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Commercial real estate giant CBRE once believed that ghost kitchens would account for over 20% of the U.S. restaurant industry by 2025. Today, ghost kitchens are closing at an alarming rate with some of the largest startups in the space closing operations. Just last week, Kitchen United who raised $175 million in funding for their ghost kitchen business announced they would close or sell all their locations. Kitchen United, like most ghost kitchens, ran delivery-only restaurants inside Kroger stores, malls, and inside chain restaurants sharing cooking space. Ghost Kitchens operate utilizing delivery apps like Grubhub and Uber Eats to sell food not offering dine-in options or a physical location for customers to go to. During COVID this concept quickly captured market share and customer interest as all outside dining was restricted to delivery and over 70,000 traditional restaurants closed. Top-funded ghost kitchens raised $3B in venture capital between 2020-2022 according to Crunchbase with some prominent entrepreneurs such as Uber co-founder Travis Kalanick working on their own ghost kitchens. The idea of ghost kitchens makes a lot of sense in theory with lower initial capital to start up, the ability to test new menu concepts, and lower rent and labor costs to run the business. The problem with ghost kitchens is not the feasibility of the business model, rather it’s the confusion it causes for customers. With no physical location customers are reluctant to buy from a ghost kitchen since they have no idea about the food quality, food freshness, or the authenticity of the brand. According to a survey done by the National Restaurant Association 70% of diners believe it’s important for their food to come from a restaurant with a physical location. Uber Eats has removed thousands of ghost kitchen listings from their platform due to oversaturation and low-quality results that have cluttered the app. With customers clearly avoiding ghost kitchens large restaurant chains like Wendy’s and Applebee’s are abandoning their own ghost kitchen plans. While ghost kitchens will continue to exist in some fashion as they did prior to the pandemic the once disruptive restaurant concept is unlikely to reach the lofty expectations many predicted for the space.

The first project of the $50B CHIPS and Science Act is being finalized with a $35 million grant given to BAE Systems to help support national security projects. BAE Systems is using this investment to help develop crucial semiconductor components that will help go into the Pentagon’s F-35 jet program and other crucial weapon systems. While this deal has not yet been formalized it is the start of an ambitious program that has companies such as Intel, Micron, IBM, and TSM waiting in the wings for access to grant money. The $50B CHIPS and Science Act earmarks $39B for semiconductor manufacturers and $11B for companies as well as universities for chip research and design purposes. The program started rolling out applications in February asking prospective recipients for detailed financial information while banning stock buybacks and restricting expansion plans in China for applicants. A lot is riding on the success of this program with the U.S.’ share of semiconductor manufacturing falling from 40% in 1990 to 12% presently. This downward spiral has come in a period in which technology is evolving at a rapid pace. With little production of advanced semiconductors done domestically, the U.S. has no control over its own semiconductor supply chain relying on countries like Taiwan and China for production. In the current geopolitical landscape having that access potentially threatened could have severe economic and national security repercussions. The success of this program is paramount, and its success will come down to the administration’s ability to allocate the capital to the right partners and projects. Like most government projects it’s difficult to be confident in their success but early results have been positive with major global semiconductor companies looking to take part in the program.

The Cigna and Humana merger was short lived with Cigna pulling out only a month after initial talks started. The merger would have created a healthcare behemoth the size of industry leaders UnitedHealth and CVS with $300 billion in annual revenue. Many experts believed that this merger would have been a big positive for both companies, helping create a larger more diversified managed care company. Most importantly the combined pharmacy benefit manager business would have increased purchasing power for drugs improving their value proposition to current and prospective customers. Regardless of the potential positive outcome from the deal the merger was widely hated by the market with Cigna shares dropping 10% after the merger talks were reported. The merger would have faced an intense antitrust review by the Biden administration and the newly combined company would have to shed businesses that had overlap prior to the merger. This probably would have included Cigna’s Medicare Advantage business which the company was already reviewing for divestiture in order to focus on their commercial business. With little investor support and a tough antitrust review on the horizon, Cigna has decided to end merger talks refocusing their attention on smaller bolt-on acquisitions and a $10 billion stock buyback plan. Cigna is still reviewing a potential divestiture of their Medicare Advantage business but with the merger falling through it's more likely that they will keep the unit. In a different antitrust and market environment this merger would have likely been cheered on by investors but today the market has little patience for complex merger deals that will put through the antitrust ringer.