Postcards: When Life Takes Away Lemons... (And Republic Risk)

Sometimes the simplest business decisions will enhance shareholder value. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: When Life Takes Away Lemons... (And Republic Risk)]( Sometimes the simplest business decisions will enhance shareholder value. [Garrett {NAME}](floridarepublic) Aug 7 floridarepublic   [READ IN APP](   [Republic Risk Readers, Go Here to Today’s Update.]( --------------------------------------------------------------- Dear Fellow Expat: Greetings from Dunkin Donuts on Harford Road outside of Baltimore. When we bought a new car in February… we paid for the insurance policy that covers everything in the vehicle for five years. Given that there are “who knows how many” semiconductors in that car… I would rather not have to spend $900 on a headrest… But there was one thing that the policy didn’t cover. The windshield. And the day after we bought the car… a rock hit the center. From there, over a period of months, the crack stretched across the front. Over the weekend, it was all you could see while driving. So… I’ll enjoy spending $900 on a windshield instead. I’ll be at this Dunkin Donuts for three hours… When I ordered a large iced tea, unsweetened with lemon… the woman shook her head. “We don’t have lemons anymore...” Ah… I see. I’ve seen this play before… [Upgrade to paid]( Saving Money on the Margins I’ve always loved Chipotle. Not just the food. But the company. When it first arrived in Chicago as I was heading into college, I was blown away by the simplicity. I wrote three papers in grad school about their operational efficiency. It was staggering how much volume they could deliver and how much food they could process by adding one additional team member to their lunch operations. I would sit in a Chicago Chipotle off Clark Street at lunch and watch the ballet as the line stretched out the door. And how quickly they got everyone in and out. I've discussed McDonald’s and Apple in recent days… and Chipotle will soon receive the treatment. But I want to stress something critical. Chipotle is a company that centers around “Fresh ingredients.” Chipotle has built its brand on the promise of using high-quality, fresh ingredients, often sourced locally or organically. This commitment to "Food with Integrity" has set it apart from other fast-food chains. The company has always been transparent about its food sourcing and preparation methods, appealing to health-conscious and environmentally aware consumers. But this core driver that makes it successful can also be a financial detriment. Why? Because food waste is the enemy of a business like Chipotle, which owns all its stores and has a massive supply chain. This is why sustainability is so critical. It’s good finance… Now… think back before the pandemic. In 2018, Chipotle announced a major program to cut costs and food waste. They stirred a lot of attention because they got rid of one thing that customers abused: free lemons… If you recall, Chipotle used to leave cut lemons out by the soda machines. I’d watch people put six or seven lemon slices into a bag… and walk off. The cost-cutting initiative saved millions a year… and boosted that profit margin. In this environment… I want you to pay close attention to the restaurant industry… because it’s facing a lot of pressure. There are going to be many casualties beyond Red Lobster. Don’t be surprised to see “cost-cutting” programs on the horizon. [But be ready for opportunities on names like Domino’s (DPZ) and Darden Restaurants (DRI)]( heading into next year. And… yes… Chipotle (CMG). Now then… it’s gonna be a rather interesting day in the markets with volatility falling… Maybe I’ll get another iced tea… Stay positive, Garrett {NAME} Secretary of Lemons Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()