Bloomberg Businessweek Weekend - August 29th, 2025 - Bloomberg Businessweek

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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business, finance and tech

(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebek on Bloomberg Radio.

Speaker 2 (00:32):
Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Carol is off this week, and let's be real, It's
a week that's really been about two things. The question
of FED independence after President Trump moved to oust Federal
Reserve Governor Lisa Cook, which escalates his battle for more
control of the US Central Bank. That's a story we
were all over this past week. Also all over earnings

(00:55):
from the world's most valuable company. It's the chip maker
at the heart of the AI boom and at the
center of the Trump administration's tariff war with China. Yes,
we are, of course talking about in Nvidia. It wrapped
up its earning season for US and gave a revenue
forecast into its AI tech and its China revenue. More
on the report as it was coming out in just

(01:16):
a minute plus on the economy, taking stock of the
consumer as tariff sink in with the CFO of the
Mediterranean restaurant Kava. All of that to come, We begin
with the most anticipated earnings report from this past week
and perhaps even from the quarter, and that is in Nvidia.
The company gave a tepid revenue forecast for the current period.
It signals that growth is decelerating after a staggering two

(01:38):
year boom in AI spending. For more, we leaned on
Jay Goldberg, senior analysts for Semiconductors and Electronics with Seaport
Research Partners, who joined us just as the numbers dropped.

Speaker 3 (01:49):
I'm Isabell Lee, and I joined Tim for the conversation
with Jay Goldberg. Later on in the chat, we'll bring
in Bloomberg News Big Tech team leader Sarah Fryar.

Speaker 2 (01:59):
And as a reminder, Jay is the only analyst tracked
by Bloomberg who has a cell rating on in Nvidia.

Speaker 4 (02:05):
My thesis is that in Nvidia is good company, good products.
They have this Blackwell ramp coming now, But I think
it's it's just getting harder for them. It's gotten so
big so quickly. I think it's getting harder and harder
for them to outperform the sector. We've all gotten customed
to the having these massive blowouts quarter after quarter, and
it just couldn't continue.

Speaker 2 (02:23):
Right.

Speaker 4 (02:23):
This is by any normal company, this would be an
okay quarter, right, but it's in Nvidia. We all have
heightened expectations and it was just, I think, very difficult
for them to live up to it.

Speaker 3 (02:34):
I feel like it's the outlook for a sales of
fifty four billion plus or minus two percent that is
fuzzy against estimates around fifty three point forty six billion.
But in both cases, remember the wide range of analysts
forecasts due to the unknowns of China, and I feel
like this is what we've talked about tim, how there's
such a broad range and it's hard to predict now,
especially with China. But the all important forecast revenue fifty

(02:55):
four billion dollars looks good compared with consensus.

Speaker 5 (02:58):
I think it's okay.

Speaker 4 (03:00):
I think that the China factor is interesting because like
a year ago, if somebody or some country or some
even some company wasn't able to take allocation of their
chips for whatever reason, there would be a line out
the door of other customers waiting to take those chips,
and it doesn't seem to be that the line is
that long anymore. Right, There's still there's still demand there,
but it's not this sort of triple oversubscribed demand that

(03:21):
they enjoyed a year ago.

Speaker 2 (03:24):
We're speaking of right now with Jay Goldberg, you senior
analysts for Semiconductors and Electronics with Seaport Research Partners. So
were you proven right this quarter that you're the only
analyst tracked by Bloomberg that has accelerating on the terminal.

Speaker 5 (03:38):
I'll take I'll take the win.

Speaker 4 (03:40):
I'll take I'll take a lowercase W in this case.

Speaker 2 (03:42):
I mean, it's not trading out one hundred dollars yet.

Speaker 4 (03:45):
No, But I, like I said, my thesis has all
along been that it's just getting harder for them to
beat expectations. And I think this is exactly what happened
to here.

Speaker 5 (03:54):
There's there's not much.

Speaker 4 (03:55):
Growth in data center. You know, you read all the
other headlines. It seems like AI is taking over the world,
But in reality, I think there's just it's we're going
to need some time to digest the AI we already have,
and I think it's natural that things slow down here.
For in video who's been leading for so long?

Speaker 2 (04:12):
Is it a red flag to you in any way, Jay,
that the company is authorizing this share buyback. Do growth
companies do that or is that more of a sign
of mature companies.

Speaker 5 (04:22):
It's a little bit of a red sign.

Speaker 4 (04:23):
I mean, it would seem to me that there's there's
so much opportunity out there in AI, why why not
spend that sixty billion dollars in furthering their growth? I mean,
as a shareholder, I would appreciate it, but as an
outside observer, I have to wonder couldn't they find other
ways to deploy that?

Speaker 3 (04:39):
So you make the point that it's just hard to
grow from here on out? How much of diversification is
hinged on that? We know that forty percent of the
revenue is from Microsoft, Meta Amazon, and I'm missing one.

Speaker 6 (04:53):
I can't I'm blanking on that name.

Speaker 3 (04:54):
But Vida now offers computers, networking gear, software services.

Speaker 6 (04:59):
Can we account on that?

Speaker 4 (05:00):
I think there's just it's it's good company, good products,
But like this kind of exuberance seems to be getting
the head of reality of the market. And I mean,
I have to wonder you have all the hyperscalers spending
these immense amounts of money half a trillion dollars among
the six or seven of these companies, it's hard to
see them getting a return on that anytime soon, right,

(05:23):
you sort of look through it. I don't think they
have a clear plan. They're building for something that's important,
and AI is coming, but in terms of sort of
hard dollars and cents, the ROI on that massive investment,
it's not clear how they generate that. And so I
think we're starting were to start asking more of those
kinds of questions, what are we actually going to use
all this AI for?

Speaker 2 (05:41):
I want to bring in Sarah Fryar. She's Bloomberg News
Big Tech team leader. She joins us from San Francisco.
This was the one we've all been waiting for, and
finally it has arrived, Sarah. The company giving a tepid
revenue forecast for the current period, it fuels concerns that
a massive run up in AI spending slowing. How are
you thinking about the coverage of this resport, especially in

(06:04):
the context of the other big tech companies that we've
heard from who have said, yeah, we are spending when
it comes to AI infrastructure.

Speaker 7 (06:12):
Well, you know, I think we have to put it
all in context because Nvidia is this in this space
of having so much uncertainty around the China market, around
the future of spend on data centers. The analysts who
cover the company had like fifteen billion dollars in variants
on what they expected the revenue outlook to be, whether

(06:33):
or not they included China in their models, So a
little bit of a grain of salt on that revenue
number forecast. I think it's just it's just a company
where people don't quite know what to make of their
discussions with the Trump administration about what they are are
not allowed to sell to China and whether to even
include that in their models. And they did say that

(06:55):
they didn't sell any of those eight twenty chips to
China in the quarter, So I think it's there's that.
So that doesn't necessarily indicate for us that the AI
boom is over or anything like that. That said that, the
training of models like we've seen this with Open AI,

(07:17):
like the latest and greatest model is not as much
of a leap from the prior, and you know, other
companies are having similar issues. So the idea that AI
largely engage models are just going to accelerate in smartness
until we reach super intelligence. I mean that may not be,
but there is real money going to building data centers

(07:40):
metas building one the size of Manhattan and Louisiana like
that is not over. That is very much still a
part of what companies are investing in and doing.

Speaker 3 (07:50):
I want to bring back in Jay Goldberg, he's senior
analysts at Seaport Research Partners.

Speaker 6 (07:54):
Jay.

Speaker 3 (07:55):
Aside from nvidiou struggles in China, the biggest impediment to
growth seems to be also the available lidy of supply.
Can you talk to us more about that. How Invidia
doesn't own factories and relies on outsourced production.

Speaker 4 (08:07):
So yeah, in videos manufacturing is done at TSMC, and
for a long time, last couple of years, that's been
the big constraint on in Videa's capacity is what they
can get out of TSMC, in particular the cook packaging,
the advanced packaging that TSBT does. That's starting to ease
up a little bit. TSMC is a great company. They've

(08:28):
added a lot of a lot of capacity, but now
we're starting to realize that the other big constraint on
data center growth is electricity, right, There's just not enough electricity.
With everyone wanting to open up gigawatts scale data centers
for AI, the US grid just doesn't have enough of that.
In fact, the only place that probably could even hope

(08:49):
to cope with this is China, where there's sort of
different regulatory frameworks around building new electrical capacity. So I
think that's a big bottleneck here. I think there's also
issues around Blackwell itself, Like you start to I've talked
to people who are actually putting these systems in place.
It feels very much like a first generation system. They've
added a lot of a lot of new configuration to

(09:09):
the racks and the servers that they've designed, and they're
just not fully reliable yet.

Speaker 5 (09:15):
And there's a lot of.

Speaker 4 (09:16):
Complaints from people who have to, you know, go through
all kinds of special tooling and get out special equipment
in order just to make basic configurations here. So I
think all of those are sort of constraining Blackwell to
some demands.

Speaker 2 (09:27):
Point, are you updating your price target? Are you coming
out with a note like what's the conclusion that you have?

Speaker 4 (09:34):
So I absolutely will come out a note. I don't
think I can comment on my price target. But I
see this as a lot of things moving in the
direction that I've been talking about for a while now.
You know, nothing in here makes me think I'm going
to change my outlook.

Speaker 2 (09:47):
I want to bring back in Bloomberg News Big Tech
team leader Sarah Fryar, who joins us from our San
Francisco bureau. So, Sarah, you did a great job sort
of contextualizing what else is happening from the customer perspective
of Nvidia and the companies that have come out and said, yeah,
we are still spending a lot of money on these

(10:08):
data centers we are buying from Nvidia. Are you of
the impression that there is there's we're reading too much
into this idea of a broader slowdown when it comes
to the.

Speaker 7 (10:21):
Tech Well, I think your analyst there did make a
good point that a lot of these hyperscalers, although they
are all in on investing in AI and and they
have backing from their own investors on Wall Street to
do that, they are showing that it's not really giving
them a return on investment yet. So I think the

(10:43):
big question in the next year or so is can
you know the metas Google's Microsoft, Amazon, Can all of
those who are spending on data centers show that, you know,
not only is this build out going to help them
win the the AI race and compete against each other,
but will it actually lead to higher revenue? Will it

(11:06):
actually lead to better profit over time? And so I
think that that is that is really the you know,
the thing that could slow down a lot of this investment.
I think that there for now seems to be like
a lot of excitement around building. But even you know,
some executives have said, yeah, we may be overspending right now.

(11:26):
We may be too excited about what the future will hold,
and if we can't get to the point where you know,
the technology just keeps getting better and better. And it
is more about like taking what we have learned so
far with these large language models and applying it to business,
applying it to making our you know, internal processes better,

(11:49):
making us more efficient using what AI has already accomplished.
Then that would be different than than what would contribute
to Nvidia's bottom line going forward.

Speaker 3 (12:00):
That's Bloomberg News Big Tech team leader Sarah Friar and
Jake Goldberg, Senior analyst of Semiconductors and Electronics, with Seeport
Research Partners. They helped us break down invidious earness results
earlier this week.

Speaker 2 (12:14):
Coming up. Another story dominating this week fed Independence, That
and more with Natasha Sirin from the Yale Budget Lab.

Speaker 8 (12:21):
I think that the Court has already signaled directionally that
they really think protecting this institution and protecting its independence
is immensely important, and I hope that that's what they
continue to say.

Speaker 9 (12:33):
Is this particular legal case plays out in the courts.
But the thing that I'm worried.

Speaker 8 (12:37):
About is the sort of institutional credibility and the view
by the markets and by the public and by other
countries and other investors that our central bank is independent
for any type of politicization.

Speaker 9 (12:50):
That's kind of a genie that you can't put back
in the bottle.

Speaker 8 (12:53):
It's something that's taken decades and generations to build.

Speaker 2 (12:56):
You're listening to Bloomberg BusinessWeek. This is Bloomberg.

Speaker 1 (13:04):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five Easter and
listen on Applecarplay and Android Atto with the Bloomberg Business app,
or watch us live on YouTube.

Speaker 2 (13:18):
Independence at the US Stuttle Reserve is certainly in focus
this week after President Trump's move to Federal Reserve Governor
Lisa Cook takes political pressure on the Central Bank to
new heights. The morning we recorded this, Cook filed a
lawsuit suing President Trump over his attempt to fire her
for alleged mortgage fraud, kicking off a historic fight over

(13:38):
independence of the Central Bank. For more on the scope
of presidential power to fire a FED governor and overall
FED independence, we spoke to Natasha Sarin, co founder and
president of the Yale Budget Lab. She's also a professor
of law at Yale Law School and has an appointment
in the Yale School of Management's Finance Department. She worked
at the Treasury Department as Deputy Assistant Secretary for Economic
Policy and as accouncilor to Treasury Secretary Jennet Yellen. I

(14:02):
want to start with a referencing an opinion piece from
Bill Dudley on the Bloomberg earlier today. He's former president
of the Federal Reserve Bank of New York. He's out
with a column today that says, up to now, he
wasn't worried about the threat that President Trump poses to
the Fed's independence. Now he writes, he's much more worried,
and he thinks the markets should be too. Does the
president's attack on the FED risk?

Speaker 10 (14:24):
Does?

Speaker 2 (14:24):
I mean, should we be worried about the president's attack
on the Fed?

Speaker 6 (14:27):
He should be.

Speaker 8 (14:28):
And I agree moleheartedly with Bill. I think you're in
such unchartered territory at the moment, because remember this is
coming on the heels of many months of the administration
arguing that the Federal Reserve should be cutting interest rates
and accord with the political whims of the.

Speaker 9 (14:46):
Trump administration, rather than based on its.

Speaker 8 (14:49):
Very particular dual mandate, which is about inflation and it's
about the labor market, and the fact that we have
a central bank that's independent that cares about those two things,
and those two things alone is a really significant source
of our economics security. The way I know that is
because we have experimented in the United States, as of
other countries with federal reserves that become politicized. In this country.

(15:12):
In the Nixon administration, we had Arthur Burns who was
pushing for interest rates to help President Nixon get elected,
and the result of that was runaway inflation that increased
from three to thirteen percent over a two year period.
So we do not want a central bank that functions
based on short term political whims, and I'm really worried
we're moving in exactly that direction.

Speaker 3 (15:34):
The FED said they will abide by what the Court decides,
and President Trump yesterday also said he will abide by
the same. But if the court decides that Lisa Cook
can stay, are we pass a red line? Is the
damage already done when it comes to the credibility of
the FED?

Speaker 9 (15:50):
I hope that the answer to that question is no.
And I really hope that what's important to note in.

Speaker 8 (15:56):
The context of the legal discussion here is that the
Supreme Court has really gone out of its way in
a case of that removal that had nothing to do
with the Federal Reserve to signal that the Federal Reserve
is special and that these types of positions, because it's
a quasi private institution with a particularly important role in
our economy, these types of positions are really only four

(16:19):
cause removal positions, and frankly, four cause rises to a
level and legal nomenclature that it's pretty hard to meet
in the context of malfeasance. And so I think that
the Court has already signaled directionally that they really think
protecting this institution and protecting its independence is immensely important,

(16:39):
and I hope that that's what they continue to say,
is this particular legal case plays out.

Speaker 9 (16:44):
In the courts.

Speaker 8 (16:44):
But the thing that I'm worried about is the sort
of institutional credibility and the view by the markets and
by the public and by other countries and other investors
that our central bank is independent for any type of politicization.
That's kind of a that you can't put back in
the bottle. It's something that's taken decades and generations to build,

(17:05):
and I worry that it evaporates pretty quickly as a
result of some of the types of attacks that we're seeing.
So I'm hopeful that the judiciary is going to step
in appropriately here, but I'm still really disheartened to see
the types of attacks that you've been seed leveled at
the Federal.

Speaker 9 (17:21):
Reserve of recon.

Speaker 2 (17:23):
So let's keep your law professor had on for a moment, Natasha,
and talk a little bit about the definition of four
cause in this context. You touched on it. But I'm
curious if, let's say, the allegations about mortgage fraud end
up and we haven't seen the evidence here that we
don't have that yet. But when it happened, if it
happened matters, I'm my understanding is intent matters as well.

(17:47):
So from a perspective, from a legal perspective, why don't
you think this would qualify as a four cause reason?

Speaker 8 (17:56):
I'm barred from an expert I on four cause removal
if I looked at the specifics of this particular case,
and nor frankly could we have at this point, because
Lisa Cook hasn't been charged with any crime or anything.
This is a set of allegations that have been leveled
at her by the President and by the administration. What

(18:17):
I can say is that in the particular context of
removal with respect to the Federal Reserve, the Court has
been pretty explicit that it thinks it's important, and you
saw it in the statement that the Federal Reserve put
out yesterday. These are Senate confirmed positions with very long
terms that run cross administrations, precisely to try and insulate

(18:39):
this institution from exactly the kind of political pressure that
we're seeing levied against it. And this isn't just about mortgages,
nor what has it been about the renovation of the
Federal Reserve Building, which has taken a lot of airtime
over the course of the last many months. It's very
clear that what's happening here is really frustration with the
direction of monetary policy, and that's really no place for

(19:02):
the administration to be acting. In fact, it's frankly counterproductive
to their goals of seeing interest rates come down and
seeing economic strength be very significant in this country.

Speaker 2 (19:14):
Earlier this month, our team reported that the average US
tariff rate will rise to fifteen point two percent if
rates are implemented as announced. This is according to Bloomberg Economics.
It's up from thirteen point three percent earlier and significantly
higher than the two point three percent in twenty twenty
four before President Trump took office. Just today the latest,
the President opposed to fifty percent tariff on Indian goods

(19:36):
to punish the country for buying Russian oil. That's the
highest tariff in Asia. I'm wondering how you're looking at
the frame relationship between the US and India and what's
at stake more broadly when it comes to this tariff.

Speaker 8 (19:48):
Fortunately, what we should understand, and my colleagues the Budget
lab are hard at work. By the way, updating our
estimates with respect to what happens to the effective teriff
rate and what happens to the type of revenue that
we're going.

Speaker 9 (20:01):
To see coming into this country.

Speaker 8 (20:02):
But roughly speaking, you've seen about an eightfold increase in
the average effect of teriff right over the course of
the last eight months of this administration, bringing in about
three trillion dollars of revenue into the country over the
course of the next decade. Importantly, and this goes a
bit to your point, Tim, it's never been super clear
to me what exactly the objective is of this type

(20:25):
of trade policy and where exactly it is that the
administration is hoping to land, because part of what you've
seen articulated is that this is really about sort of
China and national security and being sure that our adversaries
are held at bay. In that environment, you really are
quite worried about the idea of alienating allies, and being

(20:46):
particular with respect to not just India, but if you
think about Canada and Mexico and other countries where traditionally
they've been very strong allies of the United States, and
in fact we've been encouraging of more manufacturing to shift
particularly to India and Vietnam exactly because it shifts away
from China and so a little bit. It feels like

(21:06):
this policy has been kind of in cohetent all over
the place, and it's hard to analyze exactly why it
is we're doing what it is that we're doing in
order to be able to try and judge any success.
What I can say is, as a result of the
tariffs so far, prices are going up and going to
go up further. The economy is going to be smaller,

(21:27):
and it doesn't seem like a win from the perspective
of the American consumer or from American businesses.

Speaker 3 (21:33):
I'm glad you brought that up, because I'm curious if
you think this will undo all the years of goodwill
that the US and India have built.

Speaker 11 (21:40):
Well.

Speaker 8 (21:40):
I think that I'm worried about, frankly, is that you
are in a situation where we are very exposed to
particular relationships that it's taken to And this actually relates
to our conversation about the Federal Reserve in that a
lot of the sort of goodwill that you're describing our
things that it's taken decades acrossministrations to try and build

(22:01):
the types of working relationships with our allies that have
made us this global hedgemon and have made us a
real marker of stability in the economy, a place that
other countries want to invest in and other investors built
domestically and internationally.

Speaker 9 (22:15):
Are key to spend time in and around. And so
what you worry about.

Speaker 8 (22:19):
In some sense is not just are you alienating one
particular ally or are you moving us sending some other
countries closer into the arms of China.

Speaker 12 (22:29):
Of course you're worried about all of that, but also
I think what you're worried about is the general sort
of chaos of not exactly knowing where these tariffs are
going to land, not knowing if.

Speaker 8 (22:40):
It makes sense to try and shift part of your
manufacturing supply chain into India, because if India's effect of
terror braid is fifty percent, it's no longer the type
of place where you're going to want to be pursuing
a lot of that.

Speaker 9 (22:53):
Type of business.

Speaker 8 (22:53):
So I think it makes decision making really complicated for
the United States and for the businesses that in this country,
And it also runs real risks geopolitically that are pretty concerning.

Speaker 2 (23:05):
I promise we'd go everywhere. We have a few minutes left,
and I want to talk a little bit about the
labor market and productivity and the context of record low
birth rates in the United States, immigration that has come
down quite a bit during this administration, and what it
means for a workforce moving forward. How do you weigh

(23:26):
those two things.

Speaker 8 (23:27):
It's so interesting because I was actually talking to some
colleagues at the or some friends who work at the
Congressional Budget Office who have said that one of the
reasons why you have productivity growth over the course of
the next decade, that their estimates are going to average
in the one point eight two percent range, sorry, GDP

(23:50):
growth in the one point eight two percent range over
the course of the next ten years is precisely because
it's on the back of an increase in labor supply
that comes from immigration.

Speaker 9 (23:59):
And the reason why that's so important is because, as
you're describing, Tim, we have an aging.

Speaker 8 (24:04):
Population in this country, so a big chunk of people
are going to age out of the labor force. It's
really important that you have that supply coming in in
a world that when you don't have that supply coming
in meaningfully and you kind of shut down pathways to immigration.

Speaker 9 (24:17):
As you've seen policy wise.

Speaker 8 (24:19):
Over the course of the last many months, you start
to lose a very significant driver of labor force growth,
and then you start to lose a very significant driver
of productivity and broader economic growth.

Speaker 3 (24:30):
But with AI investment booming, do you think that AI
will be able to offset the lack of workers, whether
in relation to immigration the supply of workers that we
have are we facing right now?

Speaker 9 (24:42):
It's kind of.

Speaker 8 (24:43):
Hard to answer that question right now in some sense,
because it's hard to know exactly what to make of
the very significant capital expenditure investments we're seeing in AI,
and hard to know what to make about the role
that AI is having in the labor force thus far.
There's a great paper by Eric Roln Austin and co
authors where they look at the extent to which you're

(25:05):
actually starting to see displacement in the labor force that
has to do with artificial intelligence and its growth and
usage across different sectors of the economy, and they do
find that you're starting to see, particularly for younger workers
who are in the most exposed industries, you're starting to
see actual impacts with respect to their possibilities of labor

(25:26):
force entry, and so I do think that there is
going to be an effect here that's meaningful. It's just
really kind of early innings with respect to this type
of productivity change and shift, and early innings with respect
to knowing whether AI is really a compliment or a
substitute for other aspects.

Speaker 2 (25:44):
Of the labor our. Thanks to Natasha Sarin, president and
co founder of the Yale Budget Lab. Still ahead on
Bloomberg Business Week, More on the economy with the CFO
of the Fast Casual Chain Kava, who weighed in on
the so called fog affecting the US consumer.

Speaker 1 (26:02):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 2 (26:21):
Earlier this month, Kapa reduced its outlook for sales growth
this year, causing its stock to drop twenty two percent
just in a single day. The Fast Casual Chain foresees
a potential twenty basis point impact on margins from President
Trump's tariffs in the second half of the year as
import costs for items such as Australian beef or Greek
olives have gone up. The restaurant industry as a whole

(26:42):
is feeling the effects of inflation and a slowing economy,
specifically about so called fast casual chains feeling a bit
of pain. Shares of Chipotle and Sweet Green have also
each sunk around twenty percent or more since reporting lackluster
second quarter earnings. We wanted an update about what Cava
is doing for that. Bloomberg News equities reporter Nora Melinda
and I turned to Trisha Tolliver, chief financial officer at Cava.

(27:04):
Also joining us was Bloomberg News senior editor Nina Trentman. Trisha,
I want to start with the consumer because on the
earnings call last week, you said, quote, we're operating in
a fluid macroeconomic environment, and it's one that sort of
creates a fog for consumers during those times they tend
to step off the gas. Are things getting at all
less foggy? Are they putting their foot back on the gas?

Speaker 13 (27:27):
Well, certainly in.

Speaker 14 (27:28):
The environment, it's still a little fog out there, and
the consumers.

Speaker 13 (27:31):
Are doing the best that they can to navigate it.

Speaker 14 (27:33):
But what we're here at Cava is to make sure
that we're delivering great value for the consumer with amazing
cuisine and wonderful hospitality, and we believe when we do
that well.

Speaker 13 (27:42):
The consumers want to keep coming back. So we want
to do everything that.

Speaker 14 (27:45):
We can to make sure that we are delivering a
value for them, so that if they're in a fog
that they want and they want to enjoy a meal out,
they want to come to Cava and we believe we've
positioned ourselves.

Speaker 5 (27:55):
To do that.

Speaker 15 (27:56):
Tricia, thanks for joining us and to a photo up
on that. Just wondering why do you think your stock
sold off so much after the results? Like, of course,
I know you have strong comparisons. You grew a lot
in recent years, so probably tough comparisons is a better
word to say it. But why is the stock done
so much?

Speaker 14 (28:13):
Yeah, you know, hard to say the stock market goes
up when the stock market goes down. We've focused on
the long term and certainly making sure that we keep
in mind those strong results that we were.

Speaker 13 (28:24):
Lapping as we entered into this year.

Speaker 14 (28:26):
So over the last three years we've driven traffic twenty
percent and our two years saying restaurants sales growth were
over sixteen percent and three year at about thirty five percent.
And so there's a really strong damynamics and really reflecting
the strength of Kava and how much the consumer loves
the brand and wants to continue to be with us.
So the reflection of the Q two comps was more

(28:47):
of an anniversary or laughing over some of those higher
results in the prior.

Speaker 15 (28:52):
Year and just wondering if we're thinking about the remainder
of the year and also next year, of course we'll
see how that plays out. Wondering and how far you
prepared for a slowing economy in which also a consumer
might make changes to their preferences in terms of where
they eat, how much they spend, how often they eat out.

Speaker 14 (29:11):
Yeah, one of the things that we do know is
consumers love innovation, and certainly at Kava were prepared for that.

Speaker 13 (29:18):
Over the upcoming quarders coming.

Speaker 14 (29:20):
Soon, we'll have chicken Sharma in our restaurants, which is
a handstacked, spit roasted white meat chicken that is a
new offering in our restaurants in September, and then closely
following that will be our cinnamon sugar Peda chips that
are coming. Peta Chips are a fan favorite for us,
and we look forward to bringing them with a little
side of honey to our guests later on this year.

(29:41):
So those things, coupled with great service and incredible hospitality,
really create an opportunity for guests to enjoy us and
experience that newness that they so desire.

Speaker 15 (29:52):
So the goal is basically to also have new menu
items on the calendar, so that you basically have something
that draws people in, potentially offsetting any weakness you might see.

Speaker 14 (30:04):
Certainly a robust calendar with culinary innovation, as well as
continued execution and enhancements to our loyalty program which are
already planned for later this year. And right now, we've
got some excitement in our restaurants. We partnered with ADDIE's Coats,
it was a former employee of ours to create a

(30:25):
plushy that it's our Peina Chip plushy, which has created
a lot of buzz and excitement. I even my mom
down in Florida reached out to me and sought on Instagram, which.

Speaker 9 (30:33):
I was surprised.

Speaker 14 (30:34):
Nearing eighty she was in tuned to what was going
on and she went to go find them in her
market in Palm Harbor and was unable to find it.

Speaker 9 (30:41):
They were already sold out.

Speaker 14 (30:43):
So making sure we're culturally relevant with great cuisine as
a combination that we think will be successful.

Speaker 6 (30:49):
So I need to hear more worldless plushy.

Speaker 5 (30:52):
Is it a LaVoo bu it is?

Speaker 13 (30:55):
It is our version of a lavooboo.

Speaker 14 (30:57):
So, as I mentioned, we partner with the creator of
Hippie Potter and he did work at COVID at one
point in his career and now he's a New York
City based creator.

Speaker 13 (31:07):
It's super cute.

Speaker 14 (31:08):
I encourage you to go take a look and see
if you can buy them if they're still.

Speaker 13 (31:11):
Left where you are.

Speaker 16 (31:12):
Letricia, it sounds like you all are finding really interesting
ways to get more creative during this uncertain time period.
What about any sort of price softening. Are you all
thinking about bringing down the price point at all to
meet consumers where they are?

Speaker 14 (31:25):
You know, price has been something we've been focused on
for a very long time. So over the past five years,
from the end of nineteen to the end of twenty four,
we raised our menu prices about fifteen percent and CPI
went up twenty three percent, so we were eight percent
below CPI and I believe, as you know, in the
fast food place, prices went up during that time period

(31:46):
over thirty percent.

Speaker 13 (31:47):
So we're always focused on creating strong.

Speaker 14 (31:49):
Everyday value for our guests and we believe we're positioned
to do that. So in twenty twenty five, we've raised
MANU pricing less than two percent at one point seven percent,
well below the CPI for food away from home, and
again wanting to be thoughtful at Kava, we have very
robust restaurant level margins and we want to make sure
that we're reinvesting those margins back into team members and

(32:13):
then too guests. And one way we do that with
our guests is to minimize price increases as much as possible.

Speaker 15 (32:19):
And Trusia just talk to us a little bit about
the impact of tariffs. I know that you import beef
from Australia. You also import olives from Greece, so I
would assume there's some price impact from tariffs. Will you
posseas on to consumers and how about price increases next year?

Speaker 9 (32:36):
Yeah?

Speaker 14 (32:36):
So we do receive some items from overseas, and we
have an excellent supply chain team that has really navigated
this very fluid environment regarding tariffs and minimize the impacts
as much as possible, But we have no plans for
the rest of twenty twenty five to pass along any
price increases to absorb any tariff impact that we might experience.

Speaker 13 (33:00):
Looking thoughtfully at twenty twenty six.

Speaker 2 (33:02):
I know it's a supply chain question, but you're the
keeper of the books, so there's obviously a reason you're
importing some of these things. Could you buy us beef
rather than import it?

Speaker 14 (33:11):
We do buy US beef, so we have a blend
of US and Australian beef and there's no antibiotics ever
at it.

Speaker 2 (33:18):
Could you exclusively could you exclusively buy us beef?

Speaker 14 (33:22):
We think it's important to have a balanced, scalable supply
chain strategy and having a very diversified base of suppliers
with high quality ingredients as the best path board for us.
Always exploring what options are, but want to make sure
that we're in a position for the long term to
provide these high quality ingredients to consumers.

Speaker 2 (33:39):
Each and every day we're speaking with Kavas CFO Trisha
Tolliver joining us from Baton Rouge, Louisiana. I want to
talk a little bit about automation and ways that you
can save costs within the restaurant. What can you tell
us about ways you're exploring automation that consumers don't yet see,
whether that's in the ordering process, whether that's in the
delivery process and actually bringing that food the consumer who's

(34:00):
waiting for it, or if it's actually in the preparation process.

Speaker 9 (34:04):
Yeah, so always.

Speaker 14 (34:05):
Looking at ways to make our team members' lives easier,
to really be more efficient in our restaurants and also
creating a better guest experience. So one example in our
Connected Kitchen platform of automation is leveraging our kitchen Display
systems so kds, and so we're adding those systems to
over two hundred restaurants across our fleet. And what that

(34:25):
does is allow our team members to fill orders more
accurately and efficiently. So finding a better creating a better
guest experience, and delivering your bowl the way you've ordered
it is super important.

Speaker 13 (34:38):
And that's something that we're focused on.

Speaker 14 (34:39):
And this should also increase efficiency in the restaurant overall.
Another way is, you know, even more simply and not
automation is making sure that we find ways to make
things more efficient in the restaurants. So a little while ago,
we got all of our Peeda chips. We used to
slice them in house to make our pedic crisps, and
worked with our partners to slice them ahead of time
so that we remove that complexity at the restaurants themselves.

(35:02):
We also have explored and recently entered into an investment
with a company called hyphen to look at ways to
automate our second digital make line. So we're in very
early stages of that, but think of a world where
the team member can prepare bowls impedas at the top
of the line, and there could be automation underneath the

(35:23):
line to prepare those goals, creating greater efficiency in the restaurant.

Speaker 13 (35:27):
We don't plan to ever do that on the front
of our line. We think human.

Speaker 14 (35:31):
Connection is so important and the way we leverage technology
is to enhance the human experience and not replace it.

Speaker 16 (35:38):
Tricia, you talked about all the ways that you all
are trying to make the space more inviting for customers.
Do all have any plans for maybe celebrity partnerships or
any sort of advertising and marketing in that sense?

Speaker 14 (35:50):
You know in the first quarter of twenty twenty five.
We partnered with Gabby Thomas on our campaign during that
first quarter of the year and really liked the opportunity
for Gabby to talk to us about how she loves
our food and how it fuels her and highlighted our
spicy lamb need balls. So when it makes sense, we
want to lean into different partnerships, but it has to

(36:10):
be something that's really authentic and something that really means
something to both us and the person that we're associated with.

Speaker 15 (36:17):
Tricia, one more question for me. I'm just wondering in
terms of plan growth of the company. I know that
you're exponding and you have upped your plan for for
new stores. I'm just wondering how a you're thinking about construction
costs on the back of tariffs, and also are you
hiring new people at this point?

Speaker 14 (36:36):
And so our new growth is very robust this year.
We expect to open sixty eight to seventy new restaurants,
and much like the supply chain team, our design and
construction team has done an incredible job navigating tariffs, and
we're not expecting any impacts to our overall costs of
our restaurants that we open in some cases, they were

(36:57):
able to minimize or offset some of the impacts by
by ordering because of our strong balance sheet, leveraging our
balance sheet to pre order items to make sure that
we weren't as exposed to tariffs as we might be.

Speaker 13 (37:08):
So team's done a great.

Speaker 14 (37:09):
Job, and as we grow, we anticipate that we will
have needs to continue to support that growth.

Speaker 13 (37:14):
As we move forward.

Speaker 2 (37:16):
That was Tricia Tolliver, CFO of CAVA Our thanks also
to Nina Trentman, Bloomberg News Senior editor and writer of
the Bloomberg CFO Briefing newsletter, Norah Melinda joining us in
our next hour as well. That wraps up the first
hour of the weekend edition of Bloomberg Business Week from
Bloomberg Radio. Ahead in our next hour, we check in
with two mayors about how they're tackling challenges and creating

(37:37):
opportunities for their communities.

Speaker 10 (37:39):
Yes, well, Geary is one of those historic cities to
help build this nation, of course, founded in early nineteen
hundreds and nineteen o six, Valus Steel Gary Works, the
US Steel Plant is the reason why Geary even exists today.
We sit on the southernmost tip of Lake Michigan. Like

(38:00):
you mentioned, in your opening remarks about thirty minutes from
downtown Chicago, so our logistics and proximity in the Midwest
is very unique.

Speaker 2 (38:09):
Plus from puck Stopper to power Starter, New York Rangers,
legendary goaltender Mike Richter on helping businesses transition to clean energy.

Speaker 17 (38:18):
I've always had an interest in the environmental world and
energy in particular, and that intersection between finance and energy
is a massive one. It's only grown in the last
two decades. So the stop at Yale was excellent to
helped me kind of position myself and have a segue
from one world to another.

Speaker 2 (38:36):
This is Bloomberg Business Week. I'm Tim Stenavex day with us.
Today's top stories and global business headlines are coming up
right now.

Speaker 1 (38:46):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.

Speaker 2 (39:01):
Plenty ahead in our second hour of the weekend edition
of Bloomberg Business Week, including a lineup of mayors from
across America cities touching on topics from housing affordability to
rebuilding financial opportunities, to even the president's threats of deploying
the National Guard. Plus he's a US Hockey Hall of Famer,
a three time NHL All Star, a Stanley Cup champion,

(39:23):
and now he's dedicated to saving the planet one efficiency
measure at a time. New York Rangers legend Mike Richter
joins us later this hour. First up this hour. As
you know from listening to or watching our program, we'd
love talking to mayors across the US. They're the ones
on the front lines of this economy and they see
how policies from Washington are affecting main street and their communities.

(39:43):
I mentioned a rotation of mayoral voices. First up, Eddie Melton.
He's the mayor of Gary, Indiana. It's just twenty five
miles from Chicago, and it's known for a once thriving
steel industry. Also wants the second largest city in Indiana,
But as the steel industry has declined, to did its
population and the incomes of its residents. Now the median

(40:04):
household income in the city is about thirty five thousand dollars.
That's according to the US Census Bureau, Compared with the
median of sixty nine thousand dollars in the state. Speaking
with Carol and Bloomberg TV anchor Matt Miller, mayor Melton
says that Nippon Steels deal with US Steel is central
to reviving the US steel industry.

Speaker 10 (40:22):
Yes, well, Geary is one of those historic cities to
help build this nation. Of course, founded in early nineteen hundreds.
In nineteen got six y US Steel Gary Works, the
US Steel plant is the reason why Gary even exists today.
We sit on the southernmost tip of Lake Michigan, like

(40:43):
you mentioned in your opening remarks, about thirty minutes from
downtown Chicago, So our logistics and proximity in the Midwest
is very unique. So a lot of progress has been happening.
We know that the downturn of the economy in the
steel industry as forty or fifty years automation a US

(41:04):
Steel at is height, I had nearly thirty thousand employees
and right now we're about a four thousand employees. One
of our steal one of our largest employers. But recently
many of you already know the deal between the Pond
Steal and US Steel was on the table. Now that
the deal has been finalized and the pond will be

(41:25):
investing nearly three billion dollars in the Gary Works plant,
a estimating a little bit close to one thousand new jobs.
And that's going to help us in our resurgence back
in the local and national economy.

Speaker 18 (41:40):
I guess it's not a bad thing. I'm from Mayor,
I'm from Ohio, so I have seen a lot of
Japanese owned businesses do really well, employ a lot of Americans,
make great products. But what does it mean to you
that a company like US Steal is now going to
become a wholly owned subsidiary of subsidiary of a Japanese company.

Speaker 5 (42:03):
Well, we know that the.

Speaker 10 (42:03):
US Steal is an iconic brand, is still an American
company in my eyes and many of the eyes of
those that are close to the city and to this deal.
And I've been in close relationship with leadership and Nippon,
with President ono Son, who is in a Nepon America President,

(42:27):
Chairman of the board, Chairman Morrison, who is extremely passionate
about investing not only in the steel industry, but also
in our communities in mont Valley and Gary, and Alabama
and Arkansas so many other places where US too has
a footprint, and we know from a national security perspective,
Japan is one of our closest allies. So like you

(42:50):
mentioned the investments in other businesses that they've done around
the country, it just makes sense that the US still
at one point was the number one still producer in
the world. Right now they're ranked twenty fourth, but Nipon
has already ranked number four in the world. So this collaboration,

(43:10):
in this partnership, I think is one to yield tremendous
outcomes on steel production, securing good union jobs, but also
making sure that national security is still strong. A vibrant
and local communities will drive.

Speaker 19 (43:28):
You know from certainly doing some of these city leadership
programs and city programs and certainly anyone familiar with the
programs that Bloomberg is involved, and that a strong economy
for city is not just necessarily one industry, right, you
want diversification. Talk to us about what you're doing on
that front. I know you've got the hard rock casino,

(43:49):
you've got some other things certainly there in the area,
but talk to us about how important it is to
maybe diversify the economy as well to provide for longer
economic momentum.

Speaker 10 (44:03):
Yeah, so for so many years the city had been
dependent upon a steel industry, and I've been very intentional
on diversifying that. I was State Senator for nearly eight
years here in Indiana representing Gary in Northwest Indiana, served
as ranking minority on appropriations. So I'm very passionate about
the economy from a macro and micro level. But we're

(44:27):
also in a very good and strong position of growing
transportation and logistics in the city of Geary in northwest Indiana.
In the Chicago land area, for example, the city of
Chicago and the city of Gary. We have a partnership
with our very own airport, the Gary Chicago International Airport,
which is primarily private, as well as cargo, and we

(44:50):
are doing great works in our partnership with ups currently.
Just recently, we have a developer that's partnering with FedEx
to build a three hundred thousand square for the facility
of warehousing location right in the footprint near our airport,
but also a deep water seaport in Buffington Harbor that
made it available for shipments of goods and things of

(45:12):
that nature. That we're looking to partner and collaborate around
dealing with trade and this airport sits right in and
foreign trade zone. So not a lot of communities can
say or share the logistics that we have when it
comes down to transportation, Like ninety I sixty five, every
major corridor if you look up and it says Indiana
is to crossroads to America, which is one of our taglines,

(45:35):
and you look at the rail lines, the highways and
byways in Gary, we're definitely at the heartbeat of that.
So transportation logistics is tremendously a great opportunity tourism and hospitality.
Right now, as you mentioned, our partnership with the hard
Rock has been solidified where hard Rock is built in

(45:55):
Grand New Casino on eighty ninety four, which is at
the gateway in the corridor are going into the Illinois border.
But right now we've invested in a future partnership with
harror Rock to build a brand new convention center to
build out an entertainment corridor for northwest Indiana. So one
hundred and forty million dollars investment that's going to be

(46:17):
going into that gateway. Harrorrock has in preparation to build
a new hotel at that gateway and corridor along with
other private developers that we're going to build at the
same time to build that out.

Speaker 18 (46:31):
We are talking right now for those of you just
joining us, with Mayor Eddie Melton, the mayor of Gary, Indiana,
famous worldwide at one point for the Gary steel Works
and the city itself the birthplace of the Jackson family.

Speaker 11 (46:48):
Of course, I think.

Speaker 18 (46:49):
The first, the first major city with the black mayor.
I believe in the in the late sixties. And Mayor Melton,
you have done some things. You've cut homicides in Gary,
You've stabilized city finances in Gary, and you've reversed the
population decline. How have you managed to do that? And

(47:12):
I was going to ask how you keep up momentum,
but how have you even done that to begin with?
Especially reversing the population decline. That seems like a huge
step for any city, but certainly for Gary, Indiana.

Speaker 10 (47:23):
Yeah, it's a collaboration of partnership. We have a really
good team. One of the things that I learned being
a part of the Harvard Bloomberg program is and this
is something that Michael Bloomberg came and shared with us,
is you have to build a good team first. And
that was something I was very passionate about I was
one of the cohorts of twenty twenty four the new

(47:45):
mayors to help Bloomberg helped build our one hundred day
Plan with us, and this is the fruits of that labor, right.
So from the population decline aspect, we've done things to
make it smarter and easier to build in a city
of Geary. Home values are starting to increase significantly. We've
seen an increase in our building permits, individuals investing in

(48:09):
real estate, coming to flip old and abandoned homes, but
also building new construction as well. So Indiana University Northwest
recently did a white paper that said, for the first
time in fifty years, Gary population has grown, not a
significant growth, but it's definitely incremental growth. A little bit
close to six hundred new residents. But you got to

(48:31):
think about it, we were losing hundreds of residents for decades,
so we're definitely proud of that. When we talked about
the homicide approach, Sadly, when I was growing up, Gary
had the stigma of being a dangerous place or quote
unquote murder capital. This is one of those stigmas that
other communities have had as well. Well, that's not the

(48:53):
case anymore. I think when you look at the work
that we're doing on violence prevention, Workforce, developed a training,
collaborating with our schools right and actually policing smarter using technology.
All of that has played a part in that, but
also great leadership with our new chief police.

Speaker 19 (49:11):
Mayor Melton, I just want to ask him, just got
about forty second. Indiana has come up as one of
the possible states that could do redistricting mid cycle. Jd Vance,
the Vice President, is going to Indianapolis. I believe it's tomorrow.
What impacting might redistricting have on your efforts to revitalize
your city.

Speaker 10 (49:30):
Well, I've always loved to be a bipartisan elected official,
but I don't know how much more power they will
want in a state of Indiana that they already currently
have a super majority. This is simply to win more
congressional sleep seats and to bring back the legislature. Right now,
I don't know if that's going to be the best
use of text dollars.

Speaker 2 (49:52):
That was Eddie Melton, the mayor of Gary, Indiana, along
with Carol and Bloomberg News TV anchor Matt Miller, another
mayor who's been in the news lately is one who's
a little closer to home for those who live in
the Tri state area. Ahead of New York City's upcoming
mayoral election in November, Mayor Eric Adams sat down with
the Bloomberg News senior reporter Miles Miller to address President

(50:14):
Trump's threat to deploy the National Guard in New York
like he's done in Washington, DC.

Speaker 20 (50:19):
The partnership between the federal government and the city and
state government is extremely important, and I think there's a
role we need. My role is to make sure New
York are safe, and the numbers are shown we're doing that,
and the partnership of making sure guns don't come into
our city, and that's what we want to continue to
do with the federal government. We are ready collaborate with

(50:41):
the federal government every morning ten am with the hider, City,
state and federal authorities to go after shooters and those
who bring guns into our cities. We are very clear,
always have been. I have never moved away from the
public safety. That's a prerequisite to our prosperity. And we're
going to continue to do an amazing job. And if
the federal government wants to communicate with us and ask

(51:03):
us to go to other municipalities and help them see
what we're doing. We're willing to do that because they're
safe Americas of safe New York City, and we want
to help any way we can.

Speaker 2 (51:12):
You're listening to Bloomberg BusinessWeek. Coming up, we stick with
the mayors of America and check in with the mayor
of New Rochelle, New York on tackling housing affordability. That's next.
This is Bloomberg.

Speaker 1 (51:28):
This is the Bloomberg Business Week Daily podcast. Listen live
each weekday starting at two pm Eastern on Applecarplay and
Android Auto with the Bloomberg Business app. You can also
listen live on Amazon Alexa from our flagship New York station.
Just say Alexa play Bloomberg eleven thirty.

Speaker 11 (51:47):
Well.

Speaker 2 (51:47):
Housing is an issue all over the country. We know this.
There's not enough of it, it's too expensive because there's
not enough of it, and politicians at the national level
only have so much control thanks to the local zoning
laws and the reality of local politics. So what is
a city to do. New Rochelle, just outside of New
York City, is trying to buck the trend and build homes.

(52:10):
We're joined by the mayor Yadira Ramos Herbert. She's a
Democrat of New Rochelle. She joins us here in the
Bloomberg Interactive Brokers Studio. We should note that the City
of New Rochelle has received funding as part of the
Bloomberg Philanthropies Mayor's Challenge, and the mayor has participated in
various Bloomberg Philanthropies programs.

Speaker 6 (52:30):
Mayor Ramos Herbert, thanks for being here. Thank you for
having me.

Speaker 16 (52:33):
As we've been discussing, we know the US housing supply
and affordability really remains a prominent issue for so many
Americans who are looking to find a place to live.
Tell us a bit more about what you're doing in
the City of New Rochelle, which of course we know
is only about seventeen miles away from where we're sitting
right now in midtown Manhattan.

Speaker 6 (52:49):
What are you all doing to address some of these concerns?

Speaker 21 (52:51):
Absolutely so. Back in twenty fifteen New Rochelle setup, but
we now call the newrochell model a form based zone code. Essentially,
the city Council, in partnership with RXR and working with residents,
really sat down and took a look at where can
we build and what do we need to do to
streamline processes, sort of frontload some of the environmental reviews
and processes so that when developers come in, they can

(53:13):
be approved in as little as ninety days, break ground,
and essentially start leasing out in three years.

Speaker 2 (53:18):
Ninety days. I mean, that's like a different language. Then
we're like a different reality than we're used to if
we're talking about development. Just contextualize that for us. How
long would it typically take if you weren't able to
fast track this?

Speaker 6 (53:32):
I mean, I guess, and.

Speaker 21 (53:33):
You were from five to ten years?

Speaker 2 (53:35):
Is anything I mean within.

Speaker 21 (53:36):
The last ten years in nine years, woy exactly exactly.

Speaker 2 (53:39):
You mentioned RXR. Talk a little bit about public private
partnerships here and how you view as mayor the need
to partner with for profit companies in order to get
this done.

Speaker 21 (53:51):
Absolutely, it's been a key to what's allowed to be successful.
Those resources allow us to invest in our community without
raising property taxes. We worked with the community here do
you want to see in you Rochelle? And through our
public private partnership, we've enhanced plazas, We've brought murals, we've
increased ev charging stations, We've bought a black box theater,
right to our main street. We're opening parklets and so

(54:11):
really working together providing assurances to developers. Everybody essentially wins.
And never mind that rents are actually holding steady and
actually decrease the median rent in twenty twenty to twenty
twenty three at a rate that's unheard of in the region.

Speaker 6 (54:23):
So what have been some of the challenges.

Speaker 16 (54:25):
Of course, this isn't something I imagine had to have
been easy to accomplish, So what were some of the
challenges that you all experience as you were trying to
deliver a world an area city in which things are
a bit more affordable.

Speaker 21 (54:37):
Sure, I mean what's really wonderful is when they started.
I wasn't on the city council. I was a mom
of two kids, so I was the resident sort of
being like, I want to see stuff in the downtown.

Speaker 6 (54:44):
I want to know what's going on.

Speaker 21 (54:46):
I think change is hard, right and right now I
kind of call it like our teenage years, you know,
where two thirds of our buildings have been approved, We've
authorized eleven thousand units, eleven thousand kitchen table moments, and
about two thirds have been authorized and leasing up and
so there's construction and there's and maybe the right turn
you make for coffee you have to make a left
and wait a few more minutes at the light. But
it's staying engaged with the community and reminding them there

(55:07):
are little tangible assets in our downtown that did not
exist six years ago, never mind again contributing to the
housing and other investments we've made surrounding the downtown.

Speaker 2 (55:16):
What have been the politics of this, Because when we
talk about zoning and we talk about the idea of
building more dense and affordable housing or just more housing people,
I guess I could rephrase this. People love to complain
that housing is too expensive, but then when it comes
to actually building that housing, if it's put up to
a vote, m they strike it down.

Speaker 6 (55:36):
Not in my neighborhood, they don't want it.

Speaker 2 (55:37):
Understand well, it depends on It depends on where you live,
because that has to do with zoning, and that might
not actually be up to you. In certain parts of
New York City. It's not necessarily up to us, and
we've seen that play out. But politically this stuff can
get really charged. What do they think of it?

Speaker 6 (55:51):
Absolutely?

Speaker 21 (55:51):
I mean it's the forum based zone coding essentially allows
the city council, the elected officials to set the scaffolding
and sort of pinpoint where and then hands off the
professional staff actually closed the deal. We have a council
manager form of government, so our city manager, our commissioner
of development, we have an industrial development agency that really
work out the nuances, the financial elements of it, and

(56:12):
the projects are authorized. So again, when you decide to
build a new Michelle, there's assurances you don't have to
worry about a project being voted down the way maybe
other regions and municipalities do. If you fit the specs
that we have already identified. Again, the council, working with
the staff and the community, you have an assurance that
you're going to be able to lease up within two
to three years of breaking round.

Speaker 16 (56:29):
So you mentioned that you spent a lot of time
talking to the community, engaging with the community to see
what they'd like to see reflected in the area.

Speaker 6 (56:35):
What are some of the things that they've been interested
to see.

Speaker 21 (56:37):
Green space, of course, more space for kids to play.

Speaker 7 (56:41):
More dogs are a big.

Speaker 21 (56:42):
Hit, and so dog runs and opportunities for dogs to
have space to kind of stretch their legs. I guess
leaving the apartments we are a huge lover of the arts. So,
as I mentioned, we have a black box theater that's
going to open the first half of twenty twenty six,
and we've added murals to the community. But the downtown
development has also served as the list for other parts
of development. So we have a project called the Link.

(57:03):
We're taking three lanes of a Robert Moses kind of
project and making it a linear park connecting parts of
our farther out of our downtown to the actual downtown proper.
We just approved a project Pratt Landing is what we
call it. It's going to give waterfront access in addition
to a community asset in an armory, ninety nine condos,
one hundred apartment buildings, and a hotel, and revitalizing our

(57:24):
train station. In three to five years will be the
only station in Westchester where with one seat you can
go to Grand Central or pen And so this development
has allowed us to really respond to resident needs, concerns
and what they want to see in a really holistic way.

Speaker 2 (57:36):
So we like talking to mayors because and everybody who
listens and watches our program knows that it's where the
rubber meets the road when it comes to actually getting
stuff done. Sure, really being accountable each.

Speaker 11 (57:46):
And every jors catch us love on that afternoon, specifically
transportation and in environment just live on you.

Speaker 2 (57:58):
Talked about, Okay, well, if there's more density, if there
is more housing, you might have to wait more when
you take a right turn to get your coffee because
the traffic is increased. Do we live in a world
where we can realistically think that we could improve mass
transit in small towns or have we shown that as
a country we just cannot make those investments. I mean,
look at California's high speed rail and the failure that

(58:20):
I think many people would say we saw there.

Speaker 21 (58:22):
So New Rochelle already has the privilege of being the
second busiest line on the New Haven's lines, second only
the Grand Central believe it or not, And the majority
of our buildings are actually being built around this transit
oriented development. We're also a hub to nine bus lines,
county and city bus lines, so you can get to
the Bronx or Yonkers right from the same transit center.
And our development allows us to invest in some micromobility options.

(58:43):
We have something called this circuit, which is an electric shuttle.
You can call it like you call Ubert absolutely free.
It takes you into various parts of the city where
scooter nation as well, so micromobility, and we're investing in
bike lanes. The link will actually add bike lanes and
connectivity in another way. So I think based on our foundation,
but also the way we've been able to expand, we
are addressing transportation in a green way.

Speaker 2 (59:02):
That's interesting to hear that, like at a micromobility level
in addition to changing the way traffic patterns are. We're
speaking with Yadira Ramos Herbert, the Democratic mayor of New Rochelle,
joining us here in the Bloomberg Interactive Broker's studio. As
I mentioned, housing is probably one thing that Democrats and
Republicans at the national level can agree on needs to
be addressed. Their way of doing that doesn't necessarily fall

(59:25):
in line with one another. They don't see eye to eye.
We heard from Jade Vance at the vice presidential debate
last year talking about opening up federal land, for example,
to build more housing. What is your advice to leaders
around the country, because you've been able to do this
successfully as ways that other communities can do this.

Speaker 21 (59:43):
I mean, I think some of the models that can
be barred from a streamline processes. What are the pain
points every municipality.

Speaker 2 (59:48):
You're essentially saying, get rid of.

Speaker 21 (59:49):
Regulation, streamline processes regulation.

Speaker 2 (59:53):
How do you do that without getting rid of regulation? Now,
do you make sure that environmental review that you're not
going to kill the sea turtles or whatever if you
build here.

Speaker 21 (01:00:00):
So we did conduct an environmental review back in twenty
fifteen and with in partnership with RXR. So it's not
that we're getting rid of it, we're just front loading
that process so that you have a sense already of
if you choose to develop in this site, what are
some of the issues, what's the investment you're going to
have to make to meet those kind of codes. So
I think that's one We looked at a lot of
underutilized sites. Some of our sites were like old parking
lots that were not being used, that were.

Speaker 5 (01:00:22):
In bad shape.

Speaker 21 (01:00:23):
You know, former schools that were closed but the structure
was still there. And so every municipal leader knows their community,
they know their corners where they could be a little
bit more energy and lights on, and that with that
in combombination with streamlining processes, I think will allow some
positive results for this in the housing front.

Speaker 16 (01:00:40):
So I want to go back to your earlier question
just about what types of advice. I know you mentioned
like some of the things that you all are working on,
but I would say, you know, more logistically, what type
of advice would you give to other parts of the nation,
because not everywhere is like Neuroshelle.

Speaker 6 (01:00:53):
Of course we were talking about LA we could talk
about New York City.

Speaker 16 (01:00:56):
Here in Manhattan Midtown, sure, what is some advice that
people can take away here?

Speaker 21 (01:01:01):
I still stand by you know your corners, you know
your blocks, you know the underutilized sites, you know where
maybe it's like there, really business hasn't grown there there
really has, It's been empty, there's lack of density. And
I know it's tricky to say mid Tom Manhattan, and right,
you're gonna use that specifically. I appreciate where we are,
but every leader knows every corner. I know every corner,
every block, and where to think about that and so

(01:01:21):
really thinking about what can be catalyzed and again we
all know our own zoning and processes. Really being honest
and holistically reviewing that I think will allow different communities
to catalyze and also add housing in a way. That
helps to adjust the crisis that we're facing.

Speaker 2 (01:01:35):
You have a lot of degree. Yes, you're a litigator, Yes,
in a previous life or currently. Is this a job
that you can do while you're mayor.

Speaker 5 (01:01:43):
Yes, that's a great question.

Speaker 21 (01:01:47):
I would not be able to do it at the
same pace that I did when I was a new lawyer.
I was also an associating at Columbia Law School prior
to becoming mayor. But I actually am looking to do
a little bit of practice on the side.

Speaker 2 (01:01:58):
So this is the question about your own future and
how you think about your own political path forward. What's
next for you.

Speaker 21 (01:02:06):
I don't think about my political path forward right now.
The job is to make sure all eleven thousand units homes,
kitchen table moments are catalyzed. It's to make sure the
link launches. It's to see the landing project, the waterfront project.
And we also started something called the Vanguard Initiative. We're
investing two point twenty five million dollars in small businesses.
I want to turn on those lights on every one
of those first floors in my downtown.

Speaker 6 (01:02:26):
That's my mission.

Speaker 21 (01:02:27):
That's the only thing I'm focused on right now.

Speaker 2 (01:02:28):
You don't think at all about a bigger platform.

Speaker 21 (01:02:32):
I love the portfolio that Mirochelle has given me, and
that's really one. I want to finish the job, and
to think otherwise would take my distraction.

Speaker 2 (01:02:39):
When do you think the job will be finished?

Speaker 6 (01:02:40):
That's a great question.

Speaker 21 (01:02:41):
I mean the link, you know, maybe I think within
I would argue within five to seven we will see
a significant transformative change in the downtown that can be
measured through sales tax revenue and other initiatives and incentives
coming to life.

Speaker 2 (01:02:54):
That was Yadira Ramos, Herbert, mayor of New Rochelle, New York.
Bloomberg News cross asset reporter Emily Graffeo joining me there
as well. You're listening to Bloomberg Business Week, coming up
from saving pucks to saving the planet. How New York Rangers,
legend to Mike Richter is looking to build bigger, better
and more sustainable buildings.

Speaker 17 (01:03:13):
We are simply transferring heat. It's the idea of a
cold beer in your hand on a warm summer day.
There's a really a therm transfer, a heat transfer from
that warm hand to the cold beer. The beer heats up,
your hand cools down. We use the thermal mass of
the Earth to do that, and it sounds complicated, but
it's just physics and the really the general temperature of

(01:03:37):
the Earth doesn't waver a lot. Once you go about
four feet down below the frost line of the ambient
temperatures about fifty five degrees, and we take advantage of that.

Speaker 2 (01:03:45):
That's next. This is Bloomberg.

Speaker 1 (01:03:50):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five Easter and
listen on Apple Karplay and Android Auto with them work
Business up or watch us.

Speaker 11 (01:04:02):
Live on YouTube.

Speaker 2 (01:04:05):
Brightcore Energy is digging deep for geothermal heating and cooling.
Not just geothermal, though, they're also working on energy efficient lighting,
solar energy, really everything to help big buildings use less energy.
Mike Richter joins us. He's president of Brightcore Energy, also
former three time NHL All Star goalie, a nineteen ninety
four Stanley Cup champion with the New York Rangers. He

(01:04:26):
joins us from Armack, New York. Also with us in
the Bloomberg Interactive Brokers studio. Will Wade, He's energy reporter
for Bloomberg News. Did you play in the NHL?

Speaker 22 (01:04:35):
I did not?

Speaker 2 (01:04:36):
Adjis scate it at all. Okay, I can't either. I
just want to make sure before we move forward a
full disclosure. Mike Richter's brother, Joe Richter, works here at
Bloomberg for Bloomberg's Research arm Bloomberg Intelligence. Good to have
you both with us, Mike, I just want to start
with you. For people who know you from your career
in the NHL, what was your transition like going from

(01:04:56):
playing hockey professionally to working in sustainability with a little
stop at yell between that.

Speaker 5 (01:05:04):
Well, well, first, thanks for having me on. Great it was.
It's it's an adjustment.

Speaker 17 (01:05:09):
I think I ended my career about thirty eight years
old back in twenty twenty four, and you're a little rudderless.
You've been given your time, energy focus to being as
good as you can be in one very specific area,
and it is a bit of an artificial world. And
I loved every second of it, and I had, you know,

(01:05:30):
it was a great gift to be able to play
in the league and in the you know, New York
area in particulars it's really a special place. But I
had a young family at the time, and I was injured,
and there was a decision to make you know, d
you stay within the confines of that same I guess
focus and I've always had an interest in the environmental

(01:05:53):
world and energy in particular, and that intersection between finance
and energy is a massive one. It's only in the
last two decades. So the stop at Yale was excellent.
It helped me kind of position myself and have a
segue from one world to another. And this is just
a great opportunity and a really worthwhile pursuit.

Speaker 22 (01:06:14):
So, Mike, tell us about your transition to developing sustainable buildings.
I'm particularly interested in the geothermal I've seen some projects
do that. It's unique. It's not something we're seeing a
whole lot of yet, but I think we might be
seeing more of it.

Speaker 17 (01:06:32):
Great question. I guess two things. The energy efficiency is
kind of always InVogue, right. If you're using less resources,
you're going to be paying less. And so ultimately our
value proposition is selling savings to commercial industrial buildings. And
there is no better way of heating and cooling and
building than groundsource heat pump. And I just want to

(01:06:53):
make a distinction there geothermal as we see a lot
of Google's doing some work out there, Furvo, some really
great companies are working on the hot rock geo thermal
out west, very deep in the ground, using steam to
turn turbines as you would with a cold power plant
or even a nuclear power plant, and literally creating electrons.

(01:07:13):
We don't do that. We are simply transferring heat. It's
the idea of a cold beer in your hand on
a warm summer day. There's really a therm transfer, a
heat transfer from that warm hand to the cold beer.
The beer heats up, your hand cools down. We use
the thermal mass of the Earth to do that, and
it sounds complicated, but it's just physics. And the really

(01:07:35):
the general temperature of the Earth doesn't waver a lot.
Once you go about four feet down by little bit frostline,
the ambient temperatures about fifty five degrees and we take
advantage of that. You have heat pumps just like you
would in your air conditioning unit or more particularly in
your freezer and refrigerator, and instead of blowing that hot

(01:07:57):
air down on the ground and keeping the cool air
in the box, we just put it through a closed
loop system into the ground. That heat transfer takes place,
and you're lifting the air from fifty five degrees in
the winter time to maybe seventy to b warm inside
and in the summertime it's almost free air conditioning. So
we always say the coefficients and performance are are as

(01:08:18):
good as you're going to get right now. And honestly,
we try to be agnostic on what we're offering and
if there was a better method of heating and cool
and building, we be on it. But this has been
going on in Europe for about two decades and I'm
speaking to you in our month New York. We have
an office in Brooklyn, but also when in Stockholm Suiten,
where they have been leading the charge with allow of
the design and the execution.

Speaker 5 (01:08:38):
So we're thrilled by this.

Speaker 17 (01:08:40):
And as you know, the energy costs are going up
and demand is skyrotting, so good time to be in
this place.

Speaker 22 (01:08:45):
The geothermal involves digging a lot of holes in the ground.
Is this something you can add to an existing building
or does it have to be when you build the
building new?

Speaker 17 (01:08:54):
Yeah, and that is a great question. That is the
joke point where it gets quite complicated. You know, eighty
percent of the building stock in a city like New York,
for example, is going to be here in twenty years.
So we've done new builds, and we love it. It's
virgin territory. You command, you get the wells stuck in
the ground, you cap them, and you're connected to the

(01:09:14):
mechanical system inside, build a building around it and you're done.
How do you go into a building that's existing and
then do that same routine very very difficult. You're space constrained,
and you're even sometimes technologically constrained with what's already in
the building. So that's been the technological transformation that we've
been able to pull across the Atlantic from Europe. Just

(01:09:35):
like the on gas industry has had such great innovation,
we are really starting to write in the cottails to
that innovation and we are able to go. Now the
addressable market has blown up in terms of its scale
when you can start doing the space constraint places like
an urban setting New York City as a great example,

(01:09:56):
and the retrofit market.

Speaker 5 (01:09:57):
We literally have smaller rigs.

Speaker 17 (01:09:59):
Now I can get into these tight spaces nine and
a half feet of clearance and be able to go
five hundred feet down through the substructure of the building
into Manhattan. Shifts the bedrock and it's very stable seismically,
the thermal conductivity is phenomenal. It's a really amazing thing
that you can do, and it actually enhances the strength

(01:10:19):
of the building.

Speaker 5 (01:10:21):
It doesn't weaken it at all.

Speaker 17 (01:10:23):
But you get a transformation in terms of not only
your greenouse gases, but really, as I said, we're selling
savings what you're paying operationally month to month to the
energy companies.

Speaker 22 (01:10:34):
So you can put solar on the roof and geo
thermal in the basement and make savings at both ends
of the building.

Speaker 17 (01:10:40):
You really can actually and these heat pumps are moved
by the power that they use is electricity, and they're very,
very efficient. But I think in a place like New York,
there's limited opportunities we can change every light bulb. We're
probably not putting solar because you think of a posted
roof this massive building below fifty story building, for example,

(01:11:02):
You're just not going to get much power from that
small solar array.

Speaker 5 (01:11:05):
What do you do?

Speaker 17 (01:11:06):
And we've been able to actually do retrofits in Manhattan,
right in the heart of Manhattan, and it profoundly changes
the trajectory of that building's ability to afford payments on
the energy and just see an ROI that's really substantial.

Speaker 2 (01:11:22):
We're speaking with Mike richt Or, president of Brightcore Energy,
also former three time NHL All Star goalie nineteen ninety
four Stanley Cup champion with the New York Rangers. Also
with us in the Bloomberg Interactive Broker studio. Will Wade,
energy reporter for Bloomberg News.

Speaker 23 (01:11:36):
Mike, talk a little bit about the regulatory environment. There's
been a lot of headlines when it comes to tax
incentives for green energy. Is that area helping or hurting
your business right now?

Speaker 5 (01:11:50):
There's no question.

Speaker 17 (01:11:52):
We're a young industry in North America anyway, and so
the incumbents have an advantage. They have scale, and that's
why you have these incentive structures. The Trump administration recognized
the efficiency that's brought by geothermal and this Reconciliation bill
we came out really well at these massive federal tax

(01:12:14):
treatments are transferable, so not for profits can use them.

Speaker 5 (01:12:18):
Higher ed houses of worship.

Speaker 17 (01:12:21):
Again, we're in the commercial industrial space and it's really meaningful.
You can actually start to save up the forty and
if it's an economic development zone, fifty percent of the
capex of the front end costs. And it's already established
that the operational costs are there. The problem was you
could never get to them because it's so expensive upfront,
all those holes in the ground. That's a meaningful expense

(01:12:43):
that you wouldn't have with, say, with air source heat pumps.
What's great about this is though groundsource heat pumps are
two times as efficient as air source, so four times
efficient is often what we're replacing. So there's really meaningful
savings if you can just unlock that capex up front.
Now you can have their party finance, of course, but
the big thing is we've maintained those incentives and they're

(01:13:04):
really significant.

Speaker 5 (01:13:05):
And that's at the federal level.

Speaker 17 (01:13:07):
These things are stackable, so you have federal incentives, have
individual states have better or worse, and even different utility zones.
And the utilities understand the squeeze that they're in because
there's so much demand coming with AI and data center.

Speaker 5 (01:13:24):
So what do you do with that?

Speaker 17 (01:13:25):
You look toward efficiency and if I can make say
the Empire State building more efficient than it once was
in the ex use of forty percent less electrons, that's
a meaningful diminishment for kan ed in this case and
kind of territory. So they are they've been incredibly creative
and supportive. So we're in a very very good spot
with that.

Speaker 2 (01:13:42):
The upfront costs though with this technology are pretty high
when you think about the capex involved. How do you
make the numbers work and sort of especially compared in
places where energy isn't that expensive.

Speaker 17 (01:13:54):
Well, thankfully this is where my goaltend and background helps.
I leave it to the finance department and they've been incredible. Look,
you can't lie with these numbers. So a problem, that's
the problem, right, But the physics have to work, and
so we do a no go to go evaluation right
up front, understanding how what the thermal load of the

(01:14:15):
building is and how many boreholes we can get in there,
and how much is going to cosset for linear foot
and all those things come into play. Excuse me, but
in the end, with these incentives, none of the stackable incentives,
it can often be less than what the incumbent was
going to be to replace anyway, So we stack up
very well against air sores, heat pumps and.

Speaker 5 (01:14:37):
You know, natural gas speakers.

Speaker 17 (01:14:39):
And whatnot, and it's it's case by case you have
to do that evaluation. And truly we don't expect people
to say, hey, I want to pay extra for being
green or sustainable. No one knows what that is. They
do understand I'm saving operationally, and there's a return on investment.
And these things are really robust, right. They're not just
flood proof and fire resistant because they're literally underground and capped,

(01:15:01):
but they have a life expectancy of seventy five to
one hundred years. So I sid only go use car
salesman sometimes when you give that pitch, But there's a
lot that lends itself to really suggesting these things should
be the kind of the shape of where.

Speaker 5 (01:15:14):
Buildings are going in the next five to ten years.

Speaker 2 (01:15:16):
Our thanks to Mike rich Dr, president of bright Core Energy.
Mike a three time NHL All Star and in nineteen
ninety four Stanley Cup champ with the New York Rangers.
He joined me alongside a Bloomberg News energy reporter Will Wade.
Our thanks to Emily Graffeo for joining me there as
well while Carol was out. And that wraps up the
weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks

(01:15:38):
so much for joining us. Be sure to tune into
Bloomberg Business Week daily Monday through Friday, starting at two
pm Wall Street Time on a Bloomberg TV, Bloomberg Radio,
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(01:16:02):
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Speaker 1 (01:16:23):
This is the Bloomberg BusinessWeek Daily Podcast, available on Apple, Spotify,
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(01:16:44):
and always on the Bloomberg terminal.

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Bloomberg Businessweek Weekend - August 29th, 2025

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Carol Massar

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