🍟How McDonald’s came back

In the mid-2010s, McDonald’s — or as it’s affectionately known in Australia, Macca’s — was being dragged by customers and investors alike.

Poor restaurant upkeep, an overly complicated (often unhealthy) menu, and bad PR were chipping away at customer loyalty.

At the same time, the rapid rise of food delivery apps and fast-casual restaurants were bringing new competition to the field.

A turnaround started under CEO Steve Easterbrook

According to a recent article from The Economist, Easterbrook, who took over in March 2015, rolled out a playbook built around simplicity:

• Refocus on franchises
• Pare back the menu

In November 2019, Easterbrook was fired by McDonald’s for violating a company policy regarding office romance. The contentious dismissal is ongoing, but the company’s new CEO, Chris Kempczinski, has stayed on Easterbrook’s course.

Franchises

In 2015, 82% of the chain’s ~39k restaurants were franchises. By the end of 2019, that was up to 93%.

McDonald’s typically owns the land of its franchises, providing it with more consistent rental income and royalties. This also incentivizes the company — not just its franchisees — to invest in refurbishing its restaurants.

Menu

On the menu front, the company made a few notable changes:

• The Big Mac and Quarter Pounders that long defined Mickey D’s have returned to prominence.
• The rollout of the all-day breakfast menu pleased long-time customers.
• Most recently, it’s ramping up efforts on hot food trends (chicken and plant-based items)

Collectively, these changes have paid off: In 2019, the chain’s revenue topped $100B — and it managed to generate 43% margins in an industry that doesn’t allow for much wiggle room.

Since Easterbrook’s takeover, McDonald’s has seen its market value rise from ~$90B to ~$160B.

How the fast-food giant has adjusted during COVID

In 2020, Kempczinski has stuck with the strategy of his predecessor and double-quarter-pounder’d down (sorry) on customer experience.

Pre-COVID, the company acquired the AI upstart Apprente to automate ordering and upgrade its kiosk technology. This move has proved to be a game-changer as the pandemic has upended indoor dining.

In other words: Macca’s is backas.

Jeff Bezos ominously famously said, “Your margin is my opportunity.”

Well, there’s a whole lot of margin in the ~$500B prescription drug business — and Bezos just jumped into the arena with Amazon Pharmacy, a home delivery service for prescription meds available in 45 states.

The timing of the launch — which comes in the midst of new winter sheltering measures — could not have been better.

Laying the groundwork for years

According to CNBC, Amazon ramped up internal discussions for a pharmacy product in 2017 and followed up in 2018 with a $753m acquisition of PillPack, which sends monthly prescriptions to the elderly.

Amazon Pharmacy will leverage PillPack’s infrastructure, “including its pharmacy software, fulfillment centers and relationships with health plans.”

PillPack will continue to operate its existing subscription business.

Here is what you can get

Customers over 18 can have prescriptions sent to Amazon Pharmacy for common drugs such as birth control, insulin, triamcinolone steroid creams, metformin (blood sugar medication), and sumatriptan (migraines).

Prime members get:

• Free 2-day shipping (of course)
• Discounts of up to 80% for generic drugs, and 40% for branded drugs

Pharma competitors are shook

The market pummeled the biggest names in the space:

• CVS (-8.60%)
• Walgreens (-9.63%)
• Rite Aid (-16.33%)
• GoodRx (-22.50%)

In yet-to-be announced news, Jeff Bezos is mulling a legal name change to Pill Gates.

For the 2nd time in as many years, superduper music star Taylor Swift had the master tapes of her early works acquired… without her knowledge:

• June 2019: Superduper music manager Scooter Braun partnered up with the family office of billionaire George Soros and PE firm Carlyle to buy Big Machine Label — which owns Swift’s first 6 albums.
• November 2020: Braun just flipped Swift’s work to an investment fund for an estimated $450m (wow).

Swift has some thoughts

In a tweet, Swift lays out the backstory:

• Braun tried to “forever silence” her by asking her to sign an NDA prior to her negotiating for the original masters (she passed)
• She has started re-recording her prior work, which will “diminish the value” of the original masters

What’s next?

To find out more, we reached out to Daouda Leonard, music manager for Grimes and BloodPop as well as the founder of CreateSafe (a music management platform).

Here’s what he has to say:

“Feels similar to when Michael Jackson purchased the Beatles publishing catalog. It’s also an interesting chess match, maybe even a bit of a Queen’s Gambit in Taylor’s responses overall where she is endeavoring to rerecord all of her old material in a bid to reclaim the value that she originally created.

“Interestingly, the value of her catalog has now increased possibly 3x with the original purchase and now sale of her masters.

“This will undoubtedly increase the value of her publishing catalog as well, so all signs point to a blockbuster deal in the making at some point in the near future.

“Also one has to wonder what would happen if she were to tokenize these new recordings along with her publishing catalog and direct her fans to support her directly.”

We’ve been told by people in high places that a bunch of well-known tech companies are preparing to go public with some fat valuations:

• DoorDash: ~$16B
• Airbnb: ~$30B
• Instacart (yet to file its papers): ~$30B

With that type of money being thrown around, there will be a lot of winners. Chief among them: Y Combinator (YC).

All 3 of these bad boys went through the famed startup incubator

These won’t be YC’s first IPOs: Dropbox went public in 2018 and PagerDuty followed in 2019.

But based on the public valuations being floated around, all 3 startups will be among YC’s top 5 greatest hits:

PS. We asked Twitter what would be more valuable over the next decade:

• Bitcoin (currently valued at ~$330B)
• These top 10 YC companies (currently valued at ~$155B)

Innanet legend Anthony Pompliano (aka Pomp) — and former MFM guest — said “For the 10 you mentioned, each would have to be 1 trillion to have a chance to outperform bitcoin in [the] next decade IMO. A few may be out of business by then based on how quick tech innovation happens.”

An OG pic of the McDonald brothers in front of a not-yet opened early McDonald’s in November 1948, San Bernardino, California. It’s unclear whether or not Travis Scott attended the grand opening. (Reddit)

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