Comment by rangerelf
2 years ago
"Gives the primary business (making food profitably) a huge cash infusion, and removes a distraction"
This is so suspiciously MBA-esque: - Owning real estate (and responsibilities associated with it) are not distractions: they are the cost (and responsibilities) associated with running a business. - "a huge cash infusion" followed by [correspondingly] huge rent payments; the business becomes a prisoner.
There certainly are distractions when running a business, but owning the spot of land where it's installed is not one of them.
You are thinking about distraction wrong. Owning real estate isn't so difficult/time consuming that the managers lose much time/energy deal with it instead of running the business.
However it is an accounting distraction. If you own real estate you need to figure out which share of your profits comes from rent of real estate and which from the restaurant. If you cannot make both business profitable that means you should get rid of one. (sometimes that means sell the real estate and rent, sometimes it means close the business and rent the real estate to someone else). If both work out profitable, then keep going as is. (don't forget about intangibles, if real estate is a small loser it might be worth it just because you don't have to move and so can get loyal customers - but you should be intentionalable about accepting this loss)
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Do you think every business owns the land and building it operates in? Real estate is expensive. Maintaining a building is expensive. There are plenty of businesses that rent to avoid the capital requirement and headache of property ownership.