're also concerned about their reputations.

[Henry Epp]

They're particularly cautious right now because of.

[Kristen Schwab]

The recent history where they underestimated inflation.

[Henry Epp]

And they don't want to make that same mistake again.

[Matt Levin]

Declaring victory over inflation only to have it rear its head again, she says. It's not a great look. I'm Henry Epp for Marketplace.

[Kai Rysdal]

Tesla's been much in the news here the past month or two thanks in very large part to the politics of its CEO. But but it's still a car company that's got to sell cars. And one key differentiator that Tesla is trying to capitalize on is its full self driving technology. FSD in the vernacular over in China, the world's biggest car market. For what it's worth, Tesla says it aims to offer that FSD early next year. The company has floated the idea in fact of deploying full self driving first in taxis in China. But as Marketplace's Jennifer Pak reports, after having road tested as it were, some robo taxis made by Chinese farms, there could be some fierce competition.

[Henry Epp]

There are 16 cities in China testing robot taxis. The self driving vehicles are mainly confined to a small suburban area in each city and they usually come with a human driver for safety. Wuhan is the first to allow mostly unmanned robot taxis to operate in A bigger area, including a part of its downtown. To get there, news assistant Charles Zhang and I had to take a taxi driven by a human. What did the taxi driver say? He said that he would never get in an autonomous vehicle. Why? He didn't want to risk his life. China's government actively promotes the autonomous vehicle industry, but it hasn't publish data on safety incidents involving self driving cars. Eventually, we find a human driver who is willing to test a robot taxi with us. Xiaowei Guo has been driving regular cabs for 14 years. He got into a robot taxi with me and Zhang. It's run by tech giant Baidu.

[Rachel Plotnick]

Safety is our top priority.

[Henry Epp]

Baidu has the biggest fleet of robot taxis in Wuhan, about 400 cars. That's a tiny number compared to the tens of thousands of taxis and rideshare cars with drivers in the city. Still, Xiao Weiguo says driverless cabs could threaten his livelihood one day.

[Gene Gabolis]

Once lots of robot taxis go on the market, people like me will lose our jobs.

[Henry Epp]

But Lin Shijun, a rideshare driver from Beijing, is more optimistic about his future. He thinks the layout of Beijing, with lots of narrow streets filled with bikes and people zigzagging, could limit the role of robot taxis. Ling Zhijun says the driverless cars seem to stop every time a pedestrian comes in front.

[Matt Levin]

Robot taxis would not be able to drive in the center of Beijing. They would get stuck in the alleys.

[Henry Epp]

But Beijing runs an advanced pilot on the city's outskirts to help driverless cars navigate better by equipping roads and traffic lights with cameras and sensors too, so they can talk to the autonomous vehicles. And this has some safety benefits, says Andrew Stokels, an MIT lecturer on urban planning. Like, say there's an 18 wheeler truck blocking a robot taxi's view of an intersection.

[Rachel Plotnick]

If the cameras on the intersection see the traffic's oncoming, say around that obstruction, they'd be able to alert the car earlier as it's approaching the intersection. And it would be able to slow down or brake more smoothly.

[Henry Epp]

What isn't smooth? The ordering process for a robot taxi in China. It can take 30 minutes and a number of platforms to get one. Plus, there are designated pickup points that are sometimes few and far between. But once we're inside the driverless robot taxi, it's kind of exciting. And when cabbie Xiaowei Guo got into a robot taxi with us back in Wuhan, he was excited too, and called his friend on the phone. Look, he said the robot taxi is going pretty fast, even a bit above the speed limit. But then we slowed down once we hit more traffic. And Xiaoweiguo wasn't too impressed with the robot taxi's road skill.

[Gene Gabolis]

See, the car just stopped. If this was during morning rush hour and it stopped like this, that would cause a traffic jam.

[Henry Epp]

We arrived at our destination 37 minutes later and paid $5. But without Baidu's deep discounts, the trip would have cost $14. That's a lot more than what Xiao Weiguo's taxi would charge. Plus.

[Gene Gabolis]

The robotaxi doesn't change lanes very smoothly, so it can make passengers feel sick.

[Henry Epp]

But he says self driving technology keeps improving. He just hopes he can get to keep driving his regular cab until he retires in a few more years. In Wuhan, I'm Jennifer Paak for Marketplace.

[Kai Rysdal]

Once upon a time, your phone probably had buttons on it, right? Actual physical buttons, like 10 of them or more. Your oven had a physical dial. Your car think about the radio and the air conditioning and the heating buttons for days. And then along came touch screens and digital controls, and a lot of those buttons went out the proverbial window. Now, though, they might be making a comeback. Physical controls are reappearing on washing machines and steering wheels. Even Apple, a brand built on a minimalist Design Ethic, added two new buttons to the iPhone 16. So what is driving that change? And what can buttons, an interface that honestly sails under the radar for most of us? What can they tell us about how we interact with the world?

[Rachel Plotnick]

My name is Rachel Plotnick. I'm an associate professor of Cinema and Media Studies at Indiana University, Bloomington, and I'm the author of Power Button A History of Pleasure, Panic and the Politics of Pushing. I never expected to become an expert on buttons. Initially, I started looking at television remotes, and I thought a lot of power dynamics happen around that. Who gets to hold the remote? Who gets to decide what to watch? But that led me to this bigger topic of how buttons are connected to so many issues in our society in terms of communication. Pick up your phone and push a button to call someone or to text them. In terms of commerce, you know, think about what you do on Amazon. And I actually think there's a tremendous learning curve that comes along with pushing buttons. They seem, on the one hand, very obvious, but I think the learning comes from kind of, if I push this thing, do I know what to expect when I push it? I mean, imagine if you were sitting in a DJ's booth or you were in the cockpit of an airplane or something. Sure, they're just buttons, but if you don't know which one to push at which particular moment, you could get yourself in a lot of trouble. And so while it does seem like a very simplistic interface, I think we could make the argument that buttons can be incredibly complex depending on the situation. There was a moment when I thought we might be doing away with the concept of the button. And that was one of the earliest impulses I had to research this topic. It was around 2009, shortly after Apple iPhones were becoming really popular. I saw a lot of headlines in the news about the quote unquote, death of the button. But I do see this kind of cyclical effect, I think, in terms of design where we go through these moments where companies want to take all the buttons away and then put all the buttons back. Certainly we've seen that with smartphones, you know, with the move toward touch screens and away from many physical buttons on our devices. But then buttons are often that kind of go to interface that give us that feeling of agency and control that have a lot of tactile feedback. And so I would be hard pressed to use a button pun to really imagine this kind of total disappearance of push buttons. And I think we've seen that with a lot of these technologies where they thought this is the end of buttons as we know it. You know, the Microsoft Kinect is going to replace the controller. We're going to see VR headsets replace our phones. But personally, I'm not really convinced that that shift is ever going to take place in a totalizing kind of way. Behind every button there are all of these social choices. And it's not just about the technology itself. It's also about who made the decision for the button to work in that particular way. And what can that tell us about society? Because usually a button is just a stand in for somebody's labor or certain kinds of organizational processes or certain social decisions. And I think it's really, really important to kind of probe those connections.

[Kai Rysdal]

Rachel Plotnick, an assistant professor at Indiana University, Bloomington, and an expert obviously on all things button. Just final note on the way out today in which one hates to say I told you so, but, well, you know, there was a slew of retail earnings reports today generally making plenty of money. Those retailers are because consumers are still in a spending mood. But on its earnings call this morning, the chief financial officer at Lowe's said that the tariffs President elect Trump has promised, and this is a quote, certainly would add to product costs. Remember who pays the tariffs?

[Rachel Plotnick]

Peeps.

[Kai Rysdal]

Our digital and on demand team includes Kerry Barber Jordan Manji, Dylan Mietanen, Janet Wynne, Olga Oxman, Ellen Rolfus, Virginia K. Smith and Tony Wagner. Francesca Levy is the Executive Director of Digital and On Demand. And I'm Kai Rysdal. We will see you tomorrow, everybody.

[Matt Levin]

Foreign.

[Kai Rysdal]

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