Brick and mortar isn’t the enemy. Fixed capacity is.
I hear a lot of folks being sceptical about investing in brick and mortar businesses. Especially in "this world of AI and SaaS". I get the impulse to some extent. But "brick and mortar" isn’t one bucket. How capacity behaves inside their four walls matters more than the walls themselves. In practice, I believe there are two patterns.
Fixed-capacity brick and mortar
You have hard slots: beds, chairs, lanes. When you’re full, you’re full. If demand grows, your options are limited:
- Build more rooms. Slow and expensive.
- Raise prices.
- Cut costs.
Cutting costs is the path of least resistance. Over time it nibbles at the thing that makes the place worth visiting. In some categories that’s annoying. In others it’s unacceptable.
Elderly care homes are the clearest example. Once the rooms are full, the spreadsheet pushes you to two places. Either you expand, with all the permits and capex that come with it. Or you start "optimizing". Fewer staff per resident. Cheaper food. Deferred maintenance. It usually starts sensible and ends somewhere you never intended. I’m not interested in owning that kinda tradeoff.
Flexible-capacity brick and mortar
Same four walls, different economics. You can grow throughput or basket size without a major buildout. Think:
- A bike shop that adds service plans, fittings, events, and a decent online funnel.
- A clinic that extends hours, tightens scheduling, adds day procedures plus remote follow-up.
- A gym that layers coaching, small-group sessions, and digital programming.
- A coffee bar that sells subscriptions, catering, and beans online.
Here the ceiling moves. You’ve got levers: mix, hours, ticket size, utilization, software. You can create more value for the same square meters before you hit physics.
It’s a gradient, not a binary
And yes, even care homes can add levers. Outbound support, home-care visits, respite care, rehab-at-home, meal services, telecare coordination. Those extend reach and smooth occupancy. It’s not zero or one. But the cap gets harder sooner. Clinical ratios, supervision, regulation, and the on-site promise anchor the model. You can stretch it, you just can’t stretch it as far without bending quality.
Fixed capacity isn’t inherently bad. Also if growth isn’t your goal a full house can simply be the end state, not a problem to solve. In that world, the job is to protect quality, keep standards high, and serve well. Brick and mortar can be both valuable and interesting, just be realistic about the goal.