The Wall Street Journal covers companies. Pirate Street Journal cover categories.
Each week, we pick three headlines worth paying attention to and break down the category underneath. Live every Tuesday at 7 am PST / 10 am EST. See the news through a different lens. Keep reading in the Deep Dive Reports.
Dear Friend, Subscriber, and Category Pirate,
Here’s what we covered in this episode:
1. Jersey Mike's built the best customer base in dining. Gen Z is 2% of it.
Jersey Mike’s is worth about $7.5 billion after 20 straight years of same store sales growth and $4.3 billion in sales. About 70% of its customers are Gen X or boomers. Gen Z is 2%. Wall Street is paying about 20 times earnings, a premium to McDonald’s and Wingstop, for a plan to go from 3,300 stores to 15,000. Blackstone put $1.8 billion of debt on the company first, some of it to pay Blackstone. That debt is why 15,000 is the number.
The new CEO is moving money into TikTok. Jersey Mike’s spent about 1% of marketing on social last year while peers spent 10 to 25%. The 2% measures word of mouth, who gets named when somebody says let’s go eat. Gen Z says Chipotle, then something else. Jersey Mike’s is not on the list.
The move is to frame, name, and claim a new kind of sub, which means naming a problem nobody has named yet and owning it. A banh mi sub. A Mexican sub. Something a 22 year old texts a friend about.
Sushirrito. A million burrito places. One of them put sushi in it.
Jimmy John’s. Never claimed best. Claimed freaky fast.
Subway. Chased young and cheap with discounts, does about $500,000 a store, and is shrinking.
The unit economics already work. About $575,000 opens a Jersey Mike’s and the average store does $1.37 million a year. Gen Z is the first American cohort to put business formation ahead of family formation. Sell them the franchise, not the sandwich.
2. San Francisco's $1.2 billion mall forgot what business it was in
San Francisco Center did more than $1,000 a square foot before COVID and was valued at $1.2 billion a decade ago. It hit 93% vacancy, closed this year, and two buyers agreed to $130 million before walking away in July. Lenders are owed $558 million. Brokers say $130 million is the ceiling, a dime on the dollar, in a year when mall prices nationwide are up 13%.
California spent $24 billion on homelessness and homelessness went up. Ten million people have left in a decade. In-N-Out is no longer a California company.
Retail paid the bills, but the mall lived in the socialization category, the business of giving people somewhere to be together with no agenda. You met friends there and shot the sh*t an hour between the movie and dinner. Amazon took the retail. Nothing took the hanging out.
The experience makes the place.
3. Gen Z's favorite retirement formula has a bad word in it
Google searches for Coast FI are up 50% from last year, and a TIAA survey found 15% of Americans are actively going for it. Pick your retirement number and work backward with compound interest. Want $1.8 million at 65 at 7% returns? At 35 you need about $240,000. Hit it, stop saving, let it ride. One woman banked most of every paycheck living with her parents, had a million by 27, and quit a six figure software job.
Gen Z’s confidence in retiring comfortably at a normal age fell from 77% to 64% in a single year.
This is a languaging problem. The FI part is worth chasing. The coasting part is not. Call it runway and the whole thing changes shape. Five years to find your different, not fifty years of nothing.
Social Security’s trust fund runs dry around 2031. Nobody in Washington cuts it, so the money gets printed, and printed money is worth less.
The Creator Capitalist move is getting paid to be you, for the thing you are different at. Quitting a job you hate at 30 is the right call. Buying fifty years of nothing with it is the wrong one.
3 conversations to have about the news with the Pirate Eddie Bot and Pirate Christopher Bot
The bots take this week’s moves and run them against your category. They come with the founding membership and they jam 24/7.
Name what you are actually selling. Ask the bots what category your customer thinks you are in, then what you would have to become for them to text a friend about you.
Find the category under the revenue. Ask the bots what job you really do once you strip out the part that pays the bills. The mall sold retail and ran on hanging out.
Check your languaging. Ask the bots to grade the words on your goal. Coast and runway are the same math and two completely different lives.
Not a founding member yet? You can join here.
Arrrrrrr,
Category Pirates 🏴☠️
Eddie Yoon
Christopher Lochhead
P.S. - Every story this week came down to the same move: find the problem before you go shopping for a solution.
The Category Design Academy is where you do that at the category level. You name the problem only you can name, then design the category around it, so you stop competing on terms somebody else set.
The next cohort starts in October. Apply now to save your seat before applications close on September 30th.
