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The U.S. restaurant industry is grappling with an alarming surge in bankruptcies in 2024, with the sector on track for the highest number of filings in decades, excluding the pandemic peak in 2020. This wave of financial distress comes as restaurants struggle to balance rising labor costs, inflation, and shifts in consumer spending habits. The cost of dining out has surged, leading to decreased foot traffic, while higher interest rates have hurt companies prioritizing expansion over profitability. Small and mid-sized chains, which lack the scale to absorb these shocks, are particularly vulnerable. Industry experts warn that despite some improvement in hiring and new restaurant openings, ongoing financial strain, reduced consumer spending, and cautious lending will likely push more operators toward bankruptcy. The long-term implications could reshape the dining landscape, forcing businesses to prioritize efficiency, close underperforming locations, and explore new strategies for survival in a highly competitive market. 

 

Wall Street Journal

Once admired giants of American manufacturing, the Wall Street Journal looks at how Intel and Boeing are now struggling, with declining market value and operational issues. Intel has slashed jobs, suspended dividends, and become a takeover target, while Boeing faces production delays, labor strikes, and financial instability. The downturn in these companies has broader implications for U.S. economic and national security, as their failure could leave key industries reliant on foreign competitors like Taiwan Semiconductor Manufacturing Co. (TSMC) and Airbus. Both political parties support bolstering U.S. manufacturing, but the challenges faced by Intel and Boeing highlight the need for strategic leadership, innovation, and public support to maintain America’s global competitiveness. 

 

Wall Street Journal

CVS Health has announced that David Joyner will take over as chief executive, replacing Karen Lynch. Joyner has been president of CVS Caremark, the company’s pharmacy-benefit manager, as well as an executive vice president of CVS. Roger Farah, chairman of CVS's board of directors, has also become executive chair. CVS is making the changes after repeatedly cutting its forecasts for this year’s financial performance, moves that led to a 19% decline in its share price this year as of Thursday’s close. The firm is now planning to announce third-quarter results well below expectations, largely due to continued losses at its Aetna insurance unit. In a statement, Farah said: "We believe David and his deep understanding of our integrated business can help us more directly address the challenges our industry faces, more rapidly advance the operational improvements our company requires, and fully realize the value we can uniquely create."

 

USA Today

NBC News

The New York Times

The Wall Street Journal

The IRS is intensifying its scrutiny of corporate jet usage, particularly focusing on personal use that may lead to excessive tax deductions. The initiative is part of a broader effort to ensure wealthy individuals and complex partnerships pay their fair share of taxes. In February, the agency announced a campaign to audit corporate jet use, with training materials indicating a focus on verifying sufficient business use to justify deductions. As the IRS stated, "abusive deductions can signal that companies are taking much larger write-offs upfront than they're entitled to." Democrats are also advocating for stricter regulations on how corporate jet owners can deduct travel costs.

 

Bloomberg Tax

As the 2024 U.S. Presidential race tightens, corporate counsel are reevaluating their preparedness for potential election-related risks, both on Election Day and in the aftermath. Leigh Dance, founder and executive director of Global Counsel Leaders, underscores concerns ranging from disruptions at polling places to extended unrest beyond the Electoral Vote Count, highlighting the need for organizations to reassess risk management strategies. With public distrust in the electoral process growing, and studies revealing that a significant portion of Americans are nervous about potential election-related violence, Dance emphasizes the importance of companies developing practical measures such as voting policies, employee guidance, and clear communication strategies. Additionally, understanding the broader social and political landscape is key to mitigating disruptions that may arise from employee absenteeism, political tensions, or workplace disputes. Corporate counsel must also stay updated on legal developments and prepare their boards for potential exposure, ensuring the organization is equipped to handle any uncertainties around the 2024 election.

 

Corporate Counsel

A Wall Street Journal analysis found that many states' legal marijuana growers are underreporting mold concentrations. The analysis of over 2m mold-testing results from nine states revealed that a disproportionate share of samples were reported to contain levels just under legal limits. This suggests tainted samples are being cleared for sale, revealing a system that isn't reliably monitoring for dangerous substances in legal marijuana. The findings suggest that growers, labs, and regulators are exposing people who use legal marijuana to dangerous contaminants. The Journal requested mold-testing data from 37 states with medical or recreational marijuana programs.

 

The Wall Street Journal

In a recent legal testimony, Edward Farley, a former campaign manager for Massachusetts Treasurer Deborah Goldberg, revealed that Goldberg repeatedly requested the deletion of text messages related to Shannon O'Brien, the Massachusetts Cannabis Control Commission Chair. This raises significant concerns regarding public records laws, as Justin Silverman, executive director of the New England First Amendment Coalition, stated: “Text messages are subject to the public records law, and there are certain retention policies that govern when they can and cannot be deleted.” O'Brien was dismissed amid allegations of racially insensitive language and bullying, and she is currently appealing the decision. Farley expressed willingness to have a forensic expert retrieve the deleted messages, challenging Goldberg to do the same.

 

Boston Globe

Walmart has reached a settlement where insurance carriers will pay the company $123m, excluding any attorneys' fees and expenses awarded to the plaintiffs' counsel. The settlement, which is subject to court approval, does not include any admission of liability by Walmart. This follows lawsuits filed by three Walmart shareholders in the Delaware Court of Chancery, alleging that current and former directors and officers failed to oversee the company's distribution of prescription opioids. In 2022, Walmart agreed to pay $3.1bn to settle lawsuits related to the impact of opioid prescriptions filled by its pharmacies.

 

The Columbian

U.S. antitrust regulators have dialed back plans to collect a mass of data from companies planning mergers - but even the weakened rules could be tricky for private equity firms, according to attorneys. Last week the Federal Trade Commission voted unanimously to expand the amount of information collected under the Hart-Scott-Rodino Act, which established the federal review process for mergers and acquisitions. The new reporting system “marks a generational upgrade that will sharpen the antitrust agencies’ investigations and allow us to more effectively protect against mergers that may substantially lessen competition or tend to create a monopoly,” said FTC chair Lina Khan. However, antitrust lawyers say it will saddle private equity with more paperwork, fees and headaches, without necessarily resulting in more blocked deals. The FTC estimates the changes will add 68 hours to the length of time it takes to prepare M&A paperwork. 

 

Wall Street Journal

CSX Corp. has received a subpoena from the SEC regarding previously disclosed accounting errors and certain non-financial performance metrics. The subpoena, received this month, requests documents related to the accounting mistakes mentioned in CSX's prior quarterly report. The company is cooperating with the investigation, stating: “While the company believes its reporting complied with applicable requirements in all material respects, the company cannot anticipate the timing, scope, outcome or possible impact of the investigation, financial or otherwise.”

 

Bloomberg Tax

Accounting Today

The Michigan Democratic Party has accused Kroger of potentially using technology that could lead to price gouging. Congresswoman Rashida Tlaib (D-MI) expressed concerns in a letter, stating that electronic shelf labels (ESLs) might enable dynamic pricing, which could increase essential goods' prices during emergencies. Tlaib warned: "My concern is that these tools will be abused in the pursuit of profit." Additionally, she highlighted the risks of facial recognition software, which could lead to biased pricing. Kroger rejected the allegations, asserting that its technology aims to lower consumer costs. Tlaib's letter aligns with previous concerns from Sens. Elizabeth Warren (D-MA) and Bob Casey (D-PA)regarding the implications of digital price tags on consumer pricing.

 

The Columbus Dispatch

In a recent interview, Ryan Roslansky, chief executive of LinkedIn, emphasized the importance of adapting to an evolving job market influenced by artificial intelligence (AI). He advised professionals to view their roles as a collection of tasks rather than fixed titles, saying: “Professionals can have more agency amidst this transition by thinking of their job not as a title, but as a set of tasks.” He highlighted that the skills required for jobs have changed by nearly 40% since 2016 and are expected to rise to over 70% by 2030.

 

Straits Times

U.S. housing starts eased in September as a drop in multifamily projects outweighed a pickup in construction of single-family dwellings. The Commerce Department said housing starts fell by 0.5% to an annual rate of 1.354m in September after spiking by 7.8% to a revised rate of 1.361m in August. The increase was in line with the median projection in a Bloomberg survey of economists. Starts of single-family homes climbed 2.7% to an annualized 1.03m, while construction of multifamily homes slumped 9.4% to a four-month low. The number of overall building permits, a proxy for future construction, fell 2.9% to a 1.43m annualized rate. Starts of one-family homes rose in two of four regions, including a 6.6% increase in the South to a five-month high, and a 10.6% gain in the Northeast. “With affordability still a pressing issue in many regions, home building will likely remain stagnant until the Fed is well into its easing cycle and mortgage rates have fallen another one percentage point,” Sal Guatieri, senior economist at BMO Capital Markets, said in a note.

 

Bloomberg

RTT News

Lower-income consumers are facing significant financial pressure due to rising costs of essentials like rent and groceries, limiting their ability to spend on discretionary items. In contrast, wealthier Americans, buoyed by substantial gains in income and investments, are driving retail growth. Michael Pearce, deputy chief U.S. economist at Oxford Economics, noted: “It speaks to the ongoing strength of those Americans, which is still carrying overall spending.” Despite high inflation and interest rates, retail sales rose 0.4% from August to September, indicating consumer confidence. The Federal Reserve's research highlights a shift in spending patterns, with upper-income households increasing their retail spending by nearly 17% since January 2018, while lower-income households saw only a 7.9% increase. Experts remain optimistic that as inflation-adjusted incomes rise, overall consumer spending will continue to grow.

 

Fast Company