DOGE, Senate Leadership, & Investors Craving Cava 11/13/24
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Cnbc has quick and easy to understand business news updates at the open midday and close every weekday. Markets, money and more from wall street to main street. I'm cnbc Jessica, adding to follow and listen to C, N, B, C. Business news updates wherever you get your podcasts.

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Hi, i'm c. Nbc producer katy cramer today on squared well, elon mosque has another job. President elect Donald trump has named the world's richest man who had a budget cutting commission on government efficiency. Amon java has the story.

If you're talking about cutting two trillion dollars.

you've got to look at the whole kit and kabo to here. How is business gearing up for a whole new washington former republican house leader turn wall street exact eric cancer.

We see activity dialogue is strong cross sectors now. And I think a lot of IT does have to do with just the sentiment that came with this election.

Plus cava on a tair, the fast casual mediterranean style restaurant blowing house to the streets. Expectations CEO, brett l. Men on demand for what cov is serving.

Our goal is a thousand restaurants by twenty thirty two, which basically implies a fifteen percent plus compound annual unit growth rate.

It's wednesday, november thirteen and twenty twenty four.

Can you define cobol? Do you know what a cobo to is? What the help .

is that squab begins right now.

Stand back to back in three, two, one cubes.

Good morning, everybody, and welcome to school box right here on cnbc were alive from the next deck markets in times square. I'm beck quake along with john and and Andrew.

a sorkin mp, announcing more picks for key roles. Administration name or java joins us this morning from west palm beach, florida with a whole bunch, a whole bunch of new names.

Yeah, that's right, Angel. We're got some inside into president trumps thinking about how he wants his second term to go last night with all these announcements. Let's start with peat hedge set.

He's the fox news anchor who the president elect announced last night he wants to serve as his secretary of defense. He served in the minnesota army national guards. He served, uh, two tours in iraq and afghanistan.

He is the cohoes of box and friends weekend. Ah it's going to be an interesting, unconventional pic and you will follow along in washington to see whether he has the votes to get confirmed. Your instinct is he does have the votes to get confirmed in a republican senate.

But petch sah has you know never worked in a never run a large jorgen ization never worked in the pentagon, so definitely seen as somebody unconventional. He's known on fox and friends for a crusading against what he sees as weakness inside the U. S. Military and a real critic of, uh, gender and diversity and inclusion efforts by the pen.

So he's somebody who is symp antico a with the incoming present of the united states on woke issues that the the department of defense now let's move on to elon musan vivek RAM swami, the former president announcing last night he wants to create a new department of government efficiency you see it's doge. You see what he did there with doge coin. Elan musk and vivek rama swami would co head this new organization.

Take a look at what the former president said last night in his announcement about this organization. He said it's going to exist outside of government. He said they'll provide advice and guidance from outside of government, and will partner with the White house and the office of management budget to drive large scale structural reform and create an entrepreneurial approach to government.

Never seen before. So the key air guys, I think, is the outside of government peace. This is not something that's going to have the force of law. It's not going to have the backing of congress, at least initially, as it's described in this press release last night. And that means I won't have the actual authority to make cuts.

So think of this is more like a blue ribbon commission along the lines of simpson balls back in the twenty tens where they are going to recommend cuts and then it'll be up to congress to implement those cuts. And congress, you know, of course, says its own preferences about spending. That's why since and bulls failed in the end, because they couldn't find political agreement about the right baLance between tax increases and spending cuts.

In this case, though, boyland mosk vivek RAM swami have suggested that they want cuts that go far beyond what since and bowls ever consulted. You know, elan must talking about cutting two trillion dollars out of the six trillion dollar federal budget. Evc ramaswamy talking about cutting a million federal employees.

And he's argued that he has a way of doing that cut, which works around the civil service protections for existing federal workers that prevent them from being fired. His argument, and he's willing to take this to court, he said in the past, is that you can do reductions in force at a at a large scale level inside the federal government. And if you do that, then you get around the civil service protections he's willing to take that all the weapon the supreme court and the supreme court might back him on that, given that is a very conservative court at this point.

Guys, back of you. So amen. In in fact, IT appears that this effort by him and vac c is going to be much broader in some ways.

And I think some people had expected in that broader and that the recommendations are get main compass, all sorts of parts of of the government that couldn't otherwise be touch. You will require congress to touch IT. I think early expected that he might be brought in. This is elon, and try to touch those component parts of the government that could be touched using executive waters in the light, right?

yeah. Now this is clearly a whole of government effort. I mean, if you're talking about cutting two trillion dollars, you're got to look at the whole kit kabo to here. The problem is politically right.

I mean, you know, the reason that these kinds of efforts to find waste raud abuse typically fail in washington is that one man's waste is another man's essential government project. Writing somebody benefits from every single dollar that the federal government spends. All those people who benefit have their voices in washington, have their representatives who speak up for them, who argue for that particular piece of spending.

Every dollar has a constituency. And so the more you try to cut, the more political enemies you make. The interesting dynamic here is just the sort of total sweeping Victory the Donald trump had in the election, the popularity and dynamism of figures like elan musk and vivek RAM swami. These are uh interesting a fascinating so mea social media popular people who are going to come in and approach this in a totally different way that might get sort of momentum of its own to get congress to buy into a lot of that. But at the end of the day, you're going to talk about cutting spending in individual members of congress is districts that affect their and a lot of those boats are not going to be able .

to take the political pain from that. Although and by doing IT this way, IT also means that both those gentlemen can continue to work in their day jobs and hold all the the corporate holdings have continue to keep those. If you work for the executive branch, you'd have to divest all of issues. And that, that raised a lot of questions to what would happen if elan mask wasn't still able to run all of these companies. So I think this answer some of those questions to.

I mean, elan musk has been in public fights with a number of federal regulatory agencies and now that could happen at a time when he is proposing to cut the budget for the S, C, C or the F, A, A or any kind of other large government agency that he's tangled within the past. I think that raises just inherent conflict of interest issues.

And one of the questions here is going to be, know, what kind of authority does this, you know, new quote code department have? It'll be and outside of government advisory board that will make these recommendations. Presumably, the president elected as president will take on board some of their recommendations if they come up with ways to actually cut the federal budget h through executive orders in the life like. But at the end of the day, you you're going to need congress for this and and members of congress generally don't like you know cutting spending that the benefits their own.

Again, we watch the internal process trying to do IT um through washington and designers with simpson and bulls um in the end, they made a lot of recommendations, but they were unable to be effective with IT for those reasons.

May be it's something from the I think .

for this too and .

certainly to .

get right because there .

was not enough right.

And then the two trillion dollars is that over one year, over ten years, do we know the answers to that?

And I mean, we don't we don't know ultimately what he's going to do. But you he's talked about, you know it's a six trillion dollar annual budget. He's talked about cutting two .

trillion out of I an first .

that's the entire depression .

or yeah you can do right it's bigger than the entire exactly right. I mean and the the president aleka said that he doesn't want to cut some of the Mandatory .

spending like on the medicare, medicare.

those things that benefit .

in one year without getting defense budget.

You cut the bone, amin. I yes, where I go just wanted the, can you define kb to do you know what a kaboom is? What the hell is that and .

you use I don't know what a kit is either. Actually.

A K is action. A kid is a collection of things.

I thought a kid was A O that's a kid. Baby, go.

I just got was the last car on the train.

No, I know. It's actually from, I guess, the old for bottle B O T T E L, which is a collection of things. And just to make IT a literal, they had a cubit to kit in kyoto. That's apparently .

how using your noodle.

using you, I come on to find .

out what kit and you know what aim. If we use that, we should probably know what the hell I just decided. I know what the hell is. The funny, the funny word.

Because of, because of these discussions, you've started and got into that right now. I crying, I craning time. Somebody says champing at the bit. It's champing at the bit now. I can't hear IT.

I I really think I should do IT the boomer report and you're almost there. Not quite like .

you probably like IT.

I'm solid gene. Man.

yeah. Are you .

solid? gentle? Thank you.

Food start up. Wonder is buying delivery service, grab ub from europe. Es, just eat, take away wonders can be paying one hundred and fifty million dollars in cash.

IT will assume five hundred million dollars of debt. Just eat, take away. Bug, rub up at a twenty twenty one deal that valued at more than seven billion dollars.

Course, if you've watch the show, you probably know that wonder was founded by former walmart executive mark Lorry. He's a former internet entrepreneur, created diverse and others. This was founded back in twenty eighteen.

That company is building up kitchens that has multiple restaurant ands with dining and delivery options. The combination will allow wonder to tap into grab hub. Fleet of delivery drivers and help you create a meal super time APP.

We're showing some of these vans. I think originally, the idea was that was going to be vancsik. The drove to your house and made the dinner very fresh there. They have got away from that. They're into this idea of like the super restaurant locations where you can die. But most of us for take out but they only do take out for really big name brands and good food and a small circle because they want the food to be warm. When he gets there.

I understand you, you know, I understand you berates, I don't understand. Sending the whole kit and cobol to you have, well, we were showing the vance.

that was the only concept. I don't think that's what are doing now this gotten away from IT because it's expensive and you could only do that. Member, they were starting out out by your house and really ritti harries .

to see all the leaves and leafy, short, very verdant. They always called that leafe.

I think he must live out there because that's where he was starting the service.

It's even if you get a meal made for you by the staff away from the main part of one, that one on the beach once you know saying IT a risk, it's like you can't afford if you can, you just get customers. I think that's what bring the food to me, don't bring the .

prepared and that's what they ve learned.

I think we're just used old video, the whole kitchen sick. Okay, where's that from? And the whole kitchen sink, where is that?

Where that from? me?

Where's IT from?

Why the sink?

This will be next dates to .

the early one hundred.

Why the sink? We don't know.

I haven't .

got there yet.

Coming up the test of trumps dominance from cabinet announcements in the mean sounding department of government efficiency to the first choice for a new republican senate leader in nearly twenty years, eric canter, who knew his way around capital hillis, republican leader in the house and now works for the ema molester company.

joins us next. We're gonna have now a much more sensible regulatory outlook and IT matters. Incentives matter to business, to investors. That does.

C N B C exclusive home depot C E O ted decker on the home improvement in the street, the state of the economy and consumer spending trends stay ahead of the market square box tomorrow. Six A M B third C N B C.

Welcome back to square pod from C, N, B, C. Here's Becky que. You are watching .

squad box right here on C, N, B. C. I'm bea. Quick along with joe corn and Andrew ross scan and among today's top stories, electron tapping, elon bus and former presidential candidate the veck roa swami for what's being called the department of government efficiency, or dodge for short, that initiative is expected to work outside government to provide guidance. Members of congress will probably end up getting a say on any recommended spending cuts.

A very busy day I had for president elect trump s in the meeting with president biden at the White house this morning that wants to happen about eleven and this morning how speaker mike Johnson also expected to meet with trump in, will be finding out about the leader that the president elect will be dealing with in the senate.

Hopefully we learn that today, the race to exceeded, which mcconnell said to conclude today in us, that now on all of this form republic's major leader area canner. He is now vice chairman and managing director at modest and company. Good morning to you.

Good morning, and great to be here.

It's great to I want to hear all of your thoughts about how this is going to impact business. But just the extent that we were talking about what's going to be going on in washington today, do you have A A gamble here on on thon? Do you have a view about rick Scott know everything is going out there and everything else?

I think I think there are uncertainty comes. In fact, there is twenty seven being, I think, the magic number that one has got to acquire in terms of votes. And if rick gots in there, he could be this pooer where they go to second round.

So I think that that is my sense, come looking from the outside. And any of these leadership races, typically even in the house, outside forces don't really make a lot of difference. And let's see if we are in a new era now because I do think that .

even when the outside force is is down .

to time yeah I mean, that's what i'm saying. That is the fact that there have been protest from what I read and here on um at centers offices in their home. I mean, that's like that is new stuff. I mean .

because .

it's just right.

I think I think this is a clear signal beam. But I think also trump realizes you know this has just has always been inside his game and not sure he can really important ence IT because at the end of day it's a secret ballot so now how secret IT is after the vote yeah .

what there been a couple of senators who have said that they're going to vote for rix guy.

what you like some I like marker, but that's understandable. It's it's a .

fellow state ser part of the country and there's .

also people restrain and there's a signal that's been sense. So I do you think that you we'll see how plays out, my god, is IT. It'll stay where in the sort of more traditional lane really not .

talking about um this administration, by the way, on the finance side of IT, I assume you were spending a little bit time trying to figure out or think through who may ultimately the treasury secretary who may run commerce.

It's it's a very on your list. It's a very realize I think what what present trump has demonstrated is not too distant AR from what has gone on traditionally with modern day president. I mean, they want people who are loyal to them.

They want people who can execute on their agenda. That's exactly what's happening here. And so I don't think it's so dish this process now.

Do you think we're talking about latte, nick? Do you think we're talking about scot basson?

Who what's the lean I have I have no ability to see in as to who's really in the league right now. But I think there's one thing clear that we are about robust growth, and that's where the focus is gonna.

You are you absolutely sure can help your business and will tell. And i'm thinking about Peter yesterday or is who now has a real job I like the I like actually matters.

He was in .

a good mood. I sort to god he look like he was in a dingo. The democrats s way, but I will send him you are happy.

you are happy, reluctant expectance .

of the fact it's .

you listen, same thing with most. What we have seen is typically my short time on wall street is getting longer now is that typically washington is a sad deal, right? And its people are, you know, figuring out how to work around IT.

But I do think that over the last sort of six, eight weeks, there has been a real pause to see what's gona happen. And now we've already we've all seen the return to some of the market of sponsors. Now we've all seen, you know, sort of people.

Now I think, a breath of fresh hire on the regulatory front because you think about the changes that are in store at the ftc, there was nobody like lean icon. And I think that was more individually driven with support from the bad White house that will be gone. And we're gonna have a much, I think, more clear visibility on what regulatory prospects are in m. In I mean, yes, trump has been and was a little bit active in that. But I think IT was terms .

in terms of where the where that deal activity comes from. Besides, by the way, just going to you know this is a lot of great fees that are come to the investment banks, and you're seeing a lot of .

the banking businesses .

that are public ffa fly on the back of that news so that we know the question is you look at some of the smaller banks, you say it's going to happen in financials because you were four thousand banks in this country, they're going to come together. Do you look at energy? Do you look at by the clean energy? There might be some companies that are actually struggle. They may need to merge for other reasons.

Hundred percent. I think I think all of the above and we see um you activity dialogue is strong across sectors now. And I think a lot of IT does have to do with just the they came with this.

What what are you pointing at me?

OK, what about I like you, an agreement that we we're gonna a have now a much more sensible regulatory outlook and IT matters, incentives matter to business, to .

investors. OK big tech be able to make acquisitions. Do you think that in the office? Because that's been one of the places where it's been less clear that even in a trumped administration, if apple, if google, if amazon wants to make a big acquisition or even, by the way, Frankly, a small acquisition that IT is chAllenging. I asked, by the way, because there's even questions about whether they should be in media companies.

for example. And they like, look, I I think first of all, the just IT starts with the trump administration has individuals there who are business people that is very different from what's in the administration. Now where you have idealogues, you have academics and they have never been on the side of trying to make a decision, run A P nl.

So you start there right and and I do think that when you look at the overall discussion about m na and the option of a for a founder for someone like um who sits in silicon vali, many of whom now are very favorable towards a trump regular ory framework, m na is is an option, right? It's an exit option. IT helps our economy and its dynamism in the full of capital to its most efficient. And so yes, I think overall the element has shifted. Who knows in particular instances .

because the reason as to what you do here occasionally, even from even from president trump about google to say I want fair trade, I don't I don't want to break up the company necessarily. But then I wonder about for the last couple years you've been OpenAI make these partnerships with microsoft in a more Normal world. They might microsoft have bought an OpenAI, right? An anthropic might have been bought by an amazon or a google, and whether those type of things can happen in this new universe.

So less N I don't think I think where are .

they is a .

different question, right? I think again, there IT will not be this construct that lena con JoNathan kern ultimately was Elizabeth ren who went enable these individuals to go sit in those seats and and adhere to a framework which was completely anathema to what MMA is about. So I think we've turned the corner on that.

We're going to see much more, uh, I think, uh, conventional or traditional approach. I'm not saying that you're gonna have you concentration of power that is going to school competition? No.

we got to go. I just have one last one for you. A A different, but, uh, Petered. A who is now going to be up to run the pancake on. I don't know if you want myself for jail or Becky to run the treasury.

I mean, I guess we could you know I know a little, but I am not ready for treasury.

No, we just do that. You know we just played on TV.

The listen everyone in this table has been to A A respectable um has respectable .

education .

and but .

i'm not holding .

that against.

Not holding .

that is .

interesting pic again. And I go back to my original statement. In modern day, presidents have insistent al loyalty. I think that what we're in store for in this administration is one that's being heavily driven out of the west wing. I think when you look at not just these appointments but even in execution, IT will be very driver.

And I think the president.

well, thank you for being appreciated.

Thank you.

Our producer thinks you actually have bought a kitten kbb to for your cat. It's like a sweater, a kitten kbb to. No, I have not.

That would be a good name for if you were a closer for cats. Can kb might be good. Me might be a good name coming up.

folks. I don't know where to go with this.

Next on the pod, fast casual restaurant cava has seen a stocks surge of more than four hundred percent since its IPO. Last year, we talked to CEO brett shaman actually .

set of the team. Look, this is not the destination is the next chapter in our journey. And if we keep our heads down, focus on our mission to bring our health and unity to food, that over time, that stock Price will go up and it'll take care of itself.

Squared will be right back.

C N B C exclusive home depot C E O ted decker on the home improving industry, the state of the economy and consumer spending trends stay ahead of the market school box tomorrow six A M E R C N B C.

You're listening to school pod with joe kernin beckie k and Andrew ross sarkin .

up an anger q take .

a look at this because shares of cava, they are surging just this morning again and they're up more than four hundred percent. You're ready for this from last year. Um you probably wish we told you that a year ago, uh, the fast food jane reported stronger than expected third quarter profits and revenue raised its fully your guard and same source cells jumping eighteen percent.

Talk about a growth story to us right now to break down the results. Copco founder, oread show man, there I ask, do you look at the stock Price and what's going on? No, like inside the head office, how I as soon there's a lot of smiles.

well, we tell the team start going to go up and down every day and the night before the IPO actually set of the team. Look, this is not the destination is the next chapter in our journey. And if we keep our heads down, focus on our mission to bring heart health and community to food that over time, that stock Price will go up and it'll take care of itself.

OK talk about taking care of itself. What is the growth story from here? Because that is the big question. Obviously, there is a folks betting that the growth stories can continue and continue a pace. But when you see a stock move as far as it's moved, there's others to say you can this keep going at this rate?

yeah. Well, first, I want to give credit to our eleven thousand eight members strong, who deliver on that mission every day to bring heart, health and humanity to food. Our goal is a thousand restaurants by twenty thirty two, which basically implies a fifteen percent plus compound annual unit growth rate. This year, we've been able to exceed that a little bit. We raise our guidance to fifty six to fifty eight and new restaurants so close to the nineteen eighty percent, and we give a preliminary for next year of at least seventeen percent plus given the help and strength of our real state pipeline.

When you look at a thousand restaurants and what that looks like, I mean, there is a moment, often times where you get into this kind of period where people start to question whether you're canti zing business, other restaurants, where is the what is the the magic number where IT gets a little bit more complicated for you?

Well, we see that runway extending every year. And I think the thing that gets us most excited, I think, has investors excited. We have so many ways to win. When you look at the the broad appeal of our medicine cuisine, the consistency of performance across the country, whether it's brian park here, a manhattan or backbone, boston or mobile and alabama, we just opened a merum in kansas. And then when you look at the top dessel of our restaurants, it's everything from a suburban and shopping center that we have an n cap location, uh x urban small town with a pick up by car, drive through digital lane, free standing building, a college Jason side or an urban location with residential. So IT allows us to cast a wide net without cannibalizing existing locations.

We did here about you pretty early on from Steve case when he was here, he and ted the answers. I think that was maybe ted who brought IT to Steve. I think if i'm remembering this correctly um but they identified you really early and IT it's great food.

It's healthy. You feel like you're eating well when you're getting IT yeah it's good. It's good food. But what's the mote that keeps others from copying you? Is a getting big enough that it's too hard to take you on?

yes. So we believe we are the category defining brand, and we are in many ways, creating the next major cultural cuisine category. Medicine, ian, known over the years, we've invest in significant infrastructure. So whether that are you? Over ninety thousand square foot production facilities where we make our fresh dips and spreads. So just like my cofounder shift he used to make to zeki back in the original cover mesi restaurant that the teddy once is used to, to go to with fresh deal, fresh cue, come over hour, making a large scale batches, taking that complexity out the four walls of our restaurants and delivering IT to you with the quality, consistency and cost effectiveness that we're able to produce. And then our technology investments, our digital oral ecosystem and most importantly, our human capital investments, our people and our culture that we've built this brand on for the last fourteen years, delivering that matters in in hospitality and that, meaning cuisine.

What kind of pricing power do you think you have right now? And what's happening in terms of food costs and the like, we you talking about inflationary pressures.

yeah, we see about low single digit inflation on the the food beverages packaging side. But I think what's been interesting is as we've been able to leverage this model, so is a very powerful unit economic model. You think of the walk, the line format is the assembly line production model.

So very productive from a labor's standpoint allows us to invest in food quality and invest in our team, invest in our guests. So if you go from the end of one thousand and the end of twenty three, we only took Price about twelve percent or in that time period when CPI was up almost eighteen percent and the department of labor noted fast food was up over thirty percent. At the same time, we've been able to expand restaurant level margins.

So this year, we only took less than three percent Price, again, trying to invest in our guest. And I think that's what you've seen drive the traffic growth. So we think we have pricing latics, but we're not necessarily looking to take IT just .

because of what percentage of the business is now walk in versus pick up via mobile. Yeah, I think this is really interesting.

So we've been taken a bit of a contrarian point of view where we think the device of the dining room is greatly exaggerated. But that is not an either or. It's an and we have great digital, convenient channels, which about thirty six percent this quarter of our revenue came through those channels. But we have great physical, experiential channels where you can walk down the line, have that interactive experience and share a meal in our dining room. And that's about sixty four percent .

of our goes as as at odds. The reason I ask is anything is one of the great chAllenges star box is now faced with, right? If had such success with the mobile ordering, but as a result, you walk into those sorry if you are, you are like a second class citizen in some cases because the if you ordered online first, you're winning this sort of competition of who's going to get the attention of the buried a. How does that work where you guys well.

I think that's why you've seen the growth of fast casual as the industry for the last twenty years, and you've seen other segments like legacy casual dining shrunk because our format and the way we're oriented with our physical spaces is able to deliver both those digital and physical channels without creating a lot of that friction. I think brands are trying to figure that out many different ways, whether leveraging technology, automation or the design of their restaurants to be able to um basically what we've tried to do is create a multichannel form A P P, and give you the the control of opting in new year channel choice depending on what your needs state is and where you are in that moment.

right? Want to thank you to come in this one. Congratulations been held a run.

Thanks for having.

Thank you.

Thank you. And that is the pod for today. Thanks for listening. School box is hosted by joe turnin, backy quick and Andrew ross sorkin. Tune in weekday mornings on C, N, B, C, at a three hour show.

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We are clear.

Thanks, guys.

Cnbc has quick and easy to understand business news updates at the open midday and close every weekday markets, money and more from wall street to main street. I'm cnbc Jessica, adding to follow and listen to C, M, C. Business news updates wherever you get your podcasts.