Uber's Carnage: the Rise of Distressed Taxis

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New York City Taxi Medallions Selling at Significant Discounts

Uber's Carnage (Distressed Taxis). As taxi medallion owners continue to struggle, Evgeny Friedman's bankrupt taxi companies are establishing "market value" for the New York City taxi medallion - and it's at the low end of a recently established spectrum. The New York Times writes, "In August alone, 12 of the 21 medallion sales were part of foreclosures; the prices of all the sales ranged from $150,000 to $450,000 per medallion." Friedman's medallions sold last week to a hedge fund for $186k/each for a block of 46. As context, medallions were once worth as much as $1.3mm. Considering that there are approximately 13.8k taxis in New York City today, one observer noted that it would take Uber (or Lyft), approximately $2.6b to simply buy out the entirety of the City's fleet at that valuation - a cost of a small percentage of Uber's supposedly sizable market cap. So there you have it: "disruption," quantified.

The New York Times Needs to Do Its Homework

With press under increasing scrutiny in the wake of "fake news" and (perceived) political bias, you'd think they'd spend an ounce of time doing a little homework before publishing an editorial. 

We're not making any statements about the candidate. But, today, this is what the Times had to say about President-Elect Trump's selection of Andrew Puzder as Labor Secretary:

Query what the Times means when they say "[t]here is no evidence that health care reform has harmed job growth, and there is certainly no evidence of a restaurant recession." What? While it may be hard to delineate causation between the ACA and restaurant distress, how can the New York Times say that there is "certainly no evidence" of a restaurant recession?

Perhaps they didn't notice the recent bankruptcy filings of Cosi Inc., Garden Fresh, Fox & Hound, Logan's Roadhouse, Don Pablo's, Buffetts and Champps.  We covered the distressed restaurant space here, including the statement in the Garden Fresh supporting first day declaration that causes for the bankruptcy filing include increased healthcare costs, higher minimum wage (in California), and headwinds facing restaurants. Or how about this in the publicly-filed first day declaration supporting Cosi Inc.'s chapter 11 bankruptcy filing: "The deteriorating sales are at least partially due to macro-economic issues as the restaurant industry as a whole and the fast casual sector in particular are experiencing decreasing sales trends." 

We can debate to what degree the above constitutes sufficient evidence. Indisputable, however, is that there certainly is more than "no evidence."