Restaurant Burn Rates

Plus: US regulators want to make American kitchens less gassy ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

January 10, 2023

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Good morning.

Now that Bob Iger is back on the throne, he wants his loyal subjects to experience the magic of his kingdom at least 4 days a week.

The reinstated Disney CEO has instructed his corporate Mousketeers to return to their pre-Covid desks for 80% of the work week by March 1, according to CNBC. While Iger did not go Full Musk and demand that employees come in 5 days a week or not bother working at Disney anymore, he made it clear that he is not Goofy-ing around. “In a creative business like ours, nothing can replace the ability to connect, observe, and create with peers that comes from being physically together,” he wrote. “Nor the opportunity to grow professionally by learning from leaders and mentors.” Disney is still where dreams come true, except for those who dream of forgoing the daily commute and working from home.

Morning Brief

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Canaccord would like to invest in growth… in private.

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The World’s Best Restaurant burns out.

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America could 86 natural gas stoves.

Investment Banking

Canaccord Genuity Executives Make Take Private Bid

The leaders at Canada’s largest independent investment bank would prefer not to be disturbed in public.

On Monday, a cadre of c-suite players at Canaccord Genuity announced a take-private bid worth roughly $843 million, betting they’d have better luck with a growth-focused investment banking business away from the prying eyes of a volatile public market. In a tumultuous global economy, we’d call that a reasonable expectation of privacy.

Private I (Banking)

It should be no surprise that a firm focused on growth companies would struggle in an era of rapid inflation and rising interest rates. Canaccord, which has more than $96 billion in assets under management and specializes in IPOs, is no exception. The firm’s share price has tumbled roughly 43% in the past 12 months as net income plunged around 50% year-over-year. In June, Canaccord said its largest shareholder expressed concerns that the firm was undervalued by public markets and said it would support a take-private deal. Now, Canaccord’s top managers are heeding that call and taking advantage of the sinking stock to make a timely take-private bid, hoping to turn crisis into opportunity, or at least less of a crisis.

CEO Daniel Daviau, Chairman David Kassie as well as around a dozen other senior executives — who hold a collective ownership stake of 21% of Canaccord’s shares — are now seeking to take the company off the Toronto Stock Exchange. To do so, they’re willing to pay up, though it’s uncertain their offer is enough to convince every stakeholder:

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The group’s bid, announced at C$11.25 per share, marks a premium of over 30% on the close price Friday and over a 40% premium to the volume-weighted average of the past twenty days but it’s also just a minor increase from Canaccord’s 2014 IPO price of C$10.25.

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However, an independent committee of three board members has yet to recommend the offer to shareholders based on a preliminary analysis from the Royal Bank of Canada, which the committee hired as an independent financial advisor.

In Large Part: The bidding group said Monday that Canaccord’s largest outside shareholder, which it did not name, supports the take-private offer, and also announced that the New York-based HPS Investment Partners has agreed to provide over $615 million in debt financing to complete the deal. Who’s the mystery shareholder? Lo and behold, Canada’s top newspaper, The Globe and Mail revealed on Monday that HPS is Canaccord’s largest outside shareholder. What can we say, investment bankers are gonna think exactly like… investment bankers.

– Brian Boyle

Restaurants

The World’s Best Restaurant Is Closing

(Photo credit: Håkan Dahlström/Flickr)

If you’re craving reindeer brain custard or ants-covered shrimp, we’ve got bad news for you.

Noma, a three-Michelin star restaurant in Copenhagen that has claimed the title of “World’s Best Restaurant” five times, announced that it will close its doors in 2024, pivoting to an e-commerce model and the occasional pop-up event. Founder and head chef René Redzepi told The New York Times it is time for high-end restaurateurs to “completely rethink the industry” citing the intensive and oft-times abusive work culture abounding in professional kitchens.

Eat Your Heart Out

As of July 2022, diners at Noma could expect to spend somewhere between $420 and $700 on a meal, depending on whether they would like wine. The restaurant has also been subject to unflattering media coverage of how it treats its staff, who kept diners’ plates sparsely topped up with locally foraged ingredients – someone had to find all those ants. Having previously relied on a crop of up to 30 unpaid interns (out of 100 total staff, per the Times) Noma began paying its interns in October, which added around $50,000 to its monthly costs.

Redzepi denied that the added strain of paying interns had prompted his decision to shut the restaurant. Still, he did say the modern fine-dining business is unsustainable both “financially and emotionally.” In that sense, Noma may have a little something in common with a restaurant known not for buttermilk and scoby but for Quarter Pounders with cheese. Like Redzepi, the boss at McDonald’s also believes his food empire needs fixing:

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McDonald’s CEO Chris Kempczinski told employees on Friday to expect corporate job cuts and reorganization as the brand focuses on opening even more restaurant locations. He insisted this wasn’t because the company is cutting costs, but rather re-tooling its current structure, which he described as “outdated and self-limiting.”

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Much like Noma’s sudden intern expenditures, McDonald’s and its fast-food brethren could soon face a reckoning on the cost of labor in the US as 26 states are hiking their minimum wage — plus a court case in California could set the state’s minimum wage for fast-food workers as high as $22 per hour.

Gour-mate: As Redzepi bids his interns farewell, a new fine-dining champion has emerged in the form of 34-year-old Eric Finkelstein, who broke the Guinness World Record for most Michelin-starred restaurants visited within 24 hours, as chronicled in a Washington Post feature. Finkelstein used a finely-tuned spreadsheet plus a string of witnesses to visit 18 New York eateries, where he spent a total of $494 before tax and tips. That averages out to $27.40 per stop — no dollar menu to be sure but it’s still a rounding error at Noma.

– Isobel Asher Hamilton

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Energy

Federal Agency Could Ban Gas Stoves to Avoid Health Risks

Gas stoves are on the front burner for US regulators.

With research linking natural gas exposure to childhood asthma, the US Consumer Product Safety Commission is mulling a federal ban on gas stoves, Bloomberg reported.

But I Thought it Was All Natural

While natural gas might be the ideal way to prep your next batch of scrambled eggs — Gordon Ramsay says it’s all about going on and off the heat, you muppet — the burners are known to release unhealthy levels of nitrogen dioxide, carbon monoxide, and fine particulate matter, which the Environmental Protection Agency and World Health Organization have said are linked to respiratory illness, cardiovascular issues, and cancer. The effects are worsened without proper ventilation like a functioning hood. Recent studies found that more than 12% of childhood asthma cases can be attributed to gas stoves.

But the market might be ahead of regulators as natural gas stoves are already fading in popularity. Electric stovetops, whether they be fancy ceramic glass or just four hot plates on top of an oven, are used by roughly 60% of the US, according to the Energy Information Administration. And now, just like cars, Washington wants to make kitchens 100% electric:

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In a letter to the Consumer Product Safety Commission, Sen. Cory Booker and Rep. Don Beyer called gas-stove emissions a “cumulative burden” on Black, Latino, and low-income households.

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Fossil fuel lobbies, which stand to lose if the ban goes through, have been known for some shady practices. In 2021, Mother Jones reported how one tactic of lobbyists is to go on Nextdoor community pages, pretend to be a neighbor, and then rant about how their local politicians are looking to ban natural gas stoves sowing dissent among community members. And now trade groups are asking the government to focus less on banning natural gas and more on stricter ventilation protocols.

It’ll Cost Ya: Outside of cooking, natural gas does have another advantage over electricity – it’s cheaper. The low cost of natural gas has been a sigh of relief for Europeans caught in the middle of one of the worst energy crises in history thanks to Putin’s invasion of Ukraine. Nevertheless, cities like Los Angeles, New York, and Seattle are leading the way in banning natural gas appliances in new homes and buildings, and California, where natural gas produces 5% of the state’s air pollution each year, is also on track to ban furnaces and water heaters that rely on the energy source by 2030. The worry is household budgets will be cooked.

– Griffin Kelly

Extra Upside

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Warm Winter: Mild weather is ruining Putin’s energy squeeze on Europe.

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NY nurses want fat purses: 7,000 staged a strike on Monday.

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Just For Fun

Perspective shift.

Scenic drive.

Written by Isobel Hamilton, Griffin Kelly, and Brian Boyle.

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