mercredi 10 juin 2020

Profitability of restaurants

I'm concerned about restaurants during this pandemic. First of all, they represent an important part of the economy. I don't have any statistics about it, but I wouldn't be surprised if restaurants would represent 50% of the businesses of downtown Toronto, Vancouver and Montreal. And it's surely similar in almost every other country in the world.

In other words, if restaurants go badly, the economy goes badly. If they go bankrupt, it means a lot of people go bankrupt. Right now, thousands of little businesses are going bankrupt. The place where we buy helium balloons for birthday parties is closing after 25 years. And businesses way bigger than that are closing their doors too. It's a fucking tragedy. But the stock market doesn't care because these businesses are not listed on the TSX. 

Restaurants (and bars to a wider extent) are the worst kind of business someone could own in a pandemic because they relate on a model where you have to combine volume and proximity (except for those where takeout is a concept widely used). For most restaurants, profitability comes with the notion of packing people in a room with a lot of chairs and tables and make them eat or drink in a social atmosphere.

With social distancing (2 meters between the tables) and a maximum number of people around the same table, will it be profitable for restaurants to open their doors? If a restaurant needs to liberate a lot of place and receive 50 clients instead of 100, will they still make money? Will they really want to open?

I still like MTY and restaurants from a shareholder point of view. However, it's the complicate way to invest money these days and I don't think that problems are over. They will have at least a quarter with almost no revenue and probably a few other tough quarters.

Lately, people got excited once again with MTY because of the reopening of the economy. Me, I don't know. I don't know, because it's the best thing to say. You don't look like a fool when you affirm your ignorance.

When we eat, we use our hands, which is the most dangerous part of our anatomy now. I'd rather invest money in a sector where our hands and our mouths aren't involved, in a public place.

Anyway, do what the fuck you want to do. Buy MTY shares if you want to. Buy all the fucking shit you want. I'll still beat the fuck out of you and the market. 

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