When the Vultures Own the Chicken

Private equity, the financialization of ultra processed food, the iron law of oligarchy, and what happens when most everything you eat is a 'debt instrument'

Clear Lake Coffee Roasters · Clear Lake, Iowa · September 2026

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Let's start with chicken.

Specifically: Dave's Hot Chicken, the Los Angeles parking-lot popup founded in 2017 by three childhood friends with $900 and a portable fryer. By any measure, it was a genuine success story — a cult product, an authentic brand, explosive organic growth driven by quality and word-of-mouth. By 2025, it had 300 locations and average unit volumes exceeding $3 million per store. In June 2025, Roark Capital — a private equity firm with $37 billion in assets under management, named, with characteristic lack of irony, after the protagonist of Ayn Rand's The Fountainhead — acquired Dave's Hot Chicken for $1 billion.

Roark already owned, at the time of that acquisition: Subway. Jimmy John's. Arby's. Dunkin'. Sonic. Buffalo Wild Wings. Cinnabon. Auntie Anne's. Jamba Juice. Moe's Southwest Grill. Hardee's. Carl's Jr. And now Dave's.

One private equity firm. One portfolio. The food of your childhood, your road trip, your hangover cure, your late-night impulse — all of it, flowing upward to the same set of investors, the same carried interest, the same fiduciary obligation to maximize returns on capital regardless of what that maximization requires.

This is the story we want to tell. It is not a story about any individual company. It is a story about a system — about what happens when the drive for monopoly super profits meets the consumer economy, meets the regulatory apparatus, meets the political economy of a country that has been, for forty years, systematically organized around the interests of capital over labor. It is the story of how everything gets worse, on purpose, at scale, and how the mechanisms that might stop it have been captured, hollowed, or simply corrupted.

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I. The Playbook: Leveraged Buyouts and the Debt Machine

To understand what private equity does, you have to understand what it actually is — not the press releases, not the "value creation" language, not the PowerPoints shown to pension fund trustees at industry conferences. The actual mechanism.

A private equity firm raises a fund. The investors — high-net-worth individuals, qualified investors, institutional capital, family offices, endowments, sovereign wealth funds — commit capital. The PE firm then uses that capital, plus a large amount of borrowed money, to acquire companies. The critical word is borrowed. In a typical leveraged buyout, the acquisition is financed roughly 60 to 70 percent with debt. And crucially, that debt does not sit on the PE firm's balance sheet. It sits on the acquired company's balance sheet. The company that was just purchased now owes the money that was used to purchase it.

The debt must be serviced. Interest payments must be made, every month, from the company's operating cash flow. This is not a peripheral detail of the model — it is the model. The debt load creates the pressure that drives everything else.

Companies paying 13 to 16 times EBITDA — earnings before interest, taxes, depreciation, and amortization — to acquire consumer-facing businesses are, by definition, paying a price that can only be justified by significant future growth or by significant cost extraction, or both. In a mature category like fast food, fast casual dining, or food processing, meaningful organic growth is difficult to generate. Which leaves cost extraction.

Cost extraction has a vocabulary: "operational efficiency," "supply chain optimization," "labor cost management," "quality assurance process streamlining." Translated into plain language, this typically means: fewer workers, lower-paid workers, reduced training, cheaper ingredients, smaller portions, higher prices, deferred maintenance, and the systematic erosion of the accumulated goodwill that made the brand worth buying in the first place.

The food quality falls. The worker who was trained to handle food safely now has thirty minutes of onboarding and an online quiz to complete. The supplier who provided real beef was replaced by one who met the new cost-per-pound target. The franchise owner, squeezed by royalty increases and mandated equipment purchases and supply chain changes they have no power to resist, cuts the only costs they can: labor hours and ingredient quality.

We say this anecdotally — we are a coffee roastery, not a food safety laboratory — but our experience eating at private equity-owned chains over the past decade has been consistent: foodborne illness incidents are more frequent, portion sizes are smaller, the flavor profile has migrated toward the synthetic, and the workers serving you look exhausted in a way that suggests structural understaffing rather than a bad shift.

We are not alone in this observation. The Guardian recently reported that private equity-backed companies have accounted for the lion's share of big corporate bankruptcies in 2025 and the first half of 2026, and that US consumers have felt private equity's impact through the deteriorating quality of some fast-food outlets and disappearing stores as brands under PE ownership go broke. The mechanism is not mysterious: when a company carries debt equal to 50 percent of its enterprise value, as recent studies show is typical for PE-backed firms, every dollar that cannot be extracted from operations to service that debt is a dollar that threatens the entire structure.

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II. The Zombie Horde: 33,575 Unsold Companies and a System That Is Eating Itself

Here is where the story gets tragicomic.

The private equity model depends, ultimately, on the exit. You buy the company, you extract value, you sell it — to another company, to another PE fund, to the public markets via IPO — and you return capital to your investors, collect your carried interest (typically 20 percent of the profits, taxed at the capital gains rate rather than the income tax rate, a policy choice that transfers tens of billions of dollars annually from Treasury to PE partners), and raise your next fund.

The problem is that the exits have stopped.

As of the most recent data available, private equity firms hold 33,575 unsold companies in their portfolios — up from 32,451 at the end of 2025 and approximately double the 15,923 held a decade ago. According to PwC, PE firms are sitting on approximately $1 trillion of unsold assets. The average holding period has reached its longest on record at 5.6 years, with the median at 6.1 years — well beyond the typical five-year fund cycle. A 2025 survey by EY found that 78 percent of PE firms are holding assets beyond their typical investment horizon. Many have exited five or fewer portfolio companies since 2018.

The Guardian described the industry as facing an existential crisis. Bloomberg was blunter: "Things aren't going all that great for private equity firms."

The cause is a collision of factors: rising interest rates that made new debt more expensive; a public markets IPO window that has been largely closed to PE-backed companies after a string of post-listing disasters; and, crucially, the growing recognition by potential buyers that many of these companies have been hollowed. The goodwill has been extracted. The workers have been demoralized and undertrained. The supplier relationships have been degraded. The brand, which was purchased at a premium precisely because of its accumulated trust with customers, is now worth less than the price that was paid for it — because the trust was spent to service the debt.

These are what the industry calls, with characteristic clinical detachment, "zombie companies": businesses that aren't growing, barely generate enough cash to service debt, and are unable to attract buyers even at a discount. They linger in portfolios, consuming management attention, producing nothing of value, unable to thrive and unable to die.

And the people inside them — the workers, the franchise owners, the suppliers — absorb the consequences. Wages cut. Benefits eliminated. Pensions at risk. The PE-backed companies that do fail typically enter bankruptcy, and as a Boston College finance professor bluntly noted, "by definition there is not enough money to go around to pay" the company's debts — and all too often, it is workers who are owed pensions who lose out. Private equity-backed companies have accounted for more than 60 percent of big manufacturing bankruptcies in recent years, and an outsized number of healthcare bankruptcies too.

The industry argues that because it caters to sophisticated high-net-worth investors, it doesn't need the same regulatory scrutiny as publicly traded companies. And yet the consequences of its failures fall on workers, consumers, franchise owners, and suppliers who are anything but sophisticated investors and who had no say in the transaction.

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III. Taylor Farms, the Supply Chain, and the Invisible Debt

The same logic that operates at Dave's Hot Chicken operates less visibly throughout the food supply chain.

Consider the produce sector. Taylor Farms, now the largest fresh-cut produce company in North America, has been through multiple private equity ownership structures. Its products are ubiquitous — in Costco, in Target, in the pre-packaged salad section of virtually every major American grocery retailer. The scale enables efficiencies. The scale also enables, and requires, the same pressure on labor costs, safety protocols, and supplier relationships that operates at every PE-backed food company.

When a salad kit travels from a California processing facility to a Target in Des Moines, it passes through a supply chain organized around cost minimization at every node. The workers harvesting the lettuce. The workers washing and cutting it. The transportation. The cold chain management. At each step, the pressure is the same: meet the cost target. The cost target is set by the debt service requirement of whatever private equity structure sits above it.

The FDA food safety recall data is available, though it requires patience to parse. We will not make specific accusations here. But we will observe that the consolidation of the food supply — fewer, larger, more leveraged companies controlling more of what Americans eat — is not a neutral development from a food safety standpoint. Consolidation increases the scale of failure when failure occurs. A salad contamination event that, twenty years ago, might have affected a regional supplier's customers, now affects a national supply chain serving millions of households.

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IV. The Iron Law and the Captured State

Robert Michels, the German sociologist, formulated his "iron law of oligarchy" in 1911: all organizations, even those founded on democratic principles, inevitably tend toward oligarchic control. The mechanisms of administration, coordination, and resource allocation naturally concentrate power in the hands of those who control them. The organization may begin as a democratic movement; it ends as a bureaucracy serving those at the top.

The iron law has a modern expression in American political economy that Michels could not have anticipated: the systematic capture of the regulatory apparatus by the industries it is supposed to regulate.

The process is deliberate and patient. Step one: industry lobby for self-regulatory organizations — the proposition that the industry should regulate itself rather than submit to external oversight. This is, of course, a mutually exclusive contradiction in terms, but it has been successfully institutiated across sectors from financial services (FINRA) to food safety to pharmaceutical pricing. The self-regulatory organization is staffed by industry veterans, funded by industry dues, and structurally incapable of the adversarial relationship that effective regulation requires.

Step two: identify and exploit regulatory gaps. This is the work of industry lawyers and lobbyists — finding the spaces between existing laws where activity can occur without triggering oversight. When those gaps are identified, the next step is to codify them: to get language into legislation or regulation that explicitly exempts the activity from scrutiny. This requires access to legislators and regulators, which requires campaign contributions, which requires the kind of organized capital that small businesses and individual workers cannot match.

Step three: full state capture. The revolving door between regulatory agencies and the industries they regulate is well-documented and structural, not incidental. The SEC official who becomes a hedge fund counsel. The FDA division director who joins the pharmaceutical company they previously approved drugs for. The USDA official who moves to the meat packing industry. These individuals are not corrupt in any simple, transactional sense. They are the product of a system that has organized itself so that the interests of the regulator and the regulated are structurally aligned, and the interests of the public are structurally external.

Roark Capital, to return to our concrete example, spent $480,000 lobbying in 2024. It actively opposes the PRO Act, which would restore many union rights. Its industry dominance — owning enough of the fast food sector to effectively set labor market conditions for millions of workers — gives it political influence that cannot be purchased directly but is nonetheless real and consequential. When Roark advocates for labor policy, it is not one company making an argument; it is a significant fraction of the entire fast food labor market speaking with a single institutional voice.

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V. The Labor Share and the Financialized Economy

Behind all of this is a number that deserves more attention than it receives: the labor share of national income.

The labor share — the percentage of total economic output that flows to workers as wages and compensation — has declined from approximately 69 percent of GDP in 1970 to around 62 percent today. Seven percentage points. It sounds modest. Applied to an economy of $28 trillion, it represents roughly $2 trillion per year flowing away from labor and toward capital. That is the compound effect of forty years of policy choices: weakened unions, suppressed minimum wages, the proliferation of contract work, the offshoring of manufacturing, and the financialization of corporate governance.

Half of the decline in the labor share of national income since 1970 has been specifically attributed to financialization — the growing dominance of the financial sector and financial logic in the economy as a whole. The financial sector, which before 1939 represented less than 1 percent of GDP in wages and profits, now stands at 7 to 8 percent. Financial assets have expanded dramatically relative to any measure of real economic activity. Profits in the FIRE sector — finance, insurance, and real estate — have soared since 1980, with a brief interruption during the 2008 crisis and a full recovery since.

The logic of the financialized economy is, at its core, the logic of the leveraged buyout applied everywhere: identify cash flows, load them with debt, extract the surplus, move on. The companies that survive this process are the ones that can bear the extraction. The workers inside them bear the cost of it. The consumers who eat the food, use the service, live in the housing are the ultimate revenue source being optimized against.

Meanwhile, 89 percent of stocks are owned by the richest 10 percent of the population. Capital gains, taxed at lower rates than wages, flow overwhelmingly to the already wealthy. The carried interest exemption that allows PE partners to pay 20 percent tax on their returns — while the worker who delivers their food pays 37 percent — is a policy choice that has survived every attempt at reform, because the people who benefit from it have the resources to ensure its survival.

Social cohesion has a breaking point. We are not political scientists, and we will not pretend to know where that point is. But we observe that the conditions Piketty described as incompatible with democracy — extreme concentration of wealth, the capture of political institutions by economic elites, the erosion of the middle class — are not theoretical projections. They are the present.

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VI. What We Think, Making Coffee

We are a small roastery in Clear Lake, Iowa. We buy coffee from cooperatives. We pay fair prices. We keep honest books. We are not carried interest. We are not a zombie company. We have no institutional investors, no leverage, no special purpose vehicle, no whole-business securitization structure.

We are, in the language of the current economy, inefficient. We are a single-unit operation producing a premium product at small scale and selling it to people who care about where it comes from. We are the kind of business the financialized economy has no particular use for — too small to roll up profitably, too focused on quality to be degraded into a debt-service vehicle, too committed to its supply relationships to treat them as cost centers to be optimized.

We think this makes us important, not in spite of those things but because of them.

The alternative to the enshittified economy is not nostalgia. It is production — actual production, of actual things, by actual people, in service of actual customers who can taste the difference. It is the kind of economic activity that creates value rather than extracting it, that builds relationships rather than monetizing them, that leaves the worker, the supplier, and the customer better off than it found them.

That economy is not naive. It requires, as it always has, the political structures to support it: labor law that gives workers bargaining power, antitrust enforcement that prevents the Roark Capitals of the world from owning every chicken sandwich and every submarine and every donut in the country simultaneously, tax policy that does not systematically reward financial extraction over productive work, and regulatory agencies staffed by people whose career interests align with the public interest rather than the industry.

The zombie companies will eventually be sold or liquidated. The debt will eventually be restructured. The workers and consumers who absorbed the costs of all of this will not be compensated. That is how the cycle has worked, and nothing in the current political economy suggests it is about to change.

But the alternative exists. It is being built, one honest cup of coffee at a time, in roasteries and bakeries and independent pharmacies and small farms and family restaurants across this country, by people who have decided that the quality of what they make and the fairness of how they make it matters more than the multiple of EBITDA at which it might eventually be sold.

We are among them. We are staying.

 Six reasons for making Clear Lake Coffee Roasters - CLCR - your go-to coffee roaster:


☕️ We are a local family-run business located in the heart of Clear Lake, Iowa.

☕️ We go to great lengths to find only the finest and ethically sourced coffee around, from the top 2% of coffee beans in the world.

☕️ We only source 100% certified Arabica coffee beans, carefully hand-selecting each coffee based on specific quality and taste attributes.

☕️ Our roasting process has been refined over the years and each roast profile is individually designed to complement the nuances of the coffee we source, from Cup of Excellence (COE) award-winning producers.

☕️ By roasting in smaller batches, we can ensure our coffee is ALWAYS fresh, in fact, we roast your coffee only after you place an order - the same day your order ships out.

☕️ At CLCR, we are dedicated to a single mission: the unyielding pursuit of coffee perfection in every cup.

We would give you more reasons, but rather than reading it's better if you visit our website, purchase a bag or two, and experience a unique caffeinated or half-caff journey for yourself 😊!
Explore goodness. Click. Buy. Smile.

Clear Lake City Park Beach - Named one of USA Today's top 50 Beaches in the United States

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Clear Lake Coffee Roasters LLC · 15068 Hill St · Clear Lake, Iowa 50428  clearlakecoffeeroasters.com

Sources: The Guardian, "Private Equity Faces Existential Crisis in US as Unsold Companies Pile Up" (2026); Inc. Magazine, "Private Equity Is Stuck With 33,575 Unsold Businesses" (2026); CNBC, "Why Private Equity Is Stuck With Zombie Companies It Can't Sell" (2025); EY Private Equity Exit Readiness Survey 2025; PitchBook/PwC analysis of PE portfolio holdings; Food & Power, "Roark Acquires Another Fast Food Chain, Dave's Hot Chicken" (2025); BU Economics in Context Initiative, "The Financialization and Rising Inequality of the US Economy" (2022); Paul Krugman, "Against Oligarchy, Part III" (2026); Robert Michels, Political Parties (1911); Thomas Piketty, Capital in the Twenty-First Century (2014); Economic Policy Institute, CEO Pay data 2024.