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The fishy death of Red Lobster

businessinsider.com

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Re: The fishy death of Red Lobster

#381

Post by [deleted] »

Integrape wrote: post #364
nickpsecurity wrote: post #336

Earlier quoted context omitted.

We do evil for selfish reasons. God’s Word says the Father draws us to Him, faith itself is a gift He enables, and those who repent receive eternal life and close fellowship with God Himself. Then, His presence in our lives in many ways from changing character to answered prayers. Committing to rebellion in this life gains us nothing in the long term in comparison. A sovereign ruler who is just necessarily has to enf…

Sir, this is a Red Lobster comment thread.

[deleted]

Re: The fishy death of Red Lobster

#382

Post by devilbunny »

outop wrote: post #359
devilbunny wrote: post #327

Earlier quoted context omitted.

Because the PE firm had partners who bought the underlying real estate for themselves. I'm sure that there are PE firms that really do try to make businesses successful and profitable, but the vast majority are in it to sell off anything of value and dump all the ensuing debt into a company that will shortly go bankrupt. If you own a company, and a PE firm buys one of your clients, that should be a hint to require pr…

Your first point: this would obviously be serious fraud. I'm not sure if you have any evidence of this in this particular case or is you are alleging this is standard practice by PE funds? Your second point: why would someone lend money to a company which was going to go bankrupt? If PE firms always made the companies they controlled bankrupt, no one would lend to them. Your third point: if someone buys a company fro…

It’s not fraud if the sales are advertised and fair… even if they’re not widely publicized. But that was just spitballing.

For 2), people loan to the PE firm because they extract all the value for themselves. Their creditors get paid. People who loan to PE-controlled firms don’t seem terribly wise to me, but maybe they can model them like junk bonds.

For 3), if the firm buys one of your clients, be cautious.

Re: The fishy death of Red Lobster

#383

Post by wnc3141 »

rnd0 wrote: post #352
wnc3141 wrote: post #187

Earlier quoted context omitted.

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

So goodfellas, basically: https://www.youtube.com/watch?v=ZPtjyqgZAUk

this is so funny. I hadn't thought about this movie in a while. Weird how many similarities there actually are

Re: The fishy death of Red Lobster

#384

Post by wnc3141 »

Gormo wrote: post #373
wnc3141 wrote: post #187

Earlier quoted context omitted.

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

Sometimes it is. The more cynical version of this, though, is to engage in a protracted liquidation of the business, and get as much return on the assets as possible in the short term, with no intention of the business surviving into the long term. Optimistically, you could see this as a way of freeing operating assets from underperforming businesses and putting them back into circulation, clearing the way for superi…

I think your'e right that the playbook in reality looks more like a short term squeeze of cashflow with schemes far less imaginative than you'd think.

Some recent news stories I have enjoyed on the matter

*about Authentic Brands Inc - which in short parks on defunct retail brands and liscences out the manufacture while owning no capital themselves. https://www.npr.org/2023/11/02/1209684529/retail-bankruptcy-...

Two part podcast on implications of private equity form Freakonomics (I find balanced, rigorous, and asks challenging questions of its contributors)

1) https://freakonomics.com/podcast/should-you-trust-private-eq...

2) https://freakonomics.com/podcast/are-private-equity-firms-pl...

Re: The fishy death of Red Lobster

#385

Post by muyuu »

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…

I assume Red Lobster preemptively lowered the food grade and the service labour costs to avoid raising the prices in their menu drastically. We've had a wave of very strong inflation pretty much worldwide - or at least wherever there have been covid lock-downs and huge government payment schemes - and for many businesses, especially those that already operated at the margin of profitability, this has been their death knell.

I'm not so sure that Red Lobster would have survived if instead of lowering the quality of the product they'd have just raised the prices by say 80% overnight. I mention 80% because that's how much many hospitality businesses have raised prices in my area in London since the pandemic.

I've seen businesses go bust here that have tried both things:

- lowering quality and raising the prices by less than the average

- maintaining roughly the same quality and service but raising prices drastically

Plenty of examples in my area of businesses just collapsing with either strategy. People simply would not accept the new prices in many cases.

A business that is sort-of a luxury business like those specialised in oysters, shellfish in general, high-end cuisine etc only a very select few have survived. Those that are large chains have suffered the most, because they are not seen as so much of a special expenditure and people would just stop going.

Red Lobster perhaps would have fared better by not reacting and simply raising prices. Who knows, it's easy to make the counterfactual scenario in the abstract.

Re: The fishy death of Red Lobster

#386

Post by billyvandory »

Red Lobster has cheapened out its products all over the place. Pennywise, dollar stupid. - Got rid of Thousand Islands and Raspberry vinaigrette dressing - Got rid of the lobster and the fake lobster from the "lobster" bisque - You only get 1 bread per person now - Sweet chilli shrimp that used to be battered and fried at the restaurant replaced with some no name brand microwavable chilli scrimp - To save money, they purchase the runt of the crab and lobster, the ones that barely make legal length, that no one wants to buy - Mushroom caps mushrooms are now bottom of the barrel white mushrooms

This "restaurant" is now pure garbage.. used to go all the time, but quit going about a year ago. I'm not interested in spending 100$ per person for fast food

Re: The fishy death of Red Lobster

#388

Post by TheRealDunkirk »

prepend wrote: post #301
TheRealDunkirk wrote: post #80

Tiffany Cianci is at the dead center of a battle with private equity trying to monopolize young child development centers. Her horrific personal story will open your eyes as to just how depraved and soulless private equity can really be in their attempt to take over the world. (TL;DR: they literally forced her give a deposition while she was having a miscarriage .) The government should be writing laws to curtail the…

No one can force you to give a deposition during a miscarriage. I’ve been through a few depositions and anyone can leave for medical reasons. It’s not like there are bailiffs there forcing you to attend. Even with the most basic of cases, I can just walk out and tell my attorney to reschedule. I may have to pay other counsel’s fees, but I expect with the reason “I’m having a miscarriage” no judge is going to uphold t…

The other alternative was to violate her sacred beliefs. You clearly have no idea how nasty this litigation has been.

https://www.washingtonian.com/2023/07/24/how-a-battle-over-a...

Re: The fishy death of Red Lobster

#389

Post by anon291 »

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 is mostly driven by state pension funds that are basically unfunded entitlements. They have to pay out more now as the boomers retire, but they have no money so seek ever-increasing rates of return, even above market rate. They can't find anything on the 'public' market, so they turn to these alternatives. Meanwhile, those on the supply side see that there is money that needs to be invested in these sorts of vehicles to have any shot of paying out, and they oblige.

People will say it's all about greed, or whatever. But it's not 'the rich' buying these PE investments. It's public pension funds (i.e., government workers, teachers, mailmen). It also has nothing to do with the interest rate (although that certainly enables it, it doesn't explain the demand for the investment vehicle itself or the source of funds).

According to a study from UNC Chapel Hill [1], public pensions comprise 31% of investors at PE funds and 67% of capital.

That means that, while it's true that perhaps the other 69% of investors are the supposedly greedy rich, if it were just them investing, PE would be 3x smaller than it is today.

We have to face the truth which is that these sorts of deleterious economic effects that occur as a result of PE takeovers are due to unfunded public pension liablities.

[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4283853

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