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Elizabeth Warren Blames 'Greed', Not Bidenomics, for Red Lobster Bankruptcy

AP Photo/Matt Rourke

Elizabeth Warren has never met a problem that she didn't 1) attribute to 'corporate greed' and 2) think she could solve with more government intervention.

This time, she's pouncing on Red Lobster's recent bankruptcy, blaming corporate greed.

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Here's what Fast Company writes:

The first of the owners in question was a private-equity firm called Golden Gate Capital, which bought Red Lobster in 2014 from Darden Restaurants, which owns a number of different restaurant brands, including Olive Garden and LongHorn Steakhouse. Typically, when a private-equity firm takes over a company, it finances the acquisition by loading the company down with debt, which makes the deal cheaper for the PE firm but also makes it harder for the company to thrive. In Red Lobster’s case, though, the problems went beyond that. While Golden Gate Capital did add debt to Red Lobster’s balance sheet, it also made another move, selling off Red Lobster’s real-estate assets for $1.5 billion, forcing Red Lobster to lease those locations back.

These kinds of sale-leaseback deals are not unusual in retail or the restaurant business. And for Golden Gate, it was a great arrangement, since the deal covered most of what it had paid for Red Lobster. For Red Lobster itself, though, the arrangement was less than ideal. These were long-term leases, with rent increases written into the contract. And the leases were what are called “triple-net” leases, which meant that Red Lobster was responsible for all the operating expenses, property taxes, and insurance at the locations. As Restaurant Finance Monitor wrote at the time, the deal gave Red Lobster “little room for error” at a moment when it was struggling with falling sales and a weak brand.  

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X users were quick to point out the flaw in this thinking:

Big swing and a miss.

All of this is true.

We do, too.

And COVID lockdowns, and inflation, and government policies concerning businesses, wages, etc.

Must be nice.

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Only other's private equity and wealth. Not theirs.

Best economy ever, Jack!

Because she's using all the buzzwords.

But it's okay when politicians do it.

No, she has not.

We're not supposed to notice that.

We laughed out loud.

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Totally weird.

Excellent question. Why, Lizzy?

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