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View Diary: Harvard innovation guru: Pursuit of profit is killing the U.S. economy (199 comments)

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  •  I've seen the same crazy think destroy local chain (1+ / 0-)
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    elfling

    There is a tiny Mexican Fast Food chain in Southern CA - Frescas's - now even smaller thanks to the strange thinking of the owner. In the past year he has shut down several locations not because they are unprofitable but because he says they are not as profitable per square foot as other locations. One of the locations was in fact very profitable but he was ticked off that he couldn't get a lower rent so he shut it down. Now this would make sense if he could only find a finite number of good people to run the chain and wanted to move to more profitable locations. But in fact all he has done is lower his profits because he hasn't opened any new locations.

    My family loved the place and couldn't figure out why this guy would be willing to sacrifice actual profits in order to have a higher profit margin. The article and the linked video explained why he thought it a good idea. Who knows - maybe he is preparing to sell his business or franchise it and having only the higher profit stores will make his business more attractive even if it is actually less profitable.

    •  We lost a bookstore here the same way (1+ / 0-)
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      shenderson

      First of all, our wonderful (and fairly successful) local bookstore was purchased by a chain out of Ohio.

      Next they decided to move from a nice central location with plenty of parking to The Mall. All the loyal customers were appalled--this bookstore was the "anti-mall" experience, plus you could never find a parking place at the mall. (It goes without saying that the mall is not bike -friendly.)  So many of those those customers quit going.

      Later--even though the store was still making money at the mall--the remote owners decided that profit per square foot was not so good at this store as in stores in other cities.  (Well, duh!  They'd relocated to the mall, the most expensive rent in town.) Corporate decision making at its worst.

      So that was it--we lost the bookstore, and a few months later Borders went out of business, and then we had no bookstores in town but the used ones.  

      (PS:  There was a happy ending, thanks to Ann Patchett  who just opened a new little bookstore, Parnassus.)

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