🍎 Apple’s next frontier

The Apple-verse is already here… even if the iHeadset isn’t. Tim Cook did not unveil a mixed-reality headset at Apple’s annual developer conference this week, as some had been hoping. But he did launch several features that’ll make Apple’s devices even more central to consumers’ actual reality:

• All the upgrades: iPhone, Mac, Watch, and iPad are all getting software updates. Highlights include editable iMessages and a biometric-authentication tool dubbed “Passkeys.”
• BNPL, meet APL: A service called Apple Pay Later lets users pay for things in four interest-free installments spread over six weeks.
• Apple Car teaser: Apple’s teamed up with Ford and Honda to expand its CarPlay integration. Think: cars with Apple dashboard widgets that control A/C and radio.

An OS for everything… Increasingly the iPhone’s becoming a hardware portal to Apple’s expanding suite of services. Though the iPhone’s still Apple’s most profitable biz line, sales of services (think: iCloud, Apple Card, TV+) are growing much faster. This year Apple’s services revenue is expected to hit $80B+ (more than Mac and iPad sales combined). Some of the features announced this week compete with entire business sectors:

• iChallenger: Apple Pay Later challenges buy now, pay later giants like Affirm, while Passkeys threaten startups like LastPass. Apple has a unique ability to pose an instant threat to big companies and startups alike, thanks to its base of nearly 2B active devices.

Techier than an Apple store... Taco Bell's newest outpost looks like a server rack, but the chips inside are edible. The Crunchwrap Supreme icon just opened a restaurant concept called "Taco Bell Defy" outside Minneapolis. The table-free location features tablets, QR codes, and “vertical lifts.”

• 2 stories: All the meal prep happens out of sight on the second floor, where employees stick your Gordita Crunch in a “Jetsons”-like glass elevator that delivers it down to you.
• 4 lanes: Three drive-thru lanes are dedicated to delivery drivers and app orders. But even the traditional lane is techified with two-way video for OG ordering.
• 2 minutes: Defy is designed to deliver your grub in 120 seconds or less — among the fastest times in the industry, and less than half the time of an average Bell order.
• Zero gravity?... TB says its contactless delivery system "defies gravity" as food is transported down to ground level. (How that defies gravity defies our understanding of gravity.)

Less fry cook, more Tim Cook... fast-food’s new mantra. Digital orders and drive-thrus surged for chains like Chipotle, McD's, and Starbucks. Taco Bell parent Yum Brands (which also owns KFC and Pizza Hut) saw its digital sales grow 15% last quarter to a record $6B. With Defy, it’ll be able to handle twice the order volume of a typical Taco Bell.

Driver’s seat > booth: Pre-pandemic, less than 70% of fast-food sales came from drive-thrus. Now it’s more than 90%, even though IRL dining is back.

• Red: Target said it would take a profit hit as it cancels orders and marks down products to move excess inventory. Retailers from Walmart to Gap are purging products that were hot during stay-at-home season.
• Deal: Kohl's shares popped 9% after the company confirmed it was in talks to sell itself to Vitamin Shoppe owner Franchise Group for $8B. Investors have been urging Kohl's to sell as competition eats into profits.
• OMG: BuzzFeed’s stock lost more than a third of its value after the company’s pre-IPO lockup agreement expired yesterday. The media biz is now valued at $300M, compared to $1.5B when it went public last year.
• Liftoff: Air-taxi startup Volocopter completed its first successful test flight (just over 2 minutes long). Volo’s planning to begin IRL passenger flights at the Paris 2024 Olympics, though it needs permits.
• Drip: The first Starbucks store that voted to unionize is closing. Company reps say the decision is part of regular operations, but workers at the Ithaca, NY, location say it’s retaliation.

• SEC chair expected to speak about market efficiency at Piper Sandler conference
• Earnings expected from Campbell Soup, Five Below, and Brown Forman Corp.

Authors of this Snacks own shares of Apple, Starbucks, Walmart, and Ford

ID: 2235597