Red lobster bankruptcy

Gotta have good pups!!

 

Followup to my previous post, a prime example of how private equity played a major role in Red Lobster's downfall.

To raise enough cash to make the deal happen, Golden Gate sold off Red Lobster's real estate to another entity — in this case, a company called American Realty Capital Properties — and then immediately leased the restaurants back. The next year, Red Lobster bought back some sites, but many of its restaurants were suddenly strapped with added rent expenses. Even if Darden had kept Red Lobster, it's not clear it would have taken a different route: A press release from the time says it had contacted buyers to explore such a transaction. But in Maze's view, the sale of the real estate was sort of an original sin for Red Lobster's current troubles.
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It's a page straight out of the private equity acquisition playbook. Acquire a company using leverage and then sell off its most valuable assets. In the case of Red Lobster the real estate was one of the company's valuable assets and it also eliminated the need to pay rental expenses. Basically the same playbook that Eddie Lampert used following his acquisition of K-Mart and Sears.

 

There was nothing better for a kid at Christmastime than the sears Wishbook.

 

Both the Sears and JC Penny catalog toy pages were the most dog eared worn pages in the book (well that and the women's underwear pages)

 

DEALBREAKER! I love me some good hush puppies.

 

Back in the day Capn Louie's Galley in G'ville had the best damn hushpuppies.

 

Absolutely, I loved that place but couldn't afford to go there very often. It closed towards the tail end of my time there. I think they tore it down and now it's one of those big luxury apartment places now.

 

The only reason to go to RL is for the cheddar bay biscuits.

 

Either that or where the Publix is.

 

Got this in email, sounds like they plan to hang on in some capacity.

Dear Guests,

You may be aware that Red Lobster filed for Chapter 11 bankruptcy protection. We’d like to take a moment to explain what this means for our company, and for you, our valued guests.

For more than five decades Red Lobster has been a part of your family’s life. We’ve been there for your celebrations, big and small. We may be the place that you first discovered your love of seafood. Or where you met the love of your life on a first date. Birthdays, graduations, anniversaries and yes, weddings. We’ve been here for them all. And Red Lobster is determined to be there for these moments for generations to come. And that’s why we filed for Chapter 11 bankruptcy protection.

Bankruptcy is a word that is often misunderstood. Filing for bankruptcy does not mean we are going out of business. In fact, it means just the opposite. It is a legal process that allows us to make changes to our business and our cost structure so that Red Lobster can continue as a stronger company going forward. As many of you know, we recently made the tough decision to close a number of our restaurants.

The truth is, some of the world’s most beloved brands like Delta and Hertz have used this same process to protect their futures and their customers stood with them and rooted them on. And because of that, they emerged stronger.

Together, we have a lot worth rooting for. We’ve made delicious, high-quality seafood accessible for generations. Many of you tried lobster for the first time at our restaurant. We’ve brought you Lobsterfest and Crabfest over the years. And, of course, no meal is complete without Cheddar Bay Biscuits.

We are here and ready to continue making memories with you.

Join us. Dine with us. Root for us. Together, we can write a new chapter.

Red Lobster

 

How a global seafood giant broke Red Lobster

https://www.cnn.com/2024/05/25/business/red-lobster-bankruptcy-thai-union/index.html

 

A story that is all too common

 

Another similar story that also goes into the prior owner before Thai Union and how they killed the chain by selling the real estate and forcing the company to lease back. They extracted most of the price paid for the RE

 

This is more absolute than limited to private research sites. Once a PE takes over, the days are numbered even if the PE has intent to operate long term.

 

I’m sure, I’m just speaking on what I specifically can attest to.

The research company I work for started as a mom and pop place. Years ago they sold out and the new owners knew zero about the business. They then over leveraged themselves and went belly up. Lucky for my boss as he was the Principle Investigator. A call with the bank to explain the liabilty they had set him up with the equipment for literally pennies on the dollar.
15 years later it’s been built into a great place but the massive offers he entertains can be very attractive. Lucky for now he has zero intent to sell as he feels like it’s his child and doesn’t want some hack to kill it off.

 

The Mitt Romney playbook and exactly why he was never president.

 

You can say that again about Asian farm raised. Overly dense ponds. Zero oversight what those shrimp are fed. Pumped full of antibiotics. Soaked in moisture retention agents. Lowest grade shrimp. Basically the same crap they serve at Long John Silver as well as the large well know chains. Darden, BBI etc