What really sunk Red Lobster?

This is the Weekend Edition of Bloomberg Opinion Today, a roundup of the most popular stories Bloomberg Opinion publishes each week based on [Bloomberg]( This is the Weekend Edition of Bloomberg Opinion Today, a roundup of the most popular stories Bloomberg Opinion publishes each week based on web readership. [The Endless Shrimp Investigation]( — Matt Levine Photographer: Patrick T. Fallon/AFP/Getty Images Here is a hypothetical move: - You are in the business of producing and selling shrimp. - You expand vertically by acquiring a chain of seafood restaurants. - The restaurants start to struggle and are heavily indebted, and you worry that your equity investment is losing value and possibly worthless. - How to cut your losses? - Well, you have two relationships to the restaurant chain: You own the equity, and you also supply the shrimp. - Not much you can do with the equity: There’s a lot of debt, the creditors rank ahead of you, and they are unlikely to let you take any cash out as a dividend. - But, as the equity owner, you also control the board of directors and get to appoint the chief executive officer. - The CEO decides how much shrimp to buy. - What if he decided to buy a lot of shrimp? - Then you’d make money on the shrimp, and extract at least some value out of your equity investment. There is presumably some tipping point. There is some level where the restaurants are viable enough that you will want to operate them to maximize their equity value, but if they fall below that level, you will give up on the equity and just try to maximize the shrimp consumption. In the first equilibrium, you will spend money carefully on shrimp and biscuits and silverware and advertising, with the goal of increasing profitability. In the second equilibrium, you will spend money profligately and only on shrimp, with the goal of spending money on shrimp. Read the [whole thing]( for free. [Nikki Haley Shows Us Who She Really Is: A Coward]( — Mary Ellen Klas [It Isn’t a Crime If MAGA Does It]( — Francis Wilkinson [Flying Is Getting More Turbulent. Airlines Better Buckle Up]( — Lara Williams [An Emmy for Hot Ones? Late-Night TV Is Going Up in Flames]( — Jessica Karl [As Nvidia Goes, So Does the Valuation of US Stocks]( — John Authers [The Rise of the Disposable Car]( — Chris Bryant [Spirit and Frontier Airlines Are Playing a Losing Game With Flyers]( — Thomas Black [Copper’s Boom Story Has Some Truth — and Lots of Hogwash]( — Javier Blas [China’s Factories Are Humming. Nobody Is Buying]( — Tim Culpan More From Bloomberg Opinion Here’s what we’ve been listening to and watching this week. - X Broadcast: UK Prime Minister Rishi Sunak announced [a surprise election for July 4](. Therese Raphael, Matthew Brooker, Marcus Ashworth and Nicole Torres discuss. - [Finfluencers are really bad at picking stocks](. Kyla Scanlon knows why. - [Donald Trump didn’t take the stand]( in his fraud trial. Whatever the verdict, a reckoning awaits him, says Timothy L. O’Brien. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](