Chipotle Is Raising Their Prices, Plus Silicon Desert? Tech Companies Set Up Shop In Nevada

by 2 years ago

morning brew

Enjoy your April 18th Brew.


“Mafia better service than @comcast. Sure they shoot you, but it’s over with and they don’t charge you for the bullet.” — Former Arkansas Governor Mike Huckabee giving Comcast (and its customer service) a piece of his mind. Shots fired. 

Market Snapshot

  • Stocks reached a six-week high on Monday ahead of earnings season, led by financial and industrial stocks. All 11 sectors of the S&P 500 saw gains, and the Dow was up almost 200 points by close.
  • The dollar saw continued its rough patch as the Federal Reserve talked up the chances of another rate hike in June.

Silicon Desert? Tech Companies Set Up Shop in Nevada

Google purchased 1,210 acres—or 916 football fields—worth of land in Reno Nevada, a portion of which will house a massive data center as the internet giant expands its cloud computing network.

The plot sits within the 107,000-acre Tahoe Reno Industrial Center, which is now home to several big corporations’ data centers (like Wal-Mart and eBay) and also falls within spitting distance of Tesla’s battery ‘gigafactory‘.


Is all that space necessary Google?

Short answer: yes.

First, some believe that the extra land will be used for driverless-car research. And honestly, it doesn’t seem crazy given that Alphabet cannot currently test self-driving cars at highway speeds on its track in California and Nevada Gov. Brian Sandoval is currently sponsoring legislation to allow autonomous vehicles to operate as taxis.

Second, setting up the infrastructure to run a cloud computing business is no simple task. Not only are server racks (think filing cabinet for, you guessed it…servers) required to store the data, but major electricity and cooling infrastructure are required as well (which is why industrial parks have become so popular).


Seems like a lot of work for a lousy data center

That’s because data centers are becoming increasingly critical to Google’s business. Although advertising still generates 88% of total revenue, the search giant hopes that one day its cloud business will surpass ad revenue to compete with web hosting and cloud computing giants like Amazon Web Services and Microsoft.

Leave Some Extra Room in Your Lunch Budget

Our beloved Chipotle (+1.35%) burritos just got more expensive. Last week, Chipotle quietly hiked prices at 440 locations, or about 20% of its total restaurants. The reasoning? Rising labor and food costs = more expensive chips and guac.

And let’s not forget about that harrowing string of foodborne illness outbreaks that started in 2015. Chipotle has got a long way to go to dig itself out of that hole. But, with optimism about Chipotle’s 2017 performance, there’s no time like the present to raise prices. The good news? The increase was a mere 5%, so it won’t hit your wallet too hard.

Uber Tries on Transparency—but Its Struggles Continue

In the face of increasing scandals—like charges of sexism and an IP lawsuit—Uber decided the best move was to completely open its books. They paint quite the mixed picture: Revenue soared to $6.5 billion last year, with Q4 revenue jumping 74% year-over-year. But there’s bad news too. The ride-hailing giant reported a loss of a whopping $2.8 billion. There’s no immediate risk of a cash crunch…but it does raise serious questions about the company’s business model and future.

Airbnb Has Hotels Running Scared

It’s no secret that hotels (as well as some residents and politicians) really hate Airbnb. New documents published Monday show how the industry plans to keep fighting the home sharing platform. The American Hotel and Lodging Association, which created the documents, aims to fight Airbnb on local, state and federal levels through “comprehensive legislation in key markets.”

Additionally, the group plans to create marketing campaigns showing how Airbnb harms neighborhoods, and plant news stories to keep up the dialogue. Unfortunately for them, Airbnb’s explosive growth and its $31 billion valuation seem to be ready to put up a fight.

What Else Is Happening…

  • Walmart is reportedly close to buying mens fashion company Bonobos for around $300 million
  • Apple is officially in the self-driving car race, having received a permit from the state of California for vehicle testing
  • Boeing will layoff hundreds of engineers this week
  • Robert Taylor, the little-known mastermind of Arpanet (the web’s precursor) has died at 85

Economic Calendar

  • Monday: United Airlines Earnings (+); Housing Market Index (-)
  • Tuesday: Bank of America, Wells Fargo, Goldman Sachs, Yahoo Earnings
  • Wednesday: American Express, Blackrock, CSX, EBay, Morgan Stanley, Qualcomm Earnings; Fed Beige Book
  • Thursday: Verizon, Visa Earnings; Weekly Jobless Claims
  • Friday: GE, Morningstar Earnings; Flash April PMI’s, Existing Home Sales

Water Cooler

Major Brands Strike Out with Half the Population

Women are powerful consumers—they make a majority of purchase decisions and hold half of the wealth in America. But it seems that many major companies aren’t successfully targeting women. MBLM’s Brand Intimacy 2017 Report revealed this gender problem for marketers:

  • 10 of the 15 industries in the study were better at developing brand intimacy with men than women. And what’s brand intimacy? Exactly what it sounds like: an emotional relationship where a consumer comes to trust and feel connected with a brand.
  • And how powerful is the female consumer? Short answer: very powerful. 75% of women are the primary shoppers in their households, with women making the purchase decision over 90% of the time for homes, vacations and furnishings.
  • The top three brands that were most successful in creating brand intimacy with women were Disney, Apple and Amazon.
  • Which brands do you feel the strongest bond to? Which don’t understand you at all? Reply and let us know.

The Breakroom

Question of the Day

You are able to order Chicken McNuggets in boxes of 6,9, and 20. What is the largest number of nuggets that you cannot order using any combination of the above? (Answer)

Stat of the Day

$19.8 billion: The combined amount that bidders spent at a government airwaves auction last week. Each year, parts of the spectrum are offered to providers for wireless service. This year, T-Mobile and Dish Network took home the largest piece of the frequency pie, spending $8 billion and $6.2 billion respectively.

TAGSBusinessFinanceMorning Brew