Re:Why Restaurants Are So Fucked
by IAmGraydon on Saturday May 02, 2020 @01:05AM
(#23049392)
A landlord’s goal is to capture 100% of their tenants profits? That’s quite a misinformed statement. Their goal is to create sustainable, long term income on their investments. Taking everything they can from their tenants would not foster sustainability. I’m also really curious about your last sentence. Can you elaborate?
[ Parent
| on HN ]
The goal is to maximize income, and the maximum you can get sustainably is 100% of your lesee's profits. If you take less then you're leaving money on the table. If you take more than that (e.g. 101%) they will inevitably go out of business.
If you guess wrong and drive a place out of business, your hope is that the next tenant is more profitable and can handle the overhead. Chain restaurants are typically pretty good about this because they know their revenue potential accurately ahead of time.
>...The goal is to maximize income, and the maximum you can get sustainably is 100% of your lesee's profits.
If you hypothetically take 100% of the profits of the renter, they won't be in business long term. There likely will be a gap between when they stop paying rent and you are able to evict them. There will also likely be a gap between that point and when you get a new renter, particularly when your rent is so high.
I agree that the goal is to maximize income, but trying to take 100% of the profits of the renter is not a way to maximize long term income.