Re: The Nation's Financial Condition
Posted: Mon May 18, 2020 9:58 am
Will be interesting to see if gas prices begin to rise as more places open back up.
Same Party, Different House
https://fanlax.com/forum/
Eating in is more optimal for human life in almost every aspect, financially, health perspective, etc. I used to travel 150-200 days a year or more for a few years, know how hard it is to eat clean, even at a generic chain TGIF or whatever, let along a nice restaurant, the broccoli is drowned in butter, chicken is cooked in the fat inside of fat...BUT the Rathbuns Eggplant Fries were the BOMB! (the entrees were excellent as well) I can separate my business brain from my professional brain enough when I need to in order to be bummed that a great restaurant is gone (for now) and I don't feel bad for a CRE buyer from Charlotte who way overpaid for the complex a year ago to redevelop and is going to lose their shirt, they priced it for perfection and, to some degree, a greater fool theory, which works in major top 5-6 city trophy properties like the GM building in NYC where no one has ever made money on the cash flows alone, but rather on the terminal value flip, but not so much with high end, already redeveloped from broke down industrial, trendy properties that rely on super high restaurant and B.S. retailer rents to manage a slim 7-9% IRR on highly accomodative financing terms. Especially not in a "new money" (culture, there's plenty of old money who's kids go to Westminster and all do each others real estate deals with their parents money) city like Atlanta where the crowds move to a new neighborhood for a few years, but then leave for the hot new thing leaving not much behind like a set of locusts (a problem for less dense, infill, vertically challenged cities like Phoenix, Atlanta, Dallas, Orlando/Tampa, Houston, etc.). Only in good times does basis not matter.a fan wrote: ↑Sun May 17, 2020 2:39 pmRestaurants are bad for society?Farfromgeneva wrote: ↑Thu May 14, 2020 7:57 pm Here you go Afan, while I’m really not stressed about a major shakeout in restaurant and bars, frankly it’s like society is purging itself of something not so great for itself like a forest fire cleaning up dead trees as far as social “good”
In any event, even if you don't care about all the restaurant closings coming------a man in your business should worry about the effect these closings will have on the commercial real estate where all these restaurants used to live. What is going to go into those spaces? Certainly not retail.
And then there's office space and airlines....how many managers all over the world are looking at how much money and time they are saving from not having their workers commute or travel? And what will that do to future choices?
Is a well pet clinic something that offers effectively “elective” services or also basic veterinary needs? Caught my attention as my friend is CFO of a lender called LendingUSA that does point of sale and their second largest vertical is veterinary after funeral. Third which has fallen back is elective dental, but basically they are term/installment lending version of CareCredit or Greensky, the vet or funeral home offers the financing but it’s made by these guys who have well over 1,000 vet businesses in their network.old salt wrote: ↑Sat May 16, 2020 1:24 am PPP worked for us. It took a long time to come through, but it enabled us to keep our entire Well Pet Clinic staff on payroll for the 7 weeks we were at state mandated reduced operations. It would have sustained us even if we had to shut down completely for the lockdown period.
Our major offering is low cost spay/neuter (many grant subsidized, for low income pet owners). MD (wrongly in our opinion) deemed them "elective" & we were restricted from performing them (many have been deferred, thankfully). We were permitted to do rabies vac's & treat emergencies. What constituted emergency care was left to the discretion of the vet.Farfromgeneva wrote: ↑Mon May 18, 2020 3:32 pmIs a well pet clinic something that offers effectively “elective” services or also basic veterinary needs? Caught my attention as my friend is CFO of a lender called LendingUSA that does point of sale and their second largest vertical is veterinary after funeral. Third which has fallen back is elective dental, but basically they are term/installment lending version of CareCredit or Greensky, the vet or funeral home offers the financing but it’s made by these guys who have well over 1,000 vet businesses in their network.old salt wrote: ↑Sat May 16, 2020 1:24 am PPP worked for us. It took a long time to come through, but it enabled us to keep our entire Well Pet Clinic staff on payroll for the 7 weeks we were at state mandated reduced operations. It would have sustained us even if we had to shut down completely for the lockdown period.
My understanding is elective everything drops far far faster any necessary services even when it comes to pets (less elastic demand sensitivity, so to speak, treated as necessary)
I had to do that with my two dogs (one still with us). Felt awful when they came home drugged up, almost seemed like they new they could never be "mothers" again though that may have been the lingering drugs. But...I know that % of getting cancer if you don't fix a dog is tremendously higher, so I can see where that's maybe not essential but more than elective in a sense.old salt wrote: ↑Mon May 18, 2020 4:08 pmOur major offering is low cost spay/neuter (many grant subsidized, for low income pet owners). MD (wrongly in our opinion) deemed them "elective" & we were restricted from performing them (many have been deferred, thankfully). We were permitted to do rabies vac's & treat emergencies. What constituted emergency care was left to the discretion of the vet.Farfromgeneva wrote: ↑Mon May 18, 2020 3:32 pmIs a well pet clinic something that offers effectively “elective” services or also basic veterinary needs? Caught my attention as my friend is CFO of a lender called LendingUSA that does point of sale and their second largest vertical is veterinary after funeral. Third which has fallen back is elective dental, but basically they are term/installment lending version of CareCredit or Greensky, the vet or funeral home offers the financing but it’s made by these guys who have well over 1,000 vet businesses in their network.old salt wrote: ↑Sat May 16, 2020 1:24 am PPP worked for us. It took a long time to come through, but it enabled us to keep our entire Well Pet Clinic staff on payroll for the 7 weeks we were at state mandated reduced operations. It would have sustained us even if we had to shut down completely for the lockdown period.
My understanding is elective everything drops far far faster any necessary services even when it comes to pets (less elastic demand sensitivity, so to speak, treated as necessary)
Well Pet clinics typically focus on spay/neuter, routine vacs, & minor problems. We don't do x-rays & spay/neuter is our only surgery.
Many full service vets in MD closed down or did only emergency care.
A bit off topic but still dog related. My wife and I adopted our new forever pet 2 weeks ago. She is a Beagle/Lab/Mutt. She was dropped off waaay pregnant at an animal shelter in Kentucky. She wound up with her foster parents here in NY on a Saturday and she had 8 pups on Monday. Two weeks later her fosters brought in 8 more abandoned pups. Our little Roxy took them all in as her own. This beautiful little girl spent 2 and a half months nursing 16 puppies around the clock. I can't even imagine the love it takes to do that. Roxy is so very special to my wife and I. She has given so much unconditional love and care to all of her pups. Today she is getting the rest, nutrition and the one on one attention she has never had. Next week, hopefully we will be bringing her in to be spayed. My wife and I figure she has done more than her share of taking care of all of her pups. I just have to figure out how to get her to chase balls and for the first time in her life learn how to play. I tip my hat to you OS for all that you for our four legged friends. I don't know how you do it without getting attached to them. There were a number of people that wanted to adopt our Roxy. My wifes connections with the people at rescued treasures put us at the top of the list. I am so grateful we have our little Roxy now running the show at our house. There is nothing close to the love of a dog.Farfromgeneva wrote: ↑Mon May 18, 2020 4:21 pmI had to do that with my two dogs (one still with us). Felt awful when they came home drugged up, almost seemed like they new they could never be "mothers" again though that may have been the lingering drugs. But...I know that % of getting cancer if you don't fix a dog is tremendously higher, so I can see where that's maybe not essential but more than elective in a sense.old salt wrote: ↑Mon May 18, 2020 4:08 pmOur major offering is low cost spay/neuter (many grant subsidized, for low income pet owners). MD (wrongly in our opinion) deemed them "elective" & we were restricted from performing them (many have been deferred, thankfully). We were permitted to do rabies vac's & treat emergencies. What constituted emergency care was left to the discretion of the vet.Farfromgeneva wrote: ↑Mon May 18, 2020 3:32 pmIs a well pet clinic something that offers effectively “elective” services or also basic veterinary needs? Caught my attention as my friend is CFO of a lender called LendingUSA that does point of sale and their second largest vertical is veterinary after funeral. Third which has fallen back is elective dental, but basically they are term/installment lending version of CareCredit or Greensky, the vet or funeral home offers the financing but it’s made by these guys who have well over 1,000 vet businesses in their network.old salt wrote: ↑Sat May 16, 2020 1:24 am PPP worked for us. It took a long time to come through, but it enabled us to keep our entire Well Pet Clinic staff on payroll for the 7 weeks we were at state mandated reduced operations. It would have sustained us even if we had to shut down completely for the lockdown period.
My understanding is elective everything drops far far faster any necessary services even when it comes to pets (less elastic demand sensitivity, so to speak, treated as necessary)
Well Pet clinics typically focus on spay/neuter, routine vacs, & minor problems. We don't do x-rays & spay/neuter is our only surgery.
Many full service vets in MD closed down or did only emergency care.
Pet care is a funny business.
Well, -$35 a barrel is unsustainable, so presumably there will be some rise eventually.youthathletics wrote: ↑Mon May 18, 2020 9:58 am Will be interesting to see if gas prices begin to rise as more places open back up.
I, too, enjoy, farfromgeneva's posts, difficult to decipher as they may sometimes be!a fan wrote: ↑Mon May 18, 2020 3:34 pm I will openly admit that I had to read that post twice to understand it, farfromgeneva.
And I read slowly.
I love your posts on this subject, thanks for taking the time to write them! I learn a ton.
I have come to the conclusion that I'm horrible at macroeconomics. I can only understand what I see on the ground...and I mistakenly assume that what I see up close will mirror what happens nationally.
I'm working on it!
Curious why you suspect that the smaller places will suffer the most. I would tend to lean the opposite way....that the smaller places would thrive. Why? because it is their livelihood and a c-suite conglomerate is not protecting his/her bottom line by selling off locations or selling outright. I believe the smaller places are where the investments is at....now is the time to go grab those small shops and help them expand. I think of places to CAVA or ROTI, that are not yet franchised but provide fresh and healthy alternative fast food.MDlaxfan76 wrote: ↑Tue May 19, 2020 9:34 am What concerns me about this squeeze on restaurants is not the shift to more meals at home, but rather that the restaurants most likely to be crushed will be the smallest players, those which represent the most diversity of menus. Do we really need more Big Macs or KFC's or TGIF's? No. We could use a lot less! But entrepreneurs introducing new cuisines, flavors, to our palates...that's a real loss, I think. Likewise, I think there's real value to unique 'entertainment' venues for us to enjoy, with food and libations a rich part of the experienc
How will the small shops survive with a 33% to 40% cut in revenue in many places?youthathletics wrote: ↑Tue May 19, 2020 10:00 amCurious why you suspect that the smaller places will suffer the most. I would tend to lean the opposite way....that the smaller places would thrive. Why? because it is their livelihood and a c-suite conglomerate is not protecting his/her bottom line by selling off locations or selling outright. I believe the smaller places are where the investments is at....now is the time to go grab those small shops and help them expand. I think of places to CAVA or ROTI, that are not yet franchised but provide fresh and healthy alternative fast food.MDlaxfan76 wrote: ↑Tue May 19, 2020 9:34 am What concerns me about this squeeze on restaurants is not the shift to more meals at home, but rather that the restaurants most likely to be crushed will be the smallest players, those which represent the most diversity of menus. Do we really need more Big Macs or KFC's or TGIF's? No. We could use a lot less! But entrepreneurs introducing new cuisines, flavors, to our palates...that's a real loss, I think. Likewise, I think there's real value to unique 'entertainment' venues for us to enjoy, with food and libations a rich part of the experienc
Furthermore, with the immediate concern of dine-in, the smaller places have always provided and are more efficient at take-out, which also equals less $$$ per. sq/ft.
Fundamentally, the large players have much more access to capital, not just normally but also, quite notably, in the CARES Act. They have far more access to technology and can amortize all sorts of investments in such across their entire platform. This includes being able to stand up drive-thru, delivery options, connections, digital ordering, and marketing.youthathletics wrote: ↑Tue May 19, 2020 10:00 amCurious why you suspect that the smaller places will suffer the most. I would tend to lean the opposite way....that the smaller places would thrive. Why? because it is their livelihood and a c-suite conglomerate is not protecting his/her bottom line by selling off locations or selling outright. I believe the smaller places are where the investments is at....now is the time to go grab those small shops and help them expand. I think of places to CAVA or ROTI, that are not yet franchised but provide fresh and healthy alternative fast food.MDlaxfan76 wrote: ↑Tue May 19, 2020 9:34 am What concerns me about this squeeze on restaurants is not the shift to more meals at home, but rather that the restaurants most likely to be crushed will be the smallest players, those which represent the most diversity of menus. Do we really need more Big Macs or KFC's or TGIF's? No. We could use a lot less! But entrepreneurs introducing new cuisines, flavors, to our palates...that's a real loss, I think. Likewise, I think there's real value to unique 'entertainment' venues for us to enjoy, with food and libations a rich part of the experienc
Furthermore, with the immediate concern of dine-in, the smaller places have always provided and are more efficient at take-out, which also equals less $$$ per. sq/ft.
I use to to watch Bar Rescue all the time and the one takeaway was that alcohol was where the profit was, along with managing POS with alcohol, couple not having either of those two with skimming and you could sink. Why? b/c the margins on the food where so small. This is why I argue that small shops will be fine.....because many of those mom and pops and new creative startups are small and do not rely on alcohol sales.MDlaxfan76 wrote: ↑Tue May 19, 2020 10:54 amFundamentally, the large players have much more access to capital, not just normally but also, quite notably, in the CARES Act. They have far more access to technology and can amortize all sorts of investments in such across their entire platform. This includes being able to stand up drive-thru, delivery options, connections, digital ordering, and marketing.youthathletics wrote: ↑Tue May 19, 2020 10:00 amCurious why you suspect that the smaller places will suffer the most. I would tend to lean the opposite way....that the smaller places would thrive. Why? because it is their livelihood and a c-suite conglomerate is not protecting his/her bottom line by selling off locations or selling outright. I believe the smaller places are where the investments is at....now is the time to go grab those small shops and help them expand. I think of places to CAVA or ROTI, that are not yet franchised but provide fresh and healthy alternative fast food.MDlaxfan76 wrote: ↑Tue May 19, 2020 9:34 am What concerns me about this squeeze on restaurants is not the shift to more meals at home, but rather that the restaurants most likely to be crushed will be the smallest players, those which represent the most diversity of menus. Do we really need more Big Macs or KFC's or TGIF's? No. We could use a lot less! But entrepreneurs introducing new cuisines, flavors, to our palates...that's a real loss, I think. Likewise, I think there's real value to unique 'entertainment' venues for us to enjoy, with food and libations a rich part of the experienc
Furthermore, with the immediate concern of dine-in, the smaller places have always provided and are more efficient at take-out, which also equals less $$$ per. sq/ft.
This doesn't mean that I WANT this to happen, I just predict that's going to be the reality in this crunch. And the crunch is going to sustain way past when other businesses recover to profitability. BTW, I also would predict a drastic reduction, ultimately, in the independent, small chain grocer arena as well. The ante on technology is going to change that landscape too. There will be survivors in those markets, and indeed there are those who will either be lucky in their location or hustle successfully in their adaptability. But overall, we're going to see the bigger, better capitalized businesses make it.
There's a really terrific reality show, Bar Rescue, that I would recommend to anyone looking at restaurant/bar microeconomics. For instance, fascinating how the changes in # of table tops (and other adjustments) can make a world of difference between success and failure. And here we are saying that restaurants will need to operate with half the # of table tops for the foreseeable future.
Not to be overly political, but the CARES Act really didn't get to the small players as intended, nor remotely enough in this particular sector. And there's simply no way that these businesses are going to be able to bring back the same # of workers in July without that killing their business. The program needs adjustment fast. That is, unless we just say that those dollars are flushed.
I do have longer term optimism for the entrepreneurial restaurants at each price point level, but we're looking 2-3 years out.
It'd be interesting to hear your take on the shows after you watch a handful, a fan, given your knowledge. Undoubtedly some BS, but sure looked quite analytical to me on getting the right mix of dynamics. And yeah, table tops and turnover, at least for food oriented spots.a fan wrote: ↑Tue May 19, 2020 1:41 pm For the record, John Lafferty is a laughing stock in the high end hospitality industry. He barely knows how to make a manhattan, and wouldn't know a pilsner from a stout. There are pages devoted to actual bar operators tearing his advice apart.
Thought you'd get a kick out of this.
And yes, all the profits are in spirits, much more so than beer or wine.....yet there are precious few operators who know this. If they did, they'd pore over their spirits menus with a magnifying glass, instead of handing it over to some kid in their 20's, and hoping they know what they're doing. Because they rarely do.
It's pretty much impossible to tell what the future holds for restaurants. You don't know when social distancing will end, and you don't know who is getting what in terms of bailouts. My brother and I have completely ignored trying to guess what's going to happen, and who will survive. It's impossible to tell on a micro level. It's all heartbreaking, I can tell you that much. I wish I had the capital to lend out to keep Colorado restaurants afloat.
You can't tell when social distancing will end, and when folks will feel comfortable in confined spaces again. Could be next week. Could be next year. I have absolutely no idea. And without that piece of information? Forget trying to work out who will survive, and who won't.
Edit to add------maybe Taffer's show has changed. I just remembered the criticism I described was yeeears ago. So take what I said with that in mind.