I'm Arjun. This is my digital garden.

[ Originally posted on LinkedIn ] But is it? Is McDonald’s in the real estate business instead of fast food? I don’t think so. What McDonald’s does (as beautifully explained in this post, and in the film “The Founder” before it) is tweak its leverage. Fancy financial jargon but it’s not very uncommon in servicing companies known to have reasonably high volatility and paper thin margins. Airlines do that all the time. Ask southwest or indigo. Now, are they in the business of buying and leasing planes? Again, I don’t think so. Companies are in the business of serving their customers. I don’t remember the last time I went to McDonald’s and ordered a happy meal of 25 square feet of property. I said “I want chicken nuggets and yes, I’ll have fries with that”, and that was it. McDonald’s is a burger flipping company that hires smart accountants to make it look like a real estate company. If there’s no Big Mac, Ronald’s real estate is going to be very lonely.

People who are low on the totem pole are the first ones to notice when things are about to go south in any organisation. A few weeks ago, I was at a co-working space which made headlines for their large fundraise. Heavy IB words like TAM and SAM were used generously in the write ups. I ran into the Janitor in the restroom and asked him how he liked working there. He said, with a smirk, that earlier he had to refill the hand-wash 2-3 times a day, but now he was doing it only a few times a week. Which means, either people were not washing their hands, or, there were just less people coming in. Reading EBITDAs is good to evaluate how a *company* is doing. But if you want to know how a *business* is doing, make friends with the Janitor / IT / Admin. They probably won't validate your go to market strategy over a couple of drinks... ... but they know things.