Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The fishy death of Red Lobster

businessinsider.com

Post reply on HN
Print view View original

271–280 of 540 posts

Re: The fishy death of Red Lobster

#271

Post by anon23908203 »

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.

I feel uncomfortable when people make me feel like a jerk for consuming their service, and I would rather opt out of the entire dining experience.

Re: The fishy death of Red Lobster

#272

Post by onemoresoop »

emptysongglass wrote: post #248
wvenable wrote: post #182

Earlier quoted context omitted.

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…

>Can someone tell me everything is going to get better?

Yes but only after it will get much worse.

Re: The fishy death of Red Lobster

#273

Post by ghaff »

cityofdelusion wrote: post #249
Zenzero wrote: post #237

Earlier quoted context omitted.

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…

To be fair, Sysco can provide a lot of different levels of food. Yes, they're most associated in the public eye with the microwaved and boiled examples. But they can also deliver many fresh ingredients or just staples like rice or flour.

Re: The fishy death of Red Lobster

#274

Post by NoMoreNicksLeft »

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 mom and pop, if they raise prices too high, punish themselves when they lose business. Perhaps even to the point of insolvency and folding.

If the PE firm raises prices too high, they don't punish themselves at all, because those customers go elsewhere. "Elsewhere" being just another office/practice which they also own. Mom and pop couldn't do that themselves. They didn't have monopoly-like powers to ensure their success.

> Why is there a barrier to entry that prevents some new young doctor or vet

Because the young ones are getting started, and do not have the capital to start a practice (or to buy an existing one). How much does a dental x-ray machine cost? How much do the dental chairs cost? How much does the lawyer that fills out the paperwork to get the permits for that retail space to be a dental office cost, per hour, and how many hours of paperwork?

Re: The fishy death of Red Lobster

#275

Post by RockyMcNuts »

https://prospect.org/health/2023-05-23-quackonomics-medical-...

Interesting story of how some private equity guys would

- buy hospitals

- sell the real estate for more than they paid for the hospital, signing a long-term lease at a high rent

- pay themselves an immediate huge profit. the higher the rent the hospital promised, the bigger the sale/leaseback deal, so the bigger the profit.

- default, hospital goes bankrupt, the community and the dumb patsy who bought the hospital gets left holding the bag.

classic bustout from Goodfellas or The Sopranos, but mobsters get investigated, PE guys don't.

Re: The fishy death of Red Lobster

#276

Post by throwup238 »

bruce511 wrote: post #236
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…

I'd add that it's also a function of revaluing the assets, and then determining if the return on asset value is appropriate. Take a small restaurant. Grandad bought the building 50 years ago. That's long since paid off. The restaurant makes say 10k a month. Good honest business. But the building/land is worth say a million. The owners don't care, it's paid off. The business makes a good living. So I come along and of…

That's what it looks like to me too. All of the Red Lobsters I know of in California are in some very high volume locations, often in large multi-block shopping malls where everyone in a several mile radius goes to shop. They did a good job front running the state's population growth and locking in some great locations before they became really expensive.

It's pretty much a license to print money as long as the restaurant can maintain competitiveness in quality and cost. All of the restaurants in the strip mall that holds my nearest Red Lobster have been around for over a decade and half of them for over twenty years. The turnover is really low because everyone rakes it in as long as they don't mess it up. Looks like Red Lobster messed it up.

Re: The fishy death of Red Lobster

#277

Post by ghaff »

coldtea wrote: post #27
rl3 wrote: post #22

Earlier quoted context omitted.

> Watching private equity take over and subsequently destroy businesses is so frustrating! I agree. I uh, hope they don't do the same thing to Olive Garden, or Applebee's. That would be tragic..

Ah, American classism, where crap like McDonalds is OK, but pissing on Olive Garden and Applebees is a signal for "I'm not working class, I have taste". Perhaps because the latter are associated with aspirational working class, which is to be mocked. The upper middle class and higher going to coffee shops and restaurants targeting them and dialing the pretentiousness and crap fusion food and such to 11 is OK though,…

I'm classist I guess but McDonalds is really not OK unless I need some fries on a long drive.

But people can eat whatever they like/can afford/find convenient.

Re: The fishy death of Red Lobster

#278

Post by nickpsecurity »

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…

Most people used to believe in Jesus Christ with values built on the Bible. That was true from lay people to Ivy League colleges to even folks in prison. His blessings with His accountability both made many good things happen and limited lots of damage we’d cause. America was prosperous as the Bible said it would be.

Over the decades, people turned away from God and those values to chase new ones: money first, pleasure first, self/ego first, atheism, subjectivism, Marxism. These by themselves, if increasing enough, guarantee massive amounts of suffering for people. Whereas, the fruit of the Spirit in Galatians only does good for people when you increase it. Society made their choice.

As in Romans 1, God handed us over to our depraved minds and sins to let us feel the full consequences of selfish, godless, subjective societies. Everything has gotten worse. The solution is to repent and turn back to what God gave that worked before. Then, gradually improve ourselves in any weak areas. Wr must bake righteous values back into our families, businesses, and government. Inward change creates positive, outward results.

Re: The fishy death of Red Lobster

#279

Post by outop »

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?

You've replied with the same trivial urban myths that are endlessly repeated about private equity.

You've compared the incentives of private equity and a small business owner. Do you think that Red Lobster was previously a small business?

Why can't you answer the question on the different incentives that apply to different owners of large businesses? If a private equity fund can make a profit by buying a successful business, discouraging all its customers and then "selling the corpse", why can't other owners do the same thing?

Why does the company having a large amount of debt change the decision a restaurant chain's management makes between selling cheap and good food, or cheap and bad food, or expensive and bad food, or expensive and good food?

Literally everything that you've said about this has been handwaving and rumours. Explain the decisions based on where the money comes from and where it has to go to, if you can (you clearly can't).

You citing Nabisco as the best example of what you believe is comical since it's from 40 years ago (and famously fraudulent).

Re: The fishy death of Red Lobster

#280

Post by stainforth »

outop wrote: post #246
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…

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…

Do you think private equity funds could have other end goals when buying a company?
Post reply on HN