📱 China’s supply-chain shock
![A temporary isolation facility to house Covid-19 patients near a bridge linking Shenzhen and Hong Kong [Anthony Kwan/Getty Images]](https://cdn.robinhood.com/static_content/mwphzyq69oso/en-US/assets/files/4ddQi6V0zuNJuFvWeJt4OT_1_GettyImages-1384225765.jpg)
Hey Snackers,
Worst-timing award goes to the fan who paid $518K for Tom Brady’s “final” touchdown ball — a day before the NFL icon un-retired. Brady’s retirement lasted only 40 days, but facepalms last forever.
Stocks kicked off a critical week in the red again, as investors looked ahead to tomorrow’s Fed decision and any signs of progress in Ukraine-Russia diplomatic talks. Both countries are set to meet again today.
China's “zero Covid” policy is put to the test as new lockdowns threaten to snarl the global supply chain — again
Déjà vu… As many countries look toward a post-Covid life, China’s experiencing a surge in cases. The spike’s triggered the harshest restrictions since the virus was first discovered in Wuhan nearly two and a half years ago. On Sunday, China quickly acted to curb its 1K+ new Covid cases (a fraction of US caseloads) by closing schools, suspending public transport, and halting non-essential biz in Shenzhen, aka “China’s Silicon Valley.” Now, its 17.5M residents are on a weeklong lockdown.
- Phone problems: Foxconn, which assembles most of the planet’s iPhones, has paused production at its two Shenzhen factories. Apple shares fell nearly 3% yesterday.
- Car trouble: China also locked down all of Jilin province (population: 24M), home to auto plants operated by Volkswagen and Toyota.
Check your pockets… You’re probably carrying a gadget made in Shenzhen. Thanks to its status as China’s first “special economic zone” (think: big tax breaks for foreign companies), Shenzhen grew from a fishing village to a global tech powerhouse over the past four decades. It’s home to Chinese tech giants like Huawei and Tencent, and the world’s fourth-largest port, where China ships off 90% of its electronic exports.
The world’s things are still largely Made in China… The US imported $540B worth of goods from China last year. While many countries are trying to move on to an “endemic” phase of Covid, the world’s second-biggest economy has taken a zero-tolerance approach to any new infection spikes. That’s going to disrupt the global supply chain, already strained from pandemic shortages and, now, a war in Europe. US policymakers are trying to reduce China dependence: the House just passed a $52B bill to boost domestic chip manufacturing, which has been a priority for Biden’s admin.
Mark Wahlberg’s F45 gym franchise is booming thanks to its premium-meets-flexible strategy
Marky Mark’s back… with a back workout. F45 Training, a Mark Wahlberg-backed chain of HIIT studios, just flexed its first earnings as a public company. As you ditched at-home YouTube exercises, F45’s sales more than tripled to a quarterly record. It seems that people missed group sweat sessions:
- Team training: F45 only offers group fitness classes and it’s known for its signature 45-minute high-intensity workouts. Think: CrossFit meets SoulCycle.
- Big gaining: F45 opened 300 locations last year and expects to open 1K this year (#gainz). It’s reportedly the fastest-growing fitness franchise in the world.
Franchises aren’t just for fast food… Part of the reason F45 is expanding faster than Wahlberg’s biceps: its franchise model. F45 doesn’t need tons of cash to open new locations, because it passes most costs to franchise owners. And those owners are lining up to open gyms: franchisees have already opened 1.7K F45 gyms and bought the rights to open another 1.6K.
- More reps: Some of the biggest gym chains use franchise models: Planet Fitness and Anytime Fitness have well over 2K franchises each and charge less than $50 for monthly membership.
- Heavier weight: Premium gyms like Equinox own their eucalyptus-scented locations, which helps control branding but limits growth: Equinox has only 106 gyms but charges $170+/month.
Survival of the fittest demands strength + flexibility… Nearly a third of US gyms went out of business during the pandemic. And while the US gym industry is recovering, it still hasn’t rebounded. That’s the opening for a biz like F45, which just had a record quarter combining two key strategies: franchising and premium-ifying. Its $150 monthly fee and high-end classes give it an Equinox-like appeal, while its franchise model gives it flexibility to grow without requiring much cash on hand.
What else we’re Snackin’
- Blackout: Russian Influencers and small-biz owners shared forlorn final Instagram posts before the Kremlin shut Insta down. IG follows Meta as the latest social-media platform to be blocked in Russia.
- Euphoric: HBO Max will merge with Discovery+ to form one streaming app. They’ll become stepsiblings when their parents, Warner Media and Discovery (Food Network, Animal Planet), wrap up their own merger.
- Empire: Yuga Labs, the creator of Bored Apes Yacht Club (a collection of 10K NFTs), is buying CryptoPunks and Meebits, bringing the three most valuable NFT collections under one pixelated roof.
- Charge: Uber’s tacking on a $0.35 to $0.55 fuel surcharge for fares and deliveries. The company says the fee will be in place for at least two months and go entirely to drivers and couriers to offset the rising cost of gas.
- Violin: Meta employees will have to start doing their own laundry, one of several perks being axed as the company transitions to a hybrid-work model. Also over: valet service and early dinner.
Tuesday
- Earnings expected from Lennar, SentinelOne, Smartsheet, and Dole
Authors of this Snacks own: shares of Uber and Apple
ID: 2080273