Why Is Tesla Getting Into The Restaurant Business?

Tesla just filed for a trademark, hinting at the EV maker’s plans to open a restaurant chain — is the concept a good sign for investors?

Move over Burger King, there’s a new sheriff in town. Yesterday, Tesla (NASDAQ: TSLA) CEO Elon Musk filed applications with the U.S. Patent and Trademark Office to use its “T” logo, along with two other iterations of its “Tesla” stylized design, for use in the food industry.

Reports have emerged that the applications are all for “restaurant services, pop-up restaurant services, self-service restaurant services, take-out restaurant services.” The news comes as no big surprise though as the eccentric leader has spoken about opening a diner in Southern California for years. 

Tesla restaurants 

Musk tweeted in 2018 that he would like to build an “old-school drive-in, roller skates & rock restaurant at one of the new Tesla Supercharger locations in LA.” This was just after J.B. Straubel, Tesla’s chief technology officer, told a crowd at a restaurant convention that the company has “already been working with restaurants” on the concept for convenience stores and food shops at Tesla’s charging stations.

Musk also tweeted in April: “Major new Supercharger station coming to Santa Monica soon! Hoping to have 50’s diner & 100 best movie clips playing too. Thanks, Santa Monica city!” He even hinted at offering popcorn there along with “an outdoor screen that plays a highlight reel of the best scenes in movie history.”

The diner-convenience store plan is most likely why Tesla has registered for a food-based trademark, something that is not standard procedure for restaurants as they are usually just for brands planning to start a franchise. Therefore, the application for a trademark is a move that signals plans for big growth.

Is Tesla opening a food chain good news for shareholders?

The company has already had some success in the food and beverage industry. Last year, Tesla Tequila sold out almost immediately when it first hit shelves, proving that there is an appetite for Tesla-branded food and drinks. 

We all know how loyal Tesla fans are to the company, meaning this venture could be very successful. For most Americans, stopping to refuel (or in Tesla drivers’ case, re-charge) goes hand in hand with grabbing something quick to eat. Investors should look upon this plan as positive as anything that entices drivers to buy a Tesla vehicle over its competitors is good news, even if it is as simple as its charging stations selling tasty burgers. If the food is anywhere as popular, innovative, and ahead of its rivals as Tesla’s cars are, Californians are in for some scrumptious food. 

From another perspective, we have to remember that these stations would be very niche and would only be in California at the start so not all customers would have access. Given that there are not many charging stations out there, the food chains would most likely be hard to scale up. In addition, there are also not that many Tesla vehicles on the road at the moment, which begs the question, would a food station be profitable? The fear would be that the new business might turn out to be another loss-making venture for Tesla. 

Despite the news, which Tesla has not confirmed or denied, the auto company’s stock fell 3% on Wednesday. The drop in share price came after Tesla was forced to recall 6,000 of its cars due to concerns around loose bolts. 

Read more about Tesla below: 

What Is A Better Investment Right Now: NIO Or Tesla?

Are Tesla’s Competitors Beginning To Catch Up?

What Is A Better Investment Right Now: Tesla Or Volkswagen?

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.