I don’t think “pent-up demand” is a thing. You’re not going to go to Starbucks 3x until you catch up on missed coffee shop sessions. Demand doesn’t rollover for most things.
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To a first approximation it’s a dead loss. If you see 50% demand shortfall on a 100k monthly revenue for 3 months, and say your open falls from 50k to 25k, and capex stays same (assuming no debt relief/restructuring), you’ve basically lost 75k income for the year, period
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That’s off gross margin. If your SAG is high enough, you’ll be in the red for a quarter. If your cost of capital us high enough, you might never catch up.
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Don’t mind me, just building corporate death models for fun.
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At most a lot of discretionary spending will see a small spike that will recover a small amount of lost ground.
When aggregate demand return to pre-Covid levels it will be distributed very differently, a lot heavier on the lower part of Maslow pyramid.
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A lot of the disposable income doesn’t exist through the pandemic. The credit will almost entirely go towards minimal viable rescue.
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Some of it is real. You will get people doing more things than they normally will when they really feel safe, from eating out more to concerts, sporting events and so on, but it won’t make up for the time they sat out completely.
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I am curious how sticky quarantine habits will be.
If wfh sticks, on-the-go coffee/breakfast and lunch joints never reach the same levels.
Do people keep making sourdough? Do kids ever go back to school?
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