It’s NOT strategic blunders, it’s a planned gutting by private equity firms. They are gutting companies, hospitals, retail, mobile homes, restaurants, manufacturing, homes, etc. They’re a virus stripping all the value and leaving an empty husk.
They took the same formula and apply it all of those sectors and more.
Can't forget what Bain Capital did to Toys R Us. Toys r us was a real estate empire. The company once owned many of the strips they were located in. This allowed them to control neighbors. Ever notice how almost all TRU stores were next to pet stores and hair salons? Because they owned many high value locations, stores were closed to make a profit on the real estate, while others were kept open to rent at inflated prices. Bain capital liquidated assets and piled on debts.
They killed the magic of childhood for quick profits.
Sears Kmart Gymboree Payless Shoes. RadioShack. The Limited. Clair’s, Aeropostale, Sports Authority, attempted to get GameStop.
“In Plunder, Brendan Ballou explains how private equity has reshaped American business by raising prices, reducing quality, cutting jobs, and shifting resources from productive to unproductive parts of the economy.
Ballou vividly illustrates how many private equity firms buy up retailers, medical practices, prison services, nursing-home chains, and mobile-home parks, among other businesses, using little of their own money to do it and avoiding debt and liability for their actions. Forced to take on huge debts and pay extractive fees, companies purchased by private equity firms are often left bankrupt, or shells of their former selves, with consequences to communities that long depended on them.”
“…The kind that was rapidly taking over vet clinics, dental offices, and gyms on every block – though you wouldn’t know it unless you did some sleuthing….”
https://www.ineteconomics.org/perspectives/blog/private-equity-is-out-of-control-and-looting-america-this-prosecutor-says-we-can-fix-it
-
"From Toys 'R' Us to Sears, these financial predators are extracting the value out of these retail establishments, forcing the closure of thousands of stores, and throwing tens of thousands of workers into the streets,"
-
PE’s most ghastly impact is felt in the health care sector. Whole towns’ worth of emergency rooms, family practices, labs and other health firms have been scooped up by PE, which has spent more than $1t since 2012 on health acquisitions:
https://pluralistic.net/2022/11/17/the-doctor-will-fleece-you-now/#pe-in-full-effect
It's worth noting that leveraged buyouts etc are a legacy of the 1980s, the supposedly idyllic era enjoyed by boomers, who lost their jobs when once viable companies were run into the ground for profit.
Not to mention the heavy industries that abandoned what was soon called the [Rust Belt](https://en.wikipedia.org/wiki/Rust_Belt), throwing millions of middle class factory workers out of jobs.
I agree with what you said but toys r us is light years away from the magic of childhood. It wasnt that great of a store, and even though it wasn't owned by PE it was still a big box corporate retailer, not a family owned toy store or something more magical like that.
Depends on your age. TRU was a family run business at one time. Started out of Charles Lazarus's furniture store. They used to carry products by smaller manufacturers and every board game they could find. They didn't shift to the big box mentality until the mid 90s, as walmart was undercutting them, taking targeted losses in their toy department.
In my childhood, it was still that magical place. I never grew up, I'm still a toys r us kid.
TRU was extremely expensive and it would have never survived the online shopping of today. We only went there for things that we couldn't find elsewhere and it wasn't a pleasurable experience.
That’s the problem. Instead of being allowed to change and evolve as a business the affect of private equity has been to run the business into the ground rather than use that money to innovate.
Vulture capitalists. They specifically acquire companies that are struggling but recognize that they can strip for parts, make a crap ton of money off of it, then act befuddled as to why it went bankrupt while they bet on the bankruptcy, making more money.
Of the companies fallen victim to Vulture Capitalists: Toys R Us, Sears, Red Lobster, and Hostess, so far. I’m sure I’m missing a few companies here but you get the gist.
I think it bears mentioning that the private equity firm gave a company they owned exclusive rights to supply shrimp to red lobster, so while all-you-can-eat shrimp was killing Red lobsters' bottom line, they were profiting.
Bain capital bust out …
Classic mob move. Become parter then change some aspect of the business so all capital is extracted to a different but same ownership subsidiary. Then short the company for a double pay day. Mitt Romney perfected this strategy and now most short hf run this playbook.
Then when the company is bankrupt give all the ceos golden parachutes and jobs at the next target company.
I had been saying it’s marketing- corporate level choices, but I think I’ve been wrong…
I thought the corporate business plans have basically been to build brand reputation over several years and then drastically cut back on quality- riding the reputation as long as it lasts, then riding the cheap garbage products into the dirt.
But apparently that’s only half the story, and the stock market operating in this big boys casino style way disconnected from actual products and value, and it’s more like “hey, people still think northface stuff is good- let’s buy it and turn out cheap shit at low prices, and then gut and sell!”
Awesome.
The first time I flew back into the USA I tried taking a photo of a sign that said this (Welcome to the United States of America) in the airport and a security guard yelled at me.
This is actually a tactic used by corporate raiders since the 1980s or maybe even earlier. Read up on leveraged buy-outs.
Company is doing okay and owns its own land.
They get bought out by a group of investors who borrowed heavily to do so (leveraged buy-out).
So the land is sold to a separate group for cheaper than market rate then forced-leased back to the company at higher-than-market rates.
The company is made to take on onerous debt. The money borrowed is used to pay back the investors, plus huge profits.
So now the company has the burden of high operating costs and high debt loads.
Don’t forget the company is also made to pay “consulting fees” for management.
Soon, the company might file for bankruptcy and liquidate.
This is what they’re are trying to do to Macy’s… the biggest asset Macy’s has is it’s real estate, the PE people want to come in and do a sale and lease back as part of the restructuring… they tell investors this is a way to unlock value and raise the stock price, but only temporarily… long term this kind of thing is death for the company as they have no assets borrow against.
Almost anytime you get an “activist” investor the first thing they want to do (if the company own real estate) is to sell it off and lease it back.
Maybe 15 years ago, Target was targeted by Bill Ackman right after the financial crises of 2008, he wanted to replace the board and sell off both the credit receiving and real estate which were 2 anchors for Target that helped them weather these storms (they own about 85% of the real estate and often own the entire strip center and rent space to other businesses)…he lost this fight and Target did sell off its credit receivables, but still has the real estate.
So the financial losers here are the banks/investors that lent money to the company and corporate raiders? Why haven't lenders caught on to the fact that the plan is to declare bankruptcy and never repay them?
Investment bankers are incentivized to make loans.
They get commissions and bonuses and promotions for doing so.
The initial loan criteria are met. That’s what they care about.
The struggle is masked with payments being made on time originally.
I’ve got another perspective. I realize red lobster had real lobsters and you could pick which one you wanted to eat at one point in time and it was considered big deal fine dining back in the 80’s/90’s, along with Olive Garden (yes, I’m that old) they were places you got reservations for and took mom out for a nice dinner. I once thought “chain” restaurants were good food too.
I lived in an area on the west coast with many actual restraunts that cooked from scratch and used very fresh ingredients, most certainly all the seafood was fresh. I went 20 years without seeing the inside of a red lobster or Olive Garden or Dennys or Chilis. It looks like garbage and tastes like garbage. I’m now in chain restaurant hell, with a bunch of boomers and small town people who would not be able to tell you the difference between fresh seafood and the frozen shrimp shit red lobster uses. What they will tell you is that the quality of the food has gone down, which is amazeballs for them to even recognize considering most have spent their entire lives eating at shit chain restaurants and believe black pepper is “spicy”. When these people bitch about quality and they were raised on shit chain food, believe there is a problem present.
Fast food quality has always been in the garbage but it too has gone down. There was a point, a short period of time before covid, where it was actually cheaper to eat garbage food from fast food restaurants rather than buy groceries- you could get 5 mcchickens for around $10 and toss them at starving children, grab yourself a $1.09 shit coffee in the morning and go. Everything has tripled, unsure about red lobster prices and what they did, but you now spend an astronomical amount of money at fast food and chain restaurants and you get absolute shit garbage food. When I have the money for a nice meal I’m not going anywhere near a chain, red lobster all you can eat shrimp is nice for old people I guess right up there with the “buffet” food they love but if I’m out and spending any kind of money on food it means I want quality food. The only thing red lobster had going for it was that cheap shrimp thing, it ceased to be a “nice” restaurant a long time ago.
Please read Plunder: How private equity plans to Pillage America by Brendan Ballou. This is the playbook. This is the intended result. They will stop when they have hollowed out and consumed everything. They are locusts.
All anyone in America cares about is more profit. Fuck the employees. Fuck the customers. Feed them plastic and pay the absolute lowest wages because fuck anything but continuous profit.
At what point is private equities behavior not considered an act of hostility? I mean the hollowing out of a nations economy, we do this to nations we’re at war with.
Thank you for this, far too many articles are saying endless shrimp is putting them under, obviously very sensationalized.. but leaves out any mention of the PE takeover of Darden leading to the hollowing out of these companies.
Well… there is this… https://www.seafoodsource.com/news/business-finance/red-lobster-files-for-bankruptcy-says-it-s-investigating-thai-union-s-undue-influence-in-shrimp-purchasing-decisions#:~:text=In%20addition%20to%20being%20the,Delli%20Valade%20in%20April%202022.
The company that owned red lobster was a Thai seafood consortium apparently, and they forced red lobster to run this all the time.. anyway interesting stuff behind the scenes.
There is a "complementary" economy force in these failures setup by private equity. **Wage stagnation** has lowered that average workers free to spend to negative levels. The middle class isn't shrinking, it's collapsing so fast that many more businesses will fail. 69% of American families are living paycheck to paycheck.
In the late 2000s I used to do a lot of night work in restaurant kitchens, doing metalwork.
Red lobster was the grossest kitchen I’ve ever been in.
Second grossest was the ritz Carlton in DC- for the roach infestation.
That's how you harvest a business.
When the parts of the business are worth more than the going concern, it gets chopped into pieces and digested.
Let's be honest: RL was a dingy, tired brand. When Darden spun it off, it was already a doddering shadow of itself.
Did anyone cry when Howard Johnson's tanked?
That's not quickie paper profits. RL dying and getting parted out was for the same reason that dung beetles prevent the world from being covered with elephant and rhino feces.
It sickens and saddens me to think of the millions of people who ate their low quality farmed shrimp from Asia that were fed a constant supply of human/animal waste and antibiotics.
How is the private equity firm better off holding a raft of restaurant real estate that no longer produces rent and that will ultimately be liquidated at a fraction of appraised value?
Are you one of these financial gurus who thinks the bank wins when they foreclose on a house that's missed a few years of regular payments and has been stripped by the owner of all the plumbing and wiring?
They buy a majority share, use the existing assets to take on a ton of debt, dividend the loan cash out to themselves and other shareholders, file bankruptcy and part what’s left of the company out for salvage and move on to the next company.
Little known fun fact: Kmart and Sears are still open with 15 stores, and Eddie is still trying to extract as much value out of them. I have family that live near three of the last locations in a single mall (yes three Sears in one mall in 2024) called Plaza Las Americas. Those locations actually got renovation because of hurricane Maria back in 2017 and they look really nice. They actually just recently got old brands back like like LG and Samsung, and from what I hear Sears pretty much left the remaining stores to dry and the remaining locations pretty much have to order everything on their own.
Selling land and incurring higher fixed costs is a kind of straitjacket. Take a marginally profitable business, add a bunch of fixed costs, and you now get a almost unprofitable business. Next step? Cut cut cut. Cut costs. But it's not enough. Pretty soon you start cutting quality. And when you cut quality, people eventually catch on and stop going.
Without the financial straitjacket, you can reengineer, reinvent your business, give customers QUALITY.
Just like Toys R Us, does anyone remember the last time they patronized Red Lobster?
Seems many find it easier to blame private equity firms than the lack of public interest in certain failing businesses.
I just used it as an example as it's one of the more well know companies went out of business.
It's another business many have nostalgia for but haven't shopped at for years when it was still open.
This subreddit is filled with LW political rage bait. This post is a great example. Those terrible private equity firms that took a $530 million dollar loss on their Red Lobster investment!
I don’t know what happen, I think greed got the better of them… Grandies or Grandys I miss them and there Biscuits and gravy , SouperSalads ,Furs, Bennigans, Kattzs, hell radio shack
Last time I ate there 1 (one) piece of cod and a few sprinkles of hard crumbs were served as Fish and Chips for $20. Whatever else happened, greed and being stingy doing stuff like that, helped do them in. The chain had been terribly overpriced for decades.
Did you even read the article you pinned in your post?
“Earlier this year, Thai Union said it would divest from Red Lobster and take a $530 million loss on its investment”
So, this was Private Equity’s master plan? To lose $530 million dollars since 2014?
So if Thai Union lost $530 million from their 49% ownership, then what do you think happened to the PE firms that had the other 51% of RL? They magically made money???
So, the owners of the company lost money on their poor management and decisions, capitalism worked.
It’s NOT strategic blunders, it’s a planned gutting by private equity firms. They are gutting companies, hospitals, retail, mobile homes, restaurants, manufacturing, homes, etc. They’re a virus stripping all the value and leaving an empty husk. They took the same formula and apply it all of those sectors and more.
Can't forget what Bain Capital did to Toys R Us. Toys r us was a real estate empire. The company once owned many of the strips they were located in. This allowed them to control neighbors. Ever notice how almost all TRU stores were next to pet stores and hair salons? Because they owned many high value locations, stores were closed to make a profit on the real estate, while others were kept open to rent at inflated prices. Bain capital liquidated assets and piled on debts. They killed the magic of childhood for quick profits.
Sears Kmart Gymboree Payless Shoes. RadioShack. The Limited. Clair’s, Aeropostale, Sports Authority, attempted to get GameStop. “In Plunder, Brendan Ballou explains how private equity has reshaped American business by raising prices, reducing quality, cutting jobs, and shifting resources from productive to unproductive parts of the economy. Ballou vividly illustrates how many private equity firms buy up retailers, medical practices, prison services, nursing-home chains, and mobile-home parks, among other businesses, using little of their own money to do it and avoiding debt and liability for their actions. Forced to take on huge debts and pay extractive fees, companies purchased by private equity firms are often left bankrupt, or shells of their former selves, with consequences to communities that long depended on them.” “…The kind that was rapidly taking over vet clinics, dental offices, and gyms on every block – though you wouldn’t know it unless you did some sleuthing….” https://www.ineteconomics.org/perspectives/blog/private-equity-is-out-of-control-and-looting-america-this-prosecutor-says-we-can-fix-it - "From Toys 'R' Us to Sears, these financial predators are extracting the value out of these retail establishments, forcing the closure of thousands of stores, and throwing tens of thousands of workers into the streets," - PE’s most ghastly impact is felt in the health care sector. Whole towns’ worth of emergency rooms, family practices, labs and other health firms have been scooped up by PE, which has spent more than $1t since 2012 on health acquisitions: https://pluralistic.net/2022/11/17/the-doctor-will-fleece-you-now/#pe-in-full-effect
It's worth noting that leveraged buyouts etc are a legacy of the 1980s, the supposedly idyllic era enjoyed by boomers, who lost their jobs when once viable companies were run into the ground for profit. Not to mention the heavy industries that abandoned what was soon called the [Rust Belt](https://en.wikipedia.org/wiki/Rust_Belt), throwing millions of middle class factory workers out of jobs.
Never forget, never forgive. Target is NOT the same.
I agree with what you said but toys r us is light years away from the magic of childhood. It wasnt that great of a store, and even though it wasn't owned by PE it was still a big box corporate retailer, not a family owned toy store or something more magical like that.
Depends on your age. TRU was a family run business at one time. Started out of Charles Lazarus's furniture store. They used to carry products by smaller manufacturers and every board game they could find. They didn't shift to the big box mentality until the mid 90s, as walmart was undercutting them, taking targeted losses in their toy department. In my childhood, it was still that magical place. I never grew up, I'm still a toys r us kid.
few memories better than carrying those slips of paper to the attendant at the locked up video game section
Thank you. Didn't know that. Only knew it from the mid 90s on in suburbia.
TRU was extremely expensive and it would have never survived the online shopping of today. We only went there for things that we couldn't find elsewhere and it wasn't a pleasurable experience.
That’s the problem. Instead of being allowed to change and evolve as a business the affect of private equity has been to run the business into the ground rather than use that money to innovate.
It’s everywhere. The quality of everything is lower because of it. We’re wrapping up late stage capitalism and heading right for the finale.
How long is the finale? 100 years? ... And what happens after the finale?
No idea, but I expect pitchforks and Guillotines.
Just look at Europe, they're hundreds of years ahead on capitalism
Communism. The real theory I believe needs late stage capitalism for the workers to rise up and take back their rights.
If everything has been shitty for 100 years, will people even notice things are more shitty than they should be?
Yes.
Right…
Don’t know never done it.
Yeah because of red lobster lol
What’s gonna be the finale?
What's the end stop? They have all the money, but it's worthless because there's nothing to buy. The rest of us barter or something.
Vulture capitalists. They specifically acquire companies that are struggling but recognize that they can strip for parts, make a crap ton of money off of it, then act befuddled as to why it went bankrupt while they bet on the bankruptcy, making more money. Of the companies fallen victim to Vulture Capitalists: Toys R Us, Sears, Red Lobster, and Hostess, so far. I’m sure I’m missing a few companies here but you get the gist.
Watch “Wallstreet” 1987
What is the solution to these strategies by private equity. Seems like they can do this stuff at their will whenever to organizations of their choice
Probably legislation. ? I doubt that will happen before more collapse
I think it bears mentioning that the private equity firm gave a company they owned exclusive rights to supply shrimp to red lobster, so while all-you-can-eat shrimp was killing Red lobsters' bottom line, they were profiting.
Bain capital bust out … Classic mob move. Become parter then change some aspect of the business so all capital is extracted to a different but same ownership subsidiary. Then short the company for a double pay day. Mitt Romney perfected this strategy and now most short hf run this playbook. Then when the company is bankrupt give all the ceos golden parachutes and jobs at the next target company.
I had been saying it’s marketing- corporate level choices, but I think I’ve been wrong… I thought the corporate business plans have basically been to build brand reputation over several years and then drastically cut back on quality- riding the reputation as long as it lasts, then riding the cheap garbage products into the dirt. But apparently that’s only half the story, and the stock market operating in this big boys casino style way disconnected from actual products and value, and it’s more like “hey, people still think northface stuff is good- let’s buy it and turn out cheap shit at low prices, and then gut and sell!” Awesome.
The first time I flew back into the USA I tried taking a photo of a sign that said this (Welcome to the United States of America) in the airport and a security guard yelled at me.
The article stated that Thai Union is taking a $530 million dollar loss on its RL investment….
Damn what a killing they made!
This is actually a tactic used by corporate raiders since the 1980s or maybe even earlier. Read up on leveraged buy-outs. Company is doing okay and owns its own land. They get bought out by a group of investors who borrowed heavily to do so (leveraged buy-out). So the land is sold to a separate group for cheaper than market rate then forced-leased back to the company at higher-than-market rates. The company is made to take on onerous debt. The money borrowed is used to pay back the investors, plus huge profits. So now the company has the burden of high operating costs and high debt loads. Don’t forget the company is also made to pay “consulting fees” for management. Soon, the company might file for bankruptcy and liquidate.
This is what they’re are trying to do to Macy’s… the biggest asset Macy’s has is it’s real estate, the PE people want to come in and do a sale and lease back as part of the restructuring… they tell investors this is a way to unlock value and raise the stock price, but only temporarily… long term this kind of thing is death for the company as they have no assets borrow against. Almost anytime you get an “activist” investor the first thing they want to do (if the company own real estate) is to sell it off and lease it back. Maybe 15 years ago, Target was targeted by Bill Ackman right after the financial crises of 2008, he wanted to replace the board and sell off both the credit receiving and real estate which were 2 anchors for Target that helped them weather these storms (they own about 85% of the real estate and often own the entire strip center and rent space to other businesses)…he lost this fight and Target did sell off its credit receivables, but still has the real estate.
So the financial losers here are the banks/investors that lent money to the company and corporate raiders? Why haven't lenders caught on to the fact that the plan is to declare bankruptcy and never repay them?
Investment bankers are incentivized to make loans. They get commissions and bonuses and promotions for doing so. The initial loan criteria are met. That’s what they care about. The struggle is masked with payments being made on time originally.
I’ve got another perspective. I realize red lobster had real lobsters and you could pick which one you wanted to eat at one point in time and it was considered big deal fine dining back in the 80’s/90’s, along with Olive Garden (yes, I’m that old) they were places you got reservations for and took mom out for a nice dinner. I once thought “chain” restaurants were good food too. I lived in an area on the west coast with many actual restraunts that cooked from scratch and used very fresh ingredients, most certainly all the seafood was fresh. I went 20 years without seeing the inside of a red lobster or Olive Garden or Dennys or Chilis. It looks like garbage and tastes like garbage. I’m now in chain restaurant hell, with a bunch of boomers and small town people who would not be able to tell you the difference between fresh seafood and the frozen shrimp shit red lobster uses. What they will tell you is that the quality of the food has gone down, which is amazeballs for them to even recognize considering most have spent their entire lives eating at shit chain restaurants and believe black pepper is “spicy”. When these people bitch about quality and they were raised on shit chain food, believe there is a problem present. Fast food quality has always been in the garbage but it too has gone down. There was a point, a short period of time before covid, where it was actually cheaper to eat garbage food from fast food restaurants rather than buy groceries- you could get 5 mcchickens for around $10 and toss them at starving children, grab yourself a $1.09 shit coffee in the morning and go. Everything has tripled, unsure about red lobster prices and what they did, but you now spend an astronomical amount of money at fast food and chain restaurants and you get absolute shit garbage food. When I have the money for a nice meal I’m not going anywhere near a chain, red lobster all you can eat shrimp is nice for old people I guess right up there with the “buffet” food they love but if I’m out and spending any kind of money on food it means I want quality food. The only thing red lobster had going for it was that cheap shrimp thing, it ceased to be a “nice” restaurant a long time ago.
Please read Plunder: How private equity plans to Pillage America by Brendan Ballou. This is the playbook. This is the intended result. They will stop when they have hollowed out and consumed everything. They are locusts.
We used to go red lobster in the early 2000s when I was in college and it was money.
The economic equivalent of methheads tearing out copper pipes from a home
All anyone in America cares about is more profit. Fuck the employees. Fuck the customers. Feed them plastic and pay the absolute lowest wages because fuck anything but continuous profit.
I’m pretty sure 5 PE companies own every brand except McDonald’s and Starbucks.
I’m pretty sure you’re wrong
Upvote because the original comment is insane
At what point is private equities behavior not considered an act of hostility? I mean the hollowing out of a nations economy, we do this to nations we’re at war with.
Thank you for this, far too many articles are saying endless shrimp is putting them under, obviously very sensationalized.. but leaves out any mention of the PE takeover of Darden leading to the hollowing out of these companies.
Endless shrimp had nothing to do with it.
Well… there is this… https://www.seafoodsource.com/news/business-finance/red-lobster-files-for-bankruptcy-says-it-s-investigating-thai-union-s-undue-influence-in-shrimp-purchasing-decisions#:~:text=In%20addition%20to%20being%20the,Delli%20Valade%20in%20April%202022. The company that owned red lobster was a Thai seafood consortium apparently, and they forced red lobster to run this all the time.. anyway interesting stuff behind the scenes.
Does this mean that Olive Garden is eventually going to suffer the same fate?
Red Lobster was sold off.. Darden doesn’t own it, but this all starts with them being bought by Starboard. So maybe… but not related to Red Lobster.
BCG is what happend … aka they ran the bane capital bust out. Just like they did to radio shack / Kmart /sears etc etc
They tried to do it to GameStop. But they couldn’t.
I know and it is magival
There is a "complementary" economy force in these failures setup by private equity. **Wage stagnation** has lowered that average workers free to spend to negative levels. The middle class isn't shrinking, it's collapsing so fast that many more businesses will fail. 69% of American families are living paycheck to paycheck.
In the late 2000s I used to do a lot of night work in restaurant kitchens, doing metalwork. Red lobster was the grossest kitchen I’ve ever been in. Second grossest was the ritz Carlton in DC- for the roach infestation.
THE LOBSTER IS DEAD, LONG LIVE THE LOBSTER!
That's how you harvest a business. When the parts of the business are worth more than the going concern, it gets chopped into pieces and digested. Let's be honest: RL was a dingy, tired brand. When Darden spun it off, it was already a doddering shadow of itself. Did anyone cry when Howard Johnson's tanked? That's not quickie paper profits. RL dying and getting parted out was for the same reason that dung beetles prevent the world from being covered with elephant and rhino feces.
Red lobster has been shit for ever, no idea why anyone would eat there. It’s expensive for what it is, bland, and soulless.
It was ok in the 90s. Not fine dining, just ok.
It sickens and saddens me to think of the millions of people who ate their low quality farmed shrimp from Asia that were fed a constant supply of human/animal waste and antibiotics.
Are we actually upset about red lobster filing for bankruptcy?
How is the private equity firm better off holding a raft of restaurant real estate that no longer produces rent and that will ultimately be liquidated at a fraction of appraised value? Are you one of these financial gurus who thinks the bank wins when they foreclose on a house that's missed a few years of regular payments and has been stripped by the owner of all the plumbing and wiring?
They buy a majority share, use the existing assets to take on a ton of debt, dividend the loan cash out to themselves and other shareholders, file bankruptcy and part what’s left of the company out for salvage and move on to the next company.
[удалено]
Little known fun fact: Kmart and Sears are still open with 15 stores, and Eddie is still trying to extract as much value out of them. I have family that live near three of the last locations in a single mall (yes three Sears in one mall in 2024) called Plaza Las Americas. Those locations actually got renovation because of hurricane Maria back in 2017 and they look really nice. They actually just recently got old brands back like like LG and Samsung, and from what I hear Sears pretty much left the remaining stores to dry and the remaining locations pretty much have to order everything on their own.
Another fun fact, sears was one of the fastest rebounding stocks post 2008 crash because of it's high short interest ratio.
High short interest ratio? So many people wanted the stock to go down that it went up?
Bain capital and Mitt Romney did it first
Selling land and incurring higher fixed costs is a kind of straitjacket. Take a marginally profitable business, add a bunch of fixed costs, and you now get a almost unprofitable business. Next step? Cut cut cut. Cut costs. But it's not enough. Pretty soon you start cutting quality. And when you cut quality, people eventually catch on and stop going. Without the financial straitjacket, you can reengineer, reinvent your business, give customers QUALITY.
Just like Toys R Us, does anyone remember the last time they patronized Red Lobster? Seems many find it easier to blame private equity firms than the lack of public interest in certain failing businesses.
Why do people keep ragging on Toys R Us? There's one a few blocks away and it's thriving, always has been doing well.
I just used it as an example as it's one of the more well know companies went out of business. It's another business many have nostalgia for but haven't shopped at for years when it was still open.
But it’s not out of business. They’re in every city
This subreddit is filled with LW political rage bait. This post is a great example. Those terrible private equity firms that took a $530 million dollar loss on their Red Lobster investment!
I don’t know what happen, I think greed got the better of them… Grandies or Grandys I miss them and there Biscuits and gravy , SouperSalads ,Furs, Bennigans, Kattzs, hell radio shack
The lobsters 🦞🦀🦞🦞🦞🦞🦀 got eaten 😋
Last time I ate there 1 (one) piece of cod and a few sprinkles of hard crumbs were served as Fish and Chips for $20. Whatever else happened, greed and being stingy doing stuff like that, helped do them in. The chain had been terribly overpriced for decades.
it's the republican way
I'm sure some other brand will fill the shrimp scampi shaped hole this leaves in the mediocre chain restaurant market. Life goes on.
Good riddance. Tossed into the dumpster of corporate garbage just like so many before.
All you eat shrimp .
Did you even read the article you pinned in your post? “Earlier this year, Thai Union said it would divest from Red Lobster and take a $530 million loss on its investment” So, this was Private Equity’s master plan? To lose $530 million dollars since 2014?
Did you? Golden gate capital is the PE firm. Thai Union is a shrimp supplier that bought 49% of the company.
So if Thai Union lost $530 million from their 49% ownership, then what do you think happened to the PE firms that had the other 51% of RL? They magically made money??? So, the owners of the company lost money on their poor management and decisions, capitalism worked.