4 ms·

That's pretty standard, even for well-run chains. Gives the primary business (making food profitably) a huge cash infusion, and removes a distraction. Obviousl

That's pretty standard, even for well-run chains. Gives the primary business (making food profitably) a huge cash infusion, and removes a distraction. Obviously deal terms are important, but that action on its own isn't stripping for the sake of stripping.

red_trumpet 2y ago
> Gives the primary business (making food profitably) a huge cash infusion What is "stripping for the sake of stripping" of not this?
triceratops 2y ago
McDonald's, possibly the most successful chain of them all, doesn't seem to think owning real estate is a distraction.
- quickthrowman 2y ago
  McDonald’s is an REIT that happens to sell hamburgers.
- bombcar 2y ago
  Part of this is because of how McDonald's handles franchise agreements (for various reasons).
- SoftTalker 2y ago
  That's because McDonald's is a real-estate company that finances itself by selling hamburgers.
organsnyder 2y ago
How is owning real estate a distraction for a restaurant chain? Presumably their new landlords aren't going to maintain kitchen equipment and other infrastructure that makes up a lot of the maintenance burden. If it's really such a distraction, outsource it—but don't sell the real estate.
- bluGill 2y ago
  That depends - how long will the location be a great location for that business? You really need an good accountant and a reliable psychic to figure this out, an accountant can figure out how tax code, laws, and other details apply - while the psychic can tell you how the tax code, fads, and your life will change in the future. (I don't believe a reliable psychic exists - but you still need one to figure out the correct answer) If you will be there for decades it is worth owning. The land can be paid off and still working for you. Likewise the building is depreciated and paid for (check with an accountant!), but you are still there using it - you still need to remodel and maintain it though. You pay more upfront, but long term it is a better investment. However many businesses are fad - they do well for a few years and then people move on to the next fad and you should close up. If you only need the real estate for a couple years you should rent/lease: you won't see a payoff from the upfront costs, and you are stuck with the real estate while trying to sell it.
rangerelf 2y ago
"Gives the primary business (making food profitably) a huge cash infusion, and removes a distraction" This is so suspiciously MBA-esque: - Owning real estate (and responsibilities associated with it) are not distractions: they are the cost (and responsibilities) associated with running a business. - "a huge cash infusion" followed by [correspondingly] huge rent payments; the business becomes a prisoner. There certainly are distractions when running a business, but owning the spot of land where it's installed is not one of them.
- d0odk 2y ago
  Do you think every business owns the land and building it operates in? Real estate is expensive. Maintaining a building is expensive. There are plenty of businesses that rent to avoid the capital requirement and headache of property ownership.
- bluGill 2y ago
  You are thinking about distraction wrong. Owning real estate isn't so difficult/time consuming that the managers lose much time/energy deal with it instead of running the business. However it is an accounting distraction. If you own real estate you need to figure out which share of your profits comes from rent of real estate and which from the restaurant. If you cannot make both business profitable that means you should get rid of one. (sometimes that means sell the real estate and rent, sometimes it means close the business and rent the real estate to someone else). If both work out profitable, then keep going as is. (don't forget about intangibles, if real estate is a small loser it might be worth it just because you don't have to move and so can get loyal customers - but you should be intentionalable about accepting this loss)
  - idontpost 2y ago
    [dead]

red_trumpet 2y ago

> Gives the primary business (making food profitably) a huge cash infusion What is "stripping for the sake of stripping" of not this?

triceratops 2y ago

McDonald's, possibly the most successful chain of them all, doesn't seem to think owning real estate is a distraction.

quickthrowman 2y ago
McDonald’s is an REIT that happens to sell hamburgers.
bombcar 2y ago
Part of this is because of how McDonald's handles franchise agreements (for various reasons).
SoftTalker 2y ago
That's because McDonald's is a real-estate company that finances itself by selling hamburgers.

organsnyder 2y ago

How is owning real estate a distraction for a restaurant chain? Presumably their new landlords aren't going to maintain kitchen equipment and other infrastructure that makes up a lot of the maintenance burden. If it's really such a distraction, outsource it—but don't sell the real estate.

bluGill 2y ago
That depends - how long will the location be a great location for that business? You really need an good accountant and a reliable psychic to figure this out, an accountant can figure out how tax code, laws, and other details apply - while the psychic can tell you how the tax code, fads, and your life will change in the future. (I don't believe a reliable psychic exists - but you still need one to figure out the correct answer) If you will be there for decades it is worth owning. The land can be paid off and still working for you. Likewise the building is depreciated and paid for (check with an accountant!), but you are still there using it - you still need to remodel and maintain it though. You pay more upfront, but long term it is a better investment. However many businesses are fad - they do well for a few years and then people move on to the next fad and you should close up. If you only need the real estate for a couple years you should rent/lease: you won't see a payoff from the upfront costs, and you are stuck with the real estate while trying to sell it.

rangerelf 2y ago

"Gives the primary business (making food profitably) a huge cash infusion, and removes a distraction" This is so suspiciously MBA-esque: - Owning real estate (and responsibilities associated with it) are not distractions: they are the cost (and responsibilities) associated with running a business. - "a huge cash infusion" followed by [correspondingly] huge rent payments; the business becomes a prisoner. There certainly are distractions when running a business, but owning the spot of land where it's installed is not one of them.

d0odk 2y ago
Do you think every business owns the land and building it operates in? Real estate is expensive. Maintaining a building is expensive. There are plenty of businesses that rent to avoid the capital requirement and headache of property ownership.
bluGill 2y ago
You are thinking about distraction wrong. Owning real estate isn't so difficult/time consuming that the managers lose much time/energy deal with it instead of running the business. However it is an accounting distraction. If you own real estate you need to figure out which share of your profits comes from rent of real estate and which from the restaurant. If you cannot make both business profitable that means you should get rid of one. (sometimes that means sell the real estate and rent, sometimes it means close the business and rent the real estate to someone else). If both work out profitable, then keep going as is. (don't forget about intangibles, if real estate is a small loser it might be worth it just because you don't have to move and so can get loyal customers - but you should be intentionalable about accepting this loss)
- idontpost 2y ago
  [dead]