Today’s links Red Lobster was killed by private equity, not Endless Shrimp: Using class warfare as cover for looting. Hey look at this: Delights to delectate. This day in history: 2009, 2014, 2019, 2023 Upcoming appearances: Where to find me. Recent appearances: Where I’ve been. Latest books: You keep readin’ em, I’ll keep writin’ ’em. Upcoming books: Like I said, I’ll keep writin’ ’em. Colophon: All the rest. Red Lobster was killed by private equity, not Endless Shrimp (permalink) 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. Hey look at this (permalink) ‘My songs spread like herpes’: why did satirical genius Tom Lehrer swap worldwide fame for obscurity? https://www.theguardian.com/music/article/2024/may/22/my-songs-spread-like-herpes-why-did-satirical-genius-tom-lehrer-swap-worldwide-fame-for-obscurity (h/t Metafilter) The last XOXO https://2024.xoxofest.com/ The great rewiring: is social media really behind an epidemic of teenage mental illness? https://www.nature.com/articles/d41586-024-00902-2 This day in history (permalink) #15yrsago LA cop union buys stake in newspaper, demands critical writers be fired https://web.archive.org/web/20090523133759/http://latimesblogs.latimes.com/lanow/2009/05/la-police-union-wants-san-diego-newspaper-writers-fired.html #15yrsago UK towns move to extend abusive license plate surveillance grid https://news.bbc.co.uk/1/hi/programmes/whos_watching_you/8064333.stm #15yrsago BA getting rid of first class in new planes https://www.theguardian.com/business/2009/may/22/british-airways-first-class-loss #15yrsago English schoolkids go on strike until CCTVs are removed from classes https://www.guardian-series.co.uk/news/4377621.LOUGHTON__Pupils_walk_out_of_lessons_in_protest_against_Big_Brother_cameras/ #15yrsago Obamabot to be installed at Disney World, will robotically cover up torture, suspend habeas corpus https://www.nytimes.com/2009/05/22/us/politics/22obamatron.html #15yrsago Obama promises to suspend Habeas Corpus https://web.archive.org/web/20090524000332/http://open.salon.com/blog/behind_blue_eyes/2009/05/22/obama_proposes_indefinite_preventive_detention_without_trial #15yrsago Verizon to cops: we won’t help you track down sick, possibly dying man unless you pay his $20 phone bill https://web.archive.org/web/20090524071613/https://www.timesreporter.com/homepage/x862899385/Unconscious-Carroll-man-found-after-11-hour-search #15yrsago T-Minus: graphic novel tells the history of the space race https://memex.craphound.com/2009/05/22/t-minus-graphic-novel-tells-the-history-of-the-space-race/ #10yrsago Brandalists replace 365 outdoor ads in 10 UK cities with hand-printed works of art https://www.youtube.com/watch?v=lKRmVwqhEdE #10yrsago Glorious juvenile moment of Dragon’s Lair heroism https://www.youtube.com/watch?v=XQ9cqaVjufo #10yrsago Edward Snowden hosted a cryptoparty and ran a Tor exit node https://www.wired.com/2014/05/snowden-cryptoparty/ #10yrsago Substitute fine old rums for bourbon and save https://web.archive.org/web/20140523092132/http://www.theawl.com/2014/05/how-to-shut-up-about-the-whiskey-shortage #10yrsago House leaders gut NSA-curbing USA FREEDOM Act https://www.eff.org/deeplinks/2014/05/eff-dismayed-houses-gutted-usa-freedom-act #5yrsago Exploitation of workers becomes more socially acceptable if the workers are perceived as “passionate” about their jobs https://pubmed.ncbi.nlm.nih.gov/30998042/ #5yrsago The “Uber of Live Music” will charge you $1100-1600 to book a house show, pay musicians $100 https://www.jwz.org/blog/2019/05/the-uber-of-live-music/ #5yrsago Trump’s stealth attack on Social Security: “Chained CPI” https://www.commondreams.org/views/2019/05/21/beware-trumps-sneak-attack-social-security #5yrsago In less than one second, a malicious web-page can uniquely fingerprint an Iphone, Pixel 2 or Pixel 3 without any explicit user interaction https://www.ieee-security.org/TC/SP2019/papers/405.pdf #5yrsago Americans believe that they should own the mountains of data produced by their cars, but they don’t https://www.nytimes.com/2019/05/20/opinion/car-repair-data-privacy.html #5yrsago A self-appointed wing of the American judicial system is about to make it much harder to fight terms of service https://www.vice.com/en/article/a3x79a/new-proposal-would-let-companies-further-screw-you-over-with-terms-of-service #1yrago Justice Warriors https://pluralistic.net/2023/05/22/libras-assemble/#the-uz Upcoming appearances (permalink) Media Ecology Association keynote (Amherst, NY), Jun 6-9 https://media-ecology.org/convention HOPE XV, Jul 14 (Queens, NY) https://www.hope.net/talks.html American Association of Law Libraries keynote (Chicago), Jul 21 https://www.aallnet.org/conference/agenda/keynote-speaker/ Recent appearances (permalink) Upstream podcast https://podscripts.co/podcasts/upstream/the-big-tech-con-w-cory-doctorow Libraries in Response https://www.youtube.com/watch?v=IUQZPn9ffSs Suur Futuroloogiline Kongress https://www.youtube.com/watch?v=6hITj793htg&t=398s Latest books (permalink) The Bezzle: a sequel to "Red Team Blues," about prison-tech and other grifts, Tor Books (US), Head of Zeus (UK), February 2024 (the-bezzle.org). Signed, personalized copies at Dark Delicacies (https://www.darkdel.com/store/p3062/Available_Feb_20th%3A_The_Bezzle_HB.html#/). "The Lost Cause:" a solarpunk novel of hope in the climate emergency, Tor Books (US), Head of Zeus (UK), November 2023 (http://lost-cause.org). Signed, personalized copies at Dark Delicacies (https://www.darkdel.com/store/p3007/Pre-Order_Signed_Copies%3A_The_Lost_Cause_HB.html#/) "The Internet Con": A nonfiction book about interoperability and Big Tech (Verso) September 2023 (http://seizethemeansofcomputation.org). Signed copies at Book Soup (https://www.booksoup.com/book/9781804291245). "Red Team Blues": "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books http://redteamblues.com. Signed copies at Dark Delicacies (US): and Forbidden Planet (UK): https://forbiddenplanet.com/385004-red-team-blues-signed-edition-hardcover/. "Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com "Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The Washington Post called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59?sk=f6cd10e54e20a07d4c6d0f3ac011af6b) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html) "Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html "Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p2682/Corey_Doctorow%3A_Poesy_the_Monster_Slayer_HB.html#/. Upcoming books (permalink) Picks and Shovels: a sequel to "Red Team Blues," about the heroic era of the PC, Tor Books, February 2025 Unauthorized Bread: a graphic novel adapted from my novella about refugees, toasters and DRM, FirstSecond, 2025 Colophon (permalink) Today’s top sources: Currently writing: A Little Brother short story about DIY insulin PLANNING Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FORTHCOMING TOR BOOKS JAN 2025 Vigilant, Little Brother short story about remote invigilation. FORTHCOMING ON TOR.COM Spill, a Little Brother short story about pipeline protests. FORTHCOMING ON TOR.COM Latest podcast: No One Is the Enshittifier of Their Own Story https://craphound.com/news/2024/05/19/no-one-is-the-enshittifier-of-their-own-story/ This work – excluding any serialized fiction – is licensed under a Creative Commons Attribution 4.0 license. That means you can use it any way you like, including commercially, provided that you attribute it to me, Cory Doctorow, and include a link to pluralistic.net. https://creativecommons.org/licenses/by/4.0/ Quotations and images are not included in this license; they are included either under a limitation or exception to copyright, or on the basis of a separate license. Please exercise caution. 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