How Capitalism & Private Equity Firms Killed Red Lobster

No Industry is Safe From Asset Stripping Parasites; Private Equity

Red Lobster’s Bankruptcy: A Tale of Private Equity Exploitation

Private equity firms Golden Gate Capital and Thai Union drove Red Lobster, the iconic seafood chain, into bankruptcy through a series of financially exploitative maneuvers aimed at enriching themselves at the expense of the company’s long-term viability.

The Real Estate Sale-Leaseback Scheme

In 2014, Golden Gate Capital acquired Red Lobster for $2.1 billion but immediately sold off the chain’s real estate for $1.5 billion, pocketing most of their initial investment. This saddled Red Lobster with burdensome long-term leases and high rent costs, leaving little room for error in its operations. The company’s annual rent expenses ballooned to approximately $200 million or 10% of its revenues by 2023.