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The fishy death of Red Lobster

businessinsider.com

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Re: The fishy death of Red Lobster

#211

Post by pwillia7 »

javagram wrote: post #152
tonymet wrote: post #143

Earlier quoted context omitted.

Well thankfully restaurant & AI startup aren't the only two industries worthy of investing in. Jokes aside, I get mom & pops. But I'm dubious on the "growth" chains like a Shake Shack or Chick Fil A. My current theory is that they are effectively MLMs with different structures: private equity MLM, owner-operator (franchisee) MLM. See Subway for the end result

Chick fil A is privately held and their franchise operator model doesn’t require a large infusion of cash from the franchisee. Only 10k cash, so it’s more like a manager job with profit sharing and I don’t see how it could be a MLM.

Because you have to pay for the job

Re: The fishy death of Red Lobster

#212

Post by WesleyJohnson »

FuriouslyAdrift wrote: post #200

We'll always have Long John Silver's. All hail the hush puppy!

LJS was always an extravagant treat when I was a kid as it was seemingly more expensive than McDonald's or Taco Bell, and further away from where we lived.

When I started making my own money, it was one of my regular indulgences.

As an adult, I rarely ever see them anymore. And when I do go (it's been years), I'm always left feeling sick to my stomach, and yet still hungry. The portions sizes have shrunk considerably, even more shrinkflation. The greasiness, while expected with that kind of food, it so much worse. The fries are soggy, and you hardly ever get any crunchies anymore!

I missed the late 90's LJS something terrible. :)

Re: The fishy death of Red Lobster

#214

Post by Der_Einzige »

tensor wrote: post #177
jncfhnb wrote: post #169

Earlier quoted context omitted.

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

I'm not convinced that is actually true. Can you think of an example? A game that has near universally good reviews but is not successful?

That's easy dude.

System Shock 2

Psychonauts

Shenmue

Okami

Conkers bad fur day

Re: The fishy death of Red Lobster

#215

Post by underlipton »

TheMagicHorsey wrote: post #57
dmurray wrote: post #16

Earlier quoted context omitted.

The "private equity kills beloved brand" stories are usually overcooked, as far as I can tell. They usually involve PE taking over firms that were already in financial trouble, which is what made them attractively priced to PE in the first place. The PE firm would also prefer to have a nice profitable business, but if they can't turn it around, they have options like asset stripping or selling the name to a different…

I never understood how PE firms get blamed for rising costs in doctor's offices and vets. If a PE firm can just unilaterally raise prices, then why didn't he mom n pop practices do the same? Where is the competition? Why is there a barrier to entry that prevents some new young doctor or vet from coming in and undercutting the PE business?

The two groups have very different goals. One wants sustainable profit running a sustainable business, the other wants short-term profit by any legal means necessary.

Re: The fishy death of Red Lobster

#216

Post by ghaff »

kube-system wrote: post #178
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…

I don't even really think it's food quality alone that is the issue. It's the total package doesn't match preferences. I think many millennials would be fine with Red Lobster quality food, if it were quick enough for lunch. But the format is slow, sit-down service. And the atmosphere in these restaurants is not what millennials are looking for to relax or entertain.

That's actually sort of been a sort of a revolution with things like fast casual burgers and a lot of food in airports (at least those that serve upscale cities). A lot of people don't really want at least somewhat extended sitdown. They want fairly decent food that's served quickly.

Individual preferences vary obviously but I'll basically never eat at McDonalds but some of the burger places like Shake Shack and In-and-Out hit the spot now and then.

Re: The fishy death of Red Lobster

#217

Post by underlipton »

OkayPhysicist wrote: post #197
underlipton wrote: post #192

Earlier quoted context omitted.

Millennials don't have families and can barely afford the transportation to get to these places, let alone the cost of a decent meal there. The ones that can aren't satisfied with a cookie-cutter franchise experience. But, that's assuming that the more well-off generations aren't going. I dunno if that's the case; things other than revenue can be squeezing RL.

Damn near everybody who has a family right now is a Millennial. Millennials are 30-45 years old

Sorry. What I meant to imply was, "Millennials don't have families [at a rate relative to preceding generations.]" Millennial families are less numerous and smaller.

Re: The fishy death of Red Lobster

#218

Post by ink_13 »

DiggyJohnson wrote: post #157
TheGlav wrote: post #121

Earlier quoted context omitted.

What a short sighted, money grubbing decision by people that didn't actually care about the wellbeing of the company. Keeping the land the restaurants are on means higher margins of profit long term and the ability to weather problems. Selling it off and then leasing it back does...exactly what happened here.

You're responding as if the person you're replying to wasn't asking a question, but stating a fact. Do you know about the details or even a general outline of the considerations that went into this decision?

Bluntly, they're irrelevant. Selling off the real estate is a short-term books-juicer that's tantamount to pillaging the contingency fund. Classic corporate raider move.

Re: The fishy death of Red Lobster

#219

Post by prepend »

RunSet wrote: post #199
chiefalchemist wrote: post #176

Earlier quoted context omitted.

It's not the optimization per se, it's taking it too far, over-playing it to the point of removing the magic, the special sauce, etc.

> The founder of Costco told a CEO who wanted to raise the prices on Costco's hot dogs: "If you raise the effing hot dog, I will kill you. Figure it out." https://www.snopes.com/fact-check/costco-founder-kill-hotdog...

I’m still waiting for a story 20 years from now when they finally raise the hotdog price and the old CEO is 90 and kills the CEO who raised the price.

Or maybe it’s not the CEO he threatened, but a new one.

Re: The fishy death of Red Lobster

#220

Post by braza »

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…

> Private equity firms prey on companies that are already struggling. Yes, they take a struggling company and hasten its demise. But healthy companies don't end up getting bought by private equity in the first place.

From the finance/economics perspective, what should be the ideal replacement for Private Equity?

At least for me they seem like a part of the ecosystem responsible for extending the lifespan of some companies and eventually maximizing revenue in those that has success, and this premium is used to cover the losses in other bets.

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