Red Lobster's Tale of Woe

The bankruptcy of Red Lobster reveals one of America's worst problems: The institutionalization of mechanisms for the rich to get richer, at the expense of everyone else. It seems the robber barons never went away.

General Mills bought Red Lobster, decades ago, then spun it off as Darden Restaurants. Another Darden restaurant, Olive Garden, prospered, but Red Lobster didn't, and suffered from lower and lower investment. 

Then Darden sold Red Lobster to Golden Gate Capital, a hedge fund, in 2014. Red Lobster did a sale-leaseback at that time, and the new landlord raised the rent to Red Lobster. That was 10 years ago, but it did put major pressure on the restaurant. 

Then Golden Gate sold a minority stake to Thai Union, which was Red Lobster's shrimp purveyor. 

Red Lobster had not only "endless shrimp," but also "endless bad CEOs." For years, they strangled the company with poor decisions. The endless shrimp debacle might've been the straw that broke the camel's back. 

If this sad story says anything, it speaks to the need to find some way to prevent the too-common practice (by the rich) of buying companies, larding them up with debt, but instead of investing that money in growth of the company, the bastards take it out as huge executive compensation for themselves. Hedge funds do it; the big acquisitions like Goldman do it groups of wealthy individuals do it. In the end, everyone suffers except the rich bastards who do it. Time and time again. While they are sucking the company dry, they are extolling the virtues of Capitalism, and they are brainwashing workers to believe that somehow, making the rich even richer is a good thing for the workers.

A sustainable way to run a chain of restaurants would be to:

- Be employee-owned, to prevent a hedge fund from taking over. Avoid debt like the plague, and rely on organic growth of the business;

- Avoid hiring expensive CEOs! Almost all CEOs are grossly overpaid, yet most CEOs bring little of value to management. Instead, companies should make a qualified existing senior employee serve as CEO for a year or two, then rotate to someone else. And cut their pay a bit, to make sure they won't want to remain CEO. And work very hard to have an active, wise Board to advise the CEO. 

- Give every employee a share of profits (and profits go only to employees, as there aren't any shareholders). The percent of profit share for an employee rises with years of service and seniority of position. Open the books to every employee, and have accountants whose job it is to explain those books in full. Make sure that the ratio of "highest salary" to " lowest salary" among employees is not more than 5x (vs up to 300x now).

Then, employees would be well-treated and would stay. Oh, and while we're at it, every company needs to commit to treating its customers well. Not just lip service, but full customer service, including a profit share refunded to the best customers, in good years!