Dear Friend,

“THE PERIGEE.” Those were the first words my instructor uttered to me as my Captain’s Certification session began.

“Huh?” I said.

He went on, “THE PERIGEE…..I am going to teach you two dozen things: the currents, the tides, etc., but there is one thing that will eventually hang you up on the May River…”

I replied, “And that would be the perigee, correct?”

The salty man spun his baseball cap sideways, looked at me over the top of his sunglasses, and slowly nodded in affirmation.

Most every coastal body of water on Earth has two tides every 24 hours: one high and one low. So, there is nothing that unusual about the two tides of the May River. However, the May River has one of the nastiest currents on the East Coast, and it is at its worst when the sun, moon, and Earth are in alignment (at the time of the new or full moon)….a “perigee.” At perigee, the solar tide has an additive effect on the lunar tide, creating extra-high high tides, and very low low tides. Combine a perigee with a nasty current and funny things can happen…..and, boy, can it happen quickly! So, yes, I got bit last Saturday for the first time since we moved south. That is our Scout…..stuck…….“high and dry”—no adult beverages or snacks—for a three-hour period.

Now there are worse things on Earth than being stuck on a sandbar on a perfectly brilliant and sunny day, especially when you have your Chuck-it ball launcher, your Brittany on-board, and a 1-mile stretch of gator-free and sandy beach. The thing about being stranded by a low tide is that time cures all. All you have to do is wait, and the tide rolls back in and on-board and away you go!

Sitting on the beach, waiting for the tide to roll in, reminded me of our current economic times. In the deal markets, we enjoyed a 15 year high tide with nothing but blue skies and plenty of easy, navigable water. It was the longest high tide in my 41 year career. We now find ourselves with a bit of a “perigee low tide” in many sectors of the deal markets. But, for those who have never yet experienced a “financial perigee,” have hope that at some point the tide will come back as it has in the past.

So, we start this week’s newsletter with a boat story. A GM-backed startup’s pontoon boat has been quietly drawing a crowd on the West Coast, given it has no gas motor to yell over. Americans continue to be drawn to the outdoors, such that campgrounds are investing in resort-like amenities, and to the indoors for pickleball, providing a unique franchising opportunity. We also look into current consumer sentiment and the return of lower-income guests to Chipotle. And don’t forget to peruse our Thinking Green series!

Be Well and Be Outdoors,

Jim D'Aquila

News That Matters.....

GM-backed Startup’s Quiet Electric Pontoon Boat is a Conversation Starter

Seattle-based Pure Watercraft attracted a crowd of boating enthusiasts, investors, tech notables, and one Seattle Seahawks legend with a hometown unveiling of the new Pure Pontoon at Mount Baker Rowing & Sailing Center on Wednesday.
The fully electric boat is the first product of the startup’s partnership with General Motors, established in November 2021 when the company acquired a 25% stake in Pure at a cost of $150 million.
The Pure Pontoon is powered by single (50 horsepower equivalent) or twin 25kW electric outboard motors weighing 112 pounds each. Top speed is 26 mph with the twin setup and 14 mph with the single.
Wind noise aside, it was just easier than trying to shout over a gas-powered engine. And there was no smell of gas fumes floating in the air.

Link to Article

Sporting Goods Industry’s 2022 Growth Boosted by Inflation

The Sports & Fitness Industry Association (SFIA) released its 2023 State of the Industry Report, showing 4.3 percent revenue growth in U.S. wholesale sales of athletic footwear, apparel, sports and fitness equipment, and licensed products in 2022.
The gains represent the second-largest percentage growth since 2010, driven by inflation, and marked by a pullback from the record performance of 15.8 percent in 2021.
Total sales are estimated to have reached over $116 billion.
In terms of sports and fitness participation rates, more Americans reported participating in physical activities at the core and casual levels, but team and fitness club activity rates have not recovered to pre-pandemic levels.

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Pickleball: Is the Pandemic's Hottest Sports Craze Coming to Franchising?

As of early 2023, the sport is being played by over 36 million Americans.
More recently, high-profile athletes, including LeBron James, Tom Brady and Patrick Mahomes, have elevated the sport further with investments in professional pickleball teams.
With a persistent rise in demand, Ace Pickleball Club, a concept that focuses on developing and running indoor pickleball clubs, has brought the sport to the franchising space.
“Each Ace Pickleball Club will feature between 8 and 16 courts in a climate-controlled environment with on-court technology for instant replay and live streaming to provide the ultimate pickleball playing experience,” the brand website says. “Members of all ages and skill levels will be able to participate in a variety of activities offered at their local club, including daily open play, clinic, leagues, tournaments, social and glow-in-the-dark events.”

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Campgrounds Continue to Modernize and Improve Facilities for Visitors

As the nationwide interest in the great outdoors continues to soar, more consumers are flocking to nearby campsites to soak in the sunshine. In response, the campground industry has been booming, with revenue increasing along with amenities and the number of open campsites.
One example of this is Yogi Bear’s Jellystone Park Camp-Resorts, which is enjoying record profits.
Alongside the Jellystone Park franchise’s ongoing success, Luray RV Resort, located in Luray, VA, is expanding its 73 campsites to 350!
The resort[Luray RV Resort] will be incorporating community-centered amenities like an amphitheater, resort-like pool, cabanas, and a recreational center with pickleball, basketball, mountain bike track, corn hole, and RC car track, according to a press release.

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78% of Women Identify as the Primary Household Shopper

In a new consumer study—Breaking Stereotypes: The Women Driving Sales in Male-Centric Categories–over three-quarters of women identify as the primary shopper in their household, and yet certain brands and categories continue to focus on men as the target consumer, leaving dollars on the table with valuable female shoppers.
Women spend $7.4B annually on power and hand tools, and 40% of female power and hand tool buyers made their purchase for their own use.
The top DIY projects completed by them include landscaping/gardening (56% of female power/hand tool buyers), painting/wallpapering (51%), light fixture repair/installation (38%), and plumbing repair/installation (31%).
While women did purchase men’s razors and deodorant for themselves (36% and 21%, respectively), the majority bought for their partners (63% and 74%, respectively) but still were the final decision makers on the purchase
69% of female protein powder buyers bought the products for themselves, compared to just 35% purchasing it for a partner.

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A Potential for Discretionary Spending Contraction

Nearly 70 percent of consumers believe the country is in a recession, with 68 percent believing it will worsen in the following months, according to a study from Numerator, a data and insights company.
About 43 percent of all shoppers interviewed indicated that spending money on restaurants, bars, or food delivery services has caused discomfort.
This has caused 41 percent to say that, in the coming months, they will cut back on these services.
Among all income levels, roughly 25 percent said they will reduce their snacks and candy purchases, and 23 percent said they will purchase less alcohol.

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High Beef Prices Drive More Foodservice to Chicken

“Right now, in foodservice and retail there’s a tremendous incentive to feature chicken because beef is so expensive,” said David Maloni, foodservice supply chain analyst and president of Datum FS. “And I think that you will feel that over the next several months and probably for the next couple of years.”
This price incentive is a major opportunity for chicken suppliers to partner with foodservice buyers that historically haven’t made chicken a central part of their menus, whether it’s a hamburger chain looking to compete in the chicken sandwich wars or a chain that’s never had chicken wings before.
Chicken in foodservice thrived over the past few years following the 2019 viral craze nicknamed the chicken sandwich wars.

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Chipotle's Lower-Income Guests Are Coming Back and Menu Price Hikes Are Off the Table, for Now

After seeing some inflation-weary guests reduce their visits in the second half of last year—a likely response to the chain’s menu-price increases—those lower-income diners were coming back more frequently than they had been over the prior six months, though not quite as often as they were visiting a year ago, the company said Tuesday.
Higher-income guests remained loyal, even increasing visits last year, as the chain battled rising commodity costs with menu price hikes.
And, at least for now, there are no plans to increase menu prices further this year, though inflation remains “a wildcard.” CEO Brian Niccol said Chipotle still has room to pull that pricing lever if necessary.

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C-stores Ramping up Their Hiring Efforts

Despite labor issues continuing to plague c-store operators, the industry managed to provide over 2.4 million jobs in the U.S. in 2022, according to NACS’ most recent compensation report.
Numerous operators are holding hiring events to keep their stores staffed and ready to serve customers in the coming months. While some companies are only looking to hire a couple hundred workers, others are hoping for up to 50,000.
7-Eleven hopes to hire 50,000 employees across 13,000 locations in the U.S. and Canada during its annual hiring event on April 25.
Love’s Travel Stops & Country Stores held its annual two-day hiring event March 28 and 29. In the announcement, it said it hoped to hire 2,000 employees across a range of store and service departments.

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Growing Interest in Cosmetic Injectables Spurs New Payment Options for Costly Services

As an example, Wall Street Dermatology cosmetic provider states on its website that Botox treatments can cost $500-$600 per area and treatment session. If a treatment plan requires two areas to be treated across three total sessions, the entire course of treatment would cost $3,000-$3,600.
To address these eye-popping prices, PatientFi launched on Monday a new subscription offering for providers called Privi, which seeks to make such cosmetic treatments financially accessible to patients.
Privi is billed as a subscription offering, with more flexibility and fundamental differences compared to a financing product. In essence, it gives providers an out-of-the-box solution for offering a tailored membership to their patients.
According to an American Society of Plastic Surgeons 2022 survey of 1,850 member surgeons, 76% of respondents reported seeing increased demand compared to pre-pandemic levels.

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Thinking Green

In the time fraught with environmental issues that pose a potential threat to humanity, natural ecosystems as well as, our businesses and clients, we want to call to attention to those developing and embracing green strategies to reduce energy, water and paper consumption in order to protect our home, Earth.

How Grenoble, France, Is Leading the Fight Against Climate Change

In 2022, the European Union named Grenoble the EU Green Capital, an annual award given to a city that is “leading the way in environmentally friendly urban living.”
Surrounded by mountains, Grenoble’s topography dictates its need for urban density, and thus the city is the third most concentrated in France. However, it is also dedicated to providing ample public green space through ambitious planning that encourages urban gardens, vertical gardens, and tree planting programs that allow private citizens to plant corporation-donated trees in unused public spaces
Soft mobility efforts like pedestrianized streets in the city center, a thriving carpool network, “bicycle highways,” and a municipal school for bike safety education are other examples.
The city is also replacing its asphalt with materials that allow water infiltration, has banned phytosanitary products, and is completing energy renovations of public buildings to improve their performances and reduce environmental effects.

Link to Article

Hormel Foods Corp. Ranks in Top 100 For Green Power Use

Hormel Foods Corp., a Fortune 500 global-branded food company known for its corporate citizenship, was, for the first time, included on the U.S. Environmental Protection Agency’s list of the 100 largest green power users from the Green Power Partnership (GPP).
In addition, the company ranked No. 20 on EPA’s list of Green Power Partners that are part of the Fortune 500.
Hormel Foods joined the EPA’s Green Power Partnership in 2022 and is using nearly 938 million kilowatt-hours (kWh) of green power annually, representing 100% of the overall operation’s total power needs.
In addition to recognition from the EPA, Hormel Foods has been named by Newsweek as one of America’s Most Trustworthy Companies for a second straight year and one of America’s Most Responsible Companies for four consecutive years. The company has been on 3BL’s 100 Best Corporate Citizens list 13 times, been recognized as one of the World’s Top Female-Friendly Companies by Forbes, and was recently named one of Barron’s 100 Most Sustainable Companies.

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Hydrogen-powered RV Concept—A Zero-Emission Camper with a Reasonable Range

First Hydrogen Corp., based in Vancouver, British Columbia, is making waves in the RV industry by developing a zero-emission hydrogen-fuel-cell-powered RV.
First Hydrogen CEO of Automotive Division Steve Gill said: “The First Hydrogen camper van is an example of how we see hydrogen fuel cell and other electric vehicle technologies having wider applications. We are successfully demonstrating the potential fuel cell technology has in the LCV class but are exploring how the technology can benefit other sectors, including leisure vehicles. Connecting with nature is incredibly important for recreational vehicle owners, and this concept indicates how a hydrogen vehicle could help people preserve the environment while enjoying van life.”
Hydrogen fuel cells combine hydrogen with oxygen to produce electricity, generating only water as a byproduct.
FCEVs offer an exciting alternative to battery-powered EVs with quicker refueling times, longer driving ranges, and better performance in extreme temperatures.

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Reusable Food Takeout Boxes on the Table in NYC

[Choose 2 Reuse, a bill introduced in the New York City Council this month,] would require corporate-owned, fast-fast casual restaurants in New York City to provide the option of reusable, returnable containers for dine-in, takeout and delivery, rather than using single-use packaging currently used in foodservice, as reported by The Wall Street Journal.
Consumers would be asked to later return their reusable food packaging and utensils either through delivery or logistics partners who come to pick them up or in person via receptacles at participating restaurants.
Proponents say they believe many customers are ready [to] stop throwing containers in the trash for the benefit of reducing throwaway plastics, while those who aren’t would still be able to receive single-use packaging.
The bill follows the adoption of more stringent legislation in France, which has required restaurants that seat 20 or more people to serve food in reusable packages for those dining in, also in Germany, there is now a mandate for reusable options for takeout from food sellers with five or more employees and at least 861 square feet of space.

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Lazard Private Market Advisory Consumer, Food & Retail Team

Lazard has financial advisory specialists throughout the world with experience and relationships in the consumer, leisure, food/agriculture, and e-commerce/retail industries. These bankers have played key advisory roles in some of the most important, complex and industry-defining transactions. For more information, contact one of our senior team members.