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Red Lobster files for bankruptcy, restaurants will stay open (www.nbcnews.com)

submitted 5 months ago by [email protected] to c/[email protected]

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[–] [email protected] 121 points 5 months ago (1 children)

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.

[–] [email protected] 61 points 5 months ago (5 children)

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.

[–] [email protected] 19 points 5 months ago (1 children)

Oh they can't make graphs or excel sheets either don't worry.

[–] [email protected] 9 points 5 months ago

The only pivot they know is the quote from Friends

[–] [email protected] 15 points 5 months ago (1 children)

I want to see engineers run companies that make things

I see you've never worked with engineers.

[–] [email protected] 14 points 5 months ago* (last edited 5 months ago) (1 children)

I am an engineer so take what you like from that information. I know the stereotype well but the best business leaders I've ever worked with directly were good engineers before they were anything else. I don't think it's possible to have a sustainable business plan without a rigorous understanding of every part of the process of making whatever it is that you're selling. There isn't anyone out there who knows that better than the engineers who design and build it.

[–] [email protected] 1 points 5 months ago (2 children)

Dog, we're all engineers. And the worst business leaders I've ever worked with directly were good engineers before they got promoted into positions of management (or started their own terrible business, as the case might be) in which they had no business being because the skill requirements for engineering are not automatically transferable to managing people. It's called the Peter Principle, and there's some real truth to it.

[–] [email protected] 5 points 5 months ago (1 children)

Haha yeah that's true but I don't think it negates what I'm saying. Some people aren't cut out for management and that's perfectly fine. However, getting an MBA isn't going to change you from one type of person to the other. Assuming that the basic characteristics of a manager are present in either case then I absolutely believe that an engineer will make a better high level leader than an MBA.

[–] [email protected] 3 points 5 months ago

However, getting an MBA isn’t going to change you from one type of person to the other.

Sure, an MBA is sort of useless. Management is largely based around personality. And you can't really teach personality. It's the same way for a lot of professions, like teaching, actually. In fact, I'd say the management pool should be drawn from people who were accomplished high school teachers. There's a lot of crossover there in terms of organization, planning, and dealing with a bunch of people who all hate the work you make them do.

[–] [email protected] 3 points 5 months ago

I'd rephrase it to be, "People who've worked their way up the ranks within the company have the most experience at all levels and understand what it takes to provide a good product. Those people can make good managers."

Jag-offs that graduate Stanford and just want to extract money are leaches and should be salted immediately.

[–] [email protected] 6 points 5 months ago

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.

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

[–] [email protected] 3 points 5 months ago (1 children)

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.

[–] [email protected] 5 points 5 months ago (1 children)

It’s just not their passion to deal with legalities, OSHA, taxes, payroll, accounts payable, accounts receivable, etc.

All of that should be handled by lawyers, accountants, and finance people. The MBA is not generally the one doing any of that directly though. They're the ones managing the people that do that work and telling them what to prioritize. And therein lies the problem as you correctly pointed out; those are all secondary business functions. They are important parts of any business but are not the fundamental driver of any real business. What the company makes or sells or consults about or whatever else is the actual business and MBAs don't generally know a thing about that part. Letting them steer all of the corporate ships in America is a huge miscalculation and it's also a big part of why things are getting more and more fucked up for everybody.

They aren’t looking at the human factor at all.

That is an important point. It's also a pretty good summary of the problem. MBAs ignore everything that made a business successful (people being a huge factor here) and focus on eternally increasing profits, which inevitably leads to making the product as shitty as it can possibly be while still somewhat meeting expectations, and even that last part is becoming less and less important.

[–] [email protected] 2 points 5 months ago

Great response expansion!

[–] [email protected] 1 points 5 months ago

Same way you need a bachelor's for an entry level job.

[–] [email protected] 54 points 5 months ago (1 children)

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...

[–] [email protected] 19 points 5 months ago (15 children)

I think people outside of flyover states are tired of these old corporate chain restaurants with terrible food and high prices.

[–] [email protected] 10 points 5 months ago* (last edited 5 months ago) (1 children)

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.

[–] [email protected] 18 points 5 months ago (1 children)

Millenials were forced to go to Darren Group restaurants and Applebee's almost exclusively growing up.

Blocking advertising isn't what hurt them with millenials, it's an entire childhood of awful food.

[–] [email protected] 2 points 5 months ago (1 children)

My parents never took me to these places, so I always felt like I missed out. Now they're all way too expensive to justify but it doesn't really feel like I missed out on much. McDonald's is the weirdest one. I used to think everyone hated it, until way later when I realized, nope. It was just my dad that hated it and made it so we couldn't have it. He wouldn't even drink Coke

[–] [email protected] 2 points 5 months ago (2 children)

Sounds like a good dad, all things considered.

[–] [email protected] 7 points 5 months ago

lol. That's an overly-generous way to look at it.

If only those were the only ways he forced everyone in his family to agree to support his personal preferences

For the lessons you're maybe thinking of, I'd give credit to my mom. She wouldn't let us have things like chef boyardee (had to look up the spelling. lol) because she'd say it wasn't as real but then would instead make legit pasta with store-bought ingredients. Whereas my dad would just prefer Burger King instead of McDonald's for some reason. Dude just hated things that were popular and happened to be right a couple of times. Bonus points if kids really wanted something he didn't care for - then he happily rubbed our faces in how we were dumb for wanting what everyone else wanted.

All said, they were immigrants so advertising def had to hit different for them

[–] [email protected] 6 points 5 months ago

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

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[–] [email protected] 46 points 5 months ago (1 children)

So apparently there's foul play.

From this article;

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.

[–] [email protected] 22 points 5 months ago (1 children)

How is their shrimp supplier determining what promotions they run and when?

[–] [email protected] 6 points 5 months ago (2 children)

yeah that part confused me too. is a supplier an owner too?

[–] [email protected] 20 points 5 months ago

The Thai Union owns 49% of the stock. That shouldn't be enough to control the company, but the fact that "none" of the C suite agreed with getting rid of the other suppliers but it happened anyway?

[–] [email protected] 7 points 5 months ago

Maybe. Perhaps Thai Union was going for vertical integration and wanted to have control of the fried shrimp lifecycle all the way to your mouth, but bit off more than they could chew.

[–] [email protected] 33 points 5 months ago (1 children)

In 10 years there will be no real businesses left because they were bought by private equity, then gutted and resold.

[–] [email protected] 10 points 5 months ago (1 children)

Damn, back to local then. What a shame.

[–] [email protected] 8 points 5 months ago* (last edited 5 months ago) (1 children)

Nah, it'll just be Amazon and Walmart and that's it lol. Oh, and ghost kitchens under them that are pretending not to be them.

[–] [email protected] 5 points 5 months ago

Welcome to Costco. I love you.

[–] [email protected] 32 points 5 months ago (1 children)

This is the price they must pay for offering unlimited shrimp when there aren't unlimited shrimp on the planet.

[–] [email protected] 7 points 5 months ago (1 children)

Technically there are, just not at any single given time, and only for as long as the consumption rate does not exceed the reproduction rate.

[–] [email protected] 5 points 5 months ago (2 children)

At least until the Sun runs out.

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[–] [email protected] 28 points 5 months ago (1 children)

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.

[–] [email protected] 6 points 5 months ago (1 children)

$30 in groceries won't get you very far :(

[–] [email protected] 18 points 5 months ago (1 children)

It gets you much further than a single meal at a restaurant

[–] [email protected] 4 points 5 months ago

True, it'll get you, what, fries and half a drink?

[–] [email protected] 25 points 5 months ago (2 children)

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.

[–] [email protected] 1 points 5 months ago

The employees may have been payed starvation-level wages, but dollars to donuts the C-suite was well compensated.

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[–] [email protected] 8 points 5 months ago

The shrimp must flow!

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