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magicturtle · 1 year ago

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This is happening all over, pretty sure this is what happened to both KayBee and Toys R’ Us. And now there are no toy stores.

Red Lobster was killed by private equity, not Endless Shrimp

For the rest of May, my bestselling solarpunk utopian novel THE LOST CAUSE (2023) is available as a $2.99, DRM-free ebook!

A decade ago, a hedge fund had an improbable viral comedy hit: a 294-page slide deck explaining why Olive Garden was going out of business, blaming the failure on too many breadsticks and insufficiently salted pasta-water:

https://www.sec.gov/Archives/edgar/data/940944/000092189514002031/ex991dfan14a06297125_091114.pdf

Everyone loved this story. As David Dayen wrote for Salon, it let readers "mock that silly chain restaurant they remember from their childhoods in the suburbs" and laugh at "the silly hedge fund that took the time to write the world’s worst review":

https://www.salon.com/2014/09/17/the_real_olive_garden_scandal_why_greedy_hedge_funders_suddenly_care_so_much_about_breadsticks/

But – as Dayen wrote at the time, the hedge fund that produced that slide deck, Starboard Value, was not motivated by dissatisfaction with bread-sticks. They were "activist investors" (finspeak for "rapacious assholes") with a giant stake in Darden Restaurants, Olive Garden's parent company. They wanted Darden to liquidate all of Olive Garden's real-estate holdings and declare a one-off dividend that would net investors a billion dollars, while literally yanking the floor out from beneath Olive Garden, converting it from owner to tenant, subject to rent-shocks and other nasty surprises.

They wanted to asset-strip the company, in other words ("asset strip" is what they call it in hedge-fund land; the mafia calls it a "bust-out," famous to anyone who watched the twenty-third episode of The Sopranos):

https://en.wikipedia.org/wiki/Bust_Out

Starboard didn't have enough money to force the sale, but they had recently engineered the CEO's ouster. The giant slide-deck making fun of Olive Garden's food was just a PR campaign to help it sell the bust-out by creating a narrative that they were being activists* to save this badly managed disaster of a restaurant chain.

*assholes

Starboard was bent on eviscerating Darden like a couple of entrail-maddened dogs in an elk carcass:

https://web.archive.org/web/20051220005944/http://alumni.media.mit.edu/~solan/dogsinelk/

They had forced Darden to sell off another of its holdings, Red Lobster, to a hedge-fund called Golden Gate Capital. Golden Gate flogged all of Red Lobster's real estate holdings for $2.1 billion the same day, then pissed it all away on dividends to its shareholders, including Starboard. The new landlords, a Real Estate Investment Trust, proceeded to charge so much for rent on those buildings Red Lobster just flogged that the company's net earnings immediately dropped by half.

Dayen ends his piece with these prophetic words:

Olive Garden and Red Lobster may not be destinations for hipster Internet journalists, and they have seen revenue declines amid stagnant middle-class wages and increased competition. But they are still profitable businesses. Thousands of Americans work there. Why should they be bled dry by predatory investors in the name of “shareholder value”? What of the value of worker productivity instead of the financial engineers?

Flash forward a decade. Today, Dayen is editor-in-chief of The American Prospect, one of the best sources of news about private equity looting in the world. Writing for the Prospect, Luke Goldstein picks up Dayen's story, ten years on:

https://prospect.org/economy/2024-05-22-raiding-red-lobster/

It's not pretty. Ten years of being bled out on rents and flipped from one hedge fund to another has killed Red Lobster. It just shuttered 50 restaurants and declared Chapter 11 bankruptcy. Ten years hasn't changed much; the same kind of snark that was deployed at the news of Olive Garden's imminent demise is now being hurled at Red Lobster.

Instead of dunking on free bread-sticks, Red Lobster's grave-dancers are jeering at "Endless Shrimp," a promotional deal that works exactly how it sounds like it would work. Endless Shrimp cost the chain $11m.

Which raises a question: why did Red Lobster make this money-losing offer? Are they just good-hearted slobs? Can't they do math?

Or, you know, was it another hedge-fund, bust-out scam?

Here's a hint. The supplier who provided Red Lobster with all that shrimp is Thai Union. Thai Union also owns Red Lobster. They bought the chain from Golden Gate Capital, last seen in 2014, holding a flash-sale on all of Red Lobster's buildings, pocketing billions, and cutting Red Lobster's earnings in half.

Red Lobster rose to success – 700 restaurants nationwide at its peak – by combining no-frills dining with powerful buying power, which it used to force discounts from seafood suppliers. In response, the seafood industry consolidated through a wave of mergers, turning into a cozy cartel that could resist the buyer power of Red Lobster and other major customers.

This was facilitated by conservation efforts that limited the total volume of biomass that fishers were allowed to extract, and allocated quotas to existing companies and individual fishermen. The costs of complying with this "catch management" system were high, punishingly so for small independents, bearably so for large conglomerates.

Competition from overseas fisheries drove consolidation further, as countries in the global south were blocked from implementing their own conservation efforts. US fisheries merged further, seeking economies of scale that would let them compete, largely by shafting fishermen and other suppliers. Today's Alaskan crab fishery is dominated by a four-company cartel; in the Pacific Northwest, most fish goes through a single intermediary, Pacific Seafood.

These dominant actors entered into illegal collusive arrangements with one another to rig their markets and further immiserate their suppliers, who filed antitrust suits accusing the companies of operating a monopsony (a market with a powerful buyer, akin to a monopoly, which is a market with a powerful seller):

https://www.classaction.org/news/pacific-seafood-under-fire-for-allegedly-fixing-prices-paid-to-dungeness-crabbers-in-pacific-northwest

Golden Gate bought Red Lobster in the midst of these fish wars, promising to right its ship. As Goldstein points out, that's the same promise they made when they bought Payless shoes, just before they destroyed the company and flogged it off to Alden Capital, the hedge fund that bought and destroyed dozens of America's most beloved newspapers:

https://pluralistic.net/2021/10/16/sociopathic-monsters/#all-the-news-thats-fit-to-print

Under Golden Gate's management, Red Lobster saw its staffing levels slashed, so diners endured longer wait times to be seated and served. Then, in 2020, they sold the company to Thai Union, the company's largest supplier (a transaction Goldstein likens to a Walmart buyout of Procter and Gamble).

Thai Union continued to bleed Red Lobster, imposing more cuts and loading it up with more debts financed by yet another private equity giant, Fortress Investment Group. That brings us to today, with Thai Union having moved a gigantic amount of its own product through a failing, debt-loaded subsidiary, even as it lobbies for deregulation of American fisheries, which would let it and its lobbying partners drain American waters of the last of its depleted fish stocks.

Dayen's 2020 must-read book Monopolized describes the way that monopolies proliferate, using the US health care industry as a case-study:

https://pluralistic.net/2021/01/29/fractal-bullshit/#dayenu

After deregulation allowed the pharma sector to consolidate, it acquired pricing power of hospitals, who found themselves gouged to the edge of bankruptcy on drug prices. Hospitals then merged into regional monopolies, which allowed them to resist pharma pricing power – and gouge health insurance companies, who saw the price of routine care explode. So the insurance companies gobbled each other up, too, leaving most of us with two or fewer choices for health insurance – even as insurance prices skyrocketed, and our benefits shrank.

Today, Americans pay more for worse healthcare, which is delivered by health workers who get paid less and work under worse conditions. That's because, lacking a regulator to consolidate patients' interests, and strong unions to consolidate workers' interests, patients and workers are easy pickings for those consolidated links in the health supply-chain.

That's a pretty good model for understanding what's happened to Red Lobster: monopoly power and monopsony power begat more monopolies and monoposonies in the supply chain. Everything that hasn't consolidated is defenseless: diners, restaurant workers, fishermen, and the environment. We're all fucked.

Decent, no-frills family restaurant are good. Great, even. I'm not the world's greatest fan of chain restaurants, but I'm also comfortably middle-class and not struggling to afford to give my family a nice night out at a place with good food, friendly staff and reasonable prices. These places are easy pickings for looters because the people who patronize them have little power in our society – and because those of us with more power are easily tricked into sneering at these places' failures as a kind of comeuppance that's all that's due to tacky joints that serve the working class.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/05/23/spineless/#invertebrates

#private equity #red lobster #olive garden #endless shrimp #class warfare #looters #kb toys #toys r us

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hestzhyen · 6 months ago

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Chapter 62 Chuunibyou Posting

...Hello dear void. Rumours of my death are only slightly exaggerated. I'm back from the hospital and I'm ready to chill with this chapter over the break. Taking it easy on myself and not doing the editor's notes this week. This will be short in general since I'm still in recovery, actually- sorry about that. Gonna rest up and get ready for the next chapter that drops on January 3rd.

Chihiro...?

Something something fresh hatred

I got a kick out of Chihiro from Wish, I really did. Goes to show how ridiculous his edginess in the first few chapters was before Char softened him up for the better. Everyone give Char a pat on the head for doing a good job, okay?

Iori's impression of Chihiro as a murderer is something I'll allow myself a little satisfaction for since I called him having a trashed public image thanks to his interruption of the kabuki play back in chapter 52. He's going to have a harder time completing his mission thanks to this in some way- betting on the Kamunabi using it against him somehow, but the Hishaku easily could too. It's anyone's guess on how exactly this will come to bite him in the ass but it will happen.

Worst of all, though, he's got kids imitating him like he's some MC out of an edgy wish-fulfillment LN. What a way to trivialize what someone's been through (not that Discount Chihiro knows, of course). Chihiro's image is already out of his control in some pretty damaging ways.

But She Was, in Fact, the Chosen One

Thank you for your helpful narration about the general public's reaction to Owl darkening the skies, Iori.

We don't know the kanji for Iori's name yet since it's only been spelled with Katakana so far (イヲ��), but it's clear as day that she's inherited some of Samura's reckless bravery and quick assessment abilities.

I like that she's very much an ordinary girl being thrust into a situation that's way over her head. Her memories of her dad are locked away so she's just an average highschooler being plucked out of the ordinary and tossed into the extraordinary like Discount Chihiro wished he was until Kuguri held a sword to his throat.

The seal is breaking through Iori's own will to know what the hell is going on so I wonder if the Masumi will re-do it. I think not, since Minimura had that bit about Samura underestimating kids near the end, so she'll probably get a few panels to come to terms with her real identity while Chihiro does some cool moves in the classroom to fend off the Hishaku.

I have a feeling that Iori's going to be sticking around for a while. She's getting a lot of screen time and set up for development if she's just meant to be an arc character or damsel in distress. Won't get too attached, obviously, but I kinda like her already based on the little glimpse we've seen. Looking forward to learning more about her personality and seeing what's in store for her beyond this arc.

Silly Murderers

There's no fixing this kind of crazy.

Place your bets: blood-based identification sorcery, or just plan nuts? We'll find out sooner or later.

This is gonna be another inconclusive fight since we need to see Kuguri meet the Bearer that's bonded to the blade he's pining for and learn Tomboy's name.

Small Complaint

Just a note about a small difference I'm petty enough to be annoyed about in the EN version:

The "no"s stop pretty short in English, but in Japanese...

...they run on into Minimura's speech bubble to show her racing thoughts getting cut short.

Alright dear void. Let's enjoy lobotomybachi week and let the brainrot flow during the break. Also, consider getting help before you shut down and enter a tailspin- this is a very difficult time of year for some of us. You're not alone if so. Reach out for help if you need it.

#kagurabachi #The worst time of year has passed and I am ready to kagura my bachi once again #Waiting (im)patiently for Hakuri's return #Seeing him and Chihiro as plush toys on the WSJ cover was very cute though #kb ch 62

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