PayPal thinks it can make Stablecoin less rickety.
On Monday, the company announced it’s launching a Stablecoin, a type of cryptocurrency that is pegged to the US dollar and bills itself as nice, reliable, and backed up by cold hard cash, unlike anything else you might expect to find in the crypto world. Of course that hasn’t stopped other Stablecoins from imploding spectacularly in the past, but trust us, this time everything’s going to be fine.
Morning Brief
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Wind energy’s first white squall.
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That’s going to cost you a lot of hamburgers.
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Corporate travel ain’t flying high.
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Energy
Wind Energy Faces its First Crisis as Costs Mount
(Photo Credit: Rabih Shasha/Unsplash)
It’s been anything but a breeze for wind.
Siemens Energy, a major German player in the wind energy industry, told investors on Monday the losses at its wind turbine division will likely climb higher than previously thought. This comes amid broader financing turbulence in the wind industry, according to a report in The Wall Street Journal. One executive at energy company Equinor didn’t mince words talking to the WSJ: “At the moment, we are seeing the industry’s first crisis.”
Blowing in the Wind
The cost of wind energy has fallen dramatically in recent years, Stephen Thomas, energy policy expert and emeritus professor at the University of Greenwich, told The Daily Upside. As an example, he pointed to the UK’s first major offshore wind farm contracts, which began in 2014 and were paid around £140 (approximately $224 at 2014 exchange rates) per megawatt hour. Indexed to inflation, that cost is now down to around £40 per megawatt hour. “I was frankly bewildered [by] the way prices came down,” Thomas said.
But wind projects represent a higher level of investor risk compared to good ol’ fossil fuels. “The only way renewables […] can be built is with contracts that take them out of the market and give them a guaranteed power purchase price,” Thomas said, adding: “if their costs of construction are higher than the ones their bid was based on, they are stuck with the contract price and will at best make less profit than expected, and at worst make a loss.”
Now, with a clutch of problems including abiding inflation and supply costs going up, some wind projects look like they might stall:
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According to the WSJ,at least 10 major offshore wind farm projects in the US and Europe worth a collective $33 billion have run into some kind of difficulty over the past few weeks.
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Siemens reported a loss of €712 million ($783 million) in 2022, and previously said it expected 2023 losses to be at most a few hundred million more. For its Q3 however, it reported a loss of €2.9 billion and CEO Christian Bruch described technical difficulties with its wind turbine blades as a “massive setback.”
Be There And Be Square: It’s probably not a huge surprise to our readers that bigger wind turbines create more energy, but exactly how the increase in energy production scales is pretty astonishing. “The power goes up with the square of the blade length, so if you double the blade length you get four times the amount of power, and if you triple the blade length you get nine times as much power” Thomas said, adding: “so there’s a very strong incentive to get as big as you possibly can.” So stop tilting at windmills and build bigger ones!
– Isobel Asher Hamilton
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Food
Fast-Food Restaurants Are Fighting the To-Go Trend
In the movie The Founder, future owner Ray Kroc orders his first hamburger at the original McDonald’s, asking the cashier, “Where do I eat it?” The confused employee responds: “In your car…at the park…at home. Wherever you like.”
Today, fast-food customers are still eating anywhere — except the restaurants themselves. To make in-store dining more appealing, companies aim to spruce up local franchises with renovations, The Wall Street Journalreported Monday.
Take a Seat
Due to the popularity of delivery apps surging during and since the pandemic, dining in is falling out of fashion. Dine-in customers represent less than 10% of visits at US McDonald’s, and 14% across all US fast-food restaurants in the first five months of 2023, the WSJ reported. As a result, McDonald’s and Burger King have shifted toward to-go and drive-thru services. But they’re not giving up on a facelift for many outlets.
A Burger King spokesperson told the WSJ that a remodel brings an average sales surge of 12% in the first year. McDonald’s pledged billions of dollars in 2017 to help franchisees outfit their locations with attractive seating and digital kiosks that operate like a pseudo-table service portal — out with the burger seats and more like the modern feng shui of an Apple store. However, franchise owners often end up covering a lot of the bill:
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Even for owners with an affinity for the dine-in experience, renovations can be quite expensive. McDonald’s franchisees are required to renovate their dining rooms, front counters, and bathrooms every decade, which can cost as much as $750,000, the WSJ reported.
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In 2018, a group of franchisees formed the National Owners Association to push back on remodeling requirements. They hope to limit the once-a-decade cost to $300,000.
Country Kitchen: McDonald’s renovations aren’t one-size-fits-all, and corporate headquarters will work with owners with bold ideas, like Wendy and Rick Lommen, who own a location in Wisconsin Dells, Wisconsin, that was featured in Architectural Digest as one of “The 13 Most Beautiful McDonald’s in the World.” It looks less like a quick burger stop and more like a log cabin, stocked with wood carvings, deer antlers, and a large arcade. Perhaps a little cultural and geographic flair is the key to getting in-store customers back.
–Griffin Kelly
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Travel
Europe’s Business Travel is Still Grounded
Just do it on Zoom.
It’s been more than a year since Europe lifted pandemic restrictions, but business air travel is still lagging on the Continent, and some airline executives fear it might never return.
I’m Not Leaving on a Jet Plane
Airlines love business travelers because they’re worth more than a bargain flier who buys a ticket months in advance. Business travelers often book on short notice, so even if they purchase an economy seat, they’re likely paying a lot for it.
Unfortunately Europe’s biggest airlines haven’t felt the surge of last-minute business tickets:
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Deutsche Lufthansa, Europe’s biggest airline, had hoped for a 90% rebound in corporate travel by now, but so far, it’s recovered roughly 60% of its pre-covid business, Bloomberg reported. British Airways and Air France are feeling the pain too, with the latter’s CEO telling Bloomberg that corporate travel in the French domestic market might never make a comeback.
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With budget cuts and carbon emissions in mind, corporate air travel is on the chopping block for many companies. Bloomberg reported that Zurich Insurance Group intends to keep staff flying 70% below pre-pandemic levels.
Don’t Look Up: US airlines aren’t flying steady either. While many have seen helpful earnings from “revenge travelers” — those planning trips to make up for lost time during the pandemic — corporate travel is still sluggish. Reuters reported that Alaska Air’s business bookings have been 25% below pre-pandemic levels. And a recent study from Deloitte found that even if there is substantial corporate travel growth in the next year, it “will come in an environment of higher airfares and room rates, meaning that the number of trips will likely still lag further behind.”
–Griffin Kelly
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Extra Upside
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Mamma Mia: Campbell plans to buy Rao’s sauce maker for $2.33 billion.
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Take me out to the ballgame: Warner Bros. Discovery plans a Max sports streaming tier for MLB playoffs.
