I agree about your comments on bars on the strip. Like many business post-Covid the economics of the model just don’t work. Retail/office and to a lesser extent industrial premise rent/values are in for a huge shake up.
We had a friend who won the prestigious retail shop of the year around 7 – 8 years ago in Christchurch. It looked amazing and seemed to be an excellent business (it was all fluff by the way) but little did the judges know it had struggled to make a dollar for the last 5 years. It cost them $3000 dollars a week just to open the doors – (rates, rent, insurance and paying a couple of staff)
Fixed costs in my view will need to ½ to make many of these post Covid business sustainable.
There will be a massive realignment in values in the CBD; and it will play out in the next few years.
I was talking to friend who saw the mining boom/bust in western Australia. He was fascinated to watch how a “flat white” went from $6 to $3 in the space of a few months when the mining “sugar” was taken out of the economy around 5 years ago.
For each business it’s a time to look at every line in your expense column to see where you can save a dollar and even then, in many cases it just won’t add up.
I have had a fantastic response also from a former bank manager on banks. I will print this next week.
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