Kraft Heinz cut expenses too deeply under private equity management, its new CEO says

[BumRushDaShow]

Source: Business Insider

Feb 24, 2026, 4:29 AM ET


Kraft Heinz, the company known for hot dogs, ketchup, and mac and cheese, has gone hungry for too long, according to its new CEO. The company, created in 2015 through a high-profile merger by private-equity firm 3G Capital, made deep cost cuts a focus of its strategy for managing big food brands like Oscar Mayer and Jell-O.

Steve Cahillane, who became Kraft Heinz's CEO last month, says the cost-cutting went too far.

Speaking on Thursday at the Consumer Analyst Group of New York conference in Orlando, Cahillane said that the cuts hurt Kraft Heinz's financial results. The company's shares are down roughly 74% from their 2017 high, and it expects organic net sales to decline between 1.5% and 3.5% this year.

"If you don't have the people and the capabilities, it's really difficult to deliver," he said. "We've been operating too lean, and we acknowledge that, and we're going to fix it."

Read more: https://www.businessinsider.com/kraft-heinz-cut-expenses-too-deeply-private-equity-owner-ceo-2026-2

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Kraft Heinz's CEO last month, says the cost-cutting went too far.

(snip)

"If you don't have the people and the capabilities, it's really difficult to deliver,"

Um duh.

The whole end goal of "private equity" is to suck the life out of the companies they buy, discard what is left, and move on.

These people were so steeped in their "buzz-word world" that they really believe their hype. They are about to repeat the same mistake again assuming "AI" is going to solve all their woes.

[WSHazel]

1. That is not how private equity works

Private equity has created tens of millions of jobs around the world. It encourages investment in companies and tries to turn around troubled businesses. It funds innovation. Prior to private equity and junk bonds it was impossible for small and struggling companies to get capital at reasonable valuations. Now, there is lots of capital available.

Also, private equity backed companies have much, much higher employee ownership than other types of companies.

Do private equity funds screw up? A lot, just like everybody else, and it looks like they screwed up here. Don’t generalize an entire industry because of a problem with one deal.

[Miguelito Loveless]

4. I have watched "private equity" groups

buy business for years. Same MO: Buy company. Max out the acquired companies credit lines. Pay off investors. Fire everybody in the company with critical institutional knowledge because they cost too much. Slash salaries, benefits, preventive maintenance, sell off anything useful (IP, subsidiaries, customer data, etc) to other private equity groups, and turn the company into a walking corpse. Bankruptcy follows, but the original "investors" got theirs so who cares?

[LiberalArkie]

8. Yep, they buy the companies with loans under the companies names. Loans that pay the "Private Equity" owners. Then

the companies have cash flow problems as their credit lines are maxed out. Companies are then piece-mealed out also benefiting the new owners. The pension funds are raided to benefit the owners. The companies cease to exist. The "Private Equity" owners buy a new island and a few more jets and yachts.

[uncle ray]

11. one of the things i learned is the loans are often variable rate loans.

which was a death blow to my former employer when rates went up in the post covid economy, completely unworkable in a company with long term pricing agreements with customers with legal departments larger than our company.

[Miguelito Loveless]

25. Exactly

Ghouls!

[WSHazel]

35. The investment you described would lose money for pe firm

The private equity firm can not pull enough money out of the investment through dividends alone to generate a sufficient return. They need to grow the business or their returns will be very modest or negative. In reality, there are not a lot of these “strip the company to the bones” kind of deals that actually work for anybody, and when you see it, it’s usually because the company itself is not doing very well.

[Miguelito Loveless]

38. I have seen it happen many times

Hell, they have approached our company many times to buy it because it has stellar credit and no debt. Other companies who sold (usually family-owned) saw the new owners take out huge loans (used to pay off investors), then cut everything in sight to pay back the loans. They sold off assets piecemeal, fired long time employees and hired younger, cheaper, less experienced employees. The company wobbles along for 5-10 more years and goes under, with creditors/employees left holding the bag.

[WSHazel]

40. Companies are too expensive now

That stuff worked 40 years ago. Do the math:

Assumptions:

EBITDA: $20 million
Purchase price: 12x EBITDA ($240 million)
Debt: $120 million (optimistic, probably less)
Equity: $60 million

Interest costs on debt would be over $10 million a year. Capex and debt service will eat up a lot of the rest of it. The only way the PE can make money is to grow the company. If the company goes under, the PE loses $60 million.

[Miguelito Loveless]

41. We get offers monthly, so

someone is buying companies.

[WSHazel]

47. You probably are getting inbound calls from analysts

The PEs are so desperate for deal flow that they have junior analysts cold call companies. Most of those analysts are just sucking data out of whoever will answer the phone, but they will put an offer in if their boss likes what they hear. That is another sign that the PEs have to pay too much for their investments to get away with the "sell it off for parts" approach. They have to grow their companies.

[uncle ray]

7. the "good" PE does is akin to an abusive husband buying his wife flowers.

i've observed from afar for years, then spent years at a company that went from local private ownershit to being passed from one PE firm to another before i had to quit due to the lack of ethics brought to the business by the PE firms. i worked at a level that i interacted directly with these vultures so my first hand experience confirmed what i have read and heard for years. my former employer is now winding down operations and firing over 100 people after being stripped of assets and burdened with unmanageable debt.

at a bare minimum we need regulation and transparency of PE.

[BumRushDaShow]

9. "That is not how private equity works"

In "theory", that is NOT how they are supposed to work.

But IN PRACTICE, buying up sometimes struggling businesses (most recently, hospital systems), where, without ANY knowledge about the business they are funding, they gut the place and spit out the remains.

Go do a search on all the "hospital systems" that were destroyed by the greed of the "practice".

As an example, here in the Philly metro area in Delaware County, a hospital that was founded in 1893, that gradually went through a series of mergers over a century to create a "hospital system", with multiple affiliated hospitals, runs into a hedge fund group that parachuted in from California (Prospect Medical Holdings), who saw a gold mine to exploit.

And as they drained the place, closing 2 of the hospitals as they were feasting, the state of PA sued to halt the corporate largess -

Pa. AG sues Prospect Medical Holdings for ‘corporate looting’

By Kenny Cooper Updated Oct. 30, 2024 3:25 pm

(snip)

The effects of private equity on Delco’s health care

Kearney highlighted the necessity to remember Prospect’s “original sin.”

“In 2019, the private equity firm, Leonard Green & Partners, loaded Prospect Medical Holdings with hundreds of millions of dollars in debt in exchange for a massive stakeholder dividend,” Kearney said. “This weakened Crozer financially, turning it into a house of cards.”

Prospect first acquired Crozer in 2016. Henry asserted that Prospect agreed to keep acute care services at its four hospitals open for a period of no less than 10 years. Now, only two of its hospitals are operational. Krueger said her district has been forced to live with the fallout of private equity.

“I have lost count of the number of times a nurse or doctor has reached out to me to tell me they didn’t have the supplies that they needed to treat their patients because Prospect refused to pay the vendor bill or that their caseloads were unmanageable because Prospect wasn’t willing to schedule enough nurses or doctors for that shift,” Krueger said.

(snip)

These were known vulture capitalists -

Crozer Health’s parent company has a long history of siphoning millions from its hospitals. Pa. officials were warned, but their hands were tied

By Kenny Cooper May 23, 2022

(snip)

But healthcare observers say Crozer’s troubles go back to a business deal that was initiated in 2019 — one that Pennsylvania officials were warned about, but had little power to stop.

That deal was made between Prospect’s previous owner, a private equity firm called Leonard Green & Partners, according to ProPublica. The firm siphoned $645 million from Prospect before announcing a deal to sell it in October 2019. The ProPublica report details how the transaction would hobble Prospect with $1.3 billion in lease obligations. This is after the company sold most of the hospital land to a real estate investment firm.

Leonard Green & Partners, which owned about 60% of the hospital chain, wanted to pass along its share to Prospect CEO Sam Lee and his associate, David Topper, for $12 million. This would give them 100% ownership control over Prospect.

The catch? The $12 million bill was footed by Prospect, and not the two executives — a deal that some believed was sure to leave hospitals owned by Prospect in dire financial straits.

(snip)

Last year, the rest of the hospitals in the system closed down, leaving the 5th largest county in the state of PA by population, with ZERO hospitals.

Right now, through various efforts, as of last month, a buyer was found and things are happening to put the pieces back together.

[Farmer-Rick]

20. That was a thorough documentation

There's a lot of terms used to describe private equity firms. Vulture Capitalism was coined for private firms like Bain Capital. That was Mitt's vehicle of corporate destruction.

But with hospitals, private equity was responsible for losing most of our surge capacity in our healthcare. That's why hospitals couldn't meet the demand during COVID. To bankers and elite capital investors back up capacity is just money waiting to be pocketed.

"The impact of private equity ownership is notable in specific sectors. In manufacturing, private equity-backed companies accounted for 60% (3 of 5) of the largest bankruptcies.

In the largest consumer discretionary bankruptcies, private equity-backed companies account for 71.43% (5 of 7), including brands like Joann Fabrics, At Home, and Claire’s. "https://pestakeholder.org/reports/private-equity-bankruptcy-tracker/

That site has a lot of good info about private equity firms involved in a huge number of business bankruptcy.

[BumRushDaShow]

27. Wikipedia actually has some other examples that fell on the sword (or are in process of such) of PE firms

including one of my old hang-outs - "Radio Shack"!

https://en.wikipedia.org/wiki/List_of_private_equity_owned_companies_that_have_filed_for_bankruptcy

[Farmer-Rick]

32. Good info

Thanks!

[WSHazel]

36. By this logic, no one should provide capital to troubled companies

If the private equity firms are gonna be held responsible if a company goes up bankrupt, then the smart move for a private equity firm is to never give capital to companies that might get into trouble. This is how the world used to be, and generally when a company got in trouble, it would just go out of business or would be purchased dirt cheap, wiping out the original investors and resulting in most employees getting fired. By taking on some of these challenging situations, private equity firms actually give these companies a second chance, but there will be failures. It is worth noting that the private equity firm typically loses all its investment if the company goes bankrupt.

[BumRushDaShow]

42. It needs to be regulated

THAT has been the whole problem.

You saw similar with the mortgage crises that triggered the "Great Recession" and all the bullshit junk bonds and people selling "bundles of pieces of mortgages".

It's smoke and mirrors.

"Providing capital" to spur business is something that the stock market already does, but there are regulations there (although efforts continue to tighten that up to limit or stop the "stock buybacks", particularly when the government swoops in to rescue failed business models).

I watched my own hometown newspaper - the Philadelphia Inquirer - get gutted and eviscerated by shady "Private Equities" and although it is alive today, it's only barely (like far too many other newspapers) after a series of sales that made up a sordid fiasco (and one of my BILs lost his job and had his pension screwed around with, during the phases of that after 20 years working there) -

https://www.pewresearch.org/journalism/2006/05/24/philadelphia-story/
https://www.inquirer.com/philly/business/20100428_Bidding_finally_begins_to_Inquirer__Daily_News_and_Philly_com.html
https://whyy.org/articles/delaware-judge-hears-philly-newspaper-union-plan-to-buy-inquirer-and-daily-news/
https://www.inquirer.com/philly/business/20160112_Lenfest_donates_newspapers__website_to_new_media_institute.html

[WSHazel]

37. Who would you rather have owning the hospitals?

Who would be better owners of the hospital? And what would be the incentives for those owners if they knew they could never sell their hospital to a private equity firm? How would they ever find a buyer for the company? What would be their incentive to invest money in that hospital to modernize or improve it if they were never gonna get that money back at a sale?

[BumRushDaShow]

45. NON-PROFITS

There should be NO FOR-PROFIT ENTITIES involved in "healthcare".

One of the best Children's Hospitals in the world is right here in Philly - Children's Hospital of Philadelphia (CHOP) and it is run/managed by a FOUNDATION - Children's Hospital of Philadelphia Foundation

Here is a recent analysis about their business model -

CHOP was Southeastern Pa.’s most profitable nonprofit health system in first quarter of fiscal 2026. Four systems lost money.

I can't even begin to describe the evolution of that hospital since I was a kid who had to stay there for a procedure in the old original building decades ago, and how the charitable fundraising took it to an incredible multi-building complex, with several high rises.

The latest building on CHOP's campus is under construction right now and scheduled to open in 2028 (the tall tower in the center of the pic as rendered) -



NONE of that was there when I was there in the '60s.

[Mr. Mustard 2023]

13. That is exactly how private equity firms work.

They buy businesses sell off asets then dumps loyal employees, usually tanking their pension plans if they have one. Private equity firms invent & create nothing, except spreadsheets and misery.

[popsdenver]

21. The Private Equity Firms

are taking over ALL KINDS of industries......easy pickings !!!!!!!!!!!..............leaving carnage in the wake..............

It will all come to a head sometime soon.............

[LuvLoogie]

18. Well they are fucking up the housing market for both renters and would be owners.

Also fucking up municipal water utilities and healthcare. Pretty much anything in the commons they will raid and commoditize. Why? They don't build anything or create anything. They drain labor and asset equity and leverage debt. Suckers, skimmers, and price fixers. They will saddle their brands with cost-cut derived debt to undercut independent competition, then buy/raid those independent brands if they fall under pressure. It's all for stock bump, which they raid as well then bail.

[WSHazel]

39. THEY are not the ones messing up the housing market

Trump‘s 2017 tax bill effectively eliminated the tax deduction for mortgage interest for individual homeowners by increasing the standard deduction. Investor owners still have a tax deduction for mortgage interest, because it’s a business expense. As a result, an investor owner has advantage on buying a house over a resident homeowner. This is why private equity and a lot of mom and Pop investors own so many homes.

The government should not give investors an advantage over residents in the housing market.

[Cirsium]

24. Yes, it is

Your post reads like a boilerplate PR screed for the financial industry.

Inside the Private Equity Scam—and the Livelihoods It Has Destroyed

Ostensibly, private equity firms flip underperforming private companies kind of like houses: The firms raise capital to buy “distressed assets” wholesale, take out (often massive) loans to cover a rehabilitation job, and pay their investors when the business either goes public or is sold. Greenwell locates the origin of these leveraged buyout arrangements in the “bootstrap deals” of the 1960s, when financial firms took on companies that were successful but too small to go public. Within a decade, opportunistic executives started targeting larger companies. By the ’80s, hostile takeovers of Fortune 500 companies became common, if not exactly the norm.

Today’s private equity landscape is vast: Once you’re attuned to the industry’s hold on nearly every aspect of American life, it feels impossible to escape. My local grocery, an iconic New York institution once owned by a family that pledged to hire union-represented locals and maintain the lowest prices in the city, was sold in 2020 to a national chain after a takeover from Sterling Investment Partners. On my beat, covering the health care industry, I was regularly confronted with the realities of staffing shortages and closures stemming in part from private equity firms’ attempts to bring budgets down to cover their debt. And I saw private equity’s obsession with becoming “agile” and “lean” reflected in the way the Department of Government Efficiency has deliriously hacked away at programs it has neither the capacity nor the will to understand.

As recounted in Greenwell’s book, stories like these aren’t simply anecdotal. Private equity’s influence on the economy, and our livelihoods, is significant. Twelve million Americans, she writes, work for companies that are owned by private equity. The industry operates 8 percent of private hospitals, four out of five of the largest for-profit day care chains, and currently controls $8.2 trillion in assets—a number that accounts for more than the GDP of any country besides China and the United States. And, where 2 percent of companies go bankrupt within 10 years of their founding, that number jumps to 20 percent when private equity is involved. Between 2009 and 2019, 1.3 million Americans working in retail lost their jobs as a direct result of the industry’s touch.

Private equity’s central conceit is that financiers, not skilled workers or industry experts, are best positioned to figure out what makes any given business work. In her reporting, Greenwell makes a detailed argument for the fundamental misguidedness of this stance. Many private equity managers don’t know very much at all about the businesses they run. They’re experts in markets, not trades. So it’s no wonder they hop from industry to industry deploying the same tactics, cutting jobs and saddling companies with debt and inking extractive real estate deals. Hospitals, newspapers, rental apartments, and toy stores have wildly different business models. But to a private equity firm, they’re all the same.

https://newrepublic.com/article/198351/private-equity-scam-destroys-livelihoods

Why Private Equity Should Not Exist

So what is private equity? In one sense, it’s a simple question to answer. A private equity fund is a large unregulated pool of money run by financiers who use that money to invest in and/or buy companies and restructure them. They seek to recoup gains through dividend pay-outs or later sales of the companies to strategic acquirers or back to the public markets through initial public offerings. But that doesn’t capture the scale of the model. There are also private equity-like businesses who scour the landscape for companies, buy them, and then use extractive techniques such as price gouging or legalized forms of complex fraud to generate cash by moving debt and assets like real estate among shell companies. PE funds also lend money and act as brokers, and are morphing into investment bank-like institutions. Some of them are public companies.

While the movement is couched in the language of business, using terms like strategy, business models returns of equity, innovation, and so forth, and proponents refer to it as an industry, private equity is not business. On a deeper level, private equity is the ultimate example of the collapse of the enlightenment concept of what ownership means. Ownership used to mean dominion over a resource, and responsibility for caretaking that resource. PE is a political movement whose goal is extend deep managerial controls from a small group of financiers over the producers in the economy. Private equity transforms corporations from institutions that house people and capital for the purpose of production into extractive institutions designed solely to shift cash to owners and leave the rest behind as trash. Like much of our political economy, the ideas behind it were developed in the 1970s and the actual implementation was operationalized during the Reagan era.

Now what I just described is of course not the rationale that private equity guys give for their model. According to them, PE takes underperforming companies and restructures them, delivering needed innovation for the economy. PE can also invest in early stages, helping to build new businesses with risky capital. There is some merit to the argument. Pools of capital can invest to improve companies, and many funds have built a company here and there. But only small-scale funds really do that, or such examples are exceptions to the rule or involve building highly financialized scalable businesses, like chain stores that roll up an industry (such as Staples, financed by Bain in the 1980s). At some level, having a pool of funds means being able to invest in anything, including building good businesses in a dynamic economy where creative destruction leads to better products and services. Unfortunately, these days PE emphasizes the “destruction” part of creative destruction.

The takeover of Toys “R” Us is a good example of what private equity really does. Bain Capital, KKR, and Vornado Realty Trust bought the public company in 2005, loading it up with debt. By 2007, though Toys “R” Us was still an immensely popular toy store, the company was spending 97% of its operating profit on debt service. Bain, KKR, and Vornado were technically the ‘owners’ of Toys “R” Us, but they were not liable for any of the debts of the company, or the pensions. Periodically, Toys “R” Us would pay fees to Bain and company, roughly $500 million in total. The toy store stopped innovating, stopped taking care of its stores, and cut costs as aggressively as possible so it could continue the payout. In 2017, the company finally went under, liquidating its stores and firing all of its workers without severance. A lot of people assume Amazon or Walmart killed Toys “R” Us, but it was selling massive numbers of toys until the very end (and toy suppliers are going to suffer as the market concentrates). What destroyed the company were financiers, and public policies that allowed the divorcing of ownership from responsibility.

https://www.thebignewsletter.com/p/why-private-equity-should-not-exist

[IbogaProject]

33. OP was conflaiting Leveraged Buyouts with Venture Capital

The Reagan Administration caused this mess allowing share repurchases to be done with pretax dollars.

[niyad]

34. Have you taken a look at all the medical practices pef's have bought,

and what that has done to our already-pathetic "health care"? What they are doing to real estate, mobile home parks, availability, affordability? Seriously, your defense of these rapacious firms is mind-boggling. Could you provide links to your glowing assertions? I, for one, would be very happy to see that all the evidence I have seen of their ugly corruption is unfounded. We need all the actual, legitimate, good news we can get.

[walkingman]

2. The term "buzz-word world" is so perfect to describe the madness in both private and the business world.

It's like a virus that spreads at the speed of light.

[BumRushDaShow]

10. Weird Al Yankovic wrote a song about it (one of my recent faves from him)

[progressoid]

19. I'm sending that to my spouse

She's a fan of CSNY and has to endure those types of videos at work.

[BumRushDaShow]

28. I have had to write up a many justifications for stuff

before I retired, using terminology like that, which we dubbed "verbal vomit".

(yes, the federal government was infested with that stuff)

[progressoid]

30. She has to review

stuff like this.

Now she's noticing AI generated slop pop up in various presentations. One even invented a new word! When she brought this up at a meeting, nobody seemed to know what it meant.

[BaronChocula]

44. Serious CSNY/Dylan vibes

Never heard Weird Al so serious.

Incidentally, "Weird: The Wierd Al Yankovic Story" made me laugh my ass off.

[BumRushDaShow]

46. He excels at doing song parodies

so that is why the CSNY "sound-alike".

On that same album (which was actually his first to hit #1 on the Billboard Albums chart in 2014) was his parody of Ziggy Azalea's "Fancy" -

[Miguelito Loveless]

3. Any company that is bought by

a "private equity" fund is doomed.

[popsdenver]

22. I have, for some time,

stated Companies/Industries taken over by Private Equity is a kiss of Death..........

The massive population of America doesn't have a clue what I'm referring to.........

WHILE THE NATION SLEPT...........

[lonely bird]

5. In other news

Water is wet.

[FakeNoose]

6. Does that mean they're going to rehire all the employees in Pittsburgh that got laid off?

Yeah ... I didn't think so.

[highplainsdem]

12. Some quick googling showed the company started putting a lot of emphasis on AI a couple of

years ago. Wonder if that's part of the problem.

[sakabatou]

14. It's ALWAYS private equity that fucks things up!

[Jacson6]

15. I had hot dogs and Mac & Cheese growing up.

There were 5 of us kids and Mac was 25 cents a box and a package of 12 hot dogs for $1.50 fifty years ago. Of course, we loved it and my parents loved the money it saved them in the hard economic 70's

[Zackzzzz]

16. When someone says private equity, I think of Romney.

He went so low as to even raid workers pensions.
And, my god, he ran for president?

[xuplate]

17. This is what private equity does

They buy a company, load it with debt, squeeze every drop of profit and stuff there customers. They seem to have no pride in offering a quality product or service. There is serious damage done when they buy into the healthcare industry. Adequate staffing is the first casualty. .

[C Moon]

23. "The whole end goal of "private equity" is to suck the life out of the companies they buy, discard what is left..."

That has happened to me at two long term jobs that I had. And I loved both jobs.
They bring in the guys with the suits, and you know it's all over.
Kind of like Office Space.

[Initech]

31. Yup, private equity is a virus.

I know people who work in the industry, and apparently their company has an extremely terrible reputation.

[bucolic_frolic]

26. So in order to save the company they need to increase costs

of already higher-end products. Build it and consumers will come.

I think they'll drive it into bankruptcy

[BumRushDaShow]

29. The other problem in this case, that is unspoken

is that you have a whole CADRE of "business media" who can make or break any company but insisting on some astronimic ROI or "profit margin". And if that company fails to meet the media's "expectations", then they are SOL.

So it's a self-sustaining pestilence that encourages pushing the wealth to the corporate heads, no matter how.

[Aristus]

43. Wait; you mean those private equity frat boys don't know how to run businesses? I'm shocked!

This is my shocked-face:

Maybe getting rid of everything that attracted customers to their product or service in the first place, cutting corners, doing everything on the cheap isn't so good for business after all. Oh well; as long as share-holder value keeps going up...