Highly endorse this. This is better than your first semester an Intro to Finance class in Uni
Simply - sales growth is more important than just the gross numbers, understanding pricing power, operating expenses - are key areas for evaluating an income statement
Is there any hope for a fast-casual restaurant operator? I started a concept a few years ago with a buddy in Buffalo, NY (after moving home from NYC) and it's sort of like a Digg Inn. I'll spare you a long post but there's no question that the restaurant biz is the stupidest biz you can be in. Insane volatility, and so many independent moving parts with immediate high stakes. We also sell meal preps online.. that biz seems more hopeful for the future. But if any of you are thinking of opening a small restaurant... just don't. Anyway, just a small operator having daily heart attacks looking at the cost of his chicken prices here. Godspeed.
Thanks for the post and bluntly motivating delivery.
It's frustrating how many people focus on volume and revenue - profitability second. In the hotel industry I come across is a lot, and find it so short-sighted. Once you consistently lower rate to get more volume you diminish the price-position/perception, and its rough to get back. Plus when you max out occupancy where do you expect to grow? So you work harder not smarter for market share, and have little opportunity for growth in future years since you took away your own value and maxed out inventory. I know perishable products are different, but see some parallels.
This is interesting essentially you're capped at the room max, never got into this but if you look at RE you're trying to maximize for square footage (guess) when it comes to this type of biz
Wonder how hotels vs. Airbnb will do the next couple years
I left out an important point - I am referring to luxury/lifestyle hotels, which asset managers typically do not want to run higher than 85% occupancy because of wear and tear and service level impact, plus to gain share the following year maxing out occupancy puts more pressure on rate. Full/limited service hotels max on occupancy. Hotel management companies get fees on topline revenue, so can be at odds with ownership NOI goals at times. Hotels do not look at square footage except for meeting space ratio to room count, and use key count for rooms. Suites are used to drive premiums for rate, but when you start looking by square footage it gets clunky. So if you see hotel property sales it is listed as price per key.
I think high end luxury hotels and high end airbnb will continue to do well, and the midlevel product for both may suffer for leisure, reflective of the middle class losing discretionary income. Areas I am familiar with have cracked down on short term rental licenses. Resorts have added managing that type of inventory into a revenue share program with the property owner. If you look at what type of hotels Blackstone invests in you see that spread - high end luxury/resort or supply chain hotels, nothing really in between.
we do look at square feet when looking at breaking up suites for more keys, or combining keys for more suites. This is at least my experience.
Hotels have a greater opportunity to recover for corporate travel and group/meetings/events business, you see it in NYC/SF/Silicon Valley already - so on an aggregate I think hotels will out perform and offset the slowdown in mid-level leisure. If I had to guess right now...
Plenty of people that offer a great service but don’t understand optimizing their P&L. Not everyone is a finance geek. I’d argue that people trying to learn this WILL make it.
Anyone that understood accounting/cash flow never liked Snap as an investment. Real investors just shake their heads at retail piling into Snap, but eventually it will need to turn a profit to survive. The time of zombie firms and rolling loans at 0% rates to fund VC burn is coming to a sudden end and cash flow matters again.
Some ideas for the noobs:
Help niche services get customers by doing their marketing for them
Run affiliates offers for skin, weight loss.
Start a skin or weight loss product
Start a software (SaaS) product targeting a service niche or w/e
All this is much easier than it seems (just start). You’ll suck and then learn, then wonder why you didn’t start sooner.
Make 50 calls, someone will take you up on it. Run a ton of shitty affiliates you’ll learn what works. It’s actually really fun.
tagging in a few more 'first principles'
https://bowtiedbull.substack.com/p/bowtiedbull-faq-will-be-updated-over?s=r
https://bowtiedfox.substack.com/p/faang?utm_source=substack&utm_campaign=post_embed&utm_medium=web&s=r
https://bowtiedopossum.substack.com/p/your-path-to-wifi-money?utm_source=substack&utm_campaign=post_embed&utm_medium=web&s=r
Cartoon Bull from 2035 doing a better job than a 28k USTT accountancy qualification...
Notice how bull spelled it. I agree they won’t need (redacted)
> He Knows
AWS?
Si
Awesome, might be a good time to learn to use it for cheaper than normal.
Google has their own cloud business so cant be data centers
“Rely” too… Apple is one one that makes their own chips and less silicon seems intuitive. But… a little bird told me that ain’t it.
Highly endorse this. This is better than your first semester an Intro to Finance class in Uni
Simply - sales growth is more important than just the gross numbers, understanding pricing power, operating expenses - are key areas for evaluating an income statement
Must read for all non finance jungle members
Is there any hope for a fast-casual restaurant operator? I started a concept a few years ago with a buddy in Buffalo, NY (after moving home from NYC) and it's sort of like a Digg Inn. I'll spare you a long post but there's no question that the restaurant biz is the stupidest biz you can be in. Insane volatility, and so many independent moving parts with immediate high stakes. We also sell meal preps online.. that biz seems more hopeful for the future. But if any of you are thinking of opening a small restaurant... just don't. Anyway, just a small operator having daily heart attacks looking at the cost of his chicken prices here. Godspeed.
no longer needed: monster/indeed/recruiting software/firms
Hmm probably true, if you have an audience you can just post a position on social media
Thanks for the post and bluntly motivating delivery.
It's frustrating how many people focus on volume and revenue - profitability second. In the hotel industry I come across is a lot, and find it so short-sighted. Once you consistently lower rate to get more volume you diminish the price-position/perception, and its rough to get back. Plus when you max out occupancy where do you expect to grow? So you work harder not smarter for market share, and have little opportunity for growth in future years since you took away your own value and maxed out inventory. I know perishable products are different, but see some parallels.
Just realized I am still only thinking of profitability like a pleb and not NOI like an owner...
This is interesting essentially you're capped at the room max, never got into this but if you look at RE you're trying to maximize for square footage (guess) when it comes to this type of biz
Wonder how hotels vs. Airbnb will do the next couple years
I left out an important point - I am referring to luxury/lifestyle hotels, which asset managers typically do not want to run higher than 85% occupancy because of wear and tear and service level impact, plus to gain share the following year maxing out occupancy puts more pressure on rate. Full/limited service hotels max on occupancy. Hotel management companies get fees on topline revenue, so can be at odds with ownership NOI goals at times. Hotels do not look at square footage except for meeting space ratio to room count, and use key count for rooms. Suites are used to drive premiums for rate, but when you start looking by square footage it gets clunky. So if you see hotel property sales it is listed as price per key.
I think high end luxury hotels and high end airbnb will continue to do well, and the midlevel product for both may suffer for leisure, reflective of the middle class losing discretionary income. Areas I am familiar with have cracked down on short term rental licenses. Resorts have added managing that type of inventory into a revenue share program with the property owner. If you look at what type of hotels Blackstone invests in you see that spread - high end luxury/resort or supply chain hotels, nothing really in between.
we do look at square feet when looking at breaking up suites for more keys, or combining keys for more suites. This is at least my experience.
Hotels have a greater opportunity to recover for corporate travel and group/meetings/events business, you see it in NYC/SF/Silicon Valley already - so on an aggregate I think hotels will out perform and offset the slowdown in mid-level leisure. If I had to guess right now...
If you actually found value from this article, your NGMI (never).
Plenty of people that offer a great service but don’t understand optimizing their P&L. Not everyone is a finance geek. I’d argue that people trying to learn this WILL make it.
Great post for the inexperienced
Semiconductors?
I'm guessing this means ad budgets will get slashed in the near term.
Tangential to SNAP. Wonder if LINK is diluting earnings by over hiring and awarding shares. Or is this acceptable given their hyper growth state
Anyone that understood accounting/cash flow never liked Snap as an investment. Real investors just shake their heads at retail piling into Snap, but eventually it will need to turn a profit to survive. The time of zombie firms and rolling loans at 0% rates to fund VC burn is coming to a sudden end and cash flow matters again.
no longer need their users cause their data is worthless for now?
FANG relies on trash cash printing—which will no longer be necessary.
Probably less marketing/advertising. Also companies that are struggling to grow may need to spend less on antitrust defense lawyers.
FANG won’t need OE, diversity coaches, or older admins whose productivity cuts in half every other year.