What Pizza Hut & Wendy Alert Companies To Do Now
No one is safe unless they fix themselves.
Just recently, as you may have known, Pizza Hut & Wendy’s Franchisee, NPC, has filed for Chapter 11 bankruptcy. They are in debt of $903 million, this means that they are in huge debt even before the pandemic.
Even the business that can still survive in this era is suffering, this indicates that anything can happen to anyone no matter which industry is the strongest now.
Chapter 11 bankruptcy means that it is a restructuring bankruptcy, so the stores can still operate. But, they must think about changing their business models if they are to survive another month. This means that they are not entirely bankrupt.
This case is an alarm for everyone to wake up. No one is safe.
We are in a recession. Stocks are slowing down, unemployment is increasing in nearly every industry, and businesses have been closing down. We are forced to go tech, they are to restructure their business model and think of something new without putting clients at risk.
No one is safe unless they do these two things:
1) Innovate
Just by looking around us, this pandemic has forced us to go online or offer products that involve social distancing. Everyone has become more cautious about being near to each other, hurting businesses that involve gathering people in an area such as stores or cinemas in the process.
Even if stores or restaurants are to reopen, they won’t be able to reach at its maximum capacity, reducing maximum profit as a result. This forced everyone to innovate with our products, even tech companies. Take a look at Zoom.
Zoom may have been ahead during the pandemic, but they weren’t able to stay ahead of their game because new competitors arrived. A week ago, Microsoft Teams usages surpassed Zoom, losing its lead in the video-conference market. Users prefer using Teams because they find that their collaboration tools are much more effective than Zoom. As someone who uses both, I too find Teams much simpler and effective than Zoom, so we use Teams more often.
The world may have paused for a while, but that doesn’t mean that life doesn’t. People still want something and they will snatch the first thing they find it easy and interesting. I wrote in my previous article that I work in the cinema industry and we are doing a lot of changes and implementing new models to keep up our game even when cinemas are closed. You can read it here:
2) Cut out debt
Save your costs no matter what. Don’t leave debts left hanging, look what happened to NPC at the process. They were in debt of $903 million, and with this unforeseen event coming, it got things worst for them.
I understand that in companies, paying debt can be months or a year more. But do everything in your power to pay as fast as possible, we don’t know what can happen in the future. Warren Buffett once said:
“If you’re smart, you’re going to make a lot of money without borrowing.”
Debt/mortgages were the seed that caused the 2007–2008 financial crisis. Banks were giving loans to people who couldn’t pay it back. And that was the growing bubble that eventually burst. Many big banks collapsed that year because they had too many mortgages to handle, even Lehman Brothers asked for Warren Buffett’s help to bail them out, but he refused as he knew the bank in it deep. They dug their own grave.
Clear out your borrowings, make sure you don’t owe anyone again unless you really need to. And do it as fast as possible, because we don’t know what will happen in the future.
There is also one more thing that you need to know, especially business owners.
Just two months ago, the house income rises, thanks to the $1,200 stimulus payments, but consumption decreases as stores began to temporarily close again due to the virus. This means that another market crash is to happen again.
If people are saving and not spending, this is going to be the same event as the Great Depression as back in the 1930s.
This is why I said that companies now need to innovate and cut out the debts. I hope you all learn something here.
