Small Business Resilience Highlighted at Chase Make Your Move Summit

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0:09 This is Bloomberg Businessweek 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 news as it happens. The Bloomberg Businessweek Daily Podcast. With Carol Masser and Tim Stenebeck.

0:32 Hey, one thing we want to talk about is obviously the small business community. We did get a read on U.S. small business optimism falling to a three-month low in September. A lot of what is concerning small businesses, Tim, is inflation, higher energy prices.

0:45 It matters.

0:46 It's not just that.

0:47 I mean, it also has to do with the way the consumer is feeling potentially strapped in this economy. The questions about how long this geopolitical tensions will continue, not just in the Middle East, but also Russia's invasion of Ukraine. And, you know, we talk about it a lot in the context of economic data, but small business owners are thinking about it too.

1:05 Yeah.

1:05 And so too is Stevie Barron.

1:07 He is the CEO of Chase for Business here at Make Your Move Summit in Georgia. And of course, it is hosted by the JPMorgan Chase team. But we caught up with him a little bit earlier. Here's what he had to say. First of all, we're here in Atlanta.

1:21 This is pretty cool. We're actually outside Atlanta.

1:22 Yes.

1:23 Tell us about this event and what it's all about. Your fourth year of doing this.

1:26 Yes, it's our fourth year.

1:27 We're at the Make Your Move Summit, which brings together close to 1,000 small business owners. And it's an opportunity, first of all, for them to learn from each other and to talk about all the things you just talked about in terms of how they're investing in their business, the state of the economy... The resiliency plans that they have.

1:43 So that's one big piece of it, networking. The other piece of it is just educating them on things like AI. We just actually came out of a session where we were talking about the local Atlanta economy and how that's doing relative to the U.S.

1:57 And to other states.

1:59 And we also have activations here so these small businesses can learn what JPMorgan Chase can do to help support them. Because the reality is a small business owner, particularly the businesses that we're talking about here today, and we're on the smaller end of small business.

2:11 20 million in revenue, right?

2:13 Between brand new startup all the way to 20 million. So we have a thousand businesses and they represent everything in between. And these owners are the CEOs. Oftentimes they're the CFOs, they're the head of HR, they're the chief marketing officer. And so anything we can do as a bank, to make their financial lives simpler and easier, whether it's payroll, invoicing, analytics, access to capital. They can learn all about how Chase can provide them. And the other thing I want to say about Atlanta is we launched the American Dream Initiative at JPMorgan Chase, and I'd love to share a little bit about that.

2:45 And we picked a couple of cities.

2:47 Atlanta is one of those cities that we really want to focus on how we can make the American Dream more achievable, and particularly for small business owners.

2:56 And so we're really excited about that effort.

2:58 So you mentioned it's the fourth year that you've been doing this. If you were to look back at each of those years sort of in a silo, how would you compare the optimism or the mood this year with the complicated backdrop that Carol began with? Would you say that it's been complicated all four years you've been doing this, or this one is particularly with the geoeconomics, geopolitics, and AI?

3:18 I mean, well, I think the geoeconomics a year ago, maybe you didn't have the Middle East. Well, you did have the Middle East, but a little different with Iran. But you obviously had the war going on with Russia and Ukraine. And obviously, you had nervousness about tariffs. I think they all had their own jitters each and every year.

3:35 I do think what's interesting is we do a survey of all of our small business owners every single month. And small business owners are actually very positive about their individual businesses. And the likelihood that they're going to continue to grow, succeed, and invest across the board of their own business.

3:52 Yeah, yeah. Those are all different industries.

3:54 Right.

3:55 All different industries. However, those same owners are very nervous about the economy. So about 60% of them are excited about where their businesses are heading and they're very optimistic. Only about 30% of those same folks feel the.

4:10 Same way about the economy. So there's that economy. How granular do you get?

4:13 Are they telling you energy prices are concerning us?

4:17 We don't get to that level. I mean, we can.

4:19 What's great about the survey we do every month is we have the ability to customize. So we ask questions about AI, obviously, and we've seen AI.

4:26 Comes up a lot.

4:27 And frankly, we have a session here to help small business owners ensure that they're taking advantage of AI in their business. Because frankly, if they don't, it's an existential threat for the future of their business.

4:38 Why is this so important to you guys? I mean, I'm kind of playing a little devil's advocate. We talk so much about small business owners, and it really is the backbone of the economy.

4:45 It is.

4:46 I know how much we spend on public markets and all the big names and so on, but it is really important in terms of having healthy cities and a healthy country.

4:54 But talk about it from your vantage point.

4:56 Well, let's just talk about the numbers for a second because I want to put some context to your point. Small businesses represent 45% of the GDP of the U.S.

5:05 Economy.

5:06 So how small business owners are doing is how the economy is going to do. Two out of every three new hires in the U.S. is done so by a small business. So it's not just important to JPMorgan Chase. It's not just important to Atlanta. It's important everywhere. And so we want to invest in these small business owners.

5:24 We bank around seven and a half small business owners between our small business credit card and our checking and banking relationships. We want to grow that to $ 10 million over time. That's part of our American Dream initiative.

5:37 Yeah.

5:38 You know, we want to be able to be a bank that they can access capital for. And we have commitments over the next 10 years to get to 80 billion of new originations for our small business owners. And we want a healthy, thriving small business community. And so we are investing in coaching and we have a great coaching for impact program.

5:56 Where we've already had about just shy.

5:58 Of 20,000 small businesses go through this coaching program where it could be an entrepreneur that needs help with a business plan. It can be an established business that's looking to open their second or third location and wants advice on how to do that. And we can provide that advice. It's a six-month program. We're going to ramp that up.

6:15 Our goal is to coach over 115,000 small businesses through this program. And then we're going to add more bankers across the country. You know, we have roughly 5,100 branches and we are in the contiguous 48 states and we're going to add more bankers and business bankers.

6:31 What about technologists? I mean, I think about Jamie Dimon years ago, right? Like whether it was cybersecurity, when he laid out a number... about security and spending on tech.

6:43 Yes.

6:43 And I think it surprised the world. This was a few years back.

6:46 Yes, I remember. Right?

6:47 And so, but here we are with AI.

6:49 Like, I'm just curious how you help them in that front or how much they're asking you guys about it and what.

6:53 You are doing. Yeah, so we're doing that a couple ways.

6:55 One, as I mentioned, you know, we do a bunch of seminars and we have a bunch of education series to help small businesses think about AI.

7:01 Cyber, it actually happens to be Cyber Awareness Month.

7:04 Mm-hmm.

7:05 And so we've published a bunch of research and thought leadership for small business owners to really be smart about who they're sharing their data with, how they're sharing their data. And we actually really, we just did an event in all of our 5,000 branches where we had our head of cyber at the firm come in, zoomed in pretty much into our branches. We invited clients to come in.

7:32 and talk about how they can help prepare themselves. I mean, cyber's a real threat. There's articles each and every day, I'm sure you know, and so we're very focused on just making sure they're aware of how impactful it is, and most importantly, what they, as a small business owner, can do about it themselves.

7:48 Stevie, you said that you work with companies across the spectrum. I mean, from startups with no revenue all the way up to $ 20 million in revenue. What happens when they grow above that $ 20 million figure? Do they graduate, essentially, out of the small business program?

8:01 I wouldn't call it a graduation, and there's no bright lines, but obviously at J.P. Morgan, you know, we, fortunately, our small business owners and our consumers, you can't outgrow us as a firm. Once you reach the complexity, and 20 million is really just a line of demarcation where we think a business may have a different set of needs.

8:21 So we have our emerging middle market bank that covers, you know, 20 to 100. We have our middle market that, you know, covers companies from, you know, call it $ 100 million to $ 2, $ 3 billion.

8:31 And then obviously we have our investment banking coverage.

8:34 So they want an IPO.

8:35 We can take a business from a startup that walks into one of our Chase branches, opens up a small business account. We can provide the guidance, advice, the tools and capabilities to help them grow. We love when they mature and then we can move them to the middle markets as their needs get more complex. And then if access to capital at that level and capital markets, whether it's debt or equity, I mean, we can provide M & A activity. So we love seeing this maturation process. I work very closely with our partners in middle markets. We meet all the time. And so we're happy to, to use your words, graduate a business based on the needs.

9:08 So again, I want to go back to kind of how we started macro because you really do have a great vantage point.

9:14 When you think about the U.S.

9:16 Economy through these small businesses, what are the words you would use to describe it right now?

9:20 Well, if I was going to use one word, I'd use resilient.

9:23 Okay.

9:24 Listen, if you just look.

9:26 At our own data, to your point, payrolls are up. I mean, consumer spending is strong. Where do consumers spend? They spend in small businesses. And so you just see this cycle of consumers are spending, payrolls are up, small businesses are hiring. They're paying, obviously, through payrolls, increasing payrolls.

9:45 And it's a nice cycle right now. But we are in a bit of a Goldilocks position. And so, obviously, rates are going higher. You mentioned the wars, which are driving inflationary pressure, particularly in energy.

9:57 So that's starting to impact businesses.

9:59 But again.

10:00 we've seen a lot of resilience. And even though we are at a three-month low on optimism.

10:04 We are well above that.

10:07 Historical averages in terms of that same optimism. And we're above where we were in the beginning of the year. So yes, it has dipped from kind of the spring high, but we feel pretty good.

10:16 And obviously, no one knows what's going to happen. We have no crystal ball.

10:20 Great stuff. Stevie, thank you so much. What a pleasure.

10:23 Stevie Barron, he's CEO of Chase Business Banking, joining us here.

10:26 Thanks for having us.

10:31 Stay with us. More from Bloomberg Businessweek Daily coming up after this.

10:42 Carol Master, Tim Stenevik, live here at Bloomberg Business Week Daily. Of course, the Make Your Move Summit in Georgia, hosted by Chase for Business. I have to say, every time we introduce, well, I don't know how many times, but I know a year ago when she joined us, we talked about Coca-Cola, Home Depot, UPS, Delta Airlines, Pulte Group, all of them. in the Atlanta metro area or in Atlanta proper. Mercedes, they house their North American headquarters in the metro Atlanta area. And then you've also got Rivian that I shocked you, their East Coast headquarter is in Atlanta.

11:11 I know. I was like, what?

11:13 I thought this was like a California and Illinois company, but no, they got their East Coast headquarters here.

11:17 And Mercedes just opened up like a massive Atlanta technology center as well.

11:21 Like there's just so much going on.

11:22 Just a lot of iconic brands and headquarters working with that massive corporate footprint.

11:28 Is Katie Kirkpatrick.

11:29 She's president and CEO of the Metro Atlanta Chamber, known as MAC, joining us here at the Make Your Move Summit in Georgia, hosted by Chase for Business.

11:36 So good to see you. How are you? We did realize it's a year. A lot has happened in a year. How's it going?

11:43 It's great.

11:44 I'm so glad that you highlighted all those companies as well. And glad you highlighted Mercedes-Benz because they just located their massive R & D center right here. So now it's the North American headquarters here. Rivian, not only is their East Coast headquarters here, but they also have plans to build a very large manufacturing facility that would employ 7,500 people.

12:08 How do you do that?

12:09 Because everybody has got to be competing for all of this.

12:13 Well, there is a great formula that we have, not only in Metro Atlanta, but the state of Georgia.

12:18 So we think about business certainty.

12:21 So the state of Georgia has had the best business climate ranking for 13 years in a row. We're considered the number one state for business. We also have connectivity. So I bet you all flew in through Hartsfield-Jackson International Airport.

12:35 It's a big airport.

12:36 It's a very large airport.

12:37 I walked to the wrong area to find a car and walked back, but it's okay.

12:41 It's okay.

12:42 It's okay.

12:43 You needed your steps.

12:44 But, you know, we have 160 domestic flights that are nonstop every day. 87 nonstop international flights.

12:52 And then when you talk about talent, right?

12:54 That's one of the reasons I believe Rivian chose to locate their manufacturing and their East Coast headquarters here was access to the talent. So we have something like 300,000 full-time students in our region. And if you were to draw a circle 250 miles around us, it's 1.6 million.

13:11 Wow.

13:12 So the access to talent. So you think about connectivity.

13:15 Business certainty, and access to talent, it's a great secret sauce.

13:19 Well, with growth also comes challenges.

13:21 You look at traffic in this area, and you're laughing, but this is one of the areas of the country where the traffic is consistently over and over again.

13:30 Tim, we call it success jams.

13:31 Success jams. Okay, I like that. I like that.

13:34 Even when you're stuck in that success jam.

13:35 But the point is that infrastructure needs to make sure to keep up. So how do you work with local and regional and state governments to make sure that infrastructure, and even the federal government, to make sure that infrastructure keeps up?

13:48 It's really important to business, right, that they can move products and goods and people around a region and a state.

13:54 And so it's very important to our business community.

13:56 And I was telling somebody the other day, we were founded in 1859, and we still have all of our documents from 1859 forward. And we were reading some of the minutes. And guess what was... Transportation.

14:10 Transportation.

14:12 Horse. Was it horse?

14:13 Well, it was.

14:14 It was about trolleys. It was about how do you move carriages through. But it was also like, how do you build a modern sewer system?

14:20 Yeah.

14:21 How do you make sure you have clean water? So it's interesting.

14:24 Education was another piece. But infrastructure is really important right here in this state. And so we work very closely with our city.

14:32 And county governments.

14:33 We don't necessarily have a regional government, but we do have a regional planning organization that... And then we have what I think is the nation's best state department of transportation. And they do a really good job of managing the amount of money they have for the investments in our roads and bridges. So it's a very important piece to business.

14:52 You know that?

14:53 Yeah.

14:53 So we're always actively talking about how do we make improvements.

14:57 And look, I asked the question with the acknowledgement that we have our own set of challenges in the New York City metropolitan area.

15:02 That's exactly what I was thinking about.

15:03 It's because you're growing.

15:05 And honestly, major metros that have some kind of congestion, it really is a symbol of success.

15:11 So that's why we jokingly call it success.

15:13 Okay.

15:13 Well, when we're on our way to the airport tonight, we'll say that. Success jam.

15:19 Where's Katie? Yeah, exactly.

15:21 Call me.

15:21 Hey, one thing I want to ask you, and we are thinking about this a lot, Katie, is with the midterms just around the corner, and here is the small business community and just business in general.

15:30 Yeah, let's talk politics. Let's talk politics. Everyone's favorite thing to talk about.

15:33 You know, kumbaya moment.

15:35 No, but I mean, I really do think about what are people talking about And how are they thinking about how that might change in just a few weeks?

15:43 So you won't be surprised when I use the A word, affordability. And when you think about small business owners that are here today, they're looking at input costs. What does it take to manage their supply chains to deliver the goods that they are either putting into a manufacturing process or potentially selling to a customer? So they want to understand what the costs are in their supply chain. They want to understand what the impact of taxes is. and a state, both federal and state, are gonna be, and then how much does.

16:11 It cost for labor?

16:12 Those are your three biggest inputs, and that's what we're hearing from businesses right now, those three core things. And then I have to raise, and this is across the country as well, is housing. How much does it cost to own.

16:27 Or rent a home?

16:28 And affordability in the housing market has skyrocketed.

16:32 And so we spend a lot of time thinking about what is the.

16:35 Role that the business community has in improving access to housing.

16:40 We talked about this with you last time. What is the role? And what are the actions that are actually being taken?

16:46 Well, business number one understands their customers and employees better than anybody else. So when you're making plans to either expand or relocate or maybe locate something new, they're going to have a better sense of what their needs are from an infrastructure perspective. And let me tell you, when we're working projects for companies to grow here, their number one question is, where will my employees live? What does it cost for them to live? And what is the time for them to commute to the location? And so we have a role in responsibility. We see it as an economic imperative to address housing affordability because it is such a critical piece of the business pipeline.

17:28 But the thing is, is it's such a local issue.

17:31 So this is an issue that has to be decided in some cases at the ballot box or with politicians who are willing to rezone businesses.

17:37 What has the appetite been for that in this area?

17:39 We've just started this conversation with our local county governments. We actually are part of a new housing strategy that they have actually put together about how do you manage this locally from a regional perspective.

17:53 And we're very excited to be.

17:55 Having this conversation with the people that make the decisions at the local level. But they're not the only ones that can impact some of the decision making.

18:03 You know, you've got the HUD management.

18:04 At the federal level, you've got states that also, depending on what state you're in, but here especially, they can also provide incentives to local governments to make investments for these things to go. Like if you're locating a project like Rivian.

18:17 Yeah.

18:18 Yeah, exactly.

18:19 Exactly.

18:19 No, it's interesting because you have Pulte Home here.

18:21 We do.

18:22 I'm just curious, because we've talked to home builders and it's... They talk about the difficulties in building and all the rules and oversight. But I just, I do wonder what this nut is because I have been talking about affordability. We have been talking about affordability for decades, it feels, or at least a good 10 years, if not 15.

18:42 Well, you can look at coming out of COVID.

18:44 That's really when we saw kind of the curve bend and the affordability piece. But look, this comes down to, and you mentioned Pulte Homes, Ryan Marshall, who's the CEO, is our former chairman. And he really did a really good job of reminding us that for every two jobs created, you need one bed.

19:02 You need one home.

19:04 And so when we think about growth, we can't ignore housing. And so for them, and when the housing industry across the nation talks about it, we are severely undersupplied. So we have to find ways to remove those barriers.

19:18 How has the labor picture changed in the last couple of years, given the migratory patterns and immigration into this country has changed so much under this administration? What are you hearing from the business leaders?

19:28 Yeah, I think this is an example of a K-shaped curve, right? So if you're a larger home builder in this country, it's probably impacted you far less because you're building at scale. You have the workforce that is probably aligned with you and working with you every day. I think those individual home builders, the ones that might build two houses a year, it has impacted them at a larger scale because finding crews to do woodwork, carpentry, electrician, plumbing is harder for them.

19:59 So it's harder on the small businesses than the big businesses.

20:02 Yeah, I do think the labor side of things, you will find that that's more of the conversation for the small businesses and the home building sector.

20:10 I want to talk World Cup because a year ago we were like in anticipation of it.

20:14 You guys hosted, I think, eight matches. Atlanta did.

20:16 Did you get to go to any of the games?

20:18 I went to all eight.

20:18 Oh, come on.

20:20 Yeah.

20:20 I feel like you went to more games than anyone I've ever met.

20:22 That's pretty great. Part of a perk of the job, right?

20:26 A perk of the job.

20:26 Okay.

20:27 And I didn't hesitate one minute to attend those matches.

20:30 That's pretty cool.

20:30 Okay.

20:31 Yeah.

20:31 But I'm thinking about Centennial Yards and the role that it played in it.

20:36 That development still, there's more to be done.

20:38 But what did the World Cup maybe show you and maybe some of your members about what that can do, an event like that.

20:46 So let's start at least at the national level.

20:48 I loved the unity it brought to the United States in our 250th year.

20:52 It was such a positive experience for all of us.

20:55 But Atlanta was consistently ranked the number one location for the World Cup, which is what we were gunning for. And the chair of the chamber this year is Rich McKay, who is the CEO of AMBSC, Arthur and Blank Sports and Entertainment.

21:09 Mm-hmm.

21:09 We all had a vision for what would happen, and we far surpassed that.

21:14 So what did it tell us?

21:16 One, we have a concentrated sports campus in downtown.

21:19 So you can walk.

21:20 It's accessible by transit. We have 11,000 hotel rooms within a mile. We have a convention center. We have a large park. We have State Farm Arena. We have this incredible stadium. We had 544,000 attendees in the stadium, 500,000 in the park. And what it showed us was that our downtown core is really reviving itself and living up to the standard.

21:45 Do you have the numbers yet from the economic impact of it?

21:48 Can we, can you ask me in about three weeks and I will have those numbers.

21:53 But, okay, we only have 10 seconds. Like, Like exceeding expectations, meeting expectations, you're happy with it?

21:59 Yes. Our initial, our conservative estimate was about $ 503. 2 million to the state of Georgia and the city of Atlanta.

22:07 We've exceeded that.

22:12 Stay with us. More from Bloomberg Businessweek Daily coming up after this.

22:24 We are at the Make Your Move Summit in Georgia, hosted by Chase for Business. Carol, I don't need to tell you this because little.

22:29 Birdie told me you recently bought a new car.

22:32 It's expensive.

22:32 I don't know if you've heard this. Cars are expensive nowadays.

22:35 Every kind of car, even little cars.

22:37 So I can't just say cars are expensive and point to you as an anecdote. I actually have the hard numbers that we got from Edmonds just this month, okay? This is the third quarter of the year. The average monthly car payment reached a record $ 787 in the third quarter.

22:50 I have to get my head around.

22:51 More than a quarter of U.S. car bikers.

22:53 buyers take out loans of seven years or more. So that's 84 months or longer. The average amount financed on a new car reached an all-time high of $ 44, 664 in the third quarter of the year. This is all from Edmunds. The average buyer will pay almost $ 10, 000 in interest over the life of the loan.

23:10 That's another- You know who probably knows some of these numbers, or at least the environment of it?

23:14 She's sitting here nodding her head because she knows all of this.

23:18 With us is Leslie Wimsmore.

23:19 She is the CEO of Chase Auto, the auto financing and car buying division.

23:23 Of JPMorgan Chase Bank. Who knew? We knew.

23:26 She joins us on site at the Make Your Move Summit here in Georgia.

23:29 It is hosted by Chase for Business. Leslie, welcome.

23:31 Nice to have you here. Tim and I have been eager to talk with you. Your business, one of the largest auto finance businesses in the U.S. You've got a great read on the consumer, a great read on the auto industry. Did we get the affordability picture right?

23:46 Absolutely.

23:47 The unaffordability picture.

23:51 It is a hot topic in the industry. You're absolutely right. The average vehicle prices are now $ 50, 000 for a new vehicle. And in addition to the stats that you shared, you now have 18% of car payments are now over $ 1, 000 a month. How do you do that? So, look, there's a variety of factors that go into auto financing. It starts first with what is the underlying cost of the vehicle?

24:15 What is the credit of the consumer?

24:18 What is the.

24:18 Payment term length? You highlighted that more and more consumers are extending their payment terms in order to get.

24:25 To an affordable price.

24:27 So it's for sure a hot topic, but I'm also incredibly optimistic because the auto industry has been amazingly resilient from a consumer demand perspective over the last four years.

24:39 Okay, so let's talk a little bit about the auto business, Chase Auto, and where it fits into J.P.

24:46 Morgan.

24:46 So we have, you know, not just want to talk about the consumer and the consumer picture and the auto industry, but also learn a little bit about how you fit into the bigger J.P. Morgan Chase world. It's one of the biggest auto financing businesses around in the country. You have three different segments. So one of them is the one I think that's very familiar to consumers. Like you need to buy a car. We go to you. You help us buy the car. But you have other businesses that, you know, you have a white label business. You work directly with the manufacturers who sell directly to consumers. But then you also have the car dealerships business. Did I get that right?

25:17 You did.

25:17 You did.

25:18 And so you asked first the question of how do we fit within the Chase ecosystem?

25:22 Yeah.

25:22 So 87 million U.S. households have some form of a Chase account. And as you think about our community banking franchise and all the different products and services that we provide, our goal is to have all the financial products that someone needs over the course of their life, whether it's buying a car, purchasing a home, getting a credit card to pay for their next big trip, as well as the consumer banking, savings, checking accounts, and the like. So where we fit is we're part of that ecosystem and that product suite. You're absolutely right. When you think about auto, there's three constituencies that we need to support. One of which is the auto manufacturer who wants to sell cars and they want to drive loyalty and have consumers stay

26:04 in their brands. The second of which is consumers who want to be able to get access to amazing products at great rates and payments, as well as the dealer. The dealers are an important constituency in the auto finance space. And so Our three businesses support all three of those customer segments today.

26:25 The dealer side is meaning when you finance at a dealer, when you can walk into a dealership, right?

26:29 Well, it's even more than that.

26:30 To help them buy cars? Well, so when.

26:33 You're an auto dealer, you need the financing solutions to be able to actually sell cars. So there's specific financial products that dealers need, like floor plan, that when they are selling cars on their auto lot, they are basically buying those vehicles from the auto manufacturer and they need a financial product to do that. And you also have to remember dealers are basically franchise owners. And just like with the franchise, they have to modernize their facilities frequently.

26:59 They want to acquire other auto dealerships. And then also they have to manage the daily cash flow of their business. They need treasury solutions, cash management solutions. And then they also need wealth planning. It's a pretty good business, we should note.

27:14 Yes.

27:15 We have talked about this on our program before. Auto dealers.

27:18 Auto dealers.

27:18 So we have a range of offerings that support all of the dealer needs. So yes, those are the three lines of businesses that we have.

27:25 So retail consumer, commercial solutions, private label, captive finance.

27:28 Correct.

27:29 What's the biggest? And what's the most profitable?

27:31 So the two largest business segments for us are retail and consumer, as well as our private label business.

27:38 Okay.

27:38 And just for people to understand, what do we mean by private labels? So one of the things I had the good fortune of at this conference was to interview RJ Scringe, the CEO of Rivian.

27:50 Right.

27:50 We've had a relationship with Rivian since 2021, where we are their private label. So for those of you listening, if you have a Rivian... and it's financed by Rivian Financial Services, that is really Chase providing those capabilities on a white label basis.

28:07 That makes sense. Okay.

28:08 Right.

28:09 Of those areas of the business, if we think about the consumer side of it, the challenge with affordability, it doesn't seem like it's going anywhere. We're at this point now where cars have gotten so expensive. Does that just mean that your business gets stronger and stronger because people are going to need to finance more and more vehicles in the future?

28:28 So a few things.

28:29 One of the most important metrics that we look at is overall consumer demand. And there are going to be 16 million new vehicles sold in the U.S. projected in 2026. Interestingly, it's been about 16 million vehicles consistently, generally, for the last several years. So that's always the very first thing that we look at. What we are seeing is, to your question around affordability... is you have lots of new vehicle sales, but we're also seeing an increase in new vehicles.

29:01 I'm sorry, used vehicles being purchased, right, by consumers. Or you also tend to see more and more consumers who have chosen to lease their vehicles, buy those vehicles off lease at the residual values that were negotiated when they initially purchased the car.

29:18 So we have Tesla earnings after the bell today. We're going to be looking at Tesla for, you know, Partly about cars, but mostly not about cars anymore.

29:25 Exactly.

29:26 Or about SpaceX.

29:27 Right.

29:28 One thing that we think a lot about in the context of Tesla, though, is Chinese automakers. And they're not available here in the U.S.

29:33 Yet.

29:34 I was just in Europe, and they're not all over the roads where I was.

29:38 But they're there.

29:40 But they are certainly there. The BYDs and the Polestars and the like. How do you watch what could happen with Chinese vehicles in the US? Is it realistic that those will actually be sold in the US?

29:50 So look, at the end of the day, the auto industry is global. So while we are a U.S.-focused business, we do study everything that's happening all over the world, not just in China, but also in Europe. And we keep a pulse on what are the trends as it relates to new vehicle availability. I think at the end of the day, we're going to see a lot more product innovation. And what's rooted in that is this idea of much broader product mix, much more diverse product mix, whether it's EVs, hybrids, which have really gained traction in the last year, as well as traditional ICE vehicles. Whenever China does or does not come into the market, they are influencing the market, even indirectly. And so we're going

30:36 to be prepared for all scenarios.

30:38 Just real quickly, 30 seconds, Leslie, when it comes to, you mentioned hybrids, and we've done some reporting on that.

30:43 What about pure green vehicles?

30:47 Mm-hmm.

30:49 Are you seeing any momentum there or still kind of the pushback?

30:53 We're seeing momentum.

30:55 Last year, there was a lot of momentum because you had the tax credit, right? So we did see a decrease in the penetration of EVs so far this year, but it's being made up in the hybrid segment.

31:11 Stay with us.

31:12 More from Bloomberg Businessweek Daily coming up after this. Well, our next guest is familiar to gourmands around the world. He's behind a restaurant.

31:26 What was that word?

31:28 Show off.

31:29 Restaurants and concepts such as Southern National Restaurant and Bar in Summerhill, south of downtown Atlanta, in a location I think familiar to people outside of the region because it was once the site of the 1996 Olympics.

31:40 Yeah.

31:41 Other restaurants smoke breakfast, lunch, still smoking. Hungry. I know. I know.

31:47 I'm hungry.

31:48 All right. Reggie Washington is with us. He's restaurateur.

31:50 He's over at Sonat Hospitality Group, Southern National Restaurant. He joins us on site here at the Make Your Move Summit in Georgia, hosted by Chase for Business.

31:59 Welcome. Carol, Tim, thank you so much. Nice to have you.

32:02 Thank you so much for having me.

32:03 You have got this amazing story.

32:04 It's not all based in Atlanta, but take us back to Alabama and sort of how you got your start and how you ended up in Summerhill.

32:11 Well, you know, I come from South Alabama, Mobile, Alabama. And all the men in my family have always cooked. And there's a lot of Louisiana, southern culture there, a lot of Creole, French. And so just grew up cooking and navigated up to Atlanta. Many years I worked in Montgomery, Alabama as executive chef for the governor of the state of Alabama. And then moved to Atlanta and started working at various hotels and really just went to culinary school and cooking. crafted my style of cooking.

32:46 At what point did you go from, from cooking to the business side? Um, like thinking about yourself as like bringing on this partner who's like more of the chef and then you being more of the business forward person.

32:57 Yes. Um, well, a few years we worked on a project at the Atlanta airport and that's where I met my business partner, chef Dwayne Nutter. And I just kind of naturally gravitated towards the hospitality front of the house. And, um, Just that's kind of our secret weapon.

33:12 Hey, maybe we can go there for dinner tonight on our way out.

33:14 But I'm guessing the airport is so big, I'm very worried that we're not going to be able to go. Yeah, we might talk to you after because it sounds good. Maybe we can try some of this.

33:23 I love a man who cooks. My husband cooks too, and he's amazing. So love you guys. Love all of you guys who do it because it also means I don't have to. Having said that, how would you describe the industry?

33:34 Because it's not easy.

33:36 We were amazed during COVID talking to very accomplished chefs, across the country in New York and how it was really hard to get by.

33:45 So what's the environment like right now? Higher costs, inflation.

33:49 Absolutely. Um, it is very challenging, but, um, you know, the biggest thing is just to try to figure out how to navigate, you know, with people eating less, eating.

33:59 More healthy, clean, um, GLP one has had an impact.

34:02 It has a big, a big impact on our business. And also, um, You know, never did we think we'd have a line item on our P & L for non-alcoholic beverages.

34:12 Blame this dude.

34:13 Yeah.

34:14 I'll buy it.

34:15 It's still $ 7 at a restaurant.

34:16 Exactly.

34:17 Or maybe more.

34:18 You're still making money with it.

34:20 Yeah, but, you know, it's just about navigating, pivoting, and listening to your customers and seeing what they like.

34:26 So you keep adapting.

34:27 We keep adapting. You have to. That's the beauty. My mentor said restaurant business is like show business. You can change the characters, change the sets, you know, get some new patio furniture.

34:40 Your mentor.

34:41 And I know you've worked with Chase about that. Is that the mentor you're talking about?

34:45 Different mentor.

34:46 One of my mentors. I've got several coaches. I bet. But JPMorgan Chase is really going through, you know, programs, working with them, my personal relationships with the bank. It's been amazing. This whole, you know, week has just been amazing.

35:02 What do you get out of that relationship?

35:04 Because obviously it's about capital and having a financial relationship, right?

35:07 Any small business owner needs to have that. But what else?

35:10 I would even say more.

35:12 Besides the voice of God.

35:13 Oh, that's right.

35:15 Reggie, I hear you.

35:17 Thank you, thank you.

35:17 But what else, like specifically?

35:20 Mainly it's the coaching of how to grow your business. How to... Work and not just build capital, build relationships. Getting to know if you want to go for a loan, doing your homework before you even get to the bank. And so many just relationships and tools, leveling up, having a fractional CFO, so many different things. That's interesting. And understanding where you want to go. And your exit strategy at times.

35:51 So where do you want to go next? I mean, what is the expansion strategy here? Because it seems like it's been, for lack of a better term, a very responsible growth strategy.

35:59 It has been, but we are in the airport concession business as well. So we're trying to grow our airport business.

36:04 Is that profitable for you guys?

36:06 Yeah, it's very profitable. You have a captive audience. You can't go anywhere.

36:09 We know that feeling.

36:11 And really trying to pull a healthier for you thread through all of our restaurants because people are eating better, cleaner. You know, the customers know what the ingredients and what's in food now, so there's no fooling them. So you want to make sure you have, you know, good ingredients and they taste better as well.

36:28 Yeah. In terms of restaurant concepts that you're bullish on, is it healthier?

36:32 Like, what is it?

36:34 It's healthier for you and also getting more into the market aspect of grab and go. You know, that's a big, everybody's, you know, taking food home, ordering food home. So getting more, adapting more to that. to where you can hit all segments for dining in and also.

36:51 Does that mean supermarkets and stuff, or with what?

36:53 Market items, taking bakes, you know, pasta that you can take home and cook. Yeah, so different items like that.

37:01 All right, exit plan.

37:03 Exit plan, the beach, no.

37:05 He's a young guy.

37:07 He's got tons of gear.

37:08 Well, he didn't mention exit, so that's part of the strategy here.

37:11 It's really just building a solid foundation that infrastructure to where we can level up and package our deal and sell it.

37:20 Will we start to see you outside of this area? Possibly, yes. Where are you thinking?

37:27 Just somewhere regional. I think definitely the Atlanta market has a lot.

37:31 Of potential for clubs. Sunbelt, do you want to stay in the area?

37:33 Stay in the Sunbelt in the area. So we won't see you in New York or Vegas?

37:36 I won't say that. I was in New York last week, so I had a couple things.

37:40 Okay. What's your favorite thing to eat?

37:45 Pizza and sea bass.

37:47 Okay, so then you.

37:47 Definitely have to come to New York because you know that there's no place for pizza like New York.

37:52 Or Connecticut.

37:53 Actually, up in New Haven, too.

37:54 Wonderful, wonderful.

37:57 This is the Bloomberg Businessweek Daily Podcast. Available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.