Axios Closer

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February 07, 2024

Wednesday ✅.

Today's newsletter is 697 words, a 2½-minute read.

🔔 The dashboard: The S&P 500 closed up 0.8%.

1 big thing: Fast food pushback

Illustration: Sarah Grillo/Axios

American fast-food companies are speeding ahead with global growth plans, but turmoil in the Middle East threatens to trip them up, Nathan and Axios' Kelly Tyko write.

Why it matters: The U.S. market is saturated with fast-food competition, making foreign markets particularly enticing as growth targets.

The big picture: Yum Brands, McDonald's and Starbucks are among those rapidly expanding their global footprints.

  • Yum is opening new locations at a rate of one new spot every two hours, it said today, having added 2,140 KFCs, 832 Pizza Huts and 346 Taco Bells in 2023.
  • McDonald's and Starbucks plan to open 10,000 and 17,000 new stores, respectively, over the next several years.

Yes, but: The conflict in the Middle East is beginning to undermine sales for all three, according to executives from each company.

  • KFC gets about 6% of its sales from the Middle East, while Pizza Hut gets 5%.
  • McDonald's CEO Chris Kempczinski said the chain was also seeing impacts in Muslim countries like Indonesia and Malaysia.

Between the lines: "Some consumers are shunning American brands because of the country's general support for Israel," GlobalData managing director Neil Saunders tells Axios in an email.

Meanwhile, Saunders notes that rising menu prices have deterred some international customers, raising the risk for global expansions if they collide with sluggish local economic growth.

  • Low consumer sentiment in China is also impacting the brands, executives have noted on calls.

What's next: Restaurant Brands International, whose restaurants include Burger King and Popeyes, releases its earnings on Tuesday.

2. Charted: Hydrogen powering up

Data: Hydrogen Fuel Cell Partnership; Chart: Axios Visuals

The outlook for hydrogen-powered vehicles is improving after decades of unfulfilled hype, thanks to unprecedented federal support and increased private investment, Axios' Joann Muller writes.

What's happening: In October, the Biden administration awarded $7 billion from the 2021 infrastructure law to establish seven regional hubs for hydrogen production.

  • And the Inflation Reduction Act includes tax incentives for fuel cell vehicles, hydrogen infrastructure and energy storage.

The latest: General Motors and Honda have started producing fuel cells at a factory near Detroit to power a new plug-in hybrid fuel cell version of Honda's CR-V crossover utility coming this spring.

Go deeper

3. What's happening

🚙 Uber posted its first full-year profit since its IPO. (WSJ)

🔴 Target is considering a paid membership program like rivals Amazon Prime and Walmart+. (Bloomberg)

🤧 CVS, which owns health insurer Aetna, became the latest health company to warn about rising medical costs. (CNBC)

4. Exclusive: Lyft partners with DHS

JFK Airport in New York City. Photo: Michael M. Santiago/Getty Images

Ride-hailing app Lyft is partnering with the Department of Homeland Security to teach drivers how to spot human trafficking ahead of the Super Bowl, Nathan writes.

Why it matters: An estimated 27.6 million people worldwide are victims of human trafficking, according to the State Department.

Driving the news: Lyft is joining DHS' Blue Campaign, an awareness effort designed to educate people about how to take action to thwart traffickers.

  • Lyft will provide tutorials to its drivers, starting in the Las Vegas area, where the Super Bowl is being played this week.

Worth noting: "Crimes like human trafficking can be more prevalent during events like the Super Bowl due to the mass volume of people and anonymity that large gatherings provide," DHS says.

5. Astronugget

Illustration: Brendan Lynch/Axios

Blue Origin and SpaceX get all the headlines.

  • But a little company in the U.K. with 25 employees has been sending things into space for over a decade.

Sent Into Space, the WSJ noted today, makes a business out of sending "stuff" into "space" (at 110,000 feet, it's technically just the stratosphere, but the pictures will fool you).

Details: A chicken nugget, Jameson whiskey, a wedding dress, and a meat-and-potato pie have all taken the trip, per the report.

Um, why? It's fueled some pretty good marketing campaigns. And why not?

Between the lines: There are no rockets involved. A polyethylene balloon takes the object up for its photo shoot before descending back down to Earth.

  • A single trip can cost between a few thousand dollars to "hundreds of thousands," per the WSJ.

6. What they're saying

"Continued investments in diversity initiatives are essential to the success of your business and our country's economy."
— Leaders of a dozen nonprofits representing the economic rights of minority communities, in a letter today to Fortune 500 CEOs, assailing the backlash to diversity, equity and inclusion initiatives.

Today's newsletter was edited by Pete Gannon and copy edited by Sheryl Miller.

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