A Tree Grows In Florida

Plus: Who will be the god of the video game console wars? ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

February 3, 2023

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TOGETHER WITH

Good morning and happy Friday.

Wall Street has been unenthusiastic about Meta’s pivot to virtual reality, but it’s really fired up about what the company’s doing IRL: discarding legions of employees.

Shares in the House of Zuckerberg soared more than 23% on Thursday, the biggest one-day gain the stock has seen since July 2013. The move came after Meta’s quarterly results revealed a surprising beat on topline revenue, and Mark Zuckerberg himself declared 2023 the company’s “Year of Efficiency,” thanks to slashed costs on things like… the salaries and benefits of more than 11,000 former employees. How meta indeed.

Morning Brief

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Subway regains success in the fast food market.

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Sony’s set for a fresh offensive in the console wars.

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New York loses an important crown.

Food

Subway’s Sales Climb for First Time in Years as the Company Looks to Expand in Foreign Markets

(Photo credit: _BuBBy_/Flickr)

That’s a lot of $5 footlongs.

After years of declining sales, shuttering stores, and exploitation scandals, Subway has finally seen its revenue go up. And in the wake of that good news, the sandwich chain announced it plans to open thousands of new locations around the world. Eat fresh, McDonald’s.

Cold Cut Combo

Unlike plenty of other top-performing fast food chains – McDonald’s, Starbucks, Burger King – Subway is privately owned, so its business plans are more opaque than the competition’s, but for years, it’s been known that the workplace of “sandwich artists” was struggling. According to research firm Technomic, Subway’s US locations booked $12.3 billion in sales in 2013, but annual sales plunged to $9.4 billion in 2021. On Thursday, the chain boasted that 2022 saw sales bounce by 9.2%.

Subway closed more than 1,000 US locations in 2021 but overseas, people seem hungry for more cold-cut sandwiches. CEO John Chidsey told The Wall Street Journal that Subway plans to operate 25,000 stores internationally in the next 10 years compared to 16,000 today. The goal is to reach $25 billion in sales annually, up from $16 billion.

Despite the hopeful outlook, the Connecticut-based chain has been mired by management and corruption scandals over the past few years:

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A lawsuit filed in Nevada in 2021 claimed Subway is built on a deceitful system of offering an unattainable American Dream to foreign entrepreneurs. The fee to open a Subway is only $15,000, but pretty soon, “business development agents,” which are like regional managers and often bigger franchisees, start hitting small owners with fees for infractions as minor as smudged windows and improperly cut cucumbers — the horror!

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Also in 2021, The New York Post reported Subway’s corporate offices turned a blind eye to a California regional manager, Chirayu Patel, who allegedly underpaid his workers and withheld overtime payments, which added up to $38 million.

For the first time in its corporate history, Chidsey announced that Subway will put deli slicers in every location in the hopes of boosting revenue even further. Normally the chain operates on pre-cut meats.

Don’t Ask Me About My Sandwiches: While the details are still wrapped up tighter than an Italian B.M.T (for the uninitiated, that’s Biggest, Meatiest, Tastiest), Subway could be on the verge of a potential sale. In mid-January, The Wall Street Journal reported Subway had retained advisors to attract corporate buyers and private-equity firms, and the chain could be valued at more than $10 billion.

-Griffin Kelly

Gaming

Sony Bids Farewell to PlayStation Supply Chain Woes

Getting your hands on a PlayStation 5 has been harder than a bossfight in the famously punishing Elden Ring.

The gaming console was released in November 2020 but thanks to pandemic-related supply chain woes were nearly impossible to find at retail price — until now. PlayStation owner Sony revealed on Thursday that it sold more PS5s than ever in the final quarter of 2022, providing some hard evidence that the great PS5 drought is finally coming to a close.

Play Finally Has No Limits — For Real This Time

It’s hard to overstate how difficult it’s been for gamers to score a PS5. Global chip shortages made the console scarce enough, but then consumers had to contend with scalpers programming bots to buy up units as soon as they became available. The newfound availability of PS5s has boosted Sony’s outlook, an impressive feat given the video game industry faced its first downturn in a decade this holiday season.

This is all great news for incoming Sony president Hiroki Totoki, formerly the company’s chief financial officer, who will start his new role in April and seems raring to go. “I am obsessed with growth,” Totoki said during the company’s earnings conference Thursday.

For PlayStation, growth means competing with Microsoft’s Xbox, and the console wars are shaping up to be more brutal than Mortal Kombat 11:

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Microsoft is trying to acquire game studio Activision Blizzard, which would give it control over immensely popular game titles like Call of Duty. The FTC and other antitrust bodies are currently investigating whether the deal would harm competition — and Sony is keen for lawmakers to block it.

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Late last week the drama became unusually public, with Microsoft’s head of comms tweeting: “I hear Sony is briefing people in Brussels claiming Microsoft is unwilling to offer them parity for Call of Duty if we acquire Activision.” He did not reveal his sources.

Cross-pollination: The Last of Us, an HBO series based on a 2013 game published by Sony, has bagged both critical acclaim and blossoming viewership, paving the way for more game-to-series adaptations. Amazon and Netflix are already working on a series based on PlayStation properties: Amazon scooped up the Norse epic God of War while Netflix netted post-apocalyptic robot-fauna safari epic Horizon: Zero Dawn. Meanwhile, Paramount+ boasted last March that its series based on Xbox’s Halo franchise set a new viewership record. What’s next, a Mario Bros. adaptation? Oh, wait…

– Isobel Asher Hamilton

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Jobs

Florida Tops New York New Jobs Report

As ol’ blue eyes told us, if you can make it in New York, you can make it anywhere — even Florida.

For the first time in at least 40 years, Florida tops New York in terms of total jobs, according to new data from the Bureau of Statistics. That’s a tough blow for the Big Apple. Then again, what’s more New York than devoutly following Derek Jeter and Alex Rodriguez… two New York legends turned Florida residents?

“I Heart Fort Lauderdale”

The appeals of the Sunshine State are fairly self-evident. Some 825 miles of beautiful sandy beaches, the Rock ‘n’ Roller Coaster at Walt Disney World, a preponderance of “early bird” menu specials, and, of course, no personal income tax. It’s why the state once known rather morbidly as “God’s Waiting Room” is increasingly cohabitated by grandparents and grandchildren alike.

Tech and finance workers, in particular, have flocked in droves to Florida since the start of the pandemic, finally closing the long-narrowing jobs gap between the two rather opposite states:

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By the end of 2022, Florida owned 9,578,500 nonfarm jobs, a slight edge over the 9,576,100 positions based in New York, according to the Bureau of Labor Statistics.

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Of 51 metropolitan areas with populations of 1 million residents or more, the Miami-Fort Lauderdale-West Palm Beach area had the country’s lowest jobless rate in December, according to BLS, with just 1.9% of the workforce looking for a job.

Hedging: Among the names leading the migration south: Carl Icahn, who has relocated his hedge fund to Sunny Isles Beach; Paul Singer’s Elliott Management, which moved to West Palm Beach; and Ken Griffin’s Citadel, which also moved to Palm Beach last year. Still, as Frank Sinatra would have been the first to admit, “Palm Beach, Palm Beach” just doesn’t have the same ring.

– Brian Boyle

Extra Upside

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Punxsutawney Phil saw his shadow: Bad for warm weather and the economy.

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Beyoncé tickets are about to go on sale, and Ticketmaster might just explode.

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Swipe your way to financial freedom: And no, we’re not talking about matching with some well-to-do single on Tinder. With the right credit card, you can make leaps and bounds when it comes to your finances. Meanwhile, the wrong card may leave you sweating the check on your next date. What do the credit experts recommend? Stocking your wallet with one of these high-savings credit cards, now with zero interest for up to 21 months.

Just For Fun

Highlight reel.

Precision.

Have a great weekend!

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