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The fishy death of Red Lobster

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Re: The fishy death of Red Lobster

#261

Post by gwbas1c »

WesleyJohnson wrote: post #212
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…

Maybe your standards are refined now that you're older?

My kids love crap food, and I sometimes have to sigh and go to places I'd rather not go because my kids think it's the best thing since sliced bread.

Granted, my only experience with LJS are stories from https://en.wikipedia.org/wiki/Wayne_Coyne (2nd paragraph, "Early Life" section.)

Re: The fishy death of Red Lobster

#262

Post by 1propionyl »

alfalfasprout wrote: post #184
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…

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 f…

The catch-22 is that being data-driven means being driven by what data you can measure. And that is an absolutely gobsmackingly fatal flaw.

For a 1000+ page exposition on why this is such a fatal flaw see James C. Scott's 1990s tome "Seeing Like a State" which addresses precisely this issue with receipts brought from fields ranging from agriculture, urban planning, politics, family naming systems, and more across at least 4 or 5 continents and a century.

It's an essential non-partisan read that manages to piss everyone off by being a peon to left anarchism in many ways while saying "actually yes Hayek was right about sensitivity to local conditions" and "actually the NHS and NWS are good and sometimes centralized planning isn't the worst solution".

I've not seen any direct link between them but I feel like you can draw a very firm line between it and Piketty's Capital and Ideology. You might think "wait isn't Piketty the guy who's completely data driven and publishes stupidly large amounts of xlsx files as appendices" and you'd be right except in his second book he's leaning far more heavily on sociology and just using financial data (much imputed from tax records) as support for sociological arguments that align very closely in many respects.

Re: The fishy death of Red Lobster

#263

Post by maerF0x0 »

singleshot_ wrote: post #129
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…

It’s very interesting that you seem to be making a dichotomy between Chinese and American people instead of one between rich and poor mindsets.

As I understand the gross summarization of Chinese culture is that they're extremely family oriented. Anecdotally I've heard of grandmas acting like their homeless to earn a little money to give to a grandson which drives a Ferrari. They do it because they love and maximize for the next generation.

Re: The fishy death of Red Lobster

#264

Post by ImPostingOnHN »

outop wrote: post #259
ImPostingOnHN wrote: post #254

Earlier quoted context omitted.

> 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. Not directly, but only 1 step removed. The dude is saying "let's charge the same or more for cheaper, lower-quality food, to make a higher margin so our PE firm makes more money" .

What makes you think that PE equity owners have any different incentives to any other chain restaurant owners to cut costs and improve margins?? Why would you think that private equity owners would ever make things worse to improve margins without giving careful consideration to whether or not the changes will make people less likely to spend money at their restaurants ??

Because PE equity owners DO have different incentives. It's reasonable to think things that are true.

PE is incentivised to squeeze the business and extract the value built up over time, to get large, quick returns, even if it destroys the business (they can sell the corpse after). A restaurant which delivers regular, single-digit restaurant margins indefinitely would be considered a PE investment failure.

So, the answer your 2nd question is also "because it's true". I'm happy to be convinced otherwise on either count, if you think differently.

Re: The fishy death of Red Lobster

#265

Post by ghaff »

kube-system wrote: post #238
ghaff wrote: post #216

Earlier quoted context omitted.

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-a…

There's multiple reasons why people visit a restaurant and with different needs. I think the rise of fast casual is coincident with the rise in people visiting a restaurant when it isn't a treat. When someone is looking to just grab a quick bowl, they don't care as much about atmosphere or service, their priority is something quick, easy, and good value. But then when these same people go out to dinner when it is a s…

>quick, easy, and good value

And for many, especially perhaps people out of their twenties, they want something at a level above the traditional fast food chains.

But I basically agree. If I have to I'll go to a standard dinner chain either because there aren't other options where I am or I'm dragged there by friends. But I'd never do it around home and would try to do my best to find other options when traveling--although, on the road, some brand recognition of this isn't awful may be a trigger.

Re: The fishy death of Red Lobster

#266

Post by outop »

quantified wrote: post #258
ImPostingOnHN wrote: post #254

Earlier quoted context omitted.

> 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. Not directly, but only 1 step removed. The dude is saying "let's charge the same or more for cheaper, lower-quality food, to make a higher margin so our PE firm makes more money" .

> 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. Evidently not really taking the factors into account. Would the limited partners eat there? More than once?

I don't see the relevance of this. No one eats at Red Lobster thinking "this is the exact dinner experience that billionaires would design for themselves".

Walmart is a family owned business. Do you think that the Walton family buy groceries and home furnishings there? McDonald's is a public company. Do you think that its CEO and the fund managers who hold the biggest stakes in it regularly eat there?

Re: The fishy death of Red Lobster

#267

Post by chankstein38 »

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…

I've been thinking about this a lot too. It just feels like all ends of the spectrum, for a consumer, are crashing down. Everything is harvesting and selling data, stock at stores is low and usually favors the generic (and sometimes lesser) option over the higher quality names... Apps like facebook, twitter, IG, tiktok, reddit, and youtube are making life worse for their users. Overall, it is kind of a depressing time to observe.

Re: The fishy death of Red Lobster

#268

Post by outop »

ImPostingOnHN wrote: post #264
outop wrote: post #259

Earlier quoted context omitted.

What makes you think that PE equity owners have any different incentives to any other chain restaurant owners to cut costs and improve margins?? Why would you think that private equity owners would ever make things worse to improve margins without giving careful consideration to whether or not the changes will make people less likely to spend money at their restaurants ??

Because PE equity owners DO have different incentives. It's reasonable to think things that are true. PE is incentivised to squeeze the business and extract the value built up over time, to get large, quick returns, even if it destroys the business (they can sell the corpse after). A restaurant which delivers regular, single-digit restaurant margins indefinitely would be considered a PE investment failure. So, the an…

You've just repeated and rephrased the claim that I challenged without providing any evidence or argument at all. Your actual answer to both questions is "because I believe this".

Can you explain how the math works that PE owners make money from discouraging people from going to a restaurant, and other owners don't have the same incentives?

Re: The fishy death of Red Lobster

#269

Post by ImPostingOnHN »

outop wrote: post #268
ImPostingOnHN wrote: post #264

Earlier quoted context omitted.

Because PE equity owners DO have different incentives. It's reasonable to think things that are true. PE is incentivised to squeeze the business and extract the value built up over time, to get large, quick returns, even if it destroys the business (they can sell the corpse after). A restaurant which delivers regular, single-digit restaurant margins indefinitely would be considered a PE investment failure. So, the an…

You've just repeated and rephrased the claim that I challenged without providing any evidence or argument at all. Your actual answer to both questions is "because I believe this". Can you explain how the math works that PE owners make money from discouraging people from going to a restaurant, and other owners don't have the same incentives?

I explained the difference in incentives: Restaurant margins are a PE failure [0], that alone would explain it. Your framing of the scenario as "discouraging people from going to a restaurant" is... less than charitable. A better description would be "extracting the value of customer goodwill from the business and moving it into their pockets". They're PE, they prioritize big, fast returns over long-term customer value and small, slow returns.

Add to that, the leveraged buyout mechanism that Red Lobster went through is famous for siphoning value off the target in the form of fees and other schemes, and then leaving the empty husk to die under crippling debt[1]. A clue here is that the 2nd paragraph of the article we're discussing is, "In mid-April, Bloomberg reported the debt-laden seafood chain...", and it sounded like they had trouble paying it in part because of the rent payments that started when the PE firm sold their real estate to pay for the buyout.

Can you explain why you think anything I've said so far is untrue? After all, we can't assume a PE LBO executor and a small business owner have the same incentives unless we have sufficiently convincing evidence to support that assumption.

0: https://www.indeed.com/hire/c/info/restaurant-profit-margins...

1: https://www.investopedia.com/articles/stocks/09/corporate-kl...

Re: The fishy death of Red Lobster

#270

Post by ghaff »

snarfy wrote: post #208
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…

Yep, it's the food. There are many famous 'food destinations' around the world. Usually the line goes around the block. You always have to wait, either in line, for a reservation, etc. People wait because it's worth it. The food is good.

Well, it's could also have become a meme or whatever the right term is. There's a lobster roll place in a Maine coastal town that always has lines around the block with maybe hour waits. There's a place right across the street that IMO is just as good--as are a bunch of other Maine coastal places you've never heard of.
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