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The demise of Red Lobster is a perfect case study in how to kill a business
(www.businessinsider.com)
this post was submitted on 21 May 2024
134 points (97.2% liked)
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Irrelevant. If you have a business that owns property you should have two divisions for accounting reasons, one that runs the business and one that leases the property to the business. Both sides should be making money. This should just be an accounting trick but you need to watch it, if you can't make money with either side alone that means you don't have a good business.
There are good reasons to own your own real estate, and good reasons to lease. However either way you need to make the accounting numbers work.
Not irrelevant. If they had kept the property the company would have assets. They liquidated the assets and sold the name which was now saddled with debt. That's not even remotely irrelevant it's the literal cause of the bankruptcy...can you even read???
This article just said "don't sell real estate because it is an unsustainable expense."
Private equity hate spending their own money or they overspend in an attempt to be an entrepreneur. They will buy something, squeeze all the value out of it, and then try to sell it off to be juiced by some other dumb schmuck with deep pockets and dreams.
Constant profitability is a cancer and you are giving advice on how to kill a business, with the example being Red Lobster used your "plan" and just died.
Red Lobster was already dead, they just hadn't held the funeral yet.
this wasn't two B/U in a single umbrella though, they sold estate to another company who then leased it back to them.
Which is perfectly fine to do.
Well done you guys, let's downvote the only person in the entire thread who knows what they're talking about. Brilliant stuff.