Meta Just Beat Apple at Its Own Game & McDonald’s Is Upgrading Restaurants

0:00This episode is brought to you by PayPal. You know how a mom's bag has everything? Sunscreen? Snacks? A stapler? The new PayPal app is like that, but for your money. Shop, pay, manage your account, and earn rewards all in one place. And with purchase protection on eligible items, biometric security, and pass keys, you're protected at every step. Download the new PayPal app to get started. See paypal.com slash protection terms. Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, meet the busiest Uber Eats restaurant in the world.

0:37Neal Freyman:Then, Metta is releasing smart glasses without the creepy cameras. It's Thursday, September 24th. Let's ride. In not too long, you'll be able to take off in New York City and land in Sydney, Australia. That is, if you're willing to spend... What happened to my throat? In not too long, you'll be able to take off in New York City and land in Sydney, Australia. That is, if you're willing to spend 18 hours on a plane. This week, Qantas announced the first ever nonstop service between Sydney and New York, set to begin in the middle of 2028. It's the second leg of the airline's Project Sunrise, which aims to connect the faraway continent to major western capitals.

1:19The first, coming next year, is a flight between Sydney and London, which will take longer than the New York one at 22 hours. To make these grueling journeys possible, Qantas has acquired a dozen special Airbuses equipped with an extra fuel tank holding nearly 5 ,300 gallons. There will also be a well-being zone where you can stretch out, grab a snack, or even watch a guided exercise video. Toby, need your 18-hour breakdown. How much sleeping, how much reading, how many movies?

1:46Neal Freyman:Well, first of all, you can listen to about 36 episodes of Morning Brew Daily in case you've fallen about a month behind on your schedule. You could also run six marathons if you go sub three. You might annoy some of your passengers, but in reality, you're probably going to watch some movies. So why not watch all of the Godfather trilogy all the way through twice? You could also do what our producer Emily did, who actually did just fly 19 hours to Singapore. She watched all three of the Shrek movies. So if that's more your speed. And now a word from our sponsor, Roku Ads Manager. Neil, a$5 ,000 reward sounds pretty nice, wouldn't you say?

2:24I think it depends on what it's a reward for. If$5 ,000 is my reward for eating some weird bug, I'm in. But if it's for getting a misspelled tattoo, I'd probably pass.

2:34Neal Freyman:Well, the$5 ,000 I'm talking about is for advertisers. Right now they can get a$5 ,000 match on their first spend on Roku ads manager. Roku is the top smart TV operating system in the US with 100 ad supported streaming channels. So I'd say that$5 ,000 is a worthwhile reward. To cash in on the offer, use code BREW5K at advertising.roku.com slash mbd. That's BREW5K at advertising.roku.com slash mbd. Meta came into yesterday's Connect conference with something it hasn't had in the AI race for a while now, Momentum. Its new personal AI agent, Muse, has rocketed to number one on the App Store, with its shares falling suit ripping more than 20 % since Muse launched for their best month in more than a decade.

3:23Neal Freyman:Zuck started things off by debuting smart glasses that are a little less creepy. After years of privacy concerns around people unknowingly being recorded, Meta unveiled$349 Ray-Ban audio glasses that ditched the camera entirely. You still get music calls and Muse AI just without everyone wondering if they're being surveilled. Then Zuck went after Apple. meta unveiled new vr glasses that weigh just 100 grams and cost 1300 roughly one-sixth the weight in 60 percent cheaper than apple's 3500 vision pro the capabilities still go toe-to-toe with apple though including hand and eye tracking in a 5k display mark german a bloomberg reporter who primarily covers apple summed it up on x saying they are incredible and finally zuck pulled a page from steve jobs's playbook with a one more thing moment at the end where he unveiled the muse charm a sort of physical pendant representation of your ai agent that gives tamagotchi vibes the tiny keychain device gives you a dedicated way to talk to muse throughout the day as meta tries to give you multiple ways to interact with your agent not just on your phone neil meta spent years burning tens of billions of dollars trying to convince everyone that the metaverse was the future but it seems like it wasn't all for naught it stumbled into taking the lead in building hardware for the AI age instead.

4:41Reviews of this were ecstatic. Tech journalists were comparing this to the Apple hardware rollouts of old. Vision, creativity, experimental, whimsical, certainly way more compelling than what Apple rolled out earlier this month. That is absolutely music to Zuck's ears. Apple has been the thorn in his side for decades. He has hated that you have to go to the iPhone to access Instagram, to access WhatsApp, to access Facebook. And now he's trying to create a new computing platform, whether it's glasses or this Tamagotchi style thing in your pocket, where you can access this for now ultra popular AI.

5:17So Zuck had a great night last night. A lot of people thought that this meta hardware rollout was really visionary.

5:25Neal Freyman:It all goes back to Muse too. Whether they knew it was going to be as big of a hit as it has become, Muse is just everywhere throughout this ecosystem at this point, where one of the things that they highlighted was the new Ray-Ban meta Oakley glasses that runners like. You can knock out your to-do list while on a run by saying, hey, book me a massage after this. What time is the soccer practice? You have this way to interact with it everywhere now instead of just on your phone. That's why you saw this pendant being rolled out. It's not necessarily going to be the new form factor that's going to take over from the smartphone, but it's maybe a way for kids to have a cute little emoji icon thing on their backpack and talk to it you never know what's going to happen as long as you give people different ways to interact with something that previously was gatekept by their phone so now it's on your face it's on your keychain it's on your phone it's everywhere and that's exactly how zuck wants it maybe we're seeing a split screen reaction though because in silicon valley everyone is applauding meta for this visionary hardware and Muse and is using Muse for literally everything to book their appointments, book reservations.

6:33Out in the rest of the country, there is widespread antagonism toward Meta and backlash to especially their glasses that have these cameras attached. They've even earned the moniker pervert glasses because there have been many instances of men going up to women and filming them without their consent. A bunch of bars, restaurants, hospitality venues all around the world have banned these glasses. is meta is loaded with privacy concerns. In a recent survey by Oppenheimer, just 8 % of US consumers would trust meta with their passwords. So it's very interesting to see this play out where Silicon Valley is all rallying around meta's new hardware division.

7:11Well, maybe the broader population is still very skeptical that they would want to give meta a lot of their data, even though they probably already have, and use these glasses that have cameras, which is why, you know, one reason why meta rolled out these new glasses that don't have cameras.

7:27Neal Freyman:I think it's fascinating to the business plan behind Muse because right now it's very expensive to run. People are querying it for their restaurant reservations, whatever they're doing. And Ben is basically giving you that for free right now. So what is the money-making idea? Zuck got on stage and said, we believe Muse will make you money. We're standing behind this by making it free for a huge number of tokens. over time we will profit by taking a small fee from transactions. One of the key use cases so far has been go through my email history, cancel all subscriptions that are redundant or that I'm not using.

8:04Neal Freyman:People have been posting, I've saved thousands of dollars on this. They think that might be the business model. The fact that Muse can save you money or help make you money potentially by selling off some of your stuff on Marketplace, whatever it is, they think they're going to take a little slice of that and everybody wins. We'll see if that vision comes to fruition, but it's a very interesting approach to making money with Muse. Bottom line from Kinect, I think Apple or Meta has definitely stolen the hardware spotlight from Apple, at least for now. Diesel prices have gotten so out of hand that President Trump thinks we need to keep it all for ourselves.

8:39Politico reported yesterday that his administration is preparing to ban diesel exports abroad for 90 days, a controversial high wire act that many in his own cabinet say would backfire spectacularly and outrage the U.S. energy companies who've backed him. The White House called the report fake news and Fox heard that the administration was backing away from the idea. Still, with the midterms just weeks away, what Trump desperately wants is line go down on the diesel price chart. As a result of the energy crunch in the Middle East and Russia, storing diesel costs are squeezing the wallets of American consumers and businesses, particularly farmers who use diesel to power every part of their operations.

9:15On Wednesday, the average price for diesel was a record$6.52 a gallon, up 91 cents from a month ago and up from$2.38 a year ago. Most agree that American diesel prices would fall initially should Trump announce a ban on exports. All the diesel that was supposed to head to foreign markets would get pumped back into the U.S., boosting supply and dampening the price. It's what happens after that where you see economists, the oil industry, and members of Trump's inner circle all get worried about the unintended consequences of an export ban, which they say will, over the long run, send fuel prices ratcheting back up.

9:48Just last week, Interior Secretary Doug Burgum said, quote, we would consider an export ban if we thought that actually might lower prices, but that's not the case. Toby, tons of opposition to this, but Trump feels like he needs to do something when it comes to diesel.

10:02Neal Freyman:No one really denies the fact that diesel prices would initially go down, especially in certain regions of America, especially in the Gulf region where a glut would hit the market. But where it gets complicated is the fact that refineries, they don't just make diesel. It's not just, hey, here's our diesel plant. They actually turn crude into a lot of different products. It's gasoline. It's jet fuel in addition to diesel. if refineries suddenly can't sell as much of that diesel as they are used to. The economics of running a refinery completely changed. And actually, what you might incentivize them to do is produce less diesel and produce less gasoline and produce less jet fuel, which is not good because we need more of it right now.

10:45Neal Freyman:So that's the second order effect. Yes, initially, a glut would come onto the market in the United States, lower prices. But going forward, it would really warp things economically speaking. Yeah. So on Tuesday, Trump endorsed the idea of a ban on diesel exports. But then the oil industry has mounted a furious campaign behind closed doors and actually in public to get this not to happen because they absolutely hate this idea. When refiners cut back, that means they're buying less crude oil from these companies. So you have all these industry trade groups plus the Chamber of Commerce writing a very angry, not angry letter, but a very sternly worded letter to the Trump administration saying, please do not do this.

11:28This would be catastrophic. Quote, we urge you to reject calls to ban or otherwise limit the exports of diesel and other products. Export bans would lead to less fuel production, tighter supplies and rising costs for American families, farmers and truckers. But the other side of this is Trump is getting a lot of pressure specifically from Republican senators and governors in farm states who say we need you need to address diesel because this is getting out of hand. Chuck Grassley really lit the match. He is the he is a senator from Iowa saying, you know, diesel prices is killing farmers income.

12:01And I want to bring an example of what that actually means. So I saw this TV segment on a farmer in Iowa. He has almost 10 ,000 acres of feedlot with 12 ,000 head of cattle. He uses 800 gallons of diesel a day. So rising prices are costing this guy$75 ,000 more in just diesel prices every month. Multiply that, but like for all of the farmers that are across the United States, and you can see why Trump feels the pressure to do something.

12:27Neal Freyman:It's brutal, and it could have knock-on effects for decades to come because, again, the administration wants more U.S. refining capacity in general, but refineries are, very big investments. They literally take tens of twenties of years to come online. If you are an investor, you're looking at what Washington is doing right now, maybe preventing you from selling your products on the global market. Do you really want to go down that path? Do you really want to invest in making a big refinery come online? So that is the question here. Even if you shake confidence just a little bit, you might be hurting your production decades on in the future.

13:02One final unintended consequence that we need to talk about is this would create a two-tiered market between the U.S. and every other country. And so Europe would get absolutely slammed by, obviously, you know, you think of an export ban not going to foreign markets. It would be bad for them. It would absolutely be bad for them. It would create a ton of geopolitical tensions between the U.S. and our allies in Europe and other parts of the globe because their prices would spike. And we already saw that yesterday on this report of the ban potentially coming into place. diesel prices in europe jumped as much as seven percent in europe in anticipation of this happening

13:37Neal Freyman:we'll see whether it comes to pass let's move on it's been a rough year for mcdonald's so it's throwing eight and a half billion dollars at the problem yesterday mcdanks laid out a plan called next to return some luster to the golden arches next goes after every part of the restaurant experience wants to modernize stores for the delivery age by putting in designated mobile order pickup spots play places and dining rooms will also get a facelift too in the food department McDonald's is tripling down on chicken, hoping a new hand-breaded option will help offset higher beef prices. It will also introduce more specialty drinks and breakfast options too.

14:11Neal Freyman:But you can't spend$8.5 billion without looping in some AI, so get ready to meet Archie, a Google-powered AI drive-through ordering assistant. The back of the house is also getting AI injected as well, with a system called Arch IQ, expected to bring efficiency gains. Well, it's a nice plan. The burden of execution will fall on franchise owners at an expected cost of$800 ,000 a restaurant. That's the stick. The carrot is that the upgrades are expected to add roughly$100 ,000 in annual cash flow for the average U.S. restaurant, according to the company's CFO. I've seen a lot of people comparing Nike and McDonald's these days, two iconic brands who just can't quite seem to find their stride.

14:53Neal Freyman:The company's stock is down 21 % this year. It's coming off its slowest quarterly growth since last year and fell an additional 4 % yesterday. Is next enough to right McDonald's a ship? I would be a little hesitant to compare McDonald's to Nike. I think in some sense, like Nike has certainly not, you can't eat Nike, has certainly not executed well. I think the general consensus that they've, they've stumbled, have a lot of errors. McDonald's on the other hand, you can look at their execution and said, honestly, this is pretty good stuff. You are just in a very tough market right now with inflation and just people cutting back GLP ones, changing diner habits.

15:30So this is just a broader problem. But where I would say Nike and McDonald's have similarities is that they're both operating an environment where their broader industry is just not seeing a lot of growth. It's pretty stagnant. So McDonald's grew 0.8 % sales in the first quarter, right? It's just basically flat. And all the other fast food restaurants say, yeah, we're basically seeing flat or declining foot traffic. So what McDonald's needs to do, and the CEO completely recognizes this, is in a flat market, you need to steal market share from your competitors. That's the only way you can grow.

16:01So they're leaning into chicken to go after Chick-fil-A. They're leaning into beverages. They're the second biggest coffee purveyor in the world. They want to become number one. So they're treading into Starbucks and Dunkin's and seven brews turf. So this is the way they think they need to grow is by stealing market share from competitors.

16:17Neal Freyman:I will push back a little bit on the execution side of things, because one thing that the executives said about like the previous couple of quarters is that they maybe leaned too heavily on promotions. Remember, this was a moneymaker, like the Travis Scott meal, the every insert celebrity here meal. There was tons of those. And McDonald's for a while loved that because it wrote it to growth. But now they're saying that it's leading to inadequate customer service because there's just too many promotions. It takes too long to cobble together these specialty meals all the time. So they're saying we're going to simplify things a little bit.

16:50Neal Freyman:And you are right. They are very conscious of the fact that GLP ones are going to affect their business and so are leaning heavily into a menu that they think GLP one users would like crispy chicken bowl, grilled chicken snack wrap. One of the biggest requests that they got is for grilled chicken to come back. There's also a burger bowl and egg bites for breakfast. These are intriguing ideas. We'll see which ones actually manifest on their menu, but they know that 84 % of ULS households with a GLP one user visiting McDonald's, they better have meals for them to enjoy. One lever they can pull that I think will make them a lot of money is advertising.

17:29So a bunch of retail outlets have started to do this Walmart, Amazon, Uber, they've all leaned into advertising. They say that every company becomes an ad company down the line. Looks like McDonald's is also doing that. They have piloted a program at 450 company owned restaurants that began last month where they're putting ads for separate businesses on their drive through screens. So that think about how much money that can make. They say 85 % of the U S population visits a McDonald's once a year, they have 14 ,000 locations across the U S and if they plaster ads on the drive-thru as you're going on.

18:02I mean, they could easily turn on that switch and make a lot of money.

18:05Neal Freyman:If I'm Burger King, I'm buying up all the advertising space. Am I wrong there? And also, I'm just closing the circle here. When's Nike gonna start putting ads on their shoes? At some point, every industry becomes an ad industry. All right, we're gonna take a quick break and come back with Neil's Numbers right after this. Every day, shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard too. Vanguard Investor Choice makes it easy to set your proxy voting preference for your eligible Vanguard index funds. In just a few clicks, you can have a say on important shareholder topics like executive pay and director elections.

18:44Neal Freyman:Visit Vanguard.com slash Investor Choice to learn more. It's your shares. It's your voice. It's easy. Vanguard investors own shares of their index funds, and those funds own shares of the companies they invest in. Vanguard Marketing Corporation Distributor. Neil, you ever stay in one of those hotels where you sleep in a human-sized birdcage? No. Well, don't. It's real sad. Sounds like you could use business preferences from Hotels.com. It helps travelers find the right hotel faster by remembering their go-to work trip requirements. Travelers set their preferences once, including fully refundable stays, Wi-Fi, breakfast, gym access, and more.

19:20Neal Freyman:Then future business trip searches automatically surface matching hotels. Sign up for their free rewards program and start earning on every workday at hotels.com slash morningbrew. That's hotels.com slash morningbrew. Loyalty members 18 plus. Neil, you know how I do a lot more than payroll around here? You don't do payroll. Jordan does. Oh, right. I'm thinking of Intuit QuickBooks Workforce. It helps businesses by bringing payroll, HR, talent, and your financial data together in one place. Their auto payroll can make payday run itself. With guaranteed accurate tax calculations, owners aren't second-guessing the math, just approving what's already right.

20:00Neal Freyman:Plus, payroll AI can catch issues and flag changes before they become problems. When something needs a human, live payroll and HR experts are right there to help out. For more info, head to the link in the show description. Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will melt your brain like a Derek Trucks guitar solo. For my first number, I want to take you on a trip to the restaurant that does more delivery orders on Uber Eats than any other one on the globe, making it possibly the world's busiest restaurant. Any thoughts on what kind of place it would be or where?

20:33In fact, it is a family-run Indian-Pakistani joint named Aga's located in a strip mall in the suburbs of Houston, Insider reported. This place is an absolute machine. They serve more than 4 ,000 diners a day in their physical restaurant and whip up about 1 ,600 takeout and delivery orders additionally, equivalent to half a million per year, according to the New York Times. To accommodate the crush, Agas has converted a storage room into a call center where a chunk of its 200-person workforce are constantly on the phone taking orders. It's gotten to the point where drivers from third-party delivery apps almost exclusively deliver for Agas.

21:08One told the Times that 99 % of his deliveries come from Aga's, earning$50 ,000 just from this restaurant over the past two years. So what's the secret sauce? Why is Aga's such a juggernaut? For one, the prices are affordable, serving the mass market. Two, the market is big, with 655 ,000 South Asian residents living in the Houston area. And three is customer loyalty. Aga's has invested in becoming a linchpin of the community, a real local spot that people want to order from one, two, three, four times a week. Toby, I think one of the owners, Shoutcat Meridia, said it best. It's not a restaurant.

21:42It is a food factory. The amount of food we put out every day is absolutely mind-boggling.

21:47Neal Freyman:And my favorite part is that they are so big that they have negotiated with the delivery apps to get better sweetheart deals. Shoutcat Meridia said that they have persuaded DoorDash, Uber Eats, and GrowHub to reduce their commissions in return for keeping the enormous volume that they bring to the platforms. He said, we get deals that no one else in the entire world gets. We gotta go visit. The one thing that they said, though, is they keep it very authentic and that includes a little spicy. So I'm a little nervous, but we gotta go. Yeah, I don't even know if they have a mild spicy option for you.