Business restructuring timing

The Madero Case:
Why is timing important in business restructuring?

“Timing" is fundamental in any successful business restructuring, especially when it comes to adjusting a business to a new market reality.

And this becomes evident in the case of the Madero Group.

However, it's necessary to go back in time to understand what's happening with the restaurant chain.

In 2020, with the onset of the COVID pandemic, came the decree to close businesses. During this same period, the group's business plan indicated that it was time for full expansion and the opening of new stores.

Instead of assessing the new reality, the business plan sought to impose itself upon it.

With raised funds and a strategy centered on opening new stores, Madero did not restructure its business plan after the lockdown and decided to continue investing in new store openings, betting that the pandemic would soon end, and commerce would reopen.

However, the pandemic persisted, commerce did not reopen as expected, the IPO did not materialize, and Madero, which did not operate with delivery services, had to hastily adapt to this format. The result: by 2021, it had accumulated a debt of nearly R$ 1 billion.

Insisting on opening new stores during the pandemic has proven costly for the group. The issue of "timing" is crucial in restructuring an operation.

When it became clear that the pandemic was not a passing phase, Madero should have stopped and reevaluated its business plan to seek alternative revenue streams, avoiding the current excessive debt.

With a vertically integrated production, distribution, and logistics platform and excess capacity in its supply chain, Madero had the conditions for this.

Remaining alert to the early signs of change in the business environment, identifying alternatives for the presented variables, and swiftly making the necessary changes to adapt to the new scenario are key ingredients that make businesses healthy and attractive to investors in the long term.