Yeah, I was fooled too.

Saagar apologizes for falling into a fake news story that Red Lobster was bankrupted by its own stupid mistake.

I fell for the story too, so I also apologize!

It turns out to be a textbook LBO crime. The private equity thief finds a company in trouble, offers it a fake cash infusion in exchange for part ownership. After the PE gets control, it starts saddling the company with debt to pay for the capital infusion, then sells off the real estate and forces the restaurants to rent their own stores, and pulls every trick in the book to kill the company. All You Can Eat was just the last straw in the textbook crime.

I can still halfway blame Red Lobster for agreeing to the deal in the first place. The deal was the trap.

LBO crimes have been going on forever, and have become universal since we deleted FDR’s stock laws in the 1980s. Raiders are not secret. They are known to everyone who needs to know. Companies should realize that they have ZERO chance of survival in the LBO trap, but SOME chance of survival if they don’t step into the trap. Things might look hopeless, but a smart niche switch has often saved companies in trouble. Get smaller, find a new way to use your existing facilities and workers.