A friend of mine did something recently that he’d never done before: he used Lyft instead of Uber on a business trip.
He did this because he needed a ride, and the Lyft driver was going to get to him faster than Uber. While he had never actually used Lyft before, he had downloaded the app and figured why not? After all, the Ubers that he (and everyone else we know) has ridden lately have been not-much-better than a cab, which is quite a come-down from the early days of Uber, when the driver had a bottle of water ready for you and the car smelled like a car, instead of a dorm room, and the worst you could say was that the drivers were too reliant on Waze to get around.
You’d be forgiven if, after hearing the CEO of Chipotle describe its first ShopHouse Asian Kitchen restaurant concept that was opened in DuPont Circle a few years ago, you agreed with the cohort of Wall Street’s finest that declared ShopHouse might become the next leg of growth for the then-plenty-fast-growing-already purveyor of burritos and tacos “With Integrity.”
You’d be forgiven because the CEO of Chipotle repeatedly—and by that, we mean more than a dozen times over the next few years—promoted the concept and often compared that first ShopHouse restaurant with the early days of Chipotle itself.
Chipotle reports next week and we’ll finally get to see how the company’s “buzz-worthy” (their word, not ours) marketing efforts (like the online game “Friend or Faux,” the “Chiptopia” rewards program, and the online animated movie “A Love Story”) have been working to bring customers back after last year’s food-borne illness outbreaks linked to various Chipotle restaurants caused comp-store sales to tank, spurred a CDC investigation and forced the self-styled “Food with Integrity” chain to spend a lot of money upgrading the integrity of its food-handling procedures.
Wall Street, for the most part, seems convinced the storm will blow over—if a 100-times next-year EPS multiple is any indication.
In the world of Shake-Shack, everything is about “The Shack.”
Where most restaurants report “same-store sales” and “store-level operating margins” and “store economics,” SHAK reports “same-shack” sales and “shack-level operating margins” and “shack-onomics.”
It’s a cute, quirky culture the company has built from modest roots—the now-famous hot-dog stand in Madison Square Park—into an international phenomenon, in 12 short years.
Of course, 12 years in today’s world is actually a long time, but things didn’t get serious until 2004 when the first Shake Shack restaurant opened, starting the launching pad that would shoot the rocket ship into orbit following the wildly hyped IPO just 16 months ago to the point where, by the end of the first quarter, there would be 88 such “Shacks,” with an inordinately large number—36 to be exact—licensed to other operators outside the U.S., mainly in the Middle Continue reading "Well That Was a Shack-ingly Brief Run"
It’s bad enough when analysts thank CEOs for letting them ask a question on an company earnings call, at least when they do it in a way that goes beyond a simple act of politeness and more towards a cringe-making act of fawning, which too many analysts have a way of doing these days.
This is, after all, a business: it’s an analyst’s job to ask questions; it’s a CEO’s job to answer them. Get on with it.
What’s worse, however—much worse—is when an analyst who asks a good question gets schmoozed by the CEO, and instead of following up and getting an answer, surrenders.
It happened tonight on the Apple call.
After thanking the company for “fitting me in” (really?) the analyst asked Tim Cook—all quotes are from the indispensable Seeking Alpha—a very reasonable question about the “top two or three things” Continue reading "When Analysts Surrender"
TV personality, author and commentator William D. Cohan is grumpy about a lot of things.
There’s the Duke lacrosse scandal, for one, about which he’s just publish a “shocking, thought-provoking new book”—according to the description on his own web page.
And for another there’s Wall Street, from whence he came, and about which he’s written plenty of grumpy, conspiracy-minded books.
Hence it’s no surprise to find Cohan invited to speak at the Sun Valley Writer’s Conference, whose attendees tend to be wealthy, Wall Street-leery arts supporters from L.A.
It’s even less surprising that one of the talks he gave to those same attendees was entitled “Who Has the Real Power Now on Wall Street?”—actually, less of a talk and more of a very grumpy, very conspiratorial dish about what he perceives to be the current state of Wall Street—and that the audience was Continue reading "Fact-Checking William D. Cohan; Or, Paul Is Not Dead"
The best part of this year’s Berkshire meeting—except seeing Charlie Munger in good form, which we’ll get to in a bit—was the movie.
Not the movie itself, but the end of the movie, when the sing-along tribute to Berkshire’s managers, which always used to be set to the tune of “My Favorite Things,” turned out to use “Sgt. Pepper” instead.
That’s some good taste there.
But, actually, the best part of the Beatles-themed piece of the movie came as it died out and, miraculously, the “Sgt. Pepper Reprise”—the best two minutes of The Beatles ever recorded, in your editor’s opinion—began to play during the credits.
Tom Prescott announced his retirement last night. You may not have heard of him, but as CEO of Align Technologies (the inventors of Invisalign “invisible braces”) Prescott helped turn a $70 million revenue company with 35% gross margins, negative operating margins and a $127 million market value into a near-$800 million revenue company with near-80% gross margins and 25% operating margins.
Oh, yeah, and a $4.5 billion market value, last we checked.
More than that, Tom Prescott helped Invisalign develop from a niche product not much liked by the orthodontists who were supposed to use it (it’s far more expensive to them than the old-fashioned wires and brackets, plus, in the early days, before Prescott, the Invisalign treatment was far more limited in what it could do, teeth-moving-around-wise) into a near-standard of care in orthodontics around the world.
And he did it the old-fashioned way: by spending on R&D to improve the product (a quarter billion in the last six years alone), marketing like crazy, and proselytizing every chance he had.
Along the way, Prescott had to contend with a near-fatal copycat product (fought and won in courts of law), short-selling attacks (fought and won the best way possible: just running the business well) and big-company patent suits (smartly settled).
If there ever exists a CEO Hall of Fame, Tom Prescott should get in on the first ballot.
Thus it was quite a surprise to see the headline come across the tape after last night’s close that he would retire in June, with an outside-the-company successor to take his place. No mention of such plans had ever passed his lips to anyone outside Align, and being the ripe young age of 59, nobody had ever bothered to ask him.
Nevertheless, as the ensuing conference call made clear, the decision was voluntary, had been in the works for a year and a half, and had produced a successor who looks eminently worthy of filling some big shoes.
Now you would think the first question on the call would be about the decision itself, with perhaps a follow-up on the successor and whatever plans he might have for the company.
But you would be wrong.
The first question was about what it’s always about for some of Wall Street’s Finest...near-term earnings:
“Thanks. Good afternoon. Tom or David [White, the CFO], could you just elaborate on sort of the preliminary 1Q outlook in terms of revenues and EPS…?”
It was as if Leo Messi suddenly announced his retirement from Barcelona during half-time, and the first question out of the reporters’ mouths was about who’s going to win the match.
You could almost hear Prescott and his team restraining their incredulity, but, class acts that they are, restrain they did.
Still, if there ever exists a Hall of Fame of Silly Analyst Questions, that one will get in on the first ballot.