It’s always been difficult to own and operate a successful quick serve, and in the next few years, it might get tougher. That’s because some proposed rule changes in the way a company’s balance sheets are organized could create mayhem by showing that, on paper at least, a profitable quick-serve unit is losing money.
“The greatest effect will be on businesses like quick serves and retail chains with lots of locations and real-estate leases,” says Dwayne Shackelford, a principal with Huntley, Mullaney, Spargo & Sullivan, a real-estate consultancy based in Sacramento, California. “It’s going to change the way many people view the financials of these businesses and it could affect their ability to borrow.”
The issue revolves around the way real-estate leases are accounted for on official financial statements.