Do you know what was the most prosperous food company during the Great Depression? White Castle.
And not for the reasons you’d think. The well-known fast food chain that sells hamburger sliders was one of the most incredibly conservative enterprises I have ever studied. In 1929, it was loaded with $32 million in cash. None of the restaurants have ever been franchised. It had an explicit policy of only opening a new restaurant location when it could do so from its cash on hand, and rarely rented any machines. Everything was paid for in cash.
The financial strength of White Castle during times of calamity explain why the business is still around almost a century later.
During ordinary and good times, everyone talks about the benefits of leveraging to accelerate growth. It is now common practice in business schools to teach that the lowest amount of capital contributed to a … Read the rest of this article!