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30 Business Decisions That Ended Up Hurting Companies, As Shared In This Online Group
‘Under new management’ are probably the worst words to see written at the entrance of your favorite souvlaki place, bringing uncertainty as to whether the new owners or people who were appointed to run the place will have maintained an equal level of quality that you, as a dedicated customer, are used to. And it can be any business, really—a change in ownership can be a refreshing thing or else it can totally destroy the spirit of the previous establishment or office.
Users on Reddit are sharing their most relevant stories illustrating how questionable some business decisions might be: from sold ice cream parlors to Target in Canada and Star Wars. And although the previous year has seen some businesses and companies go out of order, not all the new endeavors, as we have learned in the past, are there not to always succeed.
More info: Reddit
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#1
There was an Italian place in my hometown that was well liked for its pizza, among other things. The waitresses made the dough fresh in the kitchen, and the cooks made the sauce as close to being in-house as you can get short of actually steaming and straining tomatoes.
The owners eventually sold it, and the new owners turned it into a bar & grill. They still had the pizza, but it was all frozen dough and bland canned sauce. Meanwhile, a fan and regular of the original restaurant bought an old mechanic garage and fixed it up to be a spiritual successor to the old one -- he even got all the recipes he could from the original owners; surprise of all surprises, his is the one that succeeded while the bar & grill petered out after the novelty rush.
The bar & grill eventually sold to that guy, and now it's a new, different bar & grill, but with all the best food that the old Italian place served still on menu. It's been running strong for over a decade since.
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#2
Property management company I used to work for had a number of student properties and high-rises that were always a struggle to fill in the summer months when students went out of town.
Head office came up with an offer that anyone who signed for two years got the four summer months at 50% off. Sounds like a good deal, 50% rent is much better than zero. We signed tons of students.
However the lease templates that head office sent over showed the reduced rent rate on the lease rather than just adding the discount as a separate addendum. I noticed this discrepancy and reported it - and was subsequently ignored.
Which meant the students were signing a legal document that guaranteed them 50% rent for two years.
The company lost hundreds of thousands in revenue.
BlackestDawn 3 years ago
Depending on the wording of the lease they probably also got the summer month at 50% of the specified rate (so 25% of originally intended normal rate), making it an even bigger loss.
#3
A developer my dad worked with sold off a beautiful piece of land next to a river in a very desirable area, he sold it to another developer. The new developer cut down every tree on the 6 acre site, as he said, "he wanted to see what he had". The land then started to slide into the river, rendering it worthless and ugly.
Jen Cook 3 years ago (edited)
Ugh, not a fan of developers and it seems they are ruining my city too. Can't buy a house built in the past 15 years that has home mail delivery, a sidewalk in front, or enough space for you to walk between your home and your neighbours. The is tons of land where I live, it's greed, all the lots meant for a single home now get subdivided and have at least two. I would never pay the $500K+ for a home with zero yard, regardless of how modern or beautiful, I want to have room for at least a dog and a bbq and a sidewalk in front to walk said dog on.
#4
I used to work for a company that was bleeding money. In order to try and save money, they decided to stop honoring returns/refunds, but still advertised that they did.
Whenever someone would ask for a refund, you were supposed to tell the person that it would be processed in the next 6-8 weeks, then get them off the phone.
6-8 weeks later, when they ask where their money is, you were supposed to apologize and say their paperwork got put in the wrong stack, and that it would be put in the correct stack and would then be processed in the next 6-8 weeks.
If they complained about the length of time, you were supposed to tell them you can ask your supervisor to expedite it, and they should see it in 4-6 weeks instead.
If they threatened legal action after months and months, you were supposed to tell them to contact the company legal department ( we didn't have a company legal department) and then hang up on them. Then, make a note in their account. No one should field calls from that account further.
More than half the call center quit in a single week in protest of this decision.
Company collapsed in on itself within a few months.
#5
In my hometown there was an independent fast food and homemade ice cream place, long established and run by close friends. It was a goldmine. They decided to sell and retire. New owners immediately changed everything. Painted it a wild color, removed some attractions on the grounds, changed the 60 year old menu and switched to commercially made ice cream. They lasted 8 months.
#6
My late great uncle started a fish and chips restaurant. He had his own unique recipe for the fish and it was very popular. Businessmen had offered him thousands in cash for it over the years, but he always declined. After about 40 or so years, he decided to retire and hand the business over to an ambitious recent college grad. He offered to give her the recipe and even volunteer his services for a bit while she got comfortable in her new role as owner. She declined both and within a year, she was forced to sell the restaurant after coming close to declaring bankruptcy. My great uncle died and took the recipe with him to his grave
#7
Knew this guy who wanted to start his own BBQ and hot sauce line, here was his process:
Get high with buddy and make the decision go into business together.
Argue about who should be financing the business
Get a loan from Grandma
Order a bunch of bottles
Use a sharpie and some blank labels to put on the bottles
Fill the bottles with bulk BBQ sauce.
Try and sell these to Walmart
Get upset that Walmart won't shelve your sketch sauces
Have several hundred bottles of unsealed product that wasn't prepared hygienically.
Try and sell some to your extended family.
Get angry with extended family that they don't believe in your dreams of the last two weeks.
Beg family for money to pay back grandma.
#8
There was a shopping plaza near me with a fairly large gift store. Not a gift shop in the museum sense, basically like a Hallmark store but independent. It wasn’t exactly bustling, but they apparently did solid business and a lot of people in the community really appreciated having it there as a place to buy gifts and wrapping paper and such. The owners of the shopping plaza raise rents to the point that the shop goes out of business. The reason this was stupid is that the store front sat vacant for like 15 entire years. Seriously, this place closed when I was a child and I’m now 27 and the vacancy was only taken over very recently. If their goal in raising the rent was to have a more profitable store move in to that space, they certainly failed and missed out on decades of rent as a result.
Bill Anderson 3 years ago
Sounds like typical tax avoidance plan. You pay no local taxes on empty buildings and use the (overclaimed) costs as a tax write-off/ tax rebate income line. Ask Donald Trump, he is the master at this...
#9
This one involves my Dad. Back in the '80s he decided he wanted to teach people how to use Lotus 123, Excel, MS Word, etc. So he bought a bunch of computers for a classroom, and he wrote interactive learning programs, and printed out manuals and such. Even without advertising, he had people asking to join his class BUT ... he was never quite ready. This Lotus 123 program could use more work. He wasn't ready for a class, this MS Word tutorial isn't quite done. The perfectionist in him wouldn't let him expose the less than perfect programs/class to people ... just yet. He turned down paying customers for fear that it wasn't just perfect. He had taken a loan out from a friend to finance this, but never made a dime. He paid the loan back by selling our cottage, something he regrets to this day. And why? Because he was afraid to be flawed.
That taught me a lesson though, as the old saying goes "Perfect is the enemy of done". He could easily have made money and taught his classes, refining the programs to student feedback. He could have covered deficiencies by teaching in person. He was afraid it wasn't perfect, so it was never done. We don't talk about it, or the cottage that we built together (we had the foundation and structure built by pros, then the whole family pitched in to build the interior when we were teens).
It saddens me more because it was what he wanted to do, and he went for it ... but not quite.
#10
I worked for a video store during the time Finding Nemo came out on DVD. The video store I worked for got a huge fishtank put inside. It was so big they had to shrink the game rental section. The tank had clown fish in it. The tank was also locked and we couldn't feed the fish or clean it. This was supposed to be done by someone who I never saw come in. So the tank ended up filled with a bunch of dead Nemos in a nasty as f*** tank. Needless to say parents were very unhappy about it. The local paper did a small article about it too which didn't help an already dying store. I have no idea what they thought an expensive as Hell fish tank would do for their business.
Billy The Kid 3 years ago
If it hadn't been cleaned for a while and it had dead fish in it, it must of stunk out the shop too.
#11
I worked for a design/printing place for years, and the owner went from amazing idea to stupid idea on a regular basis. don't get me wrong - guy is a brilliant designer, totally took advantage of new tech every chance he could and made it work.
But - he was cheap and greedy, so, ruined what would have been lucrative long term business relationships.
So - we did this huge order of promo supplies for a fairly big on-line casino. huge, for him. about a 20k order, with good margins, and the chance at long term work with this company.
While it was being picked up, on the spur of the moment, he decides to pad the bill by about 200 bucks. the guy picking it up was the son of the casino owner, and literally watched the boss do this while I stood at teh till.
The customer looks at me, smiles, and pays the bill. With a huge wad of cash. And says "I know it's not your fault, but - my family is very wealthy. We didn't get that way letting people rip us off. Tell the boss over in the corner he just f***** himself out of a lot of money, because we loved the work." in a voice meant to carry.
Edit to clarify who was paying. And padding means he increased the bill over what he had quoted the job to cost.
#12
Take a help desk that has been consistently rated extremely well by its customers for their first-call-resolve, attitude, and helpfulness; outsource it to a company that's been rated towards the bottom of the list for over a decade because it costs less than the salaries/benefits of your former in house help desk. Then complain when your first-call-resolve drops through the floor and your customer satisfaction is at an all time low.
Tamsin Far 3 years ago
Yes, and I guess, as always, it was SUCH a suprise. It happened even at one of my former jobs, the company itself a service provider and knowing very well how this works. Still, they fired the cleaning staff (the least payed people in the company who hat been working there for years) and outsourced it to the lowest bidden. And then had to pay a lot for lockers because now externals entered every office, next they realized that externals would only clean things specified in the contract and not just everything that needed cleaning (who would have thought) and last there was a lot of whining that the cleaning staff changed all the time and wasn`t as motivated as the internals. But I`m sure they saved a few hundred bucks every month...
#13
Target's expansion into Canada
collapsed in 2 years and cost them Billions
#14
Kodak refusing to push digital cameras / photography, and instead focusing on film cameras. If I recall correctly, I think Kodak was one of the first companies to create a digital camera, but instead of capitalizing on it, they sat on the technology and focused on film development.
#15
I worked at JCP before and after 2011 (I think) when they revamped the whole company. They took away coupons, and they took away a lot of departments people (especially older people) loved, like custom window coverings. They also brought in extremely expensive furniture. Like $8,000 dining tables. Trust me.. no one shopping at JCP is looking to buy an $8,000 table.
They paid the CEO who brought about all these changes a massive amount of money and it failed miserably. People HATED the changes and we went from a busy store almost every weekend, to it being dead almost every weekend. It lasted maybe 2 years and then they brought back a lot of the stuff they got rid of, but the damage was done. The people who had been shopping at JCP for years and years who stopped after the changes, didn't come back.
JCP lost an insane amount of money during this whole thing and never recovered. They filed for bankruptcy last year.
GirlFriday 3 years ago
I used to shop at JCP Home. Almost all of my bedding and towels came from there. In my first home, all of my window coverings came from there. The last time I went into a JCP, it was no better than shopping closeouts at TJ Maxx.
#16
Cafe I work for decided it wanted to fire everyone except for the leads and the manager. Then told the manager they weren't paying her salary anymore AND she needed to take on more work. Assumed people would do it because they "love their jobs"
#17
20th Century Fox giving George Lucas the merchandising rights and rights to sequels for Star Wars in exchange for a pay cut on his director's fee (from half a million to $150,000)
Jennifer Gould 3 years ago
Hes made so much in Merchandising and the sequels, something like 5 billion
#18
Circuit City was pretty stupid. When the recession hit, they decided to stop selling appliances and instead focus on DVDs and televisions and such. (Appliances are known as being a recession proof item. People always need refrigerators and microwaves. They don't need DVDs.) They also wanted to cut down on labor costs, so they fired a lot of managers and assistant managers, and just left a lot of entry level employees because they were cheaper to pay. Well, entry level employees don't really know how to fully run a store, so pretty much every Circuit City became dogs***.
#19
There was a Tex-Mex place I loved in Fairbanks, Alaska. The food wasn't GREAT, but it was consistent, and the prices were fair.
Well, a new owner came in, and they decided to revamp it into a fine dining steak house. $30 was pretty much the lowest cost you could get for an item, and this was in a neighborhood that had a substantial crime rate and was right across the street from the bikini barista and the marijuana dispensary.
I stopped going, and they went under shortly thereafter. I walked in once before the place closed down, and it was dreary and empty and they had tried to bring some of the classics back to the menu, but it was far too late by then.
You were too good for this world, Los Amigos.
#20
Two members of the band Steppenwolf wanted to break away from founder John Kay and wanted to tour using the band name. John Kay told them he would allow it....only if they signed over their royalties from the song writing credits they had in the band. These two members were convinced they would be successful on their own so they agreed.
Since Steppenwolf without John Kay would be like the Rolling Stones without Mick Jagger, that version of the band flopped tremendously.
Also, even a five year old could tell you that giving up your royalties on major hits like "Born to Be Wild" and "Magic Carpet Ride" would be a really stupid thing to do, so these guys ended up having to work regular menial jobs when they could have been getting a nice royalty check in the mail instead.
#21
I worked for a small airline for several years. We did fairly well doing regional flights across the US and Canada.
Our dip s*** CEO decides we should get into the private jet market and lure in a bunch of rich people with more money than they could spend.
This plan hilariously backfired and we went into Chapter 11 bankruptcy for two reasons:
anyone that can afford a private jet wants to BUY one for themselves and hire a pilot to fly for them. They're not interested in buying a ticket AND hiring a pilot.
idiot CEO invested in outdated prop planes. Because nothing appeals to rich people more than fancy planes that scream through the air like a lawn mower cranked to 11.
Nevits Yibble 3 years ago (edited)
Second reason yes, first reason no. “Rich” people charter private jets all the time. Operating an executive jet company is competitive, but it’s not a “bad” business - there are plenty of paying customers out there. It's pretty rare for rich people to purchase and own their own jets. That's something more common to the super rich. Who wouldn’t even be target customers for this guy’s business to begin with.
#22
A radio station i used to listen to recently changed their format from 80% music, 20% talk show to 100% talk show. Then they were like “oh you can still listen to the music but it’s only going to be on our app.”
Thorfin Wolfsbane 3 years ago
there's a word for people who listen to 100% talk radio: "Rageoholics"
#23
My old company was internationally known in our industry as being one of the ideal places to be. We could hire basically anybody in the world in our space to move and work in our office. It was such a f****** awesome place to work.
The CEO decided to cash out when a larger company barely related to our industry decided to buy us. The new company basically gutted everything that made it great, then rushed to go public. The employee stock options were pennies and they drastically cut benefits. Every time there was a complaint the answer was "maybe you don't understand our vision" or "well we are a public company now." They also got rid of our office which was located in one of the hottest LA neighborhoods that everybody loved.
More than half of the OG senior members have left and a large number of others are rumored to leave. I was forced to start assisting in hiring and it was grueling. People would apply believing it was our old company, then find out what's up and go elsewhere. Oh, and the stock is plummeting.
I hate the fact that what once was is over. Those f**** ruined something great.
#24
I worked at Hollywood Video from 2006 to 2009. At that time Netflix was growing by leaps and bounds and our revenue was dwindling from year to year.
Instead of copying Netflix's model and using their more recognizable brand name to edge them out of business, Hollywood shrugged their shoulders and continued renting single DVDs for $4.99 for 3 days plus late fees.
Where they at now?
Two_rolling_black_eyes 3 years ago (edited)
The death of the video store was late fees. When Netflix developed a business model that allowed to keep a video as long as you wanted without paying more but couldn't get anymore until you returned it, they stole the market. A busy family wanted 3 movies every Friday night and as long as you remembered to return them by Tuesday, they would be there. If your 3 year old son wanted to do nothing more than watch the Lion King 4x a day., the movie you borrowed became yours after 30 days and your rent slot opened up again. No worries about dropping the movies off between Suzie's soccer game and the neighbor's dad's funeral to avoid paying twice want you rented it for.
#25
Not even sure if it was a conscious decision but Sears passing on being Amazon in the early 90's. Sears was poised and ready to be Amazon, they had most components in place already and the others they had in their arsenal.
First they had name recognition, this was important for the trust factor with the internet exploding like it was. They had the product line, for s**** sake you could buy a house from the Sears catalog. Delivery, it was there, they delivered the house that you bought!
Internet portal, they had it. They owned Prodigy, one of the more recognized internet providers of the time. This was a joint venture with IBM, you know, the most well known hardware provider for computers at the time.
So IBM sells a computer with Prodigy installed with free to stupid low cost internet access. When you sign on it drops you to a home page(that was the way it worked back then with software internet) with a link to the ONLINE SEARS CATALOG! Same great catalog, just on the WORLD WIDE WEB!
#26
Panera Cares opening less than a mile from my college campus.
For those who don't know, Panera Cares basically just let you order food and would list a "suggested donation" based on what you ordered, but ultimately it was honor system. The cashiers would just make change for you so you could put cash in the donation box. If you can't afford a meal it's fine to not pay but you are supposed to volunteer to work for two hours to cover it, but this isn't actually required.
I think generally these things are supposed to be for really affluent neighborhoods where people probably donate even more than is "suggested." But students from the college basically turned it into a real life Tragedy of the Commons experiment. There was almost never bread available because everyone would just take it. The lines were insane and people would donate like $1 if anything. It closed within a year lol.
#27
Company I worked for decided to stay open instead of closing at the start of covid. The state even said they would pay employees and give businesses money if they closed and didn’t lay people off.
Nope they stayed open and all of their customers closed down. Making no money for 5 months they had to lay off 80% of their employees.
Things started picking up last October. Well they were understaffed and couldn’t meet demands. Causing them to lose most of their big contracts. If it wasn’t supplemented by the mother company in Japan they would be done for now.
I worked there for 13yrs. Seeing how far we grew to have one bad decision cost them everything is eye opening.
Kathryn Baylis 3 years ago (edited)
American Airlines is presently having a similar problem. Self-inflicted. Hope they—-and other companies just like them—-don’t get bailed out this time. Let THEM pull themselves up by THEIR bootstraps, for a change. Or just learn how to code. (In case you’ve been living in a cave and don’t get it: /s.)
#28
In the early days of the personal computer, a fairly prominent developer Osborne went t*** up because they showed off their new model far in advance of when it was actually going to be available. So predictably dealers immediately cancelled all orders for their current computer model in preparation for the new improved version. Inventory stacked up and they were bankrupt before the new model ever came out.....
Its known as the Osborne Effect.
Andrew Gibb 3 years ago
they also built the first 'laptop'. It plugged into a car battery and was huge
#29
Around last year this time of year, I know someone in their early 50's that sold all of their investments (at a significant dip from the highs) and decided to start producing and selling hand sanitizer in little bottles out of their garage. Seeing it as a big opportunity with the virus.
They spent everything on the bottles, labels, plastic drums full of sanitizer (at a huge markup), hiring locals people to fill the bottles and put the labels on, and then a website. By the time they had inventory, they realized that they couldn't compete on price with places like Walmart or other big box stores that had finally caught up to the shortages by mid-summer. They also didn't realize that selling on Amazon was gated for that category so you had no chance of selling through there as a new seller. So now they basically have a garage full of old hand sanitizer, and no savings.
#30
Holy heck my time to shine. Prepare for a number of them.
Used to work at the corporate office of a major water park in my state (if you ever lived in Utah you know which one). The year before I started, they adopted a new 'business' practice of offering a season pass to the waterpark (and numerous other facilities) for a measly $20 per year. Not a typo. Previously they had been $150+ per year. Unbelievable right? It gets worse.
The year I started, they ran a new promotion where you buy a season pass for $25, but then also get a $20 giftcard back in the mail to Walmart or some other store. You can see where this is going.
2 weeks after I started as a fulfillment specialist (dealing with pass issues) they fired the entire call center staff of 30+ people, heaping their phone calls and emails onto my fulfillment team of 8. So in addition to all of our work creating and shipping passes, we had to take all customer service calls and emails.
It gets worse.
For some reason, they thought that it was prudent to wait until we had some large round number (I think either 500 or 1000) passes ready to ship before they would even ORDER the gift cards to send with them (even though there were thousands of passes purchased and pending with this deal). So not only were there MASSIVE delays in people getting their passes, sometimes they just wouldn't even get the gift cards either because the season was starting and they demanded their passes now instead of waiting for the gift cards too.
So double whammy there, customers angry about how long it takes to get the season passes, and not getting the gift cards.
After all this, and firing the call center, they couldn't figure out why they were still losing money. I quit, and the rest of the team quit as well within 2 weeks of me leaving. Somehow they kept afloat for another year or so, but then eventually the waterpark closed for a year or two and changed hands a few times.
It was recently bought again, 'renovated', and this new company is offering season passes for.... $30.
The circle of life, I suppose.
What do you think ?
Shelp 3 years ago
A good share of them seem to follow the pattern of "good and cheap business with unique features is bought and turned into some expensive generic store, people stop to go there", and I don't understand how people who've presumably been to business schools can still fall for that
M O'Connell 3 years ago
"selling" is the problem. I prefer businesses where the owner is personally invested, and involved in day-to-day operations. They tend to want the business to be successful, and they're good to employees because employees make that happen. When a business is sold to 'investors' all they can see is dollar signs, they are completely blind to anything else. They want to extract as much money as possible from that business because nothing else has any meaning.
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Rose the Cook 3 years ago (edited)
Seen this bad business decision multiple times. Husband decides to buy a small business, sandwich bar, coffee shop etc, for the wife to run without ensuring that she is willing to. Ends up having to employ too many staff and goes broke. Just because somebody makes the sandwiches and coffee at home doesn't mean they are prepared to do it commercially.
Nikki Sevven 3 years ago
I think many people misunderstand the scale of commercial restaurant dining. It's one thing to spend hours making lasagna for a family of four, and quite another to make enough for 60 diners. Add to that prepping/cooking the other 25 items on your menu.
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Stille20 3 years ago
Some of these are interesting but a lot of them our sour grapes, my favorite restaurant got sold and the new one wasn't as good.
Mewton’s Third Paw 3 years ago
Exactly! The question is, did the owner make money or not? Nobody cares if your hand whipped ice cream is gone now if customers are lining up for the machine made ice cream.
Load More Replies... Shelp 3 years ago
A good share of them seem to follow the pattern of "good and cheap business with unique features is bought and turned into some expensive generic store, people stop to go there", and I don't understand how people who've presumably been to business schools can still fall for that
M O'Connell 3 years ago
"selling" is the problem. I prefer businesses where the owner is personally invested, and involved in day-to-day operations. They tend to want the business to be successful, and they're good to employees because employees make that happen. When a business is sold to 'investors' all they can see is dollar signs, they are completely blind to anything else. They want to extract as much money as possible from that business because nothing else has any meaning.
Load More Replies... Rose the Cook 3 years ago (edited)
Seen this bad business decision multiple times. Husband decides to buy a small business, sandwich bar, coffee shop etc, for the wife to run without ensuring that she is willing to. Ends up having to employ too many staff and goes broke. Just because somebody makes the sandwiches and coffee at home doesn't mean they are prepared to do it commercially.
Nikki Sevven 3 years ago
I think many people misunderstand the scale of commercial restaurant dining. It's one thing to spend hours making lasagna for a family of four, and quite another to make enough for 60 diners. Add to that prepping/cooking the other 25 items on your menu.
Load More Replies... Stille20 3 years ago
Some of these are interesting but a lot of them our sour grapes, my favorite restaurant got sold and the new one wasn't as good.
Mewton’s Third Paw 3 years ago
Exactly! The question is, did the owner make money or not? Nobody cares if your hand whipped ice cream is gone now if customers are lining up for the machine made ice cream.
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