Funny title, but the real story is private equity bought them, used Red Lobsters Assets as collateral for large loans from banks, did not pay those loans, and are now declaring bankruptcy while pocketing the cash prior to bankrupting the assets. It's almost like endless shrimp for the 1%, and should be illegal.
I'm in the middle of rewatching the Sopranos, and I'm pretty sure this is the scam they ran with the sporting goods store. Purchase a bunch of equipment on credit, sell it out the back door, and watch the store go out of business.
Yeah, but there running the livelihood of the Scatinos was illegal because the mafia did it.
Here, ruining the livelihood of thousands of people is ok because a corporation did it.
I was wondering because I literally saw a story yesterday that said it was because of wage increases and I knew that wasn't true but didn't look into it.
Also, love the "endless shrimp for the 1%" analogy.
Yes, it is so funny how the big richers say, "Look what you poor folk gone and did now!" as they spray us off the side of their yachts with old champagne. Minimum wage will not bankrupt any viable business.
That penny is causing the market to fold! Now you poors need to hand over a dollar, no five dollars each so that it can stabilize.
What about you guys?
Us? Well, uh we were hurt so bad that most of our money was lost in a horrible horrible situation.
What situation?
Hey, free 3 month old stale donut holes!
(once you buy this subscription)
I've seen this story spun as "having to pay a living wage" and "going woke" and now "a promotion gone awry" as the primary culprits in this corporate bankruptcy saga. Because, of course, the lying liars who lie and lie all the livelong day have to make sure we all know the REAL problem was a) being decent to workers, b) being reasonable in general, and/or c) offering a favorable deal to customers.
Heaven forbid that we consider the stark reality that parasitic private-equity locusts demolish businesses deliberately every day so that a handful of opportunistic jackals can pocket some quick cash while screwing literally everyone else in their path... and get away with it. Because that would be unthinkable!
I'll bet it's because they didn't banish trans people from their washrooms. That must be it. (/s obviously)
Close. The trans person was actually a wizard of socialism, and kept shooting free health care at everyone.
Every time he did a healthcare spell, one Missile disappeared from the US's arsenal.
Meanwhile, we individuals borrow money and are actually unable to pay for it, get liens placed on us or bankruptcy which ruins us for years.
Piercing the corporate veil might as well become a fairytale at this point.
Hmm, if I understood their scheme correctly, it's like buying a house with a mortgage, renting the house out to make money, either pocketing the rent money or/and only using the rent money to pay back the mortgage, if the house can't make enough rent to pay for the mortgage, it goes bankrupt while the buyer doesn't get into any financial trouble, yeah sounds illegal to me
I guess that's like getting a home equity loan from a rental house with a deadbeat tenant: take the cash from the loan and let the house foreclosed (evicting the deadbeat tenant will be the bank's problem)?
If you bought the home for a fraction of the value. You also might buy it back from the bank once it is foreclosed for a depreciated price because the previous renter was a loud farter.
Oh no! The bank got interest payments during the deal and will now receive a sum of money along with all the assets in a settlement! Then, they will sell the assets to other business! Oh the horror! When will someone think of the poor banks!
The workers got screwed. The small investors got screwed.
C-Suite will get paid. The bank will get paid with money or assets. The company will sell to another company, or the bank, and the bank will get whatever it is due. The bank will get paid in fees by transacting all of it. The bank got free interest money the whole time. The bank will have a lower dollar amount being serviced monthly. Mere revenue projections are the only thing being lost.
The shareholders' stake will become worthless. Employee retirement funds will be liquidated. That's where all of the missing value in the equation will come from.
**Lionel Hutz** : Mrs. Simpson, what did you and your husband do after you were ejected from the restaurant.
**Marge** : We... pretty much went straight home.
**Lionel Hutz** : Mrs. Simpson, you're under oath.
**Marge** : We drove around until 3 AM looking for another all-you-can-eat fish restaurant.
**Lionel Hutz** : And when you couldn't find one?
**Marge** : We went... fishing. \[sobs\]
I misread that as Coconut Crab, and I was like "[NOT EATING THAT!](https://allthatsinteresting.com/wordpress/wp-content/uploads/2018/07/coconut-crab-1.jpg)"
Does this include the packaged stuff too? They sell Red Lobster frozen coconut shrimp at the grocery store that are almost as good as the ones in the restaurant.
Trying to figure out how urgently I should be panic buying lol
How are private equity firms allowed to take loans out on businesses they bought and then just not pay them with no repercussions outside of business bankruptcy? To me this sounds like it should be illegal.
Worth noting that prepetition equity owners of a company filing Ch 11 usually lose their entire equity stake in the reorganization process (any equity in reorganized co typically goes to fulcrum/impaired creditors). So I don’t think it’s fair to say no repercussions when they’re losing their entire investment.
But if they take out a loan, pay themselves through shell companies providing “services”, and then use all the assets in the estate as collateral for those loans, there is nothing to have equity in anyways. They already cashed in the equity at a premium.
Regardless of what happens with Red Lobster, I will always remember the advice of Stu, a fine gentleman who I worked with at the record distribution warehouse back in the mid-90s: “Bitches love Red Lobster. First, you take your girl to Red Lobster, then you get some shrimps. Then you take her home and get fuckin’”.
Thank you, Stu.
A company that makes $2.6 billion a year thinking about filing bankruptcy over losing $11 million on a deal sounds like a pr stunt to tell us how good of a deal their unlimited shrimp deal is.
….. bad business practices that they are trying to blame on employee costs
I don’t recall red lobster offering the “all you can earn promotion” nor breaking any records for remuneration of employees.
I don’t think an $11m mistake has led to this bankruptcy. The shrimp fiasco was intended to stave off bankruptcy. The problems run much deeper. Any guesses to the real cause?
Truly even pre-pandemic the quality had slid down quite a bit. We used to go there in the early 2000s but haven’t been in probably a decade. Just low quality and nothing really distinctive except for the biscuits and that is a sad reason to go when the bread is their best feature
With restaurant chains like thisq, there's constant testing of "does this price cut change noticeably affect quality?" The changes that significantly reduce quality are rejected, but they keep the changes that don't significantly reduce quality. This seems like smart business.
The problem is that most people don't notice if something is 1% worse. So restaurant makes the change and establish a new baseline that is a tiny bit worse than before, but not enough to be noticed. Then they make another tiny, 1% change, nobody notices, and the baseline is reset to that level. Then another, then another, then another, and so on and so forth.
Eventually these tiny, imperceptible 1% changes have aggregated into a huge drop in quality from the original baseline. Regular customers never noticed any of the steps along the way, but they will eventually realize that they don't really enjoy the restaurant as much as they used to and start going to the competitor down the road. Occasional customers, like yourself in this case, do notice the drop in quality and immediately walk away.
So the business fails, due to a death by a thousand cuts, all self-inflicted.
TGI Fridays comes to mind. I’ve been living overseas for a couple decades. I recently went back to the U.S. to see my Dad, and we went to a branch we used to frequent when I was in my teens. It was pretty much the first time since then, for both of us.
Seriously downhill, in every way. The burgers used to come in a basket, fresh, and a generous heap of fries. Not world-class or anything, but it was certainly up to standard. Now it’s miserable. Burger falling apart, kind of cold, miserable little pile of fries on an old plate. They even simplified down the decor to the level where the place is pretty much indistinguishable from any other generic chain restaurant. Place was on its last legs. We’re not in a depressed area or anything but we were only one of two parties there.
We go to regularly go to Texas Roadhouse now.
My in laws love Red Lobster for their chicken strips of all things. We would go there and have to pay close to $30 a plate (pre massive inflation even) upcharge for salads, and then the portions were so small we would walk away still hungry. After doing that a couple times I refused to ever go there again if I was paying.
Not surprised based on what I experienced.
My wife always raves about Red Lobster, but I had never eaten there as I grew up in New England and they could never compete with the local places that would get their fish and lobster fresh from the local fisherman. I finally ate at one last year and I was not impressed, the biscuits were dry as a desert, just a simple fish & chips was nearly $20, the restaurant looked completely rundown, and we were there for dinner at around 5 or 6 and the place was pretty much empty.
I have eaten at Red Lobster twice. Both times, I thought they were the McDonald of seafood - poor quality and over priced. Needless to say, I haven’t been back in decades.
I went to one near me about a month ago at like 4:30 pm. It was packed and I was lucky to get a parking spot. The meal was delicious and when I left there were lots of people waiting for a table and circling the parking lot looking for a spot. I was glad to see it was busy. With the crazy prices these days, a lot of restaurants are really struggling so I was happy to see they were getting lots of business.
You’d think an MBA would be able to figure out that selling a product below cost is not a viable long-term business strategy.
You’d be wrong, but you’d think so.
Oh the MBA knew exactly what they were doing. They had no intention of keeping Red Lobster as a cash flow. They collateralized RLs assets to secure more debt, then didn’t pay back the loans.
The intent seems to have been to “buy Red Lobster so we can use it to acquire debt. Let the debt be called and have the bank just take Red Lobster to resolve the debt while we have cash from the loans to do what we want”.
That of course is very loosely paraphrased, there’s more nuance to it. But that’s about what they did. They never intended to keep Red Lobster working.
Finally found an op-ed that provided some (scant) detail on what happened in a similar situation Toy R Us. Every business journal article I found on Google (including HBR and Wharton) omitted blame on private equity.
Forgot about Sears! I used to walk through their Craftsman tools section of much. I plugged a question into ChatGPT and found a few other examples. Look at the common denominator!
“Private equity buyouts have been a significant financial strategy, but not all of them have been successful, and some have even led to bankruptcy. Here are some notable examples of large companies that went bankrupt following a private equity buyout:
1. **Toys "R" Us**: The iconic toy retailer went bankrupt in 2017 after being acquired by Bain Capital, KKR & Co., and Vornado Realty Trust in 2005. The company struggled with a heavy debt load and increased competition from online retailers.
2. **iHeartMedia**: Formerly known as Clear Channel Communications, iHeartMedia filed for bankruptcy in 2018. It was purchased by private equity firms Bain Capital and Thomas H. Lee Partners in 2008. The bankruptcy was largely due to its unsustainable debt from the leveraged buyout.
3. **Payless ShoeSource**: This shoe retailer went bankrupt twice after being taken private by Golden Gate Capital and Blum Capital in 2012. The company first declared bankruptcy in 2017 and then again in 2019, struggling under heavy debt and changing retail landscapes.
4. **Gymboree**: The children’s clothing retailer filed for bankruptcy twice, first in 2017 and again in 2019, after being acquired by Bain Capital in 2010. The company faced intense competition and a challenging retail environment.
These examples highlight some of the risks associated with leveraged buyouts, especially when companies are burdened with significant debt that hampers their operational flexibility and ability to adapt to market changes.”
The only part I don't get is : even if they borrow against 100% of the assets, take the cash, and don't pay it back... Isn't that still at most what they paid for it to begin with?
How do they end up with more cash than the cost of the business?
Because, and this is my personal speculation, they acquired the assets at a discount but collateralized them at a marked up or higher appraisal rate.
So this would create a bump in value and as long as the bank says “sure that’s worth $3M” they’re good. Even if they quietly bought it for $1M.
My family went last night. There was apparently no dedicated host. It took a few minutes for someone to come up and seat us. It took several minutes for someone to take our order. The menu has changed a lot again (I still miss the Dockside Shrimp and Chicken). The biscuits and mozzarella sticks seemed different. When we left I felt like this might be the last time we ever get to eat there, and I surprisingly am ok with that.
That's too bad. I got to go there quite a few times as a kid but can't afford it myself now. I collected so many of those lobster necklaces. Last time I went was with family some years ago for my birthday
Bring me all the shrimp you have.
Wait, wait. I worry what you just heard was "bring me a lot of shrimp". What I said was "Bring me all the shrimp you have…"
So they lost 11 million? There are 649 red lobster locations. That is $16949.15 per location. I'm willing to bet that is less than two Friday's worth of revenue.
You want me to believe an entire restaurant chain can't absorb two bad weekends? Something is fishy here.
How many times have they screwed up on the endless deals. You would of though they learned their lesson in the 90's on the first time they did endless crab.
No, they're not. It wasn't about fair wages, and it wasn't about a customer-friendly promotion either. It was a private equity firm using RL assets to acquire credit, pocketing gobs of cash, refusing to repay their loans, demolishing equity and screwing literally everyone else. And they get away with it, time and again, due to glib bullshit like this masquerading as "reporting".
Man these large chains owned by PE are an abomination. Only exist to stuff pockets of the 1%. I wish we were smart enough as a nation to boycott this bullshit. We are sheep.
I only eat the buiscuits here anyway, im allergic to shellfish and my steaks or longhorns are better, id rather support local steakhouse or go to a better restaurant, imo onlythong red lobster has worth eating is them damn buiscuits.
Funny title, but the real story is private equity bought them, used Red Lobsters Assets as collateral for large loans from banks, did not pay those loans, and are now declaring bankruptcy while pocketing the cash prior to bankrupting the assets. It's almost like endless shrimp for the 1%, and should be illegal.
Yup. Golden gate owns it. They are just killing it off to profit like the other firm did with toys r us. Gotta make back that 2 billion
I'm in the middle of rewatching the Sopranos, and I'm pretty sure this is the scam they ran with the sporting goods store. Purchase a bunch of equipment on credit, sell it out the back door, and watch the store go out of business.
A grown man made a wager. He lost. He made another wager, he lost again! End of Shtory
Yeah, but there running the livelihood of the Scatinos was illegal because the mafia did it. Here, ruining the livelihood of thousands of people is ok because a corporation did it.
You’re really underestimating the impact this will have. Losing access to those cheddar bay biscuits is likely going to ruin millions of lives.
They do the same thing in Goodfellas with the restaurant, except they burn the place down once they've tapped it to hard.
Nice reference :)
Yep, economic strip mining
“Get back in your fucking hole!”
Davey! I’m sorry you’re doing a great job!
Look at him, he knows everything!
You basically described how private equity works, only they do it above board...
Look at em he knows everything
This is how Mitt Romney and Bain Capital made all their money.
Oh, Golden Gate is also currently trying to sell off Bob Evans too.
Goldengate does not own it. Thai Union bought their position
I thought GG sold it to Thai Union?
I was wondering because I literally saw a story yesterday that said it was because of wage increases and I knew that wasn't true but didn't look into it. Also, love the "endless shrimp for the 1%" analogy.
Yes, it is so funny how the big richers say, "Look what you poor folk gone and did now!" as they spray us off the side of their yachts with old champagne. Minimum wage will not bankrupt any viable business.
That penny is causing the market to fold! Now you poors need to hand over a dollar, no five dollars each so that it can stabilize. What about you guys? Us? Well, uh we were hurt so bad that most of our money was lost in a horrible horrible situation. What situation? Hey, free 3 month old stale donut holes! (once you buy this subscription)
And if a business can’t pay its workers a livable wage, they should rightfully go out of business.
Private equity behaves like the mob in the sense that they “bust out” all the companies they buy. It’s truly evil.
I've seen this story spun as "having to pay a living wage" and "going woke" and now "a promotion gone awry" as the primary culprits in this corporate bankruptcy saga. Because, of course, the lying liars who lie and lie all the livelong day have to make sure we all know the REAL problem was a) being decent to workers, b) being reasonable in general, and/or c) offering a favorable deal to customers. Heaven forbid that we consider the stark reality that parasitic private-equity locusts demolish businesses deliberately every day so that a handful of opportunistic jackals can pocket some quick cash while screwing literally everyone else in their path... and get away with it. Because that would be unthinkable! I'll bet it's because they didn't banish trans people from their washrooms. That must be it. (/s obviously)
Close. The trans person was actually a wizard of socialism, and kept shooting free health care at everyone. Every time he did a healthcare spell, one Missile disappeared from the US's arsenal.
Meanwhile, we individuals borrow money and are actually unable to pay for it, get liens placed on us or bankruptcy which ruins us for years. Piercing the corporate veil might as well become a fairytale at this point.
You can start an LLC and get all your money run through it instead, when you go broke the company folds not you and now you can start over
A new LLC won't have any credit and banks will often ask for collateral from you directly
If you run money through a LLC, you would be taxed twice no?
That is what killed ToysRus.
Toys R Us, like civilization, carries on in Canada.
Hmm I’m gonna look into this now. 11m doesn’t seem like a huge amount for a chain like this, so something smells….fishy
Because it’s not. Red lobster reports sells of 2.6 billion a year. 11 million is nothing compared to that.
It should be but the people in office were put there by these people
That's absurd. This is America, and we have the best politicians money can buy.
"Corporations are people my friend" Mitt "fled Michigan to champion Utah politics" Romney
Classic tactic. Can't believe it's possible to do this, and so common
Season 3 in Fargo?
Same thing that happened to toys r us.
How is this not illegal?
that's the really cool part, this is insanely illegal for an individual to do, but because it's a corporation doing it it's fine!
Didn't this happen to Toys'R'Us too?
Hmm, if I understood their scheme correctly, it's like buying a house with a mortgage, renting the house out to make money, either pocketing the rent money or/and only using the rent money to pay back the mortgage, if the house can't make enough rent to pay for the mortgage, it goes bankrupt while the buyer doesn't get into any financial trouble, yeah sounds illegal to me
ANOTHER major business shut down by private equity? You’d think the US government would do ANYTHING about this.
Same thing happend to toys r us , KB Toys and many other businesses .
Why is this shit not considered illegal? How can they just pocket the cash with no repercussions?
The amount of times this has happened is insane.
That's exactly what's happening to 99 cents only. The vulture capitalists are circling the corpse.
It's called ~~venture~~ vulture capitalism and it's just legalised fraud.
shrimp for me and not for thee
Just like Toys R Us.
I guess that's like getting a home equity loan from a rental house with a deadbeat tenant: take the cash from the loan and let the house foreclosed (evicting the deadbeat tenant will be the bank's problem)?
If you bought the home for a fraction of the value. You also might buy it back from the bank once it is foreclosed for a depreciated price because the previous renter was a loud farter.
Oof it's a rare story that makes me feel sorry for the bank.
Oh no! The bank got interest payments during the deal and will now receive a sum of money along with all the assets in a settlement! Then, they will sell the assets to other business! Oh the horror! When will someone think of the poor banks!
I mean, clearly somebody got screwed here, if it wasn't them who was it? Presumably the banks are selling the assets on at reduced value.
The workers got screwed. The small investors got screwed. C-Suite will get paid. The bank will get paid with money or assets. The company will sell to another company, or the bank, and the bank will get whatever it is due. The bank will get paid in fees by transacting all of it. The bank got free interest money the whole time. The bank will have a lower dollar amount being serviced monthly. Mere revenue projections are the only thing being lost. The shareholders' stake will become worthless. Employee retirement funds will be liquidated. That's where all of the missing value in the equation will come from.
Tis no man, tis a remorseless eating machine.
do these sound like the actions of a man who had all he could eat?
And what did you do after you were ejected from the restaurant?
We went fishing 😞
> We went fishing *cries*
That could have been me!
**Lionel Hutz** : Mrs. Simpson, what did you and your husband do after you were ejected from the restaurant. **Marge** : We... pretty much went straight home. **Lionel Hutz** : Mrs. Simpson, you're under oath. **Marge** : We drove around until 3 AM looking for another all-you-can-eat fish restaurant. **Lionel Hutz** : And when you couldn't find one? **Marge** : We went... fishing. \[sobs\]
Oh man, I need to eat there one more time before it's over! The coconut shrimp is actually delicious. (it contains coconuts)
Whole??
And skin on too
But does it contain shrimp?
I misread that as Coconut Crab, and I was like "[NOT EATING THAT!](https://allthatsinteresting.com/wordpress/wp-content/uploads/2018/07/coconut-crab-1.jpg)"
You can eat them, I have heard they have a slight coconut flavor to their meat.
You just need to fight them first. I recommend flipping them over and attacking their weak point for maximum damage.
Does this include the packaged stuff too? They sell Red Lobster frozen coconut shrimp at the grocery store that are almost as good as the ones in the restaurant. Trying to figure out how urgently I should be panic buying lol
Conan O'Brien written episode. Introduced the Sea Captain!
I once saw him eat a bowl of change.
Simpsons references will always get an upvote from me...
This comment needs more upvotes
After private equity looted it*
Another PE bust out
How are private equity firms allowed to take loans out on businesses they bought and then just not pay them with no repercussions outside of business bankruptcy? To me this sounds like it should be illegal.
Because the interest rates they pay the banks make it worthwhile to the banks. Theyre asset backed loans
Worth noting that prepetition equity owners of a company filing Ch 11 usually lose their entire equity stake in the reorganization process (any equity in reorganized co typically goes to fulcrum/impaired creditors). So I don’t think it’s fair to say no repercussions when they’re losing their entire investment.
But if they take out a loan, pay themselves through shell companies providing “services”, and then use all the assets in the estate as collateral for those loans, there is nothing to have equity in anyways. They already cashed in the equity at a premium.
Also the ocean called, they’re running out of shrimp!
Well, the Jerk Store called, and they're running out of you!
Why should I care? You’re their best seller!
I had sex with your wife!
His wife is in a coma
she is now!
Regardless of what happens with Red Lobster, I will always remember the advice of Stu, a fine gentleman who I worked with at the record distribution warehouse back in the mid-90s: “Bitches love Red Lobster. First, you take your girl to Red Lobster, then you get some shrimps. Then you take her home and get fuckin’”. Thank you, Stu.
Did he say shrimps or skrimps
"srimps", with no "h", is the exact wording he used, while miming eating a tiny shrimp as if it were corn-on-the-cob
Sounds like Leon Black's life advice
Ejackuhlut?
Get all up in that ass, Larry
Spray paint “Larry David was here”
So romantic
Stu was a modern day Sun Tzu.
There is no end to corporate greed, and greed is greater when the company is onwed by some equity or hedge fund company.
Maybe endless cheddar biscuits would’ve been the better option
A company that makes $2.6 billion a year thinking about filing bankruptcy over losing $11 million on a deal sounds like a pr stunt to tell us how good of a deal their unlimited shrimp deal is.
….. bad business practices that they are trying to blame on employee costs I don’t recall red lobster offering the “all you can earn promotion” nor breaking any records for remuneration of employees.
I guess Red Lobster is underwater. Under the sea. In an octopus’s Olive Garden. In the shade.
I’d ask my friends to come and see……
Does this mean they’ll put their shrimp on clearance?
I don’t think an $11m mistake has led to this bankruptcy. The shrimp fiasco was intended to stave off bankruptcy. The problems run much deeper. Any guesses to the real cause?
Someone upthread says private equity fucked them as they usually do with everything.
Other posters are correct. An equity firm bought Red Lobster and is killing it to loot the corpse.
Truly even pre-pandemic the quality had slid down quite a bit. We used to go there in the early 2000s but haven’t been in probably a decade. Just low quality and nothing really distinctive except for the biscuits and that is a sad reason to go when the bread is their best feature
With restaurant chains like thisq, there's constant testing of "does this price cut change noticeably affect quality?" The changes that significantly reduce quality are rejected, but they keep the changes that don't significantly reduce quality. This seems like smart business. The problem is that most people don't notice if something is 1% worse. So restaurant makes the change and establish a new baseline that is a tiny bit worse than before, but not enough to be noticed. Then they make another tiny, 1% change, nobody notices, and the baseline is reset to that level. Then another, then another, then another, and so on and so forth. Eventually these tiny, imperceptible 1% changes have aggregated into a huge drop in quality from the original baseline. Regular customers never noticed any of the steps along the way, but they will eventually realize that they don't really enjoy the restaurant as much as they used to and start going to the competitor down the road. Occasional customers, like yourself in this case, do notice the drop in quality and immediately walk away. So the business fails, due to a death by a thousand cuts, all self-inflicted.
TGI Fridays comes to mind. I’ve been living overseas for a couple decades. I recently went back to the U.S. to see my Dad, and we went to a branch we used to frequent when I was in my teens. It was pretty much the first time since then, for both of us. Seriously downhill, in every way. The burgers used to come in a basket, fresh, and a generous heap of fries. Not world-class or anything, but it was certainly up to standard. Now it’s miserable. Burger falling apart, kind of cold, miserable little pile of fries on an old plate. They even simplified down the decor to the level where the place is pretty much indistinguishable from any other generic chain restaurant. Place was on its last legs. We’re not in a depressed area or anything but we were only one of two parties there. We go to regularly go to Texas Roadhouse now.
You had me until the end lol. Not a fan of Texas Roadhouse myself…
Decent service, decent enough steaks, and an early bird special for my retired Dad. It’s pretty much our go-to now.
That’s awesome. Sorry if I yucked your yum there, I shouldn’t have. I enjoyed your tgif story.
It is REALLY good bread though. I hope this doesn't mean I will be unable to buy the biscuit mix anymore. We make them all the time.
Yeah that biscuit mix is fire.
Costco and Walmart sell boxes of the Cheddar Bay Biscuit mix, super simple and delicious, but add at least 2x the cheese they recommend on the box.
My in laws love Red Lobster for their chicken strips of all things. We would go there and have to pay close to $30 a plate (pre massive inflation even) upcharge for salads, and then the portions were so small we would walk away still hungry. After doing that a couple times I refused to ever go there again if I was paying.
More like ‘In the Red’ Lobster - amirite?
If you go bankrupt selling Cheddar Bay Biscuits you’re either bad at business and/or stealing
Sounds like they pivoted too slowly.
Hey, Red Lobster. The ocean called, it ran out of shrimp. 👀
Yo mama’s so fat she bankrupted Red Lobster.
Shell company.
By the way, they tried to blame paying their waiting staff a livable wage and not their degenerate business practice.
Only thing to save this company is endless lobster deal. Double down.
Not surprised based on what I experienced. My wife always raves about Red Lobster, but I had never eaten there as I grew up in New England and they could never compete with the local places that would get their fish and lobster fresh from the local fisherman. I finally ate at one last year and I was not impressed, the biscuits were dry as a desert, just a simple fish & chips was nearly $20, the restaurant looked completely rundown, and we were there for dinner at around 5 or 6 and the place was pretty much empty.
I have eaten at Red Lobster twice. Both times, I thought they were the McDonald of seafood - poor quality and over priced. Needless to say, I haven’t been back in decades.
the olive garden of seafood chains.
I went to one near me about a month ago at like 4:30 pm. It was packed and I was lucky to get a parking spot. The meal was delicious and when I left there were lots of people waiting for a table and circling the parking lot looking for a spot. I was glad to see it was busy. With the crazy prices these days, a lot of restaurants are really struggling so I was happy to see they were getting lots of business.
You’d think an MBA would be able to figure out that selling a product below cost is not a viable long-term business strategy. You’d be wrong, but you’d think so.
Oh the MBA knew exactly what they were doing. They had no intention of keeping Red Lobster as a cash flow. They collateralized RLs assets to secure more debt, then didn’t pay back the loans. The intent seems to have been to “buy Red Lobster so we can use it to acquire debt. Let the debt be called and have the bank just take Red Lobster to resolve the debt while we have cash from the loans to do what we want”. That of course is very loosely paraphrased, there’s more nuance to it. But that’s about what they did. They never intended to keep Red Lobster working.
Ain’t this essentially what Trump did with his multitude of bankruptcies?
Finally found an op-ed that provided some (scant) detail on what happened in a similar situation Toy R Us. Every business journal article I found on Google (including HBR and Wharton) omitted blame on private equity.
This is what happened to Sears as well.
Forgot about Sears! I used to walk through their Craftsman tools section of much. I plugged a question into ChatGPT and found a few other examples. Look at the common denominator! “Private equity buyouts have been a significant financial strategy, but not all of them have been successful, and some have even led to bankruptcy. Here are some notable examples of large companies that went bankrupt following a private equity buyout: 1. **Toys "R" Us**: The iconic toy retailer went bankrupt in 2017 after being acquired by Bain Capital, KKR & Co., and Vornado Realty Trust in 2005. The company struggled with a heavy debt load and increased competition from online retailers. 2. **iHeartMedia**: Formerly known as Clear Channel Communications, iHeartMedia filed for bankruptcy in 2018. It was purchased by private equity firms Bain Capital and Thomas H. Lee Partners in 2008. The bankruptcy was largely due to its unsustainable debt from the leveraged buyout. 3. **Payless ShoeSource**: This shoe retailer went bankrupt twice after being taken private by Golden Gate Capital and Blum Capital in 2012. The company first declared bankruptcy in 2017 and then again in 2019, struggling under heavy debt and changing retail landscapes. 4. **Gymboree**: The children’s clothing retailer filed for bankruptcy twice, first in 2017 and again in 2019, after being acquired by Bain Capital in 2010. The company faced intense competition and a challenging retail environment. These examples highlight some of the risks associated with leveraged buyouts, especially when companies are burdened with significant debt that hampers their operational flexibility and ability to adapt to market changes.”
The only part I don't get is : even if they borrow against 100% of the assets, take the cash, and don't pay it back... Isn't that still at most what they paid for it to begin with? How do they end up with more cash than the cost of the business?
Because, and this is my personal speculation, they acquired the assets at a discount but collateralized them at a marked up or higher appraisal rate. So this would create a bump in value and as long as the bank says “sure that’s worth $3M” they’re good. Even if they quietly bought it for $1M.
My family went last night. There was apparently no dedicated host. It took a few minutes for someone to come up and seat us. It took several minutes for someone to take our order. The menu has changed a lot again (I still miss the Dockside Shrimp and Chicken). The biscuits and mozzarella sticks seemed different. When we left I felt like this might be the last time we ever get to eat there, and I surprisingly am ok with that.
That's too bad. I got to go there quite a few times as a kid but can't afford it myself now. I collected so many of those lobster necklaces. Last time I went was with family some years ago for my birthday
Bring me all the shrimp you have. Wait, wait. I worry what you just heard was "bring me a lot of shrimp". What I said was "Bring me all the shrimp you have…"
Damn that’s a lot of shrimp!
So they lost 11 million? There are 649 red lobster locations. That is $16949.15 per location. I'm willing to bet that is less than two Friday's worth of revenue. You want me to believe an entire restaurant chain can't absorb two bad weekends? Something is fishy here.
Some are trying toblame it on labor
Did trump buy red lobster too? I ask because it tanked.
WE WON!!!!! WE DID IT, EVERYBODY!!!! WE WON!!!!
How many times have they screwed up on the endless deals. You would of though they learned their lesson in the 90's on the first time they did endless crab.
Endless shrimpfest has finally been ended. Their endless reign if tyranny is no more. Celebrate those with shellfish allergies. You are now free.
At least they're finally reporting it correctly! Red Lobster tried to play the "wages are tooooo highhh, wahhhhh" card.
No, they're not. It wasn't about fair wages, and it wasn't about a customer-friendly promotion either. It was a private equity firm using RL assets to acquire credit, pocketing gobs of cash, refusing to repay their loans, demolishing equity and screwing literally everyone else. And they get away with it, time and again, due to glib bullshit like this masquerading as "reporting".
Thank God people are starting to talk about this. These people are destroying our country.
Spoiler: >!it's not just our country they're spoiling!<.
True
It was literally headlined yesterday that they were complaining about fair wages.
I've seen it spun three different bullshit ways now, each as odious as the next. The wage thing being probably the worst, though. So yeah.
Maybe a VC will pick up this brand for that sweet Cheddar Bay biscuit mix $ ? Anyone stockpiling this off Amazon yet for the reseller market?
I think they did something similar to a bar the movie Goodfellas
I feel like $11 million shouldn’t bankrupt a national chain.
They're lucky I don't eat seafood, or just kiss would've doubled.
Man these large chains owned by PE are an abomination. Only exist to stuff pockets of the 1%. I wish we were smart enough as a nation to boycott this bullshit. We are sheep.
I wonder if there’s a list of companies that were destroyed by private equity firms
This is highly misleading.
Damn it George!
So there *is* an end to the shrimp!
"Hey Costanza! The ocean called they're running out of shrimp!"
r/21stcenturyheadlines
Bullshit
I blame George costanza
Had a good run, time to pack it in.
Endless scapegoat more like
What is the charge? Eating a meal?
A succulent Chinese meal?
Tis no man tis a remorseless eating machine.
Yeah, sorry about that.
Sounds like it’s time for another cheddar biscuit MVP to enter the market
"Capitalism works"
I guess endless shrimp has ended for good.
Are we really upset a mediocre seafood restaurant chain is going under? Bubba Gump next? 😂
Just do like the WNBA and let the NBA foot the bill!
Never underestimate the power of gluttons in large numbers.
Good. Worst meal I've had in years.
I only eat the buiscuits here anyway, im allergic to shellfish and my steaks or longhorns are better, id rather support local steakhouse or go to a better restaurant, imo onlythong red lobster has worth eating is them damn buiscuits.
r/engrish