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> Nope. Resale value is way too forward thinking for a corporation these days, it's all about short term profit. This kind of blanket statement is almost alway

by cowpig 4y ago

> Nope. Resale value is way too forward thinking for a corporation these days, it's all about short term profit. This kind of blanket statement is almost always wrong about anything in the messy real world. But it's especially wrong in this case. McDonald's is effectively a real estate company[0] that has been growing over ~80 years. [0] https://thestrategystory.com/2020/09/24/mcdonalds-real-estate/ https://thestrategystory.com/2020/09/24/mcdonalds-real-estat...

nickelcitymario 4y ago
> But it's especially wrong in this case. McDonald's is effectively a real estate company[0] that has been growing over ~80 years. I don't think this contradicts the contention that McDonald's is too short-term in its thinking to be worried about resale value. Yes, they're a real estate company. But most of that real estate is never sold or rented to anyone other than McDonald's franchisees. I think they designed the stores this way because they believe -- and probably have troves of data to support them -- that this style of architecture is better for their restaurants too.
- queuebert 4y ago
  Maybe just cheaper to build and only loses 5% of the brand recognition when the giant arches are still on a sign out front.
- WalterBright 4y ago
  > McDonald's is too short-term in its thinking It's not credible that a corporation that grows from one restaurant into world dominance is guilty of "short-term" thinking.
  - sophacles 4y ago
    It's equally un-credible to pretend the people who were making decisions 30 years ago are the same people making decisions today. Or to pretend that the type of thinking required to grow a restaurant into a juggernaut is the same type of thinking that maintains the juggernaut. Or that a corporation beholden to the desires of shareholders won't change behavior as the desires of those shareholders change.
    - WalterBright 4y ago
      Why would the shareholders want short term thinking? Stock valuations are based on future expected profits. Short term thinking leads to a crashing stock value, followed by bankruptcy. Investors don't want that.
      - nickelcitymario 4y ago
        ...are you really arguing corporations aren't driven by quarterly and annual results? If I do something today, and the corporation benefits in 10 years, I don't get the credit for that. Whoever has my role in 10 years gets the credit. I completely agree that corporations SHOULD think long-term. But I fail to see much evidence of that. If you want to argue that Ray Kroc had a long-term vision, you'd probably be right. But I very much doubt today's management thinks that far out.
        WalterBright 4y ago
        > But I fail to see much evidence of that. Every large company on the stock exchange is evidence of that. > are you really arguing corporations aren't driven by quarterly and annual results? Have you ever seen companies beat their quarterly earnings estimates, and yet their stock drops? That's because the shareholders were suspicious that those results were short term, and the long term outlook didn't look so hot. Any shareholder that is suspicious that a corporation has sacrificed the long term for short term profits, is going to dump that stock. Wouldn't you?
      - sophacles 4y ago
        Investors are not a single unified hive mind. Some people don't care about long term profitability - they are just in a relatively short-term position and want profits now in the form of dividends and increased price. Some people want the valuation and/or price to go down because they hold short positions. Some people want the company to forego dividends in favor of investment into long-term expansion while other people are hoping for those dividends as part of their retirement income. This is true for institutions too - they have all sorts of reasons to prefer short term gain as much as they want long term gain.

by cowpig 4y ago

nickelcitymario 4y ago

> But it's especially wrong in this case. McDonald's is effectively a real estate company[0] that has been growing over ~80 years. I don't think this contradicts the contention that McDonald's is too short-term in its thinking to be worried about resale value. Yes, they're a real estate company. But most of that real estate is never sold or rented to anyone other than McDonald's franchisees. I think they designed the stores this way because they believe -- and probably have troves of data to support them -- that this style of architecture is better for their restaurants too.

queuebert 4y ago
Maybe just cheaper to build and only loses 5% of the brand recognition when the giant arches are still on a sign out front.
WalterBright 4y ago
> McDonald's is too short-term in its thinking It's not credible that a corporation that grows from one restaurant into world dominance is guilty of "short-term" thinking.
- sophacles 4y ago
  It's equally un-credible to pretend the people who were making decisions 30 years ago are the same people making decisions today. Or to pretend that the type of thinking required to grow a restaurant into a juggernaut is the same type of thinking that maintains the juggernaut. Or that a corporation beholden to the desires of shareholders won't change behavior as the desires of those shareholders change.
  - WalterBright 4y ago
    Why would the shareholders want short term thinking? Stock valuations are based on future expected profits. Short term thinking leads to a crashing stock value, followed by bankruptcy. Investors don't want that.
    - nickelcitymario 4y ago
      ...are you really arguing corporations aren't driven by quarterly and annual results? If I do something today, and the corporation benefits in 10 years, I don't get the credit for that. Whoever has my role in 10 years gets the credit. I completely agree that corporations SHOULD think long-term. But I fail to see much evidence of that. If you want to argue that Ray Kroc had a long-term vision, you'd probably be right. But I very much doubt today's management thinks that far out.
      - WalterBright 4y ago
        > But I fail to see much evidence of that. Every large company on the stock exchange is evidence of that. > are you really arguing corporations aren't driven by quarterly and annual results? Have you ever seen companies beat their quarterly earnings estimates, and yet their stock drops? That's because the shareholders were suspicious that those results were short term, and the long term outlook didn't look so hot. Any shareholder that is suspicious that a corporation has sacrificed the long term for short term profits, is going to dump that stock. Wouldn't you?
    - sophacles 4y ago
      Investors are not a single unified hive mind. Some people don't care about long term profitability - they are just in a relatively short-term position and want profits now in the form of dividends and increased price. Some people want the valuation and/or price to go down because they hold short positions. Some people want the company to forego dividends in favor of investment into long-term expansion while other people are hoping for those dividends as part of their retirement income. This is true for institutions too - they have all sorts of reasons to prefer short term gain as much as they want long term gain.