High-Income Shoppers Flock to Walmart & Jersey Mike’s $8B Bet to Take On Subway

Summary

Morning Brew Daily: High-Income Shoppers Flock to Walmart & Jersey Mike’s $8B Bet to Take On Subway
Released on November 20, 2024

Hosts: Neal Freyman and Toby Howell

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Walmart's Strategic Shift Attracts Higher-Income Shoppers

In the latest quarter, Walmart has demonstrated remarkable performance, signaling robust growth and strategic prowess. The retail giant reported a staggering 63% rise in stock value this year, significantly outpacing the S&P 500's 25% gain. Neal Freyman highlighted, “[...] U.S. comparable sales grew 5.3%, crushing expectations of 3.7%,” emphasizing Walmart's dominance in both physical and online marketplaces.

A critical component of Walmart's success lies in its targeted approach to attracting wealthier shoppers. Toby Howell noted, “The 1% households making over $100,000 a year or more accounted for 75% of the market share gains that Walmart has made” ([04:09]). This shift is supported by initiatives like the premium food brand “Better Goods,” which includes upscale items such as oat milk and curry chicken empanadas. Additionally, Walmart's e-commerce segment surged by 22%, bringing online sales to 18% of its total revenue, effectively positioning the company as a formidable competitor to Amazon.

However, Freyman raised concerns about potential headwinds, notably the threat of new tariffs proposed by President-elect Trump, which could inflate consumer prices. Despite this, Walmart appears well-positioned to mitigate such risks, with two-thirds of its products sourced domestically and a substantial portion of revenue derived from its grocery division.

Blackstone's $8B Acquisition of Jersey Mike’s Aims for Sandwich Industry Dominance

Private equity powerhouse Blackstone has made a significant move by acquiring Jersey Mike’s for approximately $8 billion, including debt. This acquisition positions Jersey Mike’s as a formidable challenger to Subway, the current leader in the sandwich market with 37,000 locations. However, Freyman and Howell both underscored that Jersey Mike’s outperforms Subway in terms of revenue per unit.

Neal Freyman remarked, “Jersey Mike's has more than 3,000 locations, but [Blackstone] thinks they can reach 10,000 locations eventually” ([08:33]). The chain's impressive average sales of $1.4 million per unit—over double that of Subway—demonstrate its strong franchisee success. This financial robustness made Jersey Mike’s an attractive target for Blackstone, which aims to leverage its $220 billion assets to fuel rapid expansion.

Furthermore, Jersey Mike’s effective marketing strategies, including the endorsement from actor Danny DeVito, have bolstered its brand recognition and appeal. Toby Howell added, “Danny DeVito [...] does a great job on those commercials. A huge win for the Jersey Shore” ([09:47]).

Jaguar’s Bold Rebrand: A New Identity in the EV Market

Jaguar is undertaking a significant transformation in an effort to rejuvenate its brand and reclaim its status in the automotive industry. The company's latest advertising campaign diverges sharply from traditional car-centric promotions, featuring models in futuristic attire engaging in stylized performances without showcasing any vehicles. Howell critiqued the approach, stating, “If the goal is to sell cars and you show an ad with dancing models, it's going to be hard to maybe sell those cars” ([12:56]).

This rebranding is part of Jaguar's broader strategy to pivot towards the luxury electric vehicle (EV) market. The company is set to introduce three new high-end EV models in 2026, marking a decisive move away from its historical competitors like BMW and Mercedes toward more exclusive brands such as Porsche and Bentley. Neal Freyman observed, “They're starting very slim down. They're not going to try to sell a lot of cars at all and just hope to increase the price point and sell to more affluent customers” ([11:51]).

Despite the innovative direction, the response to Jaguar's rebrand has been mixed. Critics argue that the abstract advertising may alienate traditional customers and fail to effectively communicate the brand's value proposition. Nevertheless, Jaguar remains committed to this bold new identity, anticipating that it will resonate with a more upscale clientele.

Northwestern University Unveils $850M Stadium Redesign Focused on Premium Experiences

Northwestern University has announced an ambitious redesign of its football stadium, Ryan Field, with an $850 million investment aimed at enhancing fan experiences and maximizing revenue. The new design features a reduced seating capacity of 35,000, making it the smallest stadium in the Big Ten and SEC conferences. Howell explained, “They created this stadium to not just host football games, but to host high school championships and to host all of these other sort of events, concerts as well, to really monetize a stadium in a way that they hadn't before” ([18:32]).

A key aspect of the redesign is the emphasis on premium seating. Only 10% of the seats will be high-priced premium areas, which are projected to generate 40-50% of the stadium's revenue each game. This approach follows Northwestern's strategy to adapt to changing NCAA regulations and the impending financial obligations arising from athlete compensation settlements.

Neal Freyman highlighted the strategic shift, noting, “It's all about monetization and revenue maximization... they have to make money as a college athletics department” ([18:32]). The redesigned stadium also boasts a larger footprint, with extensive shops and lounge areas designed to enrich the overall fan experience beyond just the game itself.

Trump Appoints Howard Lutnick, Linda McMahon, and Dr. Oz to Key Administration Roles

President-elect Trump has continued his administration's reshuffling by nominating prominent figures to critical positions. Freyman detailed the new appointments:

• Howard Lutnick, CEO of Cantor Fitzgerald and co-chair of Trump's transition committee, has been nominated to lead the Commerce Department. Originally a contender for Treasury Secretary, Lutnick’s nomination aims to bolster the administration's focus on economic growth and domestic industry expansion.

• Linda McMahon, former CEO of WWE and co-chair of Trump's transition committee, has been appointed as Education Secretary. Her tenure is expected to emphasize reducing the reliance on degree requirements and enhancing technical and career-focused education programs.

• Dr. Oz, the well-known celebrity TV host, has been selected to oversee the Centers for Medicare and Medicaid Services. Howell commented, “He has a big influence over this next administration” ([21:36]), given the significant role these centers play in the federal budget and healthcare provision.

These appointments reflect Trump's preference for leaders with strong private sector backgrounds and vocal advocacy for education and healthcare reforms.

SpaceX's Starship Shows Progress in Sixth Test Flight

SpaceX's Starship rocket marked its sixth test flight, showcasing incremental advancements despite some setbacks. The mission successfully transported a single banana into sub-orbit, achieving the critical objective of reigniting an engine in space for the first time. Freyman humorously noted, “It carried its first payload, though. A banana” ([23:42]).

While the attempt to perform a “chopstick catch” failed, leading to a splashdown in the Gulf of Mexico, the overall mission was deemed a success. The presence of President-elect Trump and Elon Musk at the launch underscores the political and technological significance of these endeavors. Neal Freyman emphasized the importance of these tests for future NASA missions, stating, “NASA is very much looking forward to seeing starship do more of these and complete more successful ones” ([23:01]).

Delta Airlines Partners with Shake Shack for First-Class In-Flight Dining

Delta Airlines has entered into a partnership with Shake Shack to offer its renowned burgers exclusively to first-class passengers on select long-haul domestic flights from Boston. Howell expressed enthusiasm, “I absolutely love Shake Shack, so getting a Shack burger in the sky, it literally might make me fly Delta” ([24:25]). However, he also pointed out potential drawbacks, such as the challenges of reheating burgers mid-flight, which could affect quality.

The service is initially available on flights exceeding 900 miles, with plans to expand to more airports by 2025. This partnership aims to enhance the premium travel experience, although Freyman humorously noted the logistical limitations: “you’ve got to go from, like, Boston to L.A. or Boston to Denver” ([24:54]).

Airbnb’s Controversial Gladiator Experience in Rome Faces Local Opposition

Airbnb has proposed an immersive Gladiator experience set within the historic Coliseum in Rome, coinciding with the release of "Gladiator 2." The plan involves selecting 16 guests to participate in private events that simulate ancient Roman combat. However, Italian officials have strongly opposed the initiative, emphasizing the cultural and historical sanctity of the site.

Howell reflected on the cultural clash, commenting, “We are not Disneyland. We are Rome” ([25:33]). The backlash highlights the tension between commercial tourism ventures and the preservation of heritage sites. Freyman mused on the cultural differences, suggesting that such a concept might not face the same resistance in the United States, where there is generally less reverence for historical monuments.

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Conclusion

In this episode of Morning Brew Daily, Neal Freyman and Toby Howell delved into significant developments across various sectors, from retail and private equity to automotive rebranding and higher education infrastructure. Their insightful discussions, complemented by pertinent quotes and analyses, provided listeners with a comprehensive understanding of the dynamic business landscape shaping 2024.

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For more insights and daily business news, subscribe to Morning Brew Daily on your preferred podcast platform or YouTube.

Transcript

[Fidelity Speaker]

Building a portfolio with Fidelity Basket Portfolios is kind of like making a sandwich. It's as simple as picking your stocks and ETFs, sort of like your meats and other topics and managing it as one big, juicy investment. Mmm. Now that's pretty good. Learn [e-mail] baskets Investing involves risks, including risk of loss. Fidelity Brokerage Services, LLC Member nyse, SIPC.

[Neal Freyman]

Good morning, Brew Daily Show. I'm Neal Freyman.

[Toby Howell]

And I'm Toby Howell.

[Neal Freyman]

Today, Jaguar hits the reset button with a completely new identity. But can it save the iconic carmaker from obscurity?

[Toby Howell]

Ben Jersey Mike's just got bought out by private equity, and I hope Danny DeVito gets his bag. It's Wednesday, November 20th. Let's ride.

[Neal Freyman]

Breaking news out of the music world. There is a new record holder for the fastest song to reach 1 billion streams on Spotify. The soaring retro duet Die with a Smile by Bruno Mars and Lady Gaga reach the mark after just 96 days. Toby, how many of those have you accounted for?

[Toby Howell]

Neal, I might be losing my fastball. I might have to hang up the mic because I have never in my life heard that song even for a second. You know what's worse? I have never even heard the second fastest song to reach a billion streams either. The that is 7 by Jungkook and Lotto. But then finally 3, 4 and 5 are flowers by Miley Cyrus, Espresso by Sabrina Carpenter, and Stay by Kid Laroi. But I apologize to Bruno and to Lady Gaga because I have just been sleeping on your game. Never heard this song.

[Neal Freyman]

The song is incredible. I know you just listened to 10 seconds. If you had heard it and you were like, nope, nothing. But definitely listen to it. You're going to listen nonstop like I have. It's a really, really good song.

[Toby Howell]

Now a word from our sponsor, Yahoo Finance. Neal, did I ever tell you the story of the first stock I ever.

[Neal Freyman]

Bought for as much as we hang out? Surprised it never came up.

[Toby Howell]

It was Sherwin Williams, the paint company. It was winter at the time, and I thought that buying a paint company before it was time for spring renovations was a good idea.

[Neal Freyman]

Okay, I follow the logic.

[Toby Howell]

The only issue was I was a bit of a stock market newbie. So Instead of buying 10 shares, I fat fingered it and bought 100 shares. At the time, that translated to about $40,000. I did not have $40,000 to invest.

[Neal Freyman]

Neal, Wait, so you bought it on margin?

[Toby Howell]

Somehow I bought it on margin and immediately got a notification from my brokerage saying like, hey, you do not have the funds for this, I don't know. It was all a little bit murky and I panic. Sold most of it right away. But the moral of this story is the place to mess around and test new ideas is on Yahoo Finance, not in your brokerage. Yahoo Finance has real time market data so you can construct a portfolio and a watchlist without putting real money on the line. Much more responsible than college Toby.

[Neal Freyman]

To avoid mistakes like Toby's, head to Yahoo Finance.com to play around with their portfolio feature. That's Yahoo. Finance.com America just had a divisive election, but if there's one thing that unites everyone in our country, it's that we buy stuff from Walmart. Yesterday, the United States biggest retailer announced a mammoth third quarter and raised its guidance for Q4, the key holiday shopping season. Shares gained about 3% to hit a new all time high. They're up more than 63% this year compared to the S&P 500's 25% gain. What's working? Everything. U.S. comparable sales grew 5.3%. Crushing expectations of 3.7%. In E commerce, Walmart is looking like the spitting image of Amazon. With Online sales up 22%, E commerce now accounts for 18% of Walmart's total sales.

[Toby Howell]

Plus people are buying not just things for their day to day needs leads, but also those want to have items. After declining for 11 straight quarters, sales of general merchandise, which doesn't include grocery, have increased for the second quarter in a row. Neal Walmart is looking like Saquon Barkley in the open field ahead of the holiday shopping season. It's got a head of steam and looking to run some people over.

[Neal Freyman]

And you know who's driving most of the growth is rich people. The 1% households making over $100,000 a year or more accounted for 75% of the market share gains that Walmart has made. And this has been a concerted effort by Wal Mart dating back to 2019 to refresh their items, refresh their stores to go after wealthier shoppers who might be trading down for more value. They released this premium food brand that we had talked about previously on the show called Better Goods that has things like oat milk, non dairy ice cream and cardamom jam and curry chicken empanadas. And that's just one part of their strategy to go after those wealthier shoppers who account now for the second biggest corridor of all shoppers at Walmart.

[Toby Howell]

And interestingly enough, that households making $100,000 a year are typically Amazon's bread and butter competitors. So you mentioned Amazon. Walmart is infringing. They're stepping on their turf because Walmart has created this really strong online operation that is almost rivaling Walmart at this point. You can now buy online, you can pick up at thousands of stores. They have this program called Walmart, Walmart plus where you get same day grocery delivery. So they really are trying to take business away from Wal Mart because Amazon. All right, sorry, yeah, take business away from Amazon because it has been this big push and pull fight. Wal Mart's online sales have grew 22% the United States in the last quarter. So it's clearly got its sights set on the biggest E Com player as well.

[Neal Freyman]

So what could slow Walmart to roll? Because it really is on a roll. Very Saquon Barclay ask. Well, tariffs. Right. President elect Trump has pledged to enact sweeping tariffs up to 20% across the board, up to 60% on China. That that will impact retailers among the worst of any industry. Wal Mart CFO came out yesterday and said look, we are not going to be immune to tariffs. We never want to raise prices. But if tariffs do come down the pipeline, it will probably cause prices to go up for consumers. So the biggest retailer in the United States making this warning, it's probably insulated better than other retailers like Target or smaller ones. But it issuing that warning saying consumer prices may go up if this, if these tariffs do come to pass. And that is certainly going to send a shiver up the sliver up the spine of a bunch of other retailers as well.

[Toby Howell]

But as you mentioned, Walmart is actually decently situated to weather tariffs. About two thirds of its products are actually sourced within the United States. And remember a lot of Walmart's business actually comes from its grocery division when you're not getting, it's not supplying its groceries from China that is all sourced more, more locally. So that is one thing that can 60% of its revenue came from the grocery category last year. So potentially it's a little bit more insulated. And one thing that Walmart CFO has said is that their general merchandising products typically have a little bit of a higher markup than groceries. So they have some wiggle room there. If they wanted to choose to not pass on those costs to customers, they could just eat into their own margin a little bit. So they do have some kind of slack to play with. Even though that these tariffs are something that they, they have to kind of broadly say like hey, prices might go up but they are trying to say we'll do everything we can not to pass those prices on to consumers where possible. Private equity giant Blackstone took a break from rolling up companies to focus on roles and hoagies, taking a majority stake in Jersey Mike's yesterday that values the sandwich chain at around $8 billion, including debt, onions, and extra olive oil and vinegar. Jersey Mike's is the second largest sandwich company in the US by sales falling. Just Subway. But it didn't start out that way. Back in 1975, Mike's founder, Peter Kankrow opted to skip College instead borrowed $125,000 at 17 years old with the help of his high school football coach to buy the sandwich shop he had grown up working at. Fast forward to today, and Jersey Mike's has more than 3,000 locations. But Cancer and Blackstone think they can reach 10,000 locations eventually. The deal also makes Cancro one of the 500 richest people in the world with a net worth of $7 billion. So not bad for the 17 year old. Now, Jersey Mike's locations make about $1.4 million per unit, more than double that of its rival Subway. So it looks like Blackstone's got themselves a winner.

[Neal Freyman]

It looks like it. I mean, if I'm Subway, I am sweating. Subway has 37,000 locations, so a lot more than Jersey Mike's. But as you just mentioned, they don't make nearly as much on a per store basis. Jersey Mike system sales have boomed an average of 24% over the past five years. The industry average for rivals like Jimmy John's firehouse subs is 5.2%. So whatever jersey Mike's secret sauce is, and maybe we can get into why it's been so successful is really leading to tremendous growth. And then getting bought by by Blackstone, which has $220 billion, can absolutely put a, you know, jet fuel on on your growth. And they can get to 10,000 locations worldwide from just 3,000 now.

[Toby Howell]

So I do just want to compare Jersey Mike's in Subway. Once again, Jersey Mike's is selling for $8 billion with 3,000 locations. Subway sold for $9.6 billion with 37,000 locations. So subway had 12 times more locations, but only sold for about 20% higher value. So clearly franchisee success. The fact that Jersey Mike's is making $1.3 million per unit is more important than the overall unit count here when you're looking at private equity valuations.

[Neal Freyman]

And I think Jersey Mike's had a very successful marketing strategy. People who are in our area and are watching TV might know that Danny DeVito, the actor who is a Jersey native, was hired in 2022 to be the company's spokesman and he does a great job on those commercials. So a huge win for the Jersey Shore. I think Jersey Mike's or his name is not Jersey Mike's is now probably the second most famous person out of the Jersey Shore after Bruce Springsteen. And this has been just a great business success story. I'm sure they will study what Peter Cankrow did from buying this chain at 17 years old with a loan from his football coach to grow it into an $8 billion sub behemoth.

[Toby Howell]

I thought you were going to say Snooki was the most, second most or the most popular name from Jersey Shore. But you know Bruce Springsteen works too. The car brand Jaguar is making headlines for dropping a colorful and confusing new ad to announce its refreshed brand. The only issue is, as many have pointed out, there's no cars in it. Instead a group of models dressed in futuristic getups and eye popping makeup kind of wiggle around to some techno industrial beat in a sci fi looking landscape. There's an elevator involved. It's a whole thing. But Jaguar is hoping it is the start of a long road back to relevance for the once iconic British brand that has been relegated to a footnote of the modern car industry. Jaguar sold fewer than 67,000 cars globally last year and less than 8,000 in the US down 80% since 2017. So it made the bold choice to switch things up, introducing new minimalist logos and emblems to replace the well known growling cat badge. It also dropped a mismatch of new slogans like Delete ordinary, Live Vivid and copy nothing to try and paint a picture that this ain't your Bond villains Jaguar anymore. In the lead up to this rebrand, Jaguar cold models which its CEO said had close to zero profitability until it was producing just one vehicle, the F pace suv. But now it is replacing everything gas powered and launching three new high end EVs instead. So they are really starting over from scratch here. Neal.

[Neal Freyman]

Yeah, this is not a rebrand, this is a refresh. They're starting over from a clean sheet. They want you to forget everything you knew or thought you knew about Jaguar, maybe didn't even know and adopt their new mentality, their new brand of a modern high end EV company and they are clearly moving up market here. So for the past few decades Jaguar has been competing with BMW and Mercedes. So upper middle class, upper class but not that that luxury level they want to compete against The Porsche and Bentleys of the world. And it's fascinating that they just don't sell any cars. They stop production for multiple years. They're just producing this one SUV that they're going to stop producing next year and then completely restart anew in 2026 with just three EV models. A coupe GT, a GT coupe, a sedan and a utility vehicle. We don't know whether that's going to be an SUV or not. So they're just going very slim down. They're not going to try to sell a lot of cars at all and just hope to increase the price point and sell to more affluent customers.

[Toby Howell]

One thing exec said about this new image is that they expect to retain just 15% of the existing of their existing customer. So this, that is pretty insane. There is no real plan B here. They are going all in on plan A, they're going all in on luxury EVs. From the ad perspective though, a lot of people are saying this is a bit of a head scratcher because if the goal is to sell cars and you show an ad with dancing models, it's going to be hard to maybe sell those cars. So that was not a very controversial take, but Jaguar was said like, hey, we're trying to break away from the traditional old money aesthetic of Jaguar to this new brand new, colorful, bold. I mean, it's like a word salad of phrases that they put out in association with association with this ad. They said 800 people have worked on this rebrand and the guy who led it joked that we have not been sniffing the white stuff. So really trying to drive up press, really trying to go bold with this. We'll see what the cars actually look like.

[Neal Freyman]

You were deep in social media about this rebrand. What was the general reaction?

[Toby Howell]

The general reaction was like, if you are trying to reintroduce yourself to the world, like you shouldn't do it with some esoteric high level concept. Like you need to just show like, hey, we are still the brand that makes these high quality cars that you guys have used to know us by. So people are saying that they may have just gone too far down the like conceptual path. But this is just the start of the rebrand. So maybe they're, they're obviously going to unveil some cars later. Actually, they are unveiling their first car at Art Basel this year in early December. So I guess circle your calendars there if you want to see what their team that was sniffing white stuff came up with. Up next, Northwestern is rethinking what a college football stadium can look like it's.

[Neal Freyman]

Almost time to break out the lights, wreaths and jingling bells.

[Toby Howell]

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[Neal Freyman]

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[Toby Howell]

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[Neal Freyman]

Deck your halls with a Sonos smart speaker and enjoy the cinematic sound right from your couch.

[Toby Howell]

Sonos has great gifts for everyone on your list. Visit sonos.com brew to wrap up your holiday shopping that is sonos.com brew in.

[Neal Freyman]

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[Toby Howell]

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[Neal Freyman]

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[Toby Howell]

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[Neal Freyman]

You don't typically associate Northwestern University with college football innovation, but that was before Monday when it revealed the blueprints for a new stadium that could literally change the game. Ryan Field, the same name as the old stadium that's on the demolition block, will cost $850 million, making it the most expensive college football stadium ever built. It is the brainchild of the Ryan family, Western's biggest donors, who will finance the majority of the project with the school chipping in a little. So what's so different about this stadium, you know, besides the NFL level price tag? Well, it's kind of a stadium for ants. With a capacity of 35,000 people, it'll be the smallest stadium in the Big Ten and SEC and has fewer seats than almost any major college venue. That's all about Giving the fans who do come an experience that's better than tv. For instance, its vertical cantilever design means that the worst seat in ryan Field is 100ft closer to the field than the most expensive seat at Michigan's Big House, which has that classic bowl structure. Toby, one of the ryan sons, Pat Jr compared existing stadiums to driving a Model T and that his family was building something for, quote, the world you're moving into. Do you think they're going to accomplish that?

[Toby Howell]

Yeah, I mean, it is a bold move to reduce your stadium capacity by 30%. One thing that they did say, though, is that the overall footprint of the property is actually going to be 78% larger. And that is because they constructed about 200,000 square feet of just shops and, you know, lounge areas and places where you can hang out around the stadium. Because what they observed when they were trying to set out to build this field is that upper bowl seats are just really not that popular. Yes, they are cheaper, but you don't have a great view of the game. So what they found was that people kind of migrate down to hang out because they want to be part of the game day atmosphere, but they want to be closer to the action. So they usually go down to the lower bowl or just hang out near the concessions area. So they're like, what if we just got rid of that entire upper section, which is the most expensive to build, the least revenue, and just gave people more places to hang out. So you can see the thought process here of going this smaller, more, you know, fan forward experience. So I think it's a, it's a pretty good idea.

[Neal Freyman]

And another major consideration was monetization and revenue maximization, which are very business terms. But that's the way you have to think in the NCAA now with it becoming more of a quasi professional sport. The previous stadium had no, none of those luxury boxes, premium seating, clubhouses where you really can charge people a lot of money. So they just weren't making that much money. But to make, you have to make money as a college athletics department. Now, it's not even a question because coming through the pipeline is a major NCAA settlement that would allow or that would allow schools to pay athletes directly. That's house ncaa. It's in the settlement phase right now. If that comes through the pipe, then Northwestern might be on the hook for essentially a $20 million payroll. They need to make money from these stadiums. So what they're going to do is how many college home football games are there in out of 365 games six days of the year, six or seven. So they created this stadium to not just host football games, but to host high school championships and to host all of these other sort of events, concerts as well, to really monetize a stadium in a way that, that they hadn't before.

[Toby Howell]

One thing that you did mention is that a lot of the revenue does come from those premium seats. And around 10% of the seats in this venue will be higher priced premium areas. But those fans will cover 40 to 50% of the revenue each game. So it really is, they're, they're hoping and praying that these higher revenue seats do cover the rest of the kind of the cost of the stadium. And then one thing that was interesting. The typical old Ryan Field had 47,000 seats, but it had one section of premium seating seating. This year the Wildcats played their first four games in a 12,000 seat temporary stadium. But their athletic director said that they actually made more revenue per game in the 12,000 seat arena because of these premium areas than the 47,000 seat arena. So I can't say enough how much it is important that you have these premium sections because it drives so much revenue.

[Neal Freyman]

It's less fun though.

[Toby Howell]

It is less fun unless you have the money to buy with premium.

[Neal Freyman]

Right. Well, what happened with Intuit Dome and Steve Ballmer for the Clippers? I think he did not. He reduced the amount of club seating to create a more fan experience. Then again, he's got more money than God and doesn't really need to, you know, drive revenue maximization like Northwestern. With that huge payroll bill looming, let's sprint to the finish with some top news headlines. President Elect Trump continued his hiring spree to fill out his administration. Yesterday, he nominated Cantor Fitzgerald CEO Howard Lutnick, the co chair of his transition committee, to lead the Commerce Department, which is focused on expanding U.S. economic growth and boosting domestic industries. Lutnick was one of those people aiming for the position of Treasury Secretary. So this drops his name out of that bitter contest. Trump also nominated Linda McMahon, the other transition co chair and former CEO of WWE, as education secretary. And he selected the celebrity TV host Dr. Oz to head up these centers for Medicare and Medicaid.

[Toby Howell]

Yeah, Lutnick was aiming for Treasury Secretary, but getting Commerce Secretary is probably a good compromise because you still have a role in promoting economic growth. Dr. Oz might have the most impactful role though, because he will oversee programs that account for a quarter of the federal budget and also provide health care to around one in two Americans. So he has a big influence over this next administration. And then Lyndon McMahon is interesting too, because she's been pretty vocal about the fact that higher education has been kind of failing the workforce. So she's been advocating for two for jobs to require less degrees and then also increased access to technical education, more career focused education. So three vastly different profiles, but three people that Trump kind of thinks are coming from the outside and can help, you know, change things up in Washington. Space X Starship, the biggest rocket ever created, soared on its sixth test flight yesterday, proving that practice makes perfect, or at least less explosions. While the super heavy booster managed to avoid going up in flames this time, its attempt to recreate the chopstick catch it pulled off last launch didn't go to plan, with mission conditions forcing a splashdown in the Gulf of Mexico instead. It did, however, succeed in transporting its payload into sub orbit. A single banana made the trip and completed the important objective of the test flight, which was reigniting an engine in space for the first time. So, all in all, a pretty successful mission, sans the chopsticks.

[Neal Freyman]

Yeah, but that was the biggest part. I mean, we all wanted to see the chopsticks, right? We were, we were watching, we were like. And when they said, oh, we're not going to do the catch, it's pretty disappointing. But yes, this is the sixth flight of Starship. It seems to be improving every single time. And there were certainly political overtones there as well. President elect Trump was in Texas, along with his very good buddy now Elon Musk, to watch starship take flight. And NASA is very much looking forward to seeing starship do more of these and complete more successful ones, because they're not going to the, they're not going to the moon or Mars without starship being successful. So it carried its first payload, though. A banana.

[Toby Howell]

Banana. A single banana.

[Neal Freyman]

A single banana. Maybe eventually soon it will, it will carry some humans. You've had the Mile High Club, now try the Mile High Burger. Delta announced a first of its kind partnership with Shake Shack to serve its burgers to passengers on some flights. This is a bougie airline we're talking about, so the offer won't be available to everyone. It'll be served for people in first class on domestic flights departing from Boston that are at least 900 miles long. But if all goes well, Delta says Shake Shack is coming to more airports come 2025. Toby, I'm excited for this. The only time I have Shake Shack on a plane is when I buy it at JFK's Terminal 4, bring it on board and make everyone jealous.

[Toby Howell]

This is a little risky, though, because Shake Shack doesn't want its brand being associated with, you know, a soggy or rubbery product. They are cooking the burger on the ground, then they will reheat it in the air. But that has its limitations. That being said, I absolutely love Shake Shack, so getting a Shack burger in the sky, it literally might make me fly Delta. Although those limitations are a little bit of annoying. Got to fly out of Boston, have to be over 900 miles and got to be first class.

[Neal Freyman]

So you got to go from, like, Boston to L A or Boston to Denver.

[Toby Howell]

Let's do it. It's worth it for the Shack burger. Finally, it seems Airbnb's grand plan to let tourists play Gladiator in the Coliseum has ruffled some togas. In Rome, Italian officials have pushed back against the rental giants plan to turn their World Heritage site into an Airbnb experience in promotion of the new Gladiator 2 movie coming out. The company said it will select 16 guests to participate in two private events next year where you can submerge yourself in ancient times with sword on shield combat. We are not Disneyland. We are Rome, Italian politician Enzo Fosi said in a statement last week. Neal, is Airbnb going too far here?

[Neal Freyman]

I think it's Italy we're talking about. They very much treasure their ancient monuments. And I was thinking whether this could happen in the United States because I don't think we have such a level of reverence for our historical buildings. Imagine if someone wanted to throw a rager at Faneuil hall or like a murder mystery at Monticello, or if you wanted a tailgate at the Alamo or something. I think we'd be like, sure, whatever. You know, these things are not that old. We don't care so much. Let's have some fun. So maybe the American mind can't comprehend how much level of tradition is imbued in Colosseum. And also, I think it's just Airbnb. It's an American company coming in and maybe cheapening what. What they consider what is like a very, very remarkable building that, you know, that's over 2,000 years old.

[Toby Howell]

I mean, it would be sweet. Can you imagine, you know, LARPing and doing some sword, of course, on sword combat in the.

[Neal Freyman]

That's why I'm like, let's do it. I don't live there, so let's do it at. Let's do it at the Faneuil Hall. All right. That is all the time we have for today. Thanks so much for starting your morning with us and have a wonderful Wednesday. For any questions, comments or feedback, send an email to Morning Brew daily at Morning Broadcom. And if you're enjoying the pod, by all means spread the love and share it with someone who you think would benefit from a dose of business news in the morning. For anyone who needs some direction, Toby is here with some instructions.

[Toby Howell]

I want you to share the podcast with someone who you do the gladiator experience with in Rome. But what's that? Oh, it's 16 guests. Guess you gotta share today's episode with 15 of your closest friends. I don't even have 15 close friends. Yes, Good luck everyone.

[Neal Freyman]

Okay, let's roll the credits. Emily Milian is our Executive producer. Raymond Liu is our producer. Olivia Graham is our associate producer. Uchena Wagu is our Technical director. Billy Menino is on audio if you're going to Jersey, Mike Snag hair and makeup and number 13, original Italian. Devin Emery is our Chief Content Officer and our show is a production of Morning Brew.

[Toby Howell]

Great show today, Neil. Let's run it back tomorrow. Let's check in on future you what action are you taking today to set up your finances and well being for success?

[Neal Freyman]

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[Toby Howell]

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[Neal Freyman]

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