#david golden

[mostlysignssomeportents]

Red Lobster was killed by private equity, not Endless Shrimp

For the rest of May, my bestselling solarpunk utopian novel THE LOST CAUSE (2023) is available as a $2.99, DRM-free ebook!

A decade ago, a hedge fund had an improbable viral comedy hit: a 294-page slide deck explaining why Olive Garden was going out of business, blaming the failure on too many breadsticks and insufficiently salted pasta-water:

https://www.sec.gov/Archives/edgar/data/940944/000092189514002031/ex991dfan14a06297125_091114.pdf

Everyone loved this story. As David Dayen wrote for Salon, it let readers "mock that silly chain restaurant they remember from their childhoods in the suburbs" and laugh at "the silly hedge fund that took the time to write the world’s worst review":

https://www.salon.com/2014/09/17/the_real_olive_garden_scandal_why_greedy_hedge_funders_suddenly_care_so_much_about_breadsticks/

But – as Dayen wrote at the time, the hedge fund that produced that slide deck, Starboard Value, was not motivated by dissatisfaction with bread-sticks. They were "activist investors" (finspeak for "rapacious assholes") with a giant stake in Darden Restaurants, Olive Garden's parent company. They wanted Darden to liquidate all of Olive Garden's real-estate holdings and declare a one-off dividend that would net investors a billion dollars, while literally yanking the floor out from beneath Olive Garden, converting it from owner to tenant, subject to rent-shocks and other nasty surprises.

They wanted to asset-strip the company, in other words ("asset strip" is what they call it in hedge-fund land; the mafia calls it a "bust-out," famous to anyone who watched the twenty-third episode of The Sopranos):

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

Starboard didn't have enough money to force the sale, but they had recently engineered the CEO's ouster. The giant slide-deck making fun of Olive Garden's food was just a PR campaign to help it sell the bust-out by creating a narrative that they were being activists* to save this badly managed disaster of a restaurant chain.

*assholes

Starboard was bent on eviscerating Darden like a couple of entrail-maddened dogs in an elk carcass:

https://web.archive.org/web/20051220005944/http://alumni.media.mit.edu/~solan/dogsinelk/

They had forced Darden to sell off another of its holdings, Red Lobster, to a hedge-fund called Golden Gate Capital. Golden Gate flogged all of Red Lobster's real estate holdings for $2.1 billion the same day, then pissed it all away on dividends to its shareholders, including Starboard. The new landlords, a Real Estate Investment Trust, proceeded to charge so much for rent on those buildings Red Lobster just flogged that the company's net earnings immediately dropped by half.

Dayen ends his piece with these prophetic words:

Olive Garden and Red Lobster may not be destinations for hipster Internet journalists, and they have seen revenue declines amid stagnant middle-class wages and increased competition. But they are still profitable businesses. Thousands of Americans work there. Why should they be bled dry by predatory investors in the name of “shareholder value”? What of the value of worker productivity instead of the financial engineers?

Flash forward a decade. Today, Dayen is editor-in-chief of The American Prospect, one of the best sources of news about private equity looting in the world. Writing for the Prospect, Luke Goldstein picks up Dayen's story, ten years on:

https://prospect.org/economy/2024-05-22-raiding-red-lobster/

It's not pretty. Ten years of being bled out on rents and flipped from one hedge fund to another has killed Red Lobster. It just shuttered 50 restaurants and declared Chapter 11 bankruptcy. Ten years hasn't changed much; the same kind of snark that was deployed at the news of Olive Garden's imminent demise is now being hurled at Red Lobster.

Instead of dunking on free bread-sticks, Red Lobster's grave-dancers are jeering at "Endless Shrimp," a promotional deal that works exactly how it sounds like it would work. Endless Shrimp cost the chain $11m.

Which raises a question: why did Red Lobster make this money-losing offer? Are they just good-hearted slobs? Can't they do math?

Or, you know, was it another hedge-fund, bust-out scam?

Here's a hint. The supplier who provided Red Lobster with all that shrimp is Thai Union. Thai Union also owns Red Lobster. They bought the chain from Golden Gate Capital, last seen in 2014, holding a flash-sale on all of Red Lobster's buildings, pocketing billions, and cutting Red Lobster's earnings in half.

Red Lobster rose to success – 700 restaurants nationwide at its peak – by combining no-frills dining with powerful buying power, which it used to force discounts from seafood suppliers. In response, the seafood industry consolidated through a wave of mergers, turning into a cozy cartel that could resist the buyer power of Red Lobster and other major customers.

This was facilitated by conservation efforts that limited the total volume of biomass that fishers were allowed to extract, and allocated quotas to existing companies and individual fishermen. The costs of complying with this "catch management" system were high, punishingly so for small independents, bearably so for large conglomerates.

Competition from overseas fisheries drove consolidation further, as countries in the global south were blocked from implementing their own conservation efforts. US fisheries merged further, seeking economies of scale that would let them compete, largely by shafting fishermen and other suppliers. Today's Alaskan crab fishery is dominated by a four-company cartel; in the Pacific Northwest, most fish goes through a single intermediary, Pacific Seafood.

These dominant actors entered into illegal collusive arrangements with one another to rig their markets and further immiserate their suppliers, who filed antitrust suits accusing the companies of operating a monopsony (a market with a powerful buyer, akin to a monopoly, which is a market with a powerful seller):

https://www.classaction.org/news/pacific-seafood-under-fire-for-allegedly-fixing-prices-paid-to-dungeness-crabbers-in-pacific-northwest

Golden Gate bought Red Lobster in the midst of these fish wars, promising to right its ship. As Goldstein points out, that's the same promise they made when they bought Payless shoes, just before they destroyed the company and flogged it off to Alden Capital, the hedge fund that bought and destroyed dozens of America's most beloved newspapers:

https://pluralistic.net/2021/10/16/sociopathic-monsters/#all-the-news-thats-fit-to-print

Under Golden Gate's management, Red Lobster saw its staffing levels slashed, so diners endured longer wait times to be seated and served. Then, in 2020, they sold the company to Thai Union, the company's largest supplier (a transaction Goldstein likens to a Walmart buyout of Procter and Gamble).

Thai Union continued to bleed Red Lobster, imposing more cuts and loading it up with more debts financed by yet another private equity giant, Fortress Investment Group. That brings us to today, with Thai Union having moved a gigantic amount of its own product through a failing, debt-loaded subsidiary, even as it lobbies for deregulation of American fisheries, which would let it and its lobbying partners drain American waters of the last of its depleted fish stocks.

Dayen's 2020 must-read book Monopolized describes the way that monopolies proliferate, using the US health care industry as a case-study:

https://pluralistic.net/2021/01/29/fractal-bullshit/#dayenu

After deregulation allowed the pharma sector to consolidate, it acquired pricing power of hospitals, who found themselves gouged to the edge of bankruptcy on drug prices. Hospitals then merged into regional monopolies, which allowed them to resist pharma pricing power – and gouge health insurance companies, who saw the price of routine care explode. So the insurance companies gobbled each other up, too, leaving most of us with two or fewer choices for health insurance – even as insurance prices skyrocketed, and our benefits shrank.

Today, Americans pay more for worse healthcare, which is delivered by health workers who get paid less and work under worse conditions. That's because, lacking a regulator to consolidate patients' interests, and strong unions to consolidate workers' interests, patients and workers are easy pickings for those consolidated links in the health supply-chain.

That's a pretty good model for understanding what's happened to Red Lobster: monopoly power and monopsony power begat more monopolies and monoposonies in the supply chain. Everything that hasn't consolidated is defenseless: diners, restaurant workers, fishermen, and the environment. We're all fucked.

Decent, no-frills family restaurant are good. Great, even. I'm not the world's greatest fan of chain restaurants, but I'm also comfortably middle-class and not struggling to afford to give my family a nice night out at a place with good food, friendly staff and reasonable prices. These places are easy pickings for looters because the people who patronize them have little power in our society – and because those of us with more power are easily tricked into sneering at these places' failures as a kind of comeuppance that's all that's due to tacky joints that serve the working class.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/05/23/spineless/#invertebrates

[gleafer]

How David Tennant’s Photoshoot went before they got THAT shot!

[ap-menz]

Crowley and Aziraphale ~ 16x20 acrylic paints on canvas

This is my second Good Omens painting and I’m so honored and excited that it’s a commission for a dear friend 😌🙏✨

[narcissas-wildroses]

Rip David Bowie you would have loved the little gold queer alien at the Paris Olympics closing ceremony

[kezhke88]

Crowley's smug little head wiggle and smirk is definitely one of the top 10 best things of this season.

Look at them go.

[aglionbyacademia]

the foxes doing the hear me out cake challenge and who/what I think they’d put on there

Neil: Andrew Minyard, Kevin Day

Dan: Mufasa (Lion King), Filmore!, the weather app, the red M&M, Weaver (Antz), Scully (Monsters Inc.), Diego (Ice Age), Manny (Ice Age), the purple M&M, Mr. Clean, Bob Duncan (Good Luck, Charlie), Jimmy Neutron’s mom, Kevin Day

Andrew: Wymack (pissing Kevin and Dan off but the rest of the team agrees with him), Neil Josten, Ghostface, Chucky, Rumpelstiltskin (Shrek), the sound of glass breaking, a baseball bat, Wymack a second time, Gerard Way, Ben&Jerry’s peanut butter & cookies specifically, Kevin Day

Aaron: Jessica Rabbit, Lola (Sharktale), Candace (Phineas and Ferb), Fiona (Shrek), the dragon (Shrek), Sally (Cars), Matt’s mom, the green M&M, an aglet, an old fashioned quill and ink, swiss cheese, Peach (Super Mario), Kevin Day

Matt: Sarabi (Lion King), Sandy Cheeks (SpongeBob), Andrew’s car, King Julien (Madagascar), Neil Josten, the “Jules” desk chair from ikea, the fairy godmother (Shrek), peach (the fruit, cmbyn style), Birdo (Super Mario), one of those sheet face masks, marshmallow fluff, Kevin Day

Allison: Balto, Scar (Lion King), a snickers bar, a salt lamp, Jack Skellington, Emily (Corpse Bride) (yelling ensues because both Emily and Jack are just hot), Diego (Ice Age), Dr Drakken (Kim Possible), the dad from inside out, the invisible man (Hotel Transylvania), Kevin Day

Nicky: Gill (finding Nemo), Diego (Ice Age), Major Monogram (Phineas and Ferb), Christmas ornaments, groan tubes, the Belgian techno anthem “Pump Up The Jam”, Sauerkraut, Bloaters/Shamblers (The Last of Us), Coriolanus Snow (The Hunger Games), Barry B. Benson (Bee Movie), the German word “Potzblitz”, Kevin Day

Renee: a literal rainbow, the Mona Lisa, a swiss pocket knife, a braided brioche loaf, Ghostface, Haymitch Abernathy (The Hunger Games), Barbie (the actual doll), the beast (Beauty and the Beast), Mrs. Potts (Beauty and the Beast), Andrew Minyard (earning a silent high five from him and Neil), Kevin Day

Kevin: some very niche historical figures, the onceler (the Lorax), a literal exy racquet, Gloria (Madagascar), a three sixty vodka bottle, Shego (everyone yells at him that she’s not a hear me out; she’s just hot), Allison Reynolds (earning a side eye from her), Matt’s mom

Bonus:

Katelyn: Dr Doofenschmirtz (Phineas and Ferb), Vanessa Doofenschmirtz (Phineas and Ferb), Sally (Cars), Andrew Minyard (Aaron is disgusted), Ron Stoppable (Kim Possible), Timon (Lion King), Balloony (Phineas and Ferb), the number 8, the periodic table, the electronic configuration of phosphorus, Jordi (The Secret World of Santa Claus), Gordon Ramsay, Kevin Day (Aaron high fives her)

[yorsue-dolly]

Sudden kiss-

[sharon-tate]

Marilyn Monroe photographed by David Cicero, 1951

[mobius-m-mobius]

#thought that sounded familiar 💀

[dcvidsrossi]

Rossi: Well, I can't help it! I'm Italian! Flirting is part of my heritage!

Reid: What does that mean?

Emily, passing by with a cup of coffee: It means his father was a slut too.

[racetrackmybeloved]

obsessed with davey's complete inability to read the room.

like, this is five seconds after jack glares at him and (very grumpily) says 'you ever think i didnt wanna be found?'

[accioepiphany]

IF I SPEAK-

[raspbel-art]

I just like to make dual things and mixing these up was super fun

[leroiestmortvivelareine]

The recurring theme of shut doors and helplessness in tsc...

Riko forbidden to mourn his own father. Rejected even in his death.

I feel passionately grateful to Jean for instantly recognising this as third impact. And I'm so sorry Jean had to be the one to bear its fallout.

I know Riko is the worst but I also know, I know, how it feels when that particular door is slammed in your face. You can try to drown it out but part of you will never stop screaming.

Jean trying to escape abuse by doing what his abusers taught him, over and over

Jeremy knowing Jean is in trouble but unable to get through the barriers he's raised

And yet...

This one one warms me all the way through.

[infinitemarilynmonroe]

Marilyn Monroe photographed by David Conover, 1945.

[miss-crazy-rose]

The fact that I have no idea who won what at the BAFTA last night but I know that David Tennant had 3 outfits, one of which included a kilt, and the opening sketch was a Staged style bit with Michael Sheen about a dog called Bark Ruffalo