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> Olive Garden drama of years past Ahh, Olive Garden. I hope you won't mind a slight tangent involving Olive Garden, one of Paul Graham's essays, and a sneaky

> Olive Garden drama of years past Ahh, Olive Garden. I hope you won't mind a slight tangent involving Olive Garden, one of Paul Graham's essays, and a sneaky business deal: In one of his essays[1], Paul Graham wrote, "I think most businesses that fail do it because they don't give customers what they want. Look at restaurants. A large percentage fail, about a quarter in the first year. But can you think of one restaurant that had really good food and went out of business?" Yes, I can name a restaurant that had really good food and went out of business -- it was all of the Olive Garden locations in Ontario, Canada, about 15 years ago. They were always busy, always had a line-up to get in, and pretty much everyone I knew liked the food a lot. Then suddenly, without explanation, all of the Olive Gardens in Ontario shut down. Much later I learned that Olive Garden USA had shifted some large debts to its Olive Garden Canada subsidiary, and allowed the Canadian subsidiary to go bankrupt, freeing the parent corporation of the debts. (So businesses fail for odd reasons even when they have excellent products and masses of loyal customers.) [1] http://www.paulgraham.com/start.html http://www.paulgraham.com/start.html

redcap 8y ago
In that case I would suggest that Olive Garden Canada didn't "go out of business" (i.e. naturally through business dying off), but was killed intentionally. It didn't die as a result of failure on its own part. There is also a difference between a restaurant and a chain of restaurants - in any case the US component survived, so I would say that the (overall) business didn't "die off".
kbenson 8y ago
> I learned that Olive Garden USA had shifted some large debts to its Olive Garden Canada subsidiary, and allowed the Canadian subsidiary to go bankrupt, freeing the parent corporation of the debts. How does shit like that even work? It seems like it would clearly qualify under fraud. Even if it doesn't, how does it not send every potential future creditor running away as fast as possible?
- rando444 8y ago
  Doesn't sound like fraud. If you rack up a bunch of debt, but take out a mortgage on your already paid off house to get rid of the debt, is it fraud? You had a perfectly good house, but sometimes decisions have to be made. Your creditor point is valid, but only if the creditors are paying deep attention because if they're not, these actions could give the appearance of profitability and stability.
  - kbenson 8y ago
    > If you rack up a bunch of debt, but take out a mortgage on your already paid off house to get rid of the debt, is it fraud? That isn't what was described, to my understanding. What was described seems sort of like transferring all your unsecured debt to your spouse, and letting her go through some individual bankruptcy that doesn't affect you. > You had a perfectly good house, but sometimes decisions have to be made. If you're allowed to transfer debt around to related entities where negative repercussions don't affect you, the normal checks and balances of the system have failed. I imagine a similar situation (even if not purposefully attempted) is why student loans are actually protected from bankruptcy. Parents used to pay for college, because students couldn't really afford it. Parents don't necessarily want to go into bankruptcy because they may have other assets affected. If the students take out the loan, if they go into bankruptcy in the few years after graduating, the parents aren't affected. Students are a risky bet because bankruptcy has fairly little cost for them that early in life, so the loans would be very hard to get. To incentivize lenders to give the loans, you have to protect them.
jk2323 8y ago
"Look at restaurants. A large percentage fail, about a quarter in the first year. But can you think of one restaurant that had really good food and went out of business?" Yes. In fact I know a shitload of restaurants with excellent food, that went out of business. In the restaurant business your are more in the real estate business than in the food business. Location, Location, Location is everything. And how much you pay for it.
- avs733 8y ago
  Yeah that bothered me immensely. It is an assumption of 'rational' market/consumer behavior that is extremely and inaccurately reductive.
csomar 8y ago
> Yes, I can name a restaurant that had really good food and went out of business lol. That's not how it works. The business was successful. Certainly, if you put it intentionally under fire it is going to go under. There are infinite ways to bankrupt successful businesses. The most common I saw/experienced was family businesses where the heirs could not agree to the terms and kept fighting.
wodenokoto 8y ago
Plenty of restaurants go broke, despite serving good food. Just like plenty of restaurant make profits despite selling bad food.
boyce 8y ago
Sounds like pg has never owned or run a restaurant. Producing good food is much riskier than producing microwaved slop.

redcap 8y ago

In that case I would suggest that Olive Garden Canada didn't "go out of business" (i.e. naturally through business dying off), but was killed intentionally. It didn't die as a result of failure on its own part. There is also a difference between a restaurant and a chain of restaurants - in any case the US component survived, so I would say that the (overall) business didn't "die off".

kbenson 8y ago

> I learned that Olive Garden USA had shifted some large debts to its Olive Garden Canada subsidiary, and allowed the Canadian subsidiary to go bankrupt, freeing the parent corporation of the debts. How does shit like that even work? It seems like it would clearly qualify under fraud. Even if it doesn't, how does it not send every potential future creditor running away as fast as possible?

rando444 8y ago
Doesn't sound like fraud. If you rack up a bunch of debt, but take out a mortgage on your already paid off house to get rid of the debt, is it fraud? You had a perfectly good house, but sometimes decisions have to be made. Your creditor point is valid, but only if the creditors are paying deep attention because if they're not, these actions could give the appearance of profitability and stability.
- kbenson 8y ago
  > If you rack up a bunch of debt, but take out a mortgage on your already paid off house to get rid of the debt, is it fraud? That isn't what was described, to my understanding. What was described seems sort of like transferring all your unsecured debt to your spouse, and letting her go through some individual bankruptcy that doesn't affect you. > You had a perfectly good house, but sometimes decisions have to be made. If you're allowed to transfer debt around to related entities where negative repercussions don't affect you, the normal checks and balances of the system have failed. I imagine a similar situation (even if not purposefully attempted) is why student loans are actually protected from bankruptcy. Parents used to pay for college, because students couldn't really afford it. Parents don't necessarily want to go into bankruptcy because they may have other assets affected. If the students take out the loan, if they go into bankruptcy in the few years after graduating, the parents aren't affected. Students are a risky bet because bankruptcy has fairly little cost for them that early in life, so the loans would be very hard to get. To incentivize lenders to give the loans, you have to protect them.

jk2323 8y ago

"Look at restaurants. A large percentage fail, about a quarter in the first year. But can you think of one restaurant that had really good food and went out of business?" Yes. In fact I know a shitload of restaurants with excellent food, that went out of business. In the restaurant business your are more in the real estate business than in the food business. Location, Location, Location is everything. And how much you pay for it.

avs733 8y ago
Yeah that bothered me immensely. It is an assumption of 'rational' market/consumer behavior that is extremely and inaccurately reductive.

csomar 8y ago

> Yes, I can name a restaurant that had really good food and went out of business lol. That's not how it works. The business was successful. Certainly, if you put it intentionally under fire it is going to go under. There are infinite ways to bankrupt successful businesses. The most common I saw/experienced was family businesses where the heirs could not agree to the terms and kept fighting.

wodenokoto 8y ago

Plenty of restaurants go broke, despite serving good food. Just like plenty of restaurant make profits despite selling bad food.

boyce 8y ago

Sounds like pg has never owned or run a restaurant. Producing good food is much riskier than producing microwaved slop.