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🍟 The French Fry Economy

And the man who gave away $8B

This is Nick. This is Jack. And we’re still shocked by the daily scenes coming from Israel. The latest: “A trail of terror” (NYT) left by Hamas, the terrorist organization that runs the Gaza Strip. This has been Israel’s Pearl Harbor. To our Israeli Yetis, we’re thinking of you. And we’ll make today’s newsletter & show a TBOY.

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1) The French Fry Index: You Say Potato, We Say Economic Confidence

North America’s biggest french fry maker is $15B potato legend, Lamb Weston. And the carbo king says a “yes” to “do you want fries with that” means good things ahead for the economy.

The reason? It’s officially called the Fry Attachment Rate, but we like the unofficial French Fry Index. This economic phenom suggests that the share of diners who order a side of fries at fast food joints moves with economic sentiment: more fries = better feelings about $$$. These days, that rate is holding steady above pre-pandemic levels, suggesting economic confidence from fry consumers everywhere. Recession fears who?

It sounds wild, but you can trust the source: Lamb Weston, Idaho’s finest potato giant, has built a $15B empire on your sodium intake.

  • 🍟 Most of the world’s top fast food restaurants use Lamb Weston taters (10% of its sales are to McDonald’s).

  • 🍟 The co produced 8B pounds of potatoes on 4 different continents last year.

The Takeaway →

The best way to measure consumer confidence? Whether you ordered fries or not. A yes-to-fries economy is full of treat-yo-self vibes. You wouldn't say yes to the little extra treat unless you were sure the direct deposit was poppin’. Traditionally, economists ask consumers how they feel about the economy to gauge confidence—but responses can be politicized. Instead, french fries feel like a purer signal.

2) Birkenstock’s Big Moment, 249 Years in the Making

Birkenstock will IPO today with an almost $9B valuation. After 249 years in business, it’s about time.

Welcome to the NYSE: $BIRK, the company to thank for the sandal universally loved from German cobblers to Justin Biebers. The big number is $9B—the valuation:

  • 🩴 Birkenstock's $9B valuation is nearly double that of fellow comfort queen Crocs

  • 🩴 But funny thing: Birk brings in ⅓ the revenue Crocs does (it’s the arch support).

  • 🩴 Birkenstock’s bankers think Birk has higher growth potential than Crocs. Today, when stock begins trading, we’ll see if investors agree.

We jumped into the IPO paperwork and these numbers stood out →

  • 👣 A lot of talk: 90% of customers hear about Birks via word-of-mouth. The Barbie movie and Gigi Hadid are doing the heavy lifting for the marketing department.

  • 👣 No one stops at 1: The average US customer owns 3.6 pairs of Birks. 🙋🙋🏻

  • 👣 But they all prefer 1: Birk’s open-toe “Arizona” model makes up ⅓ of all sales.

The Takeaway →

Birkenstock is the poster child for the Lindy Effect. What’s that? The concept that the longer something has been around, the longer it will last (shoutout to Trung Phan’s newsletter for the idea). That’s why Birkenstock doesn’t hide its age: Its IPO paperwork highlights words like “heritage” 19x, “century” 21x, and “tradition” 41x. Here’s to 249 more years.

3) Warren Buffett’s Hero Gave it All Away—$8B of it

Billionaire Charles Feeney, who gave away his entire $8B fortune to charity, passed away this week with about $0 to his name. Warren Buffet says “[he’s] my hero and Bill Gates’s hero—he should be everybody’s hero.”

Here’s the story on the icon’s icon.

His claim to fame: He cofounded Duty Free Shoppers, the airport stores to browse 12 lb Godiva bars during your layover (for servicemen in the ‘50s, it was Marlboros and booze). All the goods are 100% tax free (aka duty free). The Duty Free biz went gangbusters and Feeney’s net worth did the same.

Wake up call: After a couple decades of counting commas in his bank balance, Feeney had a change of heart on the entire idea of mega-wealth. He started taking the subway, rented a modest apartment, and lived minimally—and gave all his money away. His beneficiaries included Haiti earthquake relief, AIDS clinics in South Africa, and tons of colleges and universities. By 2016, he'd donated away all but $2M, saving that to live out the rest of his life.

And because we know you’re wondering: Feeney’s five kids got “decent but unextravagant provisions.”

The Takeaway →

Something everyone (not just billionaires) can learn from Feeney: It’s not just about your success, it’s about what you do with your success. Getting ultra rich is Americans’ idea of glory these days. And while money and success are great, what’s really the point if it’s not doing anything?

 

🔉 President Biden addressed the nation following the events in Israel. He described Hamas’ actions as terrorism and “pure unadulterated evil.” Biden vowed to stand with Israel as they begin a siege in Gaza.

💊 Hot strike fall is in session: Walgreens pharmacists and technicians are walking out over harsh work conditions.

🎃 Skittles is launching the biggest candy innovation in years: “Littles.” They’re exactly what you think they are.

🧓 Boomers are the secret to keeping the economy booming. The 65+ crowd accounted for 22% of spending last year. Now they are saying yes to fries.

😎 Cipriani, the celeb-faved restaurant in NYC, has raised $526M to go global. The price of access worldwide? $5,000.

🏅 The Nobel Prize in Economics was awarded to Claudia Goldin for her research on gender gaps in labor force participation and earnings. She’s the third woman to win the prize.

👽 Amazon’s Ring is offering $1M to anyone who captures alien footage with their doorbell camera…so are we.

🌴 Maui reopened to tourists this week, just 2 months after the devastating wildfires. Reactions from locals are mixed.

📺 On the pod today: Roku, the smart TV device, has a bold new play to win in streaming—the MoneyBall Strategy.

 

 

The world’s largest seller of cashews is Costco. It sells ½ of the world’s cashews, which means about $300k/week in cashew sales.

From Mike and Cassie Gurzadas in St Louis, Missouri. 

 

And one more thing. Like we said on the pod, we’re thinking of our Israeli Yetis out there as events have gotten even worse.

—Nick & Jack

FYI, the writers of this newsletter own stock of Amazon and Crocs.

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