Red Lobster files for bankruptcy, restaurants will stay open
Red Lobster files for bankruptcy, restaurants will stay open
The largest seafood chain in the U.S. has been unable to regain its financial footing following the pandemic.
Hedge fund gobbled for raping capital.
Forced sale by Darden by activist (hedge) investors.
New hedge fund owned RL company immediately sells all its property (land & buildings) to separate property company owned by hedge funds.
Big dividends for hedge funds! Billions sucked out of company into shareholder pockets.
New RL then leases all properties, incurring higher costs (now paying rent!)
Pandemic.
5 year leases all up! Property company raises rent!
RL can't afford higher rent on all locations, no longer has capital to borrow against (all sold 5 years ago), and goes bankrupt.
MBAs are destroying the world.
How did we ever get to the point where an MBA is a highly respected degree? Those skills have no utility on their own and yet we allow essentially uneducated people to run basically all businesses. I want to see engineers run companies that make things, chefs run restaurants, and doctors run hospitals, not these idiots whose only skills involve making graphs and excel sheets.
Again, it comes back to Reagan.
"Deregulation" was a green light for every greedhead to go all out. Small local banks suddenly became giant investment machines.
Look up the adventures of Neil Bush, son and brother to Presidents.
Sounds great expect that most small business owners do a shit job of running the operations of a business. At best they stumble through it. It’s just not their passion to deal with legalities, OSHA, taxes, payroll, accounts payable, accounts receivable, etc.
The problem with MBAs is that they have little or no practical experience with the business they’re running (seasonality, how to motivate employees, etc). There are some good MBAs out there but there are so many more poor ones. They aren’t looking at the human factor at all. It’s a space that the universities don’t teach for. Everything is KPI related instead. That’s their ultimate downfall.
Same way you need a bachelor's for an entry level job.
Not surprised, they've gone downhill and are way too expensive, but im sure they have bankruptcy plan to get back to the way they were!
agreed to sell its business to a new entity wholly owned and controlled by its lenders, a so-called stalking horse arrangement.
Oh. Nvm, time to write them off for good...
I think people outside of flyover states are tired of these old corporate chain restaurants with terrible food and high prices.
They were restaurants that were entirely propped up by advertising. Applebee's food never looked as good in person as it did on TV, and definitely didn't taste that great.
Once Millennials started streaming video content and blocking ads there was no way they could dupe people into eating their terrible food.
I go out to eat often and haven't been to a Red Lobster in over 20 years. When I drive by them they're basically invisible to me
So apparently there's foul play.
Last summer, under Thai Union, Red Lobster turned $20 endless shrimp into a permanent item on the menu for the first time, instead of its traditional limited-time offer deal. The change cost the company $11 million and cut into Thai Union profit. In its bankruptcy filing, Red Lobster said it is investigating the circumstances of that promotion, which the company’s management opposed.
And then later...
But the company in its bankruptcy filing blamed Thai Union for the losses. Noting that under the guise of a “quality review,” Red Lobster eliminated two of its breaded shrimp suppliers, leaving Thai Union with an exclusive deal. That led to higher costs for the restaurant chain, and did not comply with the company’s typical decision-making process for picking suppliers based on projected demand.
Sounds like Red Lobster got juiced. I've never eaten there, but this is some evil stuff.
I'm sick of seeing these types of chains anyways in every small town and big city. We generally make it a point to only ever go to local places if we are eating out, which we rarely do anyways. Eating out is like...$30 /person. $30/groceries per person goes a lot longer and usually tastes way better, imo.
He highlighted the fact that dining costs have outweighed groceries, and that 50% of U.S. states had increased their minimum wages, further reducing Red Lobster's profit margin.
If you can't survive unless you're allowed to pay starvation level wages then the time for your business has come and gone.
The employees may have been payed starvation-level wages, but dollars to donuts the C-suite was well compensated.
Reading that quote in isolation from the rest of the article sounds like, "and this didn't help the situation", not "if it hands been for these higher wages, we would have been totally fine."
Let's face it, if business is hard, any increased expense is going to hurt (and is going to be mentioned in your bankruptcy filing), even if it's insignificant in isolation.
The shrimp must flow!