Meta Wants AI to Create Ads & Gen Z Could Save Chain Restaurants?

0:00Some days call for working up a sweat, working on your passion, and endless action. Ditch the glitch with Liquid IV's new energy multiplier sugar-free. Refreshing flavors like strawberry kiwi and blackberry lemonade. Scientifically formulated to support physical energy, hydration, focus, mood, and social stamina. Liquid IV's new energy multiplier sugar-free. Hydrating energy. Tap the banner to learn more. Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, stay on good terms with your former boss because boomerang hires are on the rise. Then the chain restaurants you grew up going to are making a comeback led by none other than Red Robin.

0:45It's Tuesday, June 3rd. Let's ride.

0:52It's getting a little dusty in here and not because I just rewatched Marley and Me. A literal massive dust storm coming from the Sahara Desert in Africa has blanketed the Caribbean and is expected to reach the Gulf Coast of the U.S. by the end of the week. Giant dust plumes traveling across the Atlantic Ocean are normal around this time of year, but it's still one of the world's more remarkable weather events. The good news for Americans is by the time they reach Florida, Louisiana, Alabama, and Mississippi, the plumes have lost most of their concentration. It's 5 ,000 miles of travel after all.

1:26But if you live in those states, don't be surprised to walk out to Mad Max vibes this weekend. Yeah, it's bad news for sunbathers, but the dust storm is actually good news for this year's Atlantic hurricane season, which began on Sunday. What characterizes a giant Saharan dust cloud? Very dry air. What do hurricanes or tropical storms need to form? Moisture. So you're seeing this natural tug of war between Mother Nature, the hurricane season in one corner and the Saharan dust cloud in the other. As Jason Dunnian, a meteorologist, told the New York Times, Mother Nature is fascinating. It set up this Saharan dust factory right next to the Hurricane Nursery.

2:04So shout out Mother Nature. Pretty neat, Neil. And now a word from our sponsor, LinkedIn Ads. Neil, I just finished up my fantasy Premier League season. I'm not going to lie, had a bit of a rough year. Can't win them all, Toby. There's always NFL football coming around the corner. If I may vent a little, my issue was targeting the wrong people. I rode the Erling Haaland train for too long when I should have been on the Mo Salah Express. It's a mistake that is all too common in the advertising world too. So many brands waste time, effort, and money trying to target the wrong audience when really they should have been using LinkedIn.

2:36With LinkedIn ads, you can target by job title, industry, and company, and more, so you know you're reaching the right people and doing it efficiently instead of overpaying for a Man City striker who couldn't score any goals this year. Let it go, Toby. Maybe next year LinkedIn ads will roll out a Premier League tool. Really? That would help me a lot. No, they're too busy helping B2B marketers make smarter targeting decisions. Fair enough. Head to linkedin.com slash MBD to get started. That's linkedin.com slash MBD. Ford Blue Cruise hands-free highway driving takes the work out of being behind the wheel, allowing you to relax and reconnect while also staying in control.

3:17Enjoy the drive in Blue Cruise-enabled vehicles like the F-150, Explorer, and Mustang Mach-E. Available feature on equipped vehicles. Terms apply. Does not replace safe driving. See Ford.com slash Blue Cruise for more details. Have you left a job for a position at another company, realized a few months in, these new people are super weird and skedaddled back to your previous employer? Well, there are a lot of you. A new report from ADP found that 35 % of all new hires in March were so-called boomerang employees, the term given to rehiring former workers because circling back was already taken.

3:56That 35 % is up from 31 % last March and the highest rate for that month since 2018. It's also notable because March isn't typically a month where people come back to old jobs, like say December with holiday retailers or June when college kids return to their ice cream shop. Employment analysts say the boomerang boom is a sign of where the labor market is right now. very stable but also with hiring that's very cautious both for employers and for workers adp chief economist told hr brew or toby as your favorite movie puts it stick to the stuff you know sticking to the status quo is happening in one industry in particular the information sector which contains media and tech companies in march an astonishing 68 of all new hires were returning employees toby if there's one takeaway from this it's don't burn bridges with your former boss they could be your future coworker.

4:49Yeah. If there's one takeaway for this is look at me because I'm a boomerang hired to Morning Brew. Neil originally hired me. I left and then I stayed on good terms with my co-host and now look at us. We're hosting a podcast together. But yeah, I think what it shows is a job market that just is in search of stability rather than anything new because what does a boomerang hire represents? It represents someone that the employer knows. It also represents a company that the employee knows very well. So that kind of two-way street leads to just a much smoother hiring process. Job prospects don't want to be out testing this slightly fuzzy job market for too long.

5:25And employers don't necessarily want to go and have to retrain and rehire a whole new person who doesn't know the company culture. So you're getting a lot of great bang for your buck when you target these returning employees. So it's a fascinating thing where it's almost like going back to your ex because it's just what's comfortable to you. Maybe it's the right decision. Maybe it's not. But in this current job market, it seems to be the right decision for both sides of employer and employee. And it's also a repudiation of the great resignation from a few years ago. Remember, in 2021 and 2022, scores of people were leaving their jobs for what they thought were greener pastures and maybe a pay hike.

6:04But now they're coming back to they're coming back home. 80 % of workers who quit in the Great Resignation have regrets. That's according to a new survey by Paychex. And according to another survey, this is international. Nearly 20 % of workers who quit their jobs during the pandemic have since returned to their old employers, you included. So you know why people do this. It could be perhaps that the company that they went to wasn't all that was advertised. And another reason is that perhaps they did like the company they were at. They just didn't see much career advancement. So they were like, I love the people there.

6:42Just my upward mobility was a little bit limited. And so they went to another company to find that upward mobility, to find that manager track. And then once they found that experience after a year or so, they're saying, okay, now I can come back to my old company, which I actually really liked with all this new experience. And now I have probably a better paying job and I'm now managing people or, you know, up the career ladder a little bit. And then one final aspect that makes Boomerang hires more common in the modern job market than before is that a lot of people are not moving to start a new job.

7:12Think back a few generations ago. If you got a new job, oftentimes you had to pick up your family. You had to move across the country and go work in person, work in an office. But now, given the rise of remote work, when you took that new job, when you partook in the great resignation, you probably just stayed exactly where you were. So there was no material factors, geographical factors that made it a barrier to reenter the job market at the same job you just had. So it's just fascinating. And then you just toss in housing prices as well. A lot of people weren't moving because of that. So it made it very easy to just say, hey, guys, remember me?

7:46You just knocked back on the virtual office door because you never moved in the first place. Let's move on. Meta thinks it has a use case for AI beyond pretending to be your friend, and it's making ads. Meta already offers some AI tools to generate variations of existing ads, but the company thinks it's on track to enable brands to fully create and target ads using AI by the end of next year, according to a Wall Street Journal report. If you are a new pickleball shoe brand, for instance, you could input a product image and budget, then lean on Meta to generate a full slate of ads souped to nuts, including images, video, and text.

8:20But it doesn't stop there. It would also then enable you to target specific Facebook and Instagram users with scary levels of precision. For example, one layer of personalization the AI could help with is location. So a pickleball player in SoCal might see an image with palm trees, while a New York City-based customer might be targeted by an image showing the Knicks losing. I mean, someone playing pickleball in a city. Meta sees this as a huge unlock for small to medium-sized businesses who can afford to make more in-depth ads that don't require the big production crews used by larger companies.

8:54But it's also a big boon for Meta, who generated 97 % of its overall revenue from advertising last year. This idea of a full-stack service supporting both ad creation and targeting is sort of a white whale in the ad industry, one that Meta thinks it can crack sooner rather than later. It's also an asteroid potentially that's coming to wipe out the existing advertising infrastructure agency model as we know it. Because how does advertising work now, especially for big brands? Say you're Coke and you have a Super Bowl ad that you need to fill with 60 seconds of content. You're going to go to what is an agency like Wyden and Kennedy.

9:36There's a number of these types of agencies. And you say, give me here's the product that we're pitching. like give me the creative and create this ad. And that's what big brands use. This potentially could wipe out that entire ecosystem, which is why you saw a pretty severe reaction from advertising companies on the stock market yesterday. Publicis, Omnicom, these massive ad players all fell in stock market because in this scenario that Zuck is projecting, which is, you know, they at Meta handles advertising soup to nuts. Then these agencies in the existing advertising industry as we know it does not exist anymore.

10:12And that is a pretty startling fact to think about. The positioning of it is interesting though, because a lot of this is geared more towards small and medium sized businesses who can't afford going to White and Kenny, who can't afford going to Omnicom and saying, Hey, this is our budget. It's millions of dollars. Now go make us something. It's more for like the pickleball shoe company founders who don't have a lot of money to play with, but they do want to create some high quality creative. So Meta thinks that, hey, you can input, hey, here's my shoe. I want it on the background of a pickleball court, and I want it to be in Southern California.

10:46The AI can then go in and make it for you, but then it can also go out and target it because you gave it the budget. So that for small businesses is a big unlock in the advertising game. It was fascinating, though, to see these big advertising firms fall because you would think that they are a little bit insulated from that, but maybe as AI progresses, it will start to eat into those big production budgets. But that's what's right now. The issue is the quality isn't there for someone like Coke. Like Coke doesn't necessarily want to use AI, even though I'm eating my words because they did roll out a fully AI generated ad.

11:18It does seem like it is targeted more towards smaller people who are OK with maybe a little bit of loss in quality in exchange for just what it frees them up to do. Yeah, the big or small companies are all looking to cut costs. And if you don't have to pay a huge creative team to come up with a concept and you can create what they're calling infinite creative, which AI can generate infinite types of this ad to segment based on where people are or what they do, then I could see large companies doing this as well, turning to AI once the quality gets high enough. And we've seen Meta and Google most recently roll out these stunningly realistic video generation tools that can create ads.

11:58You're already seeing AI ads out in the marketplace. I I think what Meta is trying to do will only, you know, further that proliferation. I think there will come a day sometime soon where, you know, every single ad you're seeing is created by AI. Last fall, 10 ,000 people traveled to Randall's Island in New York City to attend Chain Fest, a festival celebrating America's iconic chain restaurants run by The Office actor BJ Novak. And it wasn't an anomaly. According to The New York Times, classic chain restaurants that had been passed over for Chipotle, Cava and Sweetgreen are on the comeback thanks to a nostalgia-fueled desire to recapture that feeling of plopping down in a booth with your friends after a soccer tournament.

12:38Just look at Red Robin. After posting a surprise profit on Thursday, the maker of a criminally underrated burger has shot up 90 % on the stock market in three days, including a 20 % spike yesterday. Another chain that's been riding the nostalgia wave is the Rainforest Cafe. Yeah, remember Rainforest Cafe? Its regional VP said more 25 to 35 year olds want to revisit their experience as kids with their own children, resulting in 32 ,000 people slamming the chains pop up at the Empire State Building last October. Now, Toby, this is no doubt great news for chains, but newfound fame brings headaches and tradeoffs.

13:16At the same time, these hordes of new younger customers are coming through the door. They also must cater to the ride or die loyalists, boomers. And those two groups have very different preferences in what they want from a restaurant. Yeah, these chains are like, oh my gosh, oh my gosh, the young people are noticing us right now. What do we do? Because for a long time, their core customer base has been boomers, been Gen X. Gen Z only makes up 17 % of patrons at sit-down, mid-price, casual dining establishments in 2024. So it's a bit of a risk-reward scenario that these restaurants are weighing right now.

13:49do we go all in and try to cater to these young people that only make up 17 % of our business at the expense of maybe pissing off, for lack of a better word, these older people who don't want to see any changes to menus. They don't want to see any forward thinking. They just want to know what they've been getting for the last decade or so is what they're going to get when they sit down at a Red Lobster, at a Red Robin, et cetera. So it is kind of this thing where they've got this new crowd of people potentially coming in, but it's not necessarily something they can mortgage their whole future and bet fully on young people.

14:21But one brand that has bet fully on young people is Chili's, and it's doing that to great success. Sales at Chili's last quarter were up 31 % over the year before, and it's done that through these viral marketing, very much targeted to Gen Z. But investors have really rewarded that strategy. Sales of its parent, or its stock of its parent, Brinker International has doubled over the past year. So Chili's has fully leaned into the Gen Z. It doesn't really care about its older customer base. We'll see what happens with chains like Red Robin, Carrabba's, California Pizza Kitchen. Those are some other names in that sort of mid-priced casual category because Gen Z, it's unclear whether they get that nostalgia hit like once every few months if they'll actually go back and sit down because there has been a general transformation of dining away from actually sitting down in booths and spending time there to just picking up a burrito bowl on the go.

15:17Yeah, a lot of analysts are like, no amount of endless shrimp deals, no amount of new menu changes will recreate the feeling of sitting down with your grandma after a soccer tournament or something like that. So nostalgia only goes so far. You do have to meet young diners where they're at, which usually is updated in new menu items. Up next, let's talk about Toby's Trends. Tuesday on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity.

15:54This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon, series premiere Tuesday on NBC. Hey, business owners. We know you know the importance of maximizing every dollar. With the Delta SkyMiles Reserve Business American Express card, you can make your expenses work just as hard as you. From afternoon coffee runs to stocking office supplies and even team dinners, you can earn miles on all your business expenses. Plus, you can earn 125 ,000 bonus miles for a limited time through October 29th.

16:30The Delta SkyMiles Reserve Business card. If you travel, you know. Minimum spending requirements and terms apply. Offer ends October 29th, 2025. There are a lot of questions that reveal generational differences. Do you wear high socks or low? Can you afford a house or not? Do you think Friends was a good show? But a new question has emerged that Gen Z answers in a very specific way. Do you want to start a bar tab? To which they often answer, no. And it's that reluctance that I want to talk about on today's edition of Toby's Trends. There is a growing cohort of Gen Z bar goers who simply refuse to open a tab.

17:07Their aversion is the subject of a recent New York Times article that chronicled how many 20-somethings are opting to close out after every single overpriced Allagash White rather than keep their tab running. One explanation for their tab trepidation is that younger drinkers consume less alcohol, so they're fine with one-and-done transactions. Also, tap-to-pay has become so ubiquitous that buying a round falls into the same muscle memory as buying your morning coffee. Mainly, though, they don't like carrying around that extra mental weight. It increases anxiety in me when I leave a tab open, a 26-year-old beer sales rep told the Times.

17:44If we want to move somewhere else, it's a lot harder to close out and then leave. The business angle of this is that Gen Z actually is drinking less than previous generations, with a 2023 Gallup poll showing a 10-point decline over the past few decades in the share of 18 - to 34-year-olds who report consuming alcohol. So the reticence to an open tab is downstream of that. But also, maybe they're just shy. What do you think of this shift in bar etiquette, Neil? Does Gen Z have a point, or do they need to loosen up a little bit? I'm rolling my eyes a little bit. I'm not generally a generational hater, but I do think this is not good bar etiquette, right?

18:23Like, if you know you're going to have multiple drinks at a bar, you are taught to open up a tab. And the reason that is because it is less work for a bartender who is slammed. Every time that you need to close out, they need to go fiddle around, create the check, give it to you, take it back. And that creates just a lot more time and headaches for them. It also increases costs because outside of labor and the actual product, the the number one operational cost for a bar is credit card transaction fees. because every time they swipe your credit card, they're paying a percentage of your tab and a fixed cost to the credit card company.

19:02So the fact that they have to swipe it multiple times when they can just put it on one tab and swipe it once is just adding cost to them, it's adding time. I just don't like it. That's fair. It is on brand for Gen Z though because one, they think that it mentally just stops them from getting too carried away on a night out because every time you have to pay and then close out, that's another drink that's hitting just your mind essentially. like you know it's a very conscious action rather than just having this amorphous tab open. And if you are trying to drink less and if you're trying to be more budget conscious, those are two factors that do lead to this sort of behavior.

19:36That tap to card moment too is something they don't even, a lot of people don't even go out with their credit cards. They still, they just use fully Apple Pay. And that is kind of something that comes downstream of the pandemic, this behavior. So you can see where it arose from, whether you think it's good or bad. Neil falls in the bad category. So do most bartenders who honestly, they get confronted by these hordes of young people who haven't even thought about opening a tab. A lot of people say like, oh, I'll close it later. And they go, what do you mean you'll close it later? That's what a tab is.

20:07You either open it or close it. Just tell me what to do. So some of these bartenders are saying like, we have to politely bully these kids into figuring out what proper bar etiquette is because maybe they just didn't get that conditioning when the pandemic was going on. And so just a fascinating generational difference. Let us know maybe in the comments or in emails where you fall on this because it is sort of a generational divide. Yeah, I'm sure maybe some of the older people will be like, oh, yeah, these kids are doing – this is awful. And then the younger people listening to this might be like, well, obviously I'm going to close out my tab.

20:37I don't want to even think about it. There's been certain times where I've wanted to go and I just couldn't get the bartender's attention to close out my tab. And it's created more headaches. So I'm sure there are loud voices on both sides of this argument. Let's sprint to the finish with some final headlines. Is cream of mushroom a recession indicator? Campbell's CEO said yesterday that its customers are cooking at home at the highest level since the lockdown era of early 2020, perhaps a sign that Americans are avoiding eating out to save money during uncertain financial times. That trend, combined with its acquisition of Rao's pasta sauce, helped sales of Campbell's meals and beverages grow 15 % last quarter.

21:19Toby, is economic growth inversely related to sales of canned soup? It's a fascinating tie, and Campbell's is just a very interesting company in general because they also have a snack division. Think Goldfish. And they said that what the gains they've seen in their soup and food division was offset by losses in their snack division where people are becoming a little more choiceful, a little choosier, and not splurging on snacks like Goldfish, opting instead eating at home, eating their cream of mushroom soup. So Campbell's is a fascinating company that does reveal a lot about consumer preferences and the fact that they're cutting back on discretionary sack purchases and cooking more meals at home.

21:59Yeah, it may be a little bit of an economic indicator. Aldi, the low-cost grocery chain, is in hot water for doing something your middle school teacher would be disappointed in, copying someone else's work. The snack giant Mondelez is suing Aldi, alleging that the grocer's low-cost store brand snack packaging blatantly copies Mondelez's whole flow. It said all these cookie and cracker packaging was likely to deceive and confuse consumers, which is hard to deny when you see some of these side-by-side images. All these Nutter Butter dupe says peanut butter cream-filled cookies instead, but has the same iconic red packaging.

22:34Its Chips Ahoy knockoff also sports a big cookie on the front, framed by a blue background, and its original chocolate sandwich cookies with vanilla filling looks suspiciously like Mondelez's Oreo packaging. Neil, these in-store brands try to push it as close to the line as possible, but this time Modeless thinks Aldi has taken it a little too far. I mean, its wheat thins are called thin wheat. I would say it does push it up close to the line, and perhaps over the line, if you look at a legal challenge that it faced last year in Australia, it was held liable for copyright infringement, but this is the Aldi playbook.

23:11They do their in-store brands, make it look as close as possible to what the brand names that you are accustomed to, but at a cheaper price and hopefully not violate any copyright infringement at the same time, even though in certain cases it has in other countries and perhaps it has in the United States as well. We'll see how this lawsuit plays out. But it's this playbook is working for it because all these is one of the fastest growing grocery chains in the entire country. It has more than twenty five hundred stores now in thirty nine states. They're opening one just down the block from me. So this company is a rocket ship right now, and I don't think a little lawsuit from Mondelez is going to slow its roll.

23:50Moving on, it's not going to be a short King summer if Tinder has any say in the matter. The app is testing a height filter for its premium users, saying the feature is part of a broader effort to help people connect more intentionally on Tinder. If that sounds like a joke, it was just a few years ago. On April Fool's in 2019, Tinder teased a height verification feature in a wink to how important, supposedly, a partner's height was for some people. Now, height preferences are rolling out for real, and critics say it only reinforces Tinder's reputation as a superficial hookup app, which it's trying to evolve away from.