The fishy death of Red Lobster • Hacker News Board

Re: The fishy death of Red Lobster

#241

Post by pradn » Thu, May 02, 2024, 7:36 PM UTC

banannaise wrote: post #194

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…

The problem is that executives will ask "what makes Stardew Valley successful?" and never make it to this answer: A developer who genuinely cares about the quality of the game, interacts positively with the community around it, and makes decisions that demonstrate his caring for the game and the community. Specifically, decisions that often leave revenue on the table, particularly in the short term but arguably in th…

That's because caring and liquidity/fungibility are at opposing poles. People sell cattle but not their pet cows. Something like that.

Re: The fishy death of Red Lobster

#242

Post by MrFantastic » Thu, May 02, 2024, 7:36 PM UTC

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?

If I ever get rich, I would totally open a ghost pizza restaurant.

Margins are good. Spoilage is a non-issue.

Orders are pickup or delivery.

I can bring 10 pizzas to every party.

Re: The fishy death of Red Lobster

#243

Post by Dalewyn » Thu, May 02, 2024, 7:37 PM UTC

hooverd wrote: post #228

giantrobot wrote: post #206

Earlier quoted context omitted.

> Restaurants, at the end of the day boil down to food. You serve food. To expand on this a little, restaurants serve food in a building brought to your table by people . If the building/table/environment is dirty or just uncomfortable people don't want to be in it. If the people preparing and serving the food are doing a bad job people won't want them doing it. If a restaurant drops the quality of the food, environm…

What I don't understand is the value people place on waitstaff being enthusiastic to serve you. I don't care, as long as you they take my order and check on my drinks.

But you clearly care about the staff's enthusiasm to serve you?

Re: The fishy death of Red Lobster

#244

Post by Zenzero » Thu, May 02, 2024, 7:39 PM UTC

JackFr wrote: post #138

erikerikson wrote: post #115

Earlier quoted context omitted.

And then it was reversed, purchased back by the founder for less

Chipotle took on McDonalds as an early investor, used McDonald's investment to quickly expand from 16 to 500 stores. Chipotle had a tremendously successful IPO, which they used to fund further growth. McDonalds, who was always a minority investor, divested themselves from Chiptole earning $1.5 billion on a $450 million investment. It trades on the NYSE as CMG and has a market cap of 88 billion.

Based on how Chipotle has been the last couple years though, I foresee them going down the route of Red Lobster within the next 10 years. That kind of valuation goes against how bad the food has gotten.

Re: The fishy death of Red Lobster

#245

Post by pfdietz » Thu, May 02, 2024, 7:39 PM UTC

TheGlav wrote: post #121

phkahler wrote: post #85

>> To raise enough cash to make the deal happen, Golden Gate sold off Red Lobster's real estate to another entity — in this case, a company called American Realty Capital Properties I wonder if the Golden Gate investors also own American Realty, or are good friends of theirs. Sure GG made their money, but owning the real estate seems like a second good investment so long as the chain doesn't go under and the lease te…

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.

Why should anyone care about the wellbeing of a company? This sounds like an exercise in anthropomorphism.

Re: The fishy death of Red Lobster

#246

Post by outop » Thu, May 02, 2024, 7:39 PM UTC

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…

I think this is naive. When (for example) a private equity fund buys a casual dining chain, they will go through how the business is run in painstaking detail and try to understand exactly what makes the experience 'work' and what changes are possible or advisable.

If the olives in the salad don't taste as good or there are fewer breadsticks or the lighting makes it feel more relaxed or the greeters have more time or the menu gets shorter or the desserts arrive quicker or the pasta is less salty, that's because someone involved in that decision decided it was worth paying more for or not worth paying what they were currently paying, taking into account what factors will make people change their mind about eating there. There isn't just a random dude who sits in a room somewhere and says "let's make the food worse" based on his own whim.

If the food gets worse and it just doesn't have that same vibe anymore and you don't want to go there next time, it's because an expert in marketing or restaurant management or food design made an error in their judgement about what they could cut, what they should improve, and what they needed to keep the same. That, or the change which turned you off attracted more customers or more desirable customers who have different preferences to you.

Your restaurant changed because its corporate policy changed. But the capital structure is totally relevant in understanding why that changed.

Re: The fishy death of Red Lobster

#247

Post by _DeadFred_ » Thu, May 02, 2024, 7:42 PM UTC

duxup wrote: post #163

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…

For my poor friends the whole 'emergency pizza' thing was amazing marketing. Every other company is actively screwing them, increasing rates to unaffordable, shrinking sizes. Domino's not only stayed affordable, but said, hey, times are though, if you get in a crunch, here's an emergency pizza to fill the gap. Friggen' overdraft protection on food for their kids. The amount of good will that corporate marketing campaign brought in that group I can't even tell you. I'm talking about the single dad's working two jobs, moved back home with their parents segment. They now feel like Dominoes is the only company that hasn't f'd them. They actively talk about Dominoes randomly (we guys don't have much to talk about but still it doesn't normally fall to discount pizza discussion).

Re: The fishy death of Red Lobster

#248

Post by emptysongglass » Thu, May 02, 2024, 7:42 PM UTC

wvenable wrote: post #182

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…

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 financia…

Oh man I FEEL this deeply.

I was just wondering if it's just me feeling like everything is on a highway to terrible.

- Prices in my city, just this year, have felt like they've jumped 10 or 15 percent.

- I've been working in tech for a decade now and for the first time a new company simply refused to negotiate salary.

- I feel financially worse off than 5 years ago making a third of what I make now.

- Housing prices have exploded. I worry I will never own a home.

- Denmark has started deleting public holidays to save our social welfare state.

- Health care is the worst it's ever been. You can not get basic health diagnostics for most things in Denmark without screaming.

- Europe has a literal war at our doorstep.

- Public transit prices have jumped in the last year.

- Good quality grocery stores have closed and been replaced with discount chains. The quality of the produce is terrible.

- Democracy feels increasingly shittier and hijacked by two extremist poles of very-online meme-thought.

- Gen Z is looking like the most garbage generation of the last two centuries with more mental illness than any generation in history.

- Everything has become a political lightning rod.

I feel exploited by invisible forces I can't see or touch or name. I feel as if I have no mastery over my own life. I no longer know why I continue to contribute to a society that does not give anything back to me for my labor and exploits the best years of my life for taxes that do not improve my lot in life.

Can someone tell me everything is going to get better?

Re: The fishy death of Red Lobster

#249

Post by cityofdelusion » Thu, May 02, 2024, 7:42 PM UTC

Zenzero wrote: post #237

FireBeyond wrote: post #202

Earlier quoted context omitted.

And it's not a secret. Fettucine Alfredo? They open the plastic packet from Sysco, microwave for the appropriate amount of time, same with the sauce, put it on a plate... $18.

You're spot on. I haven't been to any sort of Red Lobster owned property in years. The last time I went to Olive garden it was completely transparent how the microwaved Sysco food is the norm now. I sat there thinking how AI could have just bought the same thing from the frozen aisle at half the price and not had to deal with sitting in a dirty Olive garden.

It’s not limited to these big chains at all — the vast, vast majority of restaurants in the States are at the mercy of Sysco. The restaurant industry is absolutely brutal right now. They are barely profitable and the best restaurants survive from underpaid family labor or under-the-table undocumented immigrants. Rent costs are insanely high, labor isn’t there and is bottom of the barrel, and non Sysco food costs too much. The average person still expects a $8 burger and fries when the cost to make it is $10 minimum.

The whole industry is on the verge of collapse, and we’ve had a ton of restaurant closures over in my neck of the woods since Covid. These aren’t Red Lobsters closing but beloved local places.

Anyone that has worked food in the last couple years knows how bad it really is.

Re: The fishy death of Red Lobster

#250

Post by pfdietz » Thu, May 02, 2024, 7:45 PM UTC

khill wrote: post #155

maerF0x0 wrote: post #67

Earlier quoted context omitted.

It's rooted in societal culture and what people incentivize (ie assign the highest multiple to). Until Americans take on a mindset of longterm/family (as I've seen many Chinese families express), they'll be doomed to make short term decisions. Right now very few Americans are able to accept an optimization that looks like "I invest today, and my grandkids will get the returns". So America is stuck in that local maxim…

At some point in my lifetime, the mindset switched from "I'm investing because I want to see long-term, steady growth and get regular dividends" to "I want to make as much money as possible as quickly as possible and damn the consequences to others". The short-sightedness and greed is destroying so much.

Or, the hardnosed focus on economical value over sentimentality is freeing resources to be used more productively elsewhere.

Schumpeter tells us the market operates by creative destruction. Properly killing companies is just as important as properly starting them.