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The fishy death of Red Lobster

businessinsider.com

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Re: The fishy death of Red Lobster

#161

Post by asdfman123 »

OkayPhysicist wrote: post #111

Even without private equity's meddling, Red Lobster would have been in a rough spot. Family dining as a segment (lower end restaurants, but with table service) is being squeezed aggressively. Compared to Gen X and before, Millennials on average are valuing food quality over service experience, ballooning the fast casual (order at the counter, but nicer than fast food) segment. This is squeezing family dining from bel…

It's not even about quality. Honestly, much of it is just that megachains aren't cool. I'm not above eating at Red Lobster but if I have to pick where I'm going to spend my money it's hardly going to be the first choice.

Re: The fishy death of Red Lobster

#162

Post by tqi »

aklemm wrote: post #146

I'd like to see business schools codify "brand value extraction" or "enshittification" as explicitly unethical. Any activity that degrades a brand for short-term cashflow--and is reasonably know to decrease future business--is necessarily fraudulent. If that is codified and taught, then journalists can point to that in all cases (of which we are overrun). It's pathetic.

What do you think "enshittification" means, exactly?

Re: The fishy death of Red Lobster

#163

Post by duxup »

bachmeier wrote: post #127

To me this is not even slightly surprising. Red Lobster used to be at the top of our list of restaurants. Then in recent years the quality of both the food and service deteriorated. One visit the food was so bad I couldn't even eat it. That was compounded by not having a server to talk to. Took our order and never returned - even had someone else bring out the order. The thing about a restaurant is that you'll always…

Quality control and management ... seem to be the secret sauce to restaurants and are amusingly unrelated to the actual food / recipes and etc.

I too have a few local places that despite being busy and great food for ages, suddenly couldn't keep good people working there. They were doing great then just fell on their face.

I suspect that they just couldn't adapt to it being more difficult to retain / keep good people and everything else suffered.

Dominoes Pizza (US national pizza chain), seems to be the alternate story, long time bargain pizza chain with poor quality.... got better quality pizza and reportedly took off again.

Re: The fishy death of Red Lobster

#164

Post by asdfman123 »

achow wrote: post #141
tonymet wrote: post #118

Can someone help explain restaurant industry economics? when the business starts out, it's high risk and low margin. Tons of capital investment. Labor intensive and hard to staff. If you are lucky you are pulling 15% margins Besides some exceptions, if you are lucky you may get some growth for 5-10 years. Then your brand falls out of favor (trends) and you spiral into bankruptcy. Who invests in this stuff?

PepsiCo acquired Pizza Hut, Taco Bell, and KFC to increase its soda fountain sales of Pepsi products.

Fundamentally they're a sickness-as-a-service company

Re: The fishy death of Red Lobster

#165

Post by asdfman123 »

munificent wrote: post #151

I look at private equity as sort of like a bacterial infection. The infection may be the thing that kills its host by sucking of all of its energy, but the reason the host was infected in the first place was because of some other problem that led to a weakened immune system. Private equity firms prey on companies that are already struggling. Yes, they take a struggling company and hasten its demise. But healthy compa…

Seems like they exist to basically sell off a brand.

People thinking that Red Lobster is a good place to eat is a valuable asset, which can be traded for short-term profits until they catch onto what's actually going on.

Re: The fishy death of Red Lobster

#166

Post by fwip »

rl3 wrote: post #50
coldtea wrote: post #47

Earlier quoted context omitted.

> The fundamental problem is that all of these businesses are devoid of soul, and the majority of the profits don't go to the people working them. That however is a problem of capitalism in general, not Olive Garden in particular. And I'd say class snobbism against lower class "taste" (independent of unhealthy fast food vs fine cuisine, since for example something like In and Out is totally acceptable by the same peo…

> That however is a problem of capitalism in general, not Olive Garden in particular. Sure, but the lengths Olive Garden's marketing goes to present the facade of a soul is so cringe that they deserve to be emblematic of said problem. > And I'd say class snobbism against lower class "taste" (independent of unhealthy fast food vs fine cuisine, since for example something like In and Out is totally acceptable by the sa…

Your McDonald's still has a Dollar Menu? Over here it's the "1-2-3 Dollar Menu" and there's nothing on it that costs less than $1.79 (a plain hamburger).

Re: The fishy death of Red Lobster

#167

Post by JumpCrisscross »

munificent wrote: post #151

I look at private equity as sort of like a bacterial infection. The infection may be the thing that kills its host by sucking of all of its energy, but the reason the host was infected in the first place was because of some other problem that led to a weakened immune system. Private equity firms prey on companies that are already struggling. Yes, they take a struggling company and hasten its demise. But healthy compa…

> look at private equity as sort of like a bacterial infection

This is honestly fair given bacteria’s ecological role as digesters/recyclers. There are probably better things to do with Red Lobster’s locations and people than serving terrible seafood.

Re: The fishy death of Red Lobster

#168

Post by DiggyJohnson »

madaxe_again wrote: post #154
sib wrote: post #56

Earlier quoted context omitted.

How long does the process take? What is the overhead (space / equipment / other costs)? And therefore, how much is the provider earning per hour?

About 20 minutes, some disposable gloves, a disposable toothbrush head impregnated with toothpaste. So about €25 an hour. Commercial rents for small spaces are dirt cheap here - probably about €600/mo. That’s probably the driving factor in the U.K. - commercial property is eyewateringly expensive.

What about labor costs? I'm not GP but I appreciate this sort of breakdown. I wouldn't have considered that commercial RE for small business is much cheaper in Portugal than GB.

Re: The fishy death of Red Lobster

#169

Post by jncfhnb »

asdfman123 wrote: post #158
bachmeier wrote: post #127

To me this is not even slightly surprising. Red Lobster used to be at the top of our list of restaurants. Then in recent years the quality of both the food and service deteriorated. One visit the food was so bad I couldn't even eat it. That was compounded by not having a server to talk to. Took our order and never returned - even had someone else bring out the order. The thing about a restaurant is that you'll always…

Increasingly I think the financialization of everything makes us less capable of understanding the world. "Red Lobster failed because of X corporate restructuring," "Red Lobster succeeded due to Y ad campaign." People go to restaurants for reasons completely unrelated to things like that. Those things are important, but just constitute the small slice of reality that can easily be measured. I saw a Twitter thread arg…

But a lot of games are cute and fun to play that do not succeed

Re: The fishy death of Red Lobster

#170

Post by darth_avocado »

asdfman123 wrote: post #159
andrewla wrote: post #103

These private equity deals are the convergence of a couple of phenomena. The most obvious is low interest rates, which is fortunately dying off. The ability to borrow lots of money is something that smaller, well-run companies, are reluctant to do. Why bring in a bunch of cash to expand and take on debt when you are operating at a reasonable profit? The secondary is the undervaluing of customer goodwill -- what PE fi…

Private equity takeovers are often just scams to convert customer trust to short-term profits, but labeled as growth. You can get away with cutting quality for a little while, but eventually customers are going to lose trust and you're not going to get it back.

But that is the PE playbook. Take businesses and squeeze as many profits out of them before they die.

https://www.nytimes.com/2023/04/28/opinion/private-equity.ht...

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