Let's not get carried away by the high revenue per square foot from the Apple store in Fifth Avenue. The average rent on this stretch is $2000 per square foot per year - so even if Apple is paying average rents, they are getting revenues of 18x rent. So, the rent works out at about 6% of revenue for this store.
And I don't think anyone would be surprised if Apple is paying a lot higher than average, for their prime spot.
When you look at the numbers like that, the number is not anywhere near as phenomenal. There are several stores around the world, whose rental costs are sub 5% of their revenues.
Just to explain what I mean - a 2 square foot vending machine in any crowded railway station probably sells more than 70,000 sodas a year at $1 a piece - that works out to just 12 sodas an hour over a 16-hour day. That vending machine probably has a better revenue per square foot than Apple!
When you look at it like that, what is phenomenal is that Apple is able to have such a huge store in such an expensive location! Even if the store size was reduced, the revenue would probably not reduce by much!
I'm sorry, but I think this is silly.
Wasn't there a big deal about Apple getting rent leverage in the GCS store? If Apple could achieve that, why wouldn't they be able to do the same in other spots. Second, you're comparing percent values of costs without taking into account the increased dollar amount revenue coming in because of its location.
Wasn't there a big deal about Apple getting rent leverage in the GCS store? If Apple could achieve that, why wouldn't they be able to do the same in other spots. Second, you're comparing percent values of costs without taking into account the increased dollar amount revenue coming in because of its location.
Dude - read your own link before you post it.... nowhere does it say that Apple got a low rent deal on their Grand Central store. On the contrary, not only did Apple pay $5M upfront, they also paid $1.1M per year, which was 4 times the rate paid by the previous tenant. And another prospective tenant clearly said it made no sense to pay $5M upfront for the property.
From even a casual reading of the story, it is apparent that Apple grossly overpaid for the space. It is clear that they wanted the space for its profile, and were willing to pay Mercatur whatever was required to get the space. This story is spun as if Mercatur was in a tough spot, locked into a long term lease they could not afford - and needed Apple to save them. But clearly, the way this played out, Mercatur probably realized that they could probably make more money by getting out of the lease than by continuing it, and they milked this for the maximum they possibly could - and Apple was perfectly fine with this, because the money is quite meaningless to Apple anyway!
$5M is less than the interest Apple earns in a single day on its cash hoard, assuming only half of the cash hoard is invested in the US, and assuming it earns a conservative 3% on the money. For others however, $5M probably made zero sense.
Don't they have better things to do? Like finish construction BEFORE 2014 World Cup and 2016 Olympics? Or social issues like poverty, crime, drug abuse/trafficking, corruption at every level of society, transportation, really bad traffic congestion in the largest cities, etc. I was born there, I know how bad it is. Fix those social issues before taking on frivolous lawsuits like this.
You talk as if this was a decision of the Brazilian government - if you were born there, you should at least have any idea what you're talking about instead of spouting self-harming xenophobia. AGAIN: ANYONE can file a frivolous lawsuit anywhere. If in doubt, go take a look at Stella Awards for some wonderful examples right there in the US.
As for all the problems listed above, many of them are also in your beloved second country - just check homicide rates in large cities such as D.C., New Orleans, Detroit and many others and compare them with São Paulo and Rio...poverty? You haven't been to the Deep South of the US, have you? Drug abuse/trafficking? The world's largest consumer of drugs is talking about what?
Corruption at every level? Go check Transparency International's index and see how many countries are WORSE than Brazil on that topic...and on and on and on - the Brazilian mongrel dog complex really upsets me, because the only reason we're not even BETTER nowadays is solely because of that ridiculous "nothing is good" attitude.
Comments
Quote:
Originally Posted by macarena
Let's not get carried away by the high revenue per square foot from the Apple store in Fifth Avenue. The average rent on this stretch is $2000 per square foot per year - so even if Apple is paying average rents, they are getting revenues of 18x rent. So, the rent works out at about 6% of revenue for this store.
And I don't think anyone would be surprised if Apple is paying a lot higher than average, for their prime spot.
When you look at the numbers like that, the number is not anywhere near as phenomenal. There are several stores around the world, whose rental costs are sub 5% of their revenues.
Just to explain what I mean - a 2 square foot vending machine in any crowded railway station probably sells more than 70,000 sodas a year at $1 a piece - that works out to just 12 sodas an hour over a 16-hour day. That vending machine probably has a better revenue per square foot than Apple!
When you look at it like that, what is phenomenal is that Apple is able to have such a huge store in such an expensive location! Even if the store size was reduced, the revenue would probably not reduce by much!
I'm sorry, but I think this is silly.
Wasn't there a big deal about Apple getting rent leverage in the GCS store? If Apple could achieve that, why wouldn't they be able to do the same in other spots. Second, you're comparing percent values of costs without taking into account the increased dollar amount revenue coming in because of its location.
Quote:
Originally Posted by Nobodyy
I'm sorry, but I think this is silly.
Wasn't there a big deal about Apple getting rent leverage in the GCS store? If Apple could achieve that, why wouldn't they be able to do the same in other spots. Second, you're comparing percent values of costs without taking into account the increased dollar amount revenue coming in because of its location.
Dude - read your own link before you post it.... nowhere does it say that Apple got a low rent deal on their Grand Central store. On the contrary, not only did Apple pay $5M upfront, they also paid $1.1M per year, which was 4 times the rate paid by the previous tenant. And another prospective tenant clearly said it made no sense to pay $5M upfront for the property.
From even a casual reading of the story, it is apparent that Apple grossly overpaid for the space. It is clear that they wanted the space for its profile, and were willing to pay Mercatur whatever was required to get the space. This story is spun as if Mercatur was in a tough spot, locked into a long term lease they could not afford - and needed Apple to save them. But clearly, the way this played out, Mercatur probably realized that they could probably make more money by getting out of the lease than by continuing it, and they milked this for the maximum they possibly could - and Apple was perfectly fine with this, because the money is quite meaningless to Apple anyway!
$5M is less than the interest Apple earns in a single day on its cash hoard, assuming only half of the cash hoard is invested in the US, and assuming it earns a conservative 3% on the money. For others however, $5M probably made zero sense.
Quote:
Originally Posted by marokero
Don't they have better things to do? Like finish construction BEFORE 2014 World Cup and 2016 Olympics? Or social issues like poverty, crime, drug abuse/trafficking, corruption at every level of society, transportation, really bad traffic congestion in the largest cities, etc. I was born there, I know how bad it is. Fix those social issues before taking on frivolous lawsuits like this.
You talk as if this was a decision of the Brazilian government - if you were born there, you should at least have any idea what you're talking about instead of spouting self-harming xenophobia. AGAIN: ANYONE can file a frivolous lawsuit anywhere. If in doubt, go take a look at Stella Awards for some wonderful examples right there in the US.
As for all the problems listed above, many of them are also in your beloved second country - just check homicide rates in large cities such as D.C., New Orleans, Detroit and many others and compare them with São Paulo and Rio...poverty? You haven't been to the Deep South of the US, have you? Drug abuse/trafficking? The world's largest consumer of drugs is talking about what?
Corruption at every level? Go check Transparency International's index and see how many countries are WORSE than Brazil on that topic...and on and on and on - the Brazilian mongrel dog complex really upsets me, because the only reason we're not even BETTER nowadays is solely because of that ridiculous "nothing is good" attitude.
Prediction : After the Brazil Olympics are over Apple will leave ..
and USA was Colony either?