What’s gone is gone? My favourite branch is the one I have to close

1The Thursday branch

In most groups I know, there’s one branch the owner visits on Thursdays. It isn’t the most profitable, or the closest to home. It’s the one he chose himself, on the street he always wanted to be on, the one he described in the expansion meeting as “different”.

When that branch’s file comes up in the review committee, the room changes its tone. The same numbers that close other branches become “circumstances” here: the street hasn’t matured yet, the season didn’t help, the new manager needs time.

2The car at the workshop

You have an old car. Last month you paid twenty thousand riyals for the engine at the Sinaiyah, Riyadh’s industrial workshop district. This month it’s back, and the gearbox needs eight thousand. And you say, “I can’t sell it now, I’ve just spent on the engine.”

The twenty thousand is gone. It’s gone if you sell the car, and it’s gone if you fix it. The only question worth asking is whether this car deserves the next eight thousand. But the mind doesn’t ask that. It asks, “How can I let the twenty go to waste?”

A losing branch is a car at the workshop.

3The saying is right; we apply it to the wrong thing

Illi fat mat, “what’s gone is gone”, is some of the wisest advice our elders left us. We say it to forgive, to close a quarrel, to start again. The irony is that we apply it to our lessons and refuse to apply it to our money.

We quickly forget why we chose the site and what we assumed in the plan. Yet we remember every riyal we spent on it. It should be the other way round: the lesson should stay alive, in writing, while the riyal already spent is gone, and dead.

4What the researchers found

In 1976 Barry Staw published a study titled “Knee-deep in the big muddy”. Business students made an investment decision in a simulation, then learned it was going the wrong way. Those personally responsible for the original decision put more money into it than the others did.¹ In other words, the branch you chose yourself is the one you’ll fund beyond what it deserves.

In 1985 Hal Arkes and Catherine Blumer documented the sunk-cost effect: people tend to continue with something because they’ve already invested money, effort or time in it. In a field study, theatre subscribers who paid full price attended more plays over the next six months than those who got a discount. One explanation they proposed: we don’t want to appear wasteful.²

There’s no published Saudi study on branch closures, and I won’t claim a percentage. But Staw and Arkes didn’t need a restaurant in Riyadh to describe what happens in the review committee.

5The autopsy

Composite example: it combines features of more than one case and does not refer to any specific group or branch. Numbers are illustrative

Look at the last column. No one asked, “If we didn’t have this branch today, would we sign for it at this rent?” Every sentence was about the past.

6What closing frees

The doctrine has one sentence I consider its hardest: “Keeping a losing branch open is a capital decision too.”³ Closing isn’t a loss. It frees three things:

Capital. The monthly loss, plus the refurbishment riyal and the next campaign, go back on the next-riyal list to compete with a branch that has proved itself.⁴

Managers. Your best manager spends a year resuscitating one branch instead of opening a new one or training three.

Attention. Your Thursdays. In the last episode we saw that your attention is the slowest station in the company.⁵

That is the meaning of thesis ten: “not yet” is a decision, not a postponement, and the group that knows when to stop is the group that can keep growing.⁶

7The rule is written before opening

The most dangerous time to write a closing rule is the day you need it. By then you have history with the branch, a manager you like, and words you said in a meeting. That’s why the Saudi Scale Playbook asks for it to be written for every site in the board pack, before signing: the day-90 limits, the recovery owner, and the exit trigger.⁷ After maturity, the exit rule applies: two consecutive quarters of negative contribution after rent send the branch to a “fix or exit” review.⁸

I’d add one thing: a date. A rule without a date stretches. Write it like this: “If contribution after rent isn’t positive by [date], the branch closes, unless the rescue is presented as a new investment competing on the next-riyal list.” And sign it before you sign the lease.

8The Sunday question

Rescue or close?

The thresholds for “positive” and “rescue” are yours, taken from the branch’s own plan. There’s no published Saudi benchmark I can give you.

10Credit, and the season finale

Escalation of commitment comes from Barry Staw (1976); the sunk-cost effect from Arkes and Blumer (1985). What I added was the workshop, and a date written before the lease.

With this episode, “The Branch Decision” is complete. Eight episodes, one sentence each:

• Episode 1: A branch is a savings circle where you pay first and collect last, so write and sign your payback ceiling before you see the site.
• Episode 2: A new branch earns its place by the sales it adds, not the sales it moves from its sister branch, so measure the difference over eight weeks against a comparison branch.
• Episode 3: The busy street’s traffic is already priced into its rent, and the winning bidder is usually the one who overestimated most, so set your bid ceiling from your own rent-to-sales before you negotiate.
• Episode 4: The supplier credit every opening brings can hide an old branch’s losses, so run the pause test: your cash if you opened nothing for six months.
• Episode 5: A delivery order is an ad you pay commission on, so count what it leaves after commission, visibility and discounts, and only on the orders that wouldn’t have come anyway.
• Episode 6: Before customers visit, they ask the AI, so make your branch data one asset with one owner and test it with twenty questions every month.
• Episode 7: The company moves at the speed of your signature, so count how long your last ten decisions waited and write your delegation limits.
• Episode 8: Your favourite branch may be the one you have to close, so write the rescue-or-close date before opening day.

One thread runs through all eight: every branch is a capital decision, and its limit is written before the riyal is spent, not after.