ryan cooper: "Golden Gate crippled Red Lobster by selling off one of its most valuable assets, the real estate it owned, in what’s known as a sale-leaseback, for $1.5 billion. With that sale, Golden Gate nearly made back its $2.1 billion purchase of Red Lobster, while turning the chain into a permanent leaser"

"Golden Gate crippled Red Lobster by selling off one of its most valuable assets, the real estate it owned, in what’s known as a sale-leaseback, for $1.5 billion. With that sale, Golden Gate nearly made back its $2.1 billion purchase of Red Lobster, while turning the chain into a permanent leaser"

The Raiding of Red Lobsterprospect.org The bankrupt casual restaurant chain didn’t fail because of Endless Shrimp. Its problems date back to monopolist seafood conglomerates and a private equity play.

stripping for parts, the only thing our economy has left

The only economic system which matters now is the same one that desperate crackheads have: the "barge into the house and rip out all the copper wiring as fast as possible before the neighbours get suspicious and call the cops" approach to economics

when we say capitalism cannot continue in its current form, this is what we mean. the end of quarter isn't even primary anymore, it's about how fast you can cut up the flesh.

Wild to see how it's becoming increasingly implausible to satisfy the need for increased profit to stay afloat by "producing something" or "providing a service". All that's left is grift, cannibalism and destroying what's left standing and selling it off for parts.

Do you guys understand the point here is that red lobster wasn't profitable AS A RESTAURANT? It was profitable as a real estate owner. The core business (selling food) was not making a profit.

yeah it's been run by private equity swindlers for over a decade, they stripped it for parts rather than adapting to a changing market

? Owning the property helped them stay profitable as a restaurant, until they were bought out and then forced to pay rent on property they used to own as a company.

Well, your profitability as a restaurant to a large extent depends on your expenses--and paying rent is one of, if not the major expense that makes or breaks you.

Same is true of McDonalds, which has long been primarily a real estate owner. Probably true of other fast-food businesses as well.

I mean, yes, hence the "strip the copper wires out of the walls" comment. I literally don't know why it matters that a company is unprofitable, ideally they should adapt to market changes and try something new rather than feast on the corpse and fire everyone employed by them.

Except the cops work for the crack heads

But it let the number go up for them. All of the employees fired as the restaurants close should be super happy that their sacrifice helped the owners keep the shareholders happy.

This was sarcasm. Sort of I bet the finance bro owners actually believe that bullshit.

It's the only thing Capitalism has left. There are other systems with better outcomes. A Producer-Based Economy (to counter our current Consumer-Based Economy) would be a good place to start.

the empire always comes home -- so too, the extractive capital turns inward.

It's wild that most media just doesn't want to touch the private equity destruction. Glad the Prospect isn't afraid to.

The bosses tend to not like it when you write about how terrible their business decisions are

Probably because it already happened to them.

It does feel media as an industry is uniquely capture by private equity, so much so that traditional revenue models like NYT and Defector are rare exceptions

vultures did the same thing to newspapers - bought em all up, consolidated wire services, fired a bunch of the staff, sold some profitable parts, cooked it up on paper to look profitable and sold it to the next sucker, rise and repeat.

When you put it like that, I can’t believe this isn’t illegal

Assholes in economics call it "creative destruction"

Figures. Hollowing out newspaper businesses, veterinarian clinics, and now hospitals. (New band name: Endless Shrimp)

ENDLESS SHRIMP On Tour Now With special guests Toys WeRe Us Greëd Ubër Allës

Kroger did the same to Fred Meyer, in case any of my PNW tweeps wondered whether Freddie's was going to survive the 2020s

Institutional Property Advisors Brokers Sale of 28-Property Fred Meyer Portfolio in Pacific Northwestshoppingcenterbusiness.com Los Angeles — Institutional Property Advisors (IPA), a division of Marcus & Millichap, has arranged the sale-leaseback of a 28-property portfolio of - California, Investment sales, News

Given the last time I went, I was accosted by armed goons, they can rot, as far as I'm concerned. Kroger really went too far on the shoplifting lie, and I'd rather go two miles to Safeway than the two blocks to my nearest Fred Meyer. (I know Albertsons isn't much better, but 🤷‍♂️ sigh)

unnecessary mergers and private equity acquisitions are the root of so much value destruction tax the shit out of all private equity transactions & reverse the borkian test for mergers companies should have to prove consumer benefit, rather than just prove there won’t be harm to consumers

Can’t wait to see what PE does with health care, like emergency rooms and hospitals! The future’s so bright!

Already not good.

hms.harvard.edu

It’s bitterly funny that Harvard Business School would use that same article as a case study for its students without changing a word.

And even the ones not owned by PE and technically nonprofit get lured into borrowing via debt and/or bonds and fall into the same debt service nightmare

Absolutely disgusting when hospitals or health insurance companies are for profit. Profiting off someone’s health/healthcare, or lack there of, should be criminal

Isn’t this essentially how Romney, the “good” Republican, made his money?

Same thing that happened to Sears & Kmart in their merger.

Yeah, it wasn't the endless shrimp, it was the capitalism.

My prior comment was unhelpful and reductive and has been deleted. I'm mad because I grew up in my dad's business and when I became a manager we discussed what it means to lead endlessly. I miss him terribly and I'm just frustrated I'll never get to own my own business because of schmucks like this.

The first thing I saw was the thumbnail and thought “what in the fresh AI-upscaled hell is this Paul’s Boutique album art?

📌

After Eddie Lampert added billions to his personal fortune doing this with Sears and faced no real consequences, the blueprint has been there.

Joe Biden may have done a good job making life harder for VCs, but hasn't even looked morosely at this absolute top-tier pestilence. I understand not picking the fight until you are ready to win, but if we somehow get a trifecta, this should be the hill the left dies on for change. Shut it all down

many companies did this in the 90s - set up sham companies in friendly jurisdictions in the Caribbean and then sold their fleets (planes, trains, autos - anything tangible) to these companies (usually owned by the top executives of the main business) who then leased the very same assets back. shady

🎶 IN THE RED LEASER! FOR THE BANKRUPT LEASER IN YOU! 🎶

Forget the food, I noticed the restaurants that survived in my hometown did so bc they owned the land.

Sale-Leaseback can be a rational decision when you need to invest elsewhere. But it's sort of a strange notion here, since RL would then be valued without that asset. This is just moving money between two piles. But also, I'm not sure RL's actual real estate was that valuable.

Oooh, running a restaurant chain like a hospital system... commonwealthbeacon.org/health-care/...

Steward’s asset-light philosophycommonwealthbeacon.org NO ONE IS QUITE SURE what to make of Steward Health Care’s latest move. A for-profit health care company operating in a sea of nonprofits, Steward has

Private equity's business model seems to consist entirely of Making Things Worse™.

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