The Real Story of How Red Lobster Ended Up in Hot Water
Like many of you, I scrolled past news reports and social media posts relating to the decline and fall of the Red Lobster seafood chain these past few weeks, without paying them much attention. I just presumed Red Lobster cut on quality, couldn’t meet rising labor costs, and thus became the latest victim of a transforming economy.
However, it’s much more than that — and what happened with this company should scare everyone. There’s not a business in America that isn’t vulnerable to the same thing happening. And so, an iconic and widely popular casual restaurant got stripped bare by greedy capitalists, and while they looted the company for every scrap that could be sold off, the working class got fucked over. Yet again.
Sound familiar?
Read:
How private equity rolled Red Lobster:
When a private-equity firm bought the iconic seafood chain in 2014, it sold the real estate under the restaurants for $1.5 billion. Then the restaurants struggled to pay the rents.
This article is the most revealing thing I’ve read which provides a clear overview as to how Red Lobster ended up boiled in hot water, consumed like a disposable paper plate and plastic knife, and is now ultimately being discarded once it can’t be squeezed for another morsel of profit.
Red Lobster faced some challenges but the chain also made it through the COVID shutdown, and was profitable despite some glaring management missteps. Then, a private equity firm swooped in, and turned up the heat. It didn’t see Red Lobster as a business, nor as an important component of hundreds of local communities and neighborhoods throughout America. The greedy capitalists saw an asset ripe for a wrecking ball.
“Asset-stripping” occurs when an owner or investor in a company sells off the assets, reaping the benefits for itself, essentially leaving a shell and crippling the company. And, that’s exactly what happened with Red Lobster as the capitalists broke apart the company, stripped the assets, and sold the scraps to its own subsidiary.
Millions of people –including workers and consumers– LOSE when a tiny fraction of “investors” WIN. No, it’s NOT a fair game, and pretending this is competition and a free market is appallingly naive. These private equity firms don’t just gut restaurants and shutter retailers, they are now going after companies like nursing homes. They’re already buying up rental homes and properties, and driving up prices far higher than the rate of inflation.
Private equity capitalists WIN. The working class, middle class, and lower classes LOSE.
No folks, this isn’t just a Red Lobster problem. We’re all in hot water now.
