Private Equity Ruins Everything
Private Equity, you've probably heard the term. It sound great, but in retail and restaurants, landing in a leveraged buyout can feel like selling the house to pay off the mortgage—then renting it back at a higher price while the lights start to flicker. Private equity is not always the villain. Sometimes it rescues a struggling company or funds real growth. Sometimes it is the raccoon invited to house-sit: it finds the good stuff, loads the place with debt, extracts cash, and leaves someone else holding the empty shelves.
Today we break down 10 well-known businesses that critics say got the private-equity treatment and came out worse—or didn’t come out at all.
10: Red Lobster
Golden Gate Capital bought the chain from Darden in 2014 for about $2.1 billion. A classic move followed: a sale-leaseback of the real estate under hundreds of restaurants for roughly $1.5 billion. The buyers got a big check. Red Lobster got a new landlord and rent—often rising rent—on buildings it used to own. Then came the decision to make “Endless Shrimp” a permanent $20 promotion. One quarter later: about $11 million in losses, supply headaches, and a company already bent by lease payments. Bankruptcy in May 2024. The shrimp were the last straw, not the original problem.
#9: Toys “R” Us
In 2005, KKR, Bain Capital, and Vornado took it private in a $6.6 billion leveraged buyout. They put up about $1.3 billion of their own cash. The rest—more than $5 billion—was borrowed and dropped onto the company. Hundreds of millions in interest every year. Money that could have refreshed stores or built a real website went to debt service instead. Stores looked tired. Amazon and others ate the market. Bankruptcy in 2017, U.S. liquidation in 2018, more than 30,000 jobs gone. The buyers collected fees. Geoffrey got laid off.
#8: Hertz
Clayton, Dubilier & Rice, Carlyle, and others bought Hertz from Ford in 2005 in a massive leveraged deal, then added more debt for fleet updates and the Dollar/Thrifty acquisition. The company stayed highly leveraged for years. When COVID stopped travel, there was little cushion. Missed payments, one of the largest bankruptcies of 2020. Hertz restructured and survived, but the story shows how financial engineering leaves even household names fragile when the unexpected hits.
#7: Claire’s
If you grew up in the mall era, you got your ears pierced at Claire’s. In 2007 Apollo bought it for $3.1 billion and loaded it with about $2.5 billion in debt. Servicing loans started mattering more than fresh inventory or store upgrades. First bankruptcy in 2018. Another in 2025, with plans for hundreds of closures before a new buyer stepped in to keep most stores open. The piercing stations may survive. The company has been through the wringer twice.
#6: Gymboree
Bright kids’ clothes, play classes in the back, reasonable prices. Bain Capital’s 2010 leveraged buyout loaded the company with fresh debt. More borrowing, bigger interest payments, less money for stores or clothes that kept up with trends. When online shopping and fast fashion exploded, Gymboree was stuck. Bankruptcy in 2017. Another later. Hundreds of stores closed. The kids outgrew the overalls faster than the company could outgrow its obligations.
#5: Friendly’s
Birthdays, Little League wins, Grandma’s Fribble—Friendly’s was a destination. Sun Capital acquired it in 2007. Debt itself is not automatically fatal. The problem is when so much cash goes to lenders that there is little left for remodeling, staffing, or fixing the booth that has been duct-taped since the Clinton years. Competitors improved. Fast-casual and delivery arrived. Friendly’s kind of stayed Friendly’s. Bankruptcy in 2011. Hundreds of locations disappeared over the years. Changing tastes mattered. So did having enough cash left to buy new grills.
#4: Panera Bread
Unlike several names on this list, Panera did not collapse. Most stores are still there. It just slid from “really good” to “good enough” after JAB Holding acquired it in 2017. More kiosks, more automation, higher prices. Longtime customers complained about shrinking portions and declining quality. Soup that once felt made on-site started arriving in bags. The baked potato disappeared. Bread-bowl inflation is real. The brand survived. The experience many people loved did not.
#3: J.Crew
Classic style without the yacht. TPG Capital and Leonard Green & Partners took it private around $3 billion. Debt climbed. Retail got harder. Online exploded. Cash that might have gone into adapting stores and product often went to servicing debt instead. Stores looked dated. Sales slowed. J.Crew filed for bankruptcy in 2020, restructured, and survived. Technically alive—like a houseplant you forgot to water for six months. Still green. Mostly.
#2: Caesars Entertainment
You would think casinos understand risk. In the 2006–2008 leveraged buyout, Apollo and TPG took Harrah’s (later Caesars) private in one of the era’s biggest deals and loaded it with roughly $20–25 billion in debt. Then the financial crisis arrived. Bad timing. Years of restructuring followed. One of the largest corporate bankruptcies in American history. The house actually lost—at least until it restructured and later changed hands again.
#1: Bed Bath & Beyond
The coupon. Everyone had one. Expired during the Reagan years? Dog chewed it? Survived three moves? The cashier shrugged and took it anyway. The store carried everything—twelve spatulas, forty-seven shower-curtain hooks, the gadget that peels mangoes only in leap years. Then focus drifted. Changing habits, Amazon, cluttered stores, inconsistent inventory, and significant financial pressure (including debt after private-equity-style involvement, even if it was not a classic full takeover) left the company unable to reinvent itself. Customers wandered aisles asking where the thing they came for actually was. Amazon would have it on the porch tomorrow. Bankruptcy and liquidation of the old chain in 2023. Twenty percent off bankruptcy still leaves you broke.
Final Thoughts
These companies faced real competition, changing tastes, and (in some cases) a pandemic. Debt and financial engineering did not invent those problems. They often made adaptation harder: less cash for stores, websites, inventory, and people when the market shifted. Follow the money. Occupancy guarantees and per-diem prison contracts are one version of the incentive problem. Sale-leasebacks and interest payments that starve operations are another.What do you think? Was it the buyout, the operators, the customers, or all of the above? What’s a favorite company you’ve watched fade? Drop it in the comments.
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