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The fishy death of Red Lobster

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Re: The fishy death of Red Lobster

#181

Post by underlipton »

jncfhnb wrote: post #169
asdfman123 wrote: post #158

Earlier quoted context omitted.

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

Bit of a rant:

Luck. Word of mouth. Anyway, things you can't control (and can barely influence) as a developer/publisher. So, we face the notion that, perhaps, if we want people to take the risk of creating and sustaining a business for reasons other than simple profit (say, to provide a needed or pleasant service), the proposition might need to be better than, "Succeed or die (sometimes literally)." Because none of it's a sure thing, and it can't be, but sane people generally aren't going to bet their life or livelihood on a risky venture (assuming that irrational passion is a form of insanity).

Re: The fishy death of Red Lobster

#182

Post by wvenable »

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…

We live in a time where almost everything is getting worse. Products are getting smaller, service is getting worse, businesses are closing, quality is going down. I don't think I've ever experienced such an obvious decline in commercial society in my entire life.

Is it the financialization of everything? Is that we reached peak growth and profit increases are only possibly through extreme optimization? Is it financial inequality?

Re: The fishy death of Red Lobster

#183

Post by tithe »

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?

> Who invests in this stuff?

Bill Ackman (founder of Pershing Square Capital Management), for one: https://lexfridman.com/bill-ackman-transcript#chapter4_inves...

Re: The fishy death of Red Lobster

#184

Post by alfalfasprout »

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…

This is the reason I've always been a detractor of purely relying on "data driven decision making". Being data driven is great... if paired with intuition and common sense.

But what ends up often happening is data-driven myopia. You see some statistic that doesn't seem optimal and you end up optimizing for that instead of figuring out how it fits into the big picture.

Restaurants, at the end of the day boil down to food. You serve food. People either like the food or they don't. How many customers you get is a function of how much people like the food, how competitive the pricing on the food is, and the market you're in.

Red lobster at the end of the day suffered from people not wanting to pay what they were charging for low quality, uninspiring seafood dishes.

People nowadays are struggling more (spare me the CPI data, hedonics and other basket adjustments mean the situation for most people is quite a bit worse than it was a few years ago) and there needs to be a value prop for dining out.

Re: The fishy death of Red Lobster

#185

Post by throwway120385 »

rwmj wrote: post #17
loutre wrote: post #2

Watching private equity take over and subsequently destroy businesses is so frustrating! This is a story that comes up again and again and there isn’t yet the overwhelming backlash that’s necessary to stop it. I highly recommend the book “Plunder: private equity’s plan to pillage America” for an extremely cogent overview of the entire situation. https://www.goodreads.com/book/show/62874267

They're currently buying up veterinary practices in the UK and turning them into cash cows. This has the effect that pet insurance has gone through the roof, and general vet bills are much higher than they used to be. Pets suffer too if owners can't afford to treat them any longer. ( https://www.theguardian.com/business/2024/mar/12/uk-vet-pric... )

Optum is doing the same thing here in the US PNW for actual doctors' offices. My SO had a mysterious charge suddenly appear in her account that nobody would explain and then she got fired as a patient and sent to collections by them a few years ago. Now that they're buying all of the clinics she essentially can't get in to any providers because of it.

Re: The fishy death of Red Lobster

#187

Post by wnc3141 »

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.

the whole point is to flip the business in 5ish years.

Re: The fishy death of Red Lobster

#188

Post by underlipton »

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…

>but the supply chain costs keep going up.

A good portion of this is cartels that could be squashed. Notably, real estate (commercial and otherwise, driving up the single biggest cost of business/living). But, then, you'd have to deal with the people who rely on cartel-ized pricing power for their income, investment collateral, etc. (But someone is going to get thrown under the bus, so might as well be them.)

Re: The fishy death of Red Lobster

#189

Post by bradjohnson »

abirch wrote: post #150
bradjohnson wrote: post #113

Earlier quoted context omitted.

Tim Hortons

Tim Hortons is part of $RBI [1] and not private equity. [1] https://en.wikipedia.org/wiki/Tim_Hortons

They are (were?) 51% owned by Brazilian private equity group 3G Capital which in turn owns 1/3 of RBI: https://en.wikipedia.org/wiki/3G_Capital

Re: The fishy death of Red Lobster

#190

Post by bradjohnson »

bradjohnson wrote: post #189
abirch wrote: post #150

Earlier quoted context omitted.

Tim Hortons is part of $RBI [1] and not private equity. [1] https://en.wikipedia.org/wiki/Tim_Hortons

They are (were?) 51% owned by Brazilian private equity group 3G Capital which in turn owns 1/3 of RBI: https://en.wikipedia.org/wiki/3G_Capital

Ah, here it is:

https://www.rbi.com/English/news/news-details/2014/Worlds-Th...

> 3G Capital to own approximately 51% of new company

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