Issue #101: Jalen Brunson's Salads?

This week, some more big Knicks hit the timeline. No, it wasn’t that Mitchell Robinson was leaving to go to their biggest rival, the Boston Celtics. It surrounds Jalen Brunson:

For those who aren’t aware, Just Salad, is one of the leaders in the fast-casual salad and wrap space with 125 locations (Issue #39 dove into their business). Despite Sweetgreen’s early meteoric rise, Just Salad has caught up and arguably surpassed it based on shrewd moves like this. Just Salad is HQ’d in New York City and has its strongest presence there too. Getting someone like Brunson, who is maybe the most revered person in NYC, is a great match. I also love how it is an equity partnership, which should, in theory, get him aligned with the long-term growth of the business.

However, for brands working with celebrities or athletes, it is a very delicate balance to strike. Too many brands have fallen by the wayside when the celebrity founder moves on to their next chapter, which is why I love this partnership already occurring, when Just Salad has a strong base. I assume Just Salad has short-term goals to reach around 300 units and long-term goals to get to 1,000 stores. Brunson will help get them there, but it will be a combination of factors that ultimately lead to their growth.

When thinking about working with a celebrity or athlete as a brand or retailer, the first step is fit. They need to be a good match with your product and customers. One partnership that will always stick out in my mind as what not to do was a celebrity who was very vocal about being sober and not drinking alcohol, launching an alcoholic canned cocktail line. Don’t do that. Second, on the customer side, do your existing customers like this person? Will it bring in incremental, complementary customers? What is the main audience demographics of that celebrity? Having a celebrity or athlete involved just needs to be done the right way.

As an aside, I cannot talk about athletes in retail without mentioning one of my favorite partnerships out of the NIL era, where college athletes can get paid money, and now have millions to invest. Seth Trimble, the UNC guard, decided to purchase the Ben & Jerry’s scoop shop franchise location in Chapel Hill. I am very curious how he decided to end up in retail, but regardless, I think it is a super smart way to remain entrenched in a community that is a big fan of your brand.

It is no secret that KFC, and the broader Yum Brands have been struggling. Within that portfolio, however, a bright spot has emerged: Saucy. What started as a pilot in one location in Florida has blossomed to over ten locations in Florida, and expansion outside of Florida to Texas. Saucy is a very simple concept, that is very Gen Z-focused. It features a mix of chicken tenders, sauces, fun beverages inspired by the dirty soda trend, and sandwiches. Not many options, just a very simple menu. Right now, it is not a franchise location like most of Yum Brands’ other concepts; it is fully owned by the parent company. It will be very interesting to follow along and see how further expansion occurs. Also on the horizon for Yum Brands, Open House, a spin on the future of KFC.

This week, further big news came out of the Kroger supermarkets as it tries to continue to turn around the business. Kroger and Giant Eagle announced that Kroger will acquire Giant Eagle. For those unaware, Giant Eagle is a supermarket and pharmacy retailer with approximately $9 billion in annual sales and 197 supermarkets. The stores are across northern Ohio, western Pennsylvania, West Virginia, Maryland, and Indiana. The transaction has been approved by Kroger's Board of Directors, and now faces regulatory approval. A pretty low purchase price considering the sales, but that is for a reason. Kroger already has stores in four out of the five states where Giant Eagle operates; there is a clear overlap in locations. The move is super defensive in my opinion, as Kroger continues to fight off competition from mass merchandisers and other low-price retailers recently. Investors seem to feel the same way, as the stock price did not really move with this acquisition. Overall, I totally understand why Kroger made the move, but in my opinion, they should focus more on getting the most out of the existing footprint, which they are not, before expanding. It will be interesting to see first if this passes regulators, and second, how the integration works.

Fast-food sandwich chains have been a popular target for large restaurant conglomerates and PE firms. They are generally stable, recession-proof businesses that provide an affordable product and always have room to grow. In November 2024, Blackstone bought Jersey Mike’s, likely for many of those exact reasons. Now, after just under two years of operating the business, Blackstone is ready to list Jersey Mike’s on the public markets. Since Blackstone got involved, Jersey Mike’s has been on an expansion tear. There are currently 3,300 locations, 1,600 in development, and aspirations to hit 7,500 locations. A large chunk of that expansion will come from international markets, where Jersey Mike’s has a sparse number of locations. That is, however, a slight decrease from the goal of 10,000 locations that were floated when Blackstone bought it. Still, a nice return for Blackstone after purchasing it for $8B, and the IPO valuation is targeting at least $12B.

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