Another One Bites The Dust – Bennigan’s Restaurants

We’ve been playing a lot of Queen lately, here at Routing By Rumor world headquarters. Especially this tribute to all of the victims of the U.S. economy. It’s too bad that Washington still can’t bring itself to accepting what most Americans already know.

The latest victims are the restaurants owned by S&A Restaurant Corp., which is part of Texas-based Metromedia Restaurant Group, which is part of the privately held Metromedia Company, owned by the 93-year-old billionaire philanthropist John Werner Kluge.

About John Kluge…

Columbia University in New York City announced last year that Mr. Kluge had pledged $400 million to the University, the largest gift in it’s history. With a little less than $10 billion to his name, poor Mr. Kluge is all the way down at #31 on Forbes magazine’s list of the 400 richest Americans, just below Nike’s Philip Knight, but ahead of eBay’s Pierre Omidyar.

Apparently, all of their company owned locations in the United States have closed, and they have filed for Chapter 7 bankruptcy. This past June, Metromedia disputed the accuracy of this report in the Wall Street Journal, that claimed they had already prepared a bankruptcy filing. There were about 150 company owned Bennigan’s restaurants, and 58 Steak and Ale restaurants. Apparently, a smaller number of franchised Bennigan’s locations in the United States and elsewhere are remaining open for now. Restaurants operating under the Ponderosa Steakhouse and Bonanza Steakhouse brands, also owned by Metromedia Restaurant Group, appear to be staying open for now.

John Werner Kluge (photo credit: columbia.edu)

As has been the case at many other companies that have crashed and burned, many Bennigan’s employees were unaware of the closings until they showed up for work last Tuesday, and were greeted by a sign on the locked front door giving them the good news (If you look closely at the photos in this article from the Fort Worth Star-Telegram about the closings, we believe you’ll see a locksmith changing the lock on the front door at a Fort Worth, Texas Bennigan’s …yup, good call, since this article identifies the locksmith!). What ever happened to the good old two weeks notice when your job is about to self-destruct ? OK, maybe two weeks is asking too much… how about 24 hours notice. Maybe it’s just us, but we don’t think that any employer worth working for would treat their employees that way. We think it shows a complete lack of class. We understand that S&A Restaurant Corp. was probably in dire financial straits, but couldn’t they have done better by their employees ?

These days, it is standard procedure for employers to state right there on the job application that it is “employment at will”, and they can terminate you at any time, for any reason, or for no reason at all. For certain, this is driven by the fear of lawsuits, but how the hell can they expect to hire employees who will be committed to the company, if the company won’t make any commitment to their employees ? To us, this is a prime example of the sorry state of American business in the 21st century. And employers wonder why they can’t find loyal, dedicated employees. They wonder why people quit without giving them fair notice. How much notice did Metromedia give their employees about the fact that they would be closing their doors? None. Yet there were published reports a month or two earlier that Metromedia had already prepared a bankruptcy filing.  Shame on you, Mr. Kluge. Those were some of your hardest working and lowest paid employees, who helped you get to #31 on the Forbes list. Welcome to the era of the disposable employee.

In our mind, employees of other Metromedia businesses have every right to simply pick up the phone one day, and tell their boss they won’t be coming to work any more.  If management at any company has a problem with loyalty like that, just remind them that it was their decision to classify you as an “at will” employee, and that you are simply exercising the freedom that being “at will” gives you.

The asymptotically decreasing tenures of the last few CEO’s at Metromedia Restaurant Group (MRG) may shed some light on the troubles at the company. Clay Dover resigned as CEO in late May after holding that position for about six months. Mr. Dover had previously held other positions at MRG, and had replaced Vince Runco, who had been MRG’s CEO for less than a year. Mr. Runco replaced Jeff Moody, who was CEO for about 18 months. Mr. Moody had replaced John Todd, who held the CEO title at MRG for just shy of two years.

Published reports have questioned whether the affected employees will be receiving their paychecks for hours worked up until the restaurant closures, and whether consumers who hold gift cards from the two chains will receive refunds. Our advice… don’t hold your breath. Of course, if Metromedia Restaurant Group wanted to show it’s loyal customers some goodwill, they could announce that gift cards from their Bennigan’s and Steak and Ale restaurants will be honored at their Ponderosa and Bonanza Steakhouse locations. But again, don’t hold your breath.

The minimally carnivorous, quasi-vegetarian staff at Routing by Rumor has never set foot in either a Bennigan’s or a Steak and Ale, so we don’t know if we missed much, but for thousands of their employees now out of work, it’s a disaster. Restaurant workers are among the lowest paid workers, and in the very tough economic times we are experiencing now, they will have a difficult time finding employment.

This brings up another hardship that restaurant workers in the United States are subject to. Many employees allege that they are forced to share their tips with managers and other employees. By law, employers can’t require employees to share their tips with management. To make matters worse, restaurant workers are not subject to the same minimum wage standards that other workers are protected by. As long as their salary plus their tips equal the mandated minimum wage, their employers are within the law. This means that in many cases, they are paid virtually nothing by their employers. Here’s an article from Nation’s Restaurant News, that describes many of the abuses that restaurant employees allege, and some of the litigation that has resulted, involving some of the largest and best known restaurant chains in the country, including names like Applebee’s, which is owned by IHOP.

As of this morning, it appeared that the websites for Bennigan’s (www.bennigans.com), Steak and Ale (www.steakandale.com), and Metromedia Restaurant Group (www.metromediarestaurants.com) had all been taken down. And the vultures are already starting to swoop down and pick through Bennigan’s remains. Check out this article about a locksmith that was hired to change the locks at a Florida Bennigan’s location, and decided to load up his van with liquor and food that remained in the restaurant. He got caught.

– Routing By Rumor

CompUSA Goes Belly Up

As Queen elequently put it, Another One Bites The Dust (watch the youtube video)

… and now, we can report that CompUSA bytes the dust.

Gee Whiz, I must be psychic or something. Just a few days ago, I posted a comment on this blog that CompUSA, a chain of computer stores in the United States, would soon bite the dust.I just stumbled across this article on Reuters and this article on cbsnews that confirms that CompUSA is on it’s way out. According to Reuters, the chain has been sold to the liquidation outfit Gordon Brothers. They will be closing the remaining 103 CompUSA stores in early 2008. No surprise, actually, since CompUSA closed most of it’s stores earlier this year. In recent years, CompUSA was controlled by Mexican businessman Carlos Slim Helu, reportedly the richest person on the planet, even wealthier than Bill Gates or Warren Buffet (see this Fortune article on Carlos Slim).

Have you ever seen a tree that was pruned to death? After a certain amount of pruning, the death of the tree is inevitable, because it can’t absorb enough sunlight to survive. So too with computer retailers (or any business, I suspect). I was quite certain that it was simply a matter of time before CompUSA was history. That time appears to be at hand.

I don’t have an MBA. I’m not an accountant or a retail executive. I’m a computer geek. But I know mismanagement when I see it, and CompUSA was a poster child for piss-poor management. I can’t tell you how many times I went into one of several local CompUSA stores to purchase sale items and came up empty-handed. So, I would walk over to one of the computer terminals that the sales staff used, and I would enter the SKU of the item I was looking for. Nine times out of ten, the computer showed that the store had stock on hand, sometimes a large quantity, but it was nowhere to be found. A few times, when I would pester one of the salespeople to go check the stockroom, they would usually find the item in the back, and bring one out for me. Sometimes, they wouldn’t want to bother because they did not have any confidence in the inventory quantities shown in the computer. Maybe that was just an excuse because they were lazy, or maybe their inventory tracking really was inaccurate. Sometimes they would say it was in the store somewhere, but they didn’t know where.

What a joke. I mean, if you go through the trouble of ordering inventory, printing up a sale circular, and shipping the item to your stores, but you don’t follow through and put the stuff out on your sales floor so it will sell, you don’t belong in business. This wasn’t a rare occurance. It was the status quo at CompUSA. I am confident that if you put me in charge of CompUSA, I could have done a better job. Who knows, maybe I could have saved them. I think part of the problem was that the chain had changed ownership years ago. When any business gets sold, especially if the new owners are investors and/or absentee owners who don’t know the business, look out. With some very rare exceptions, nobody will do as good a job running the business as the person or people that founded it. They don’t have the same passion. If the business fails, they’ll just move on to something else. There’s little devotion or emotional attachment, because it’s not their baby.

The sales people at CompUSA were rarely motivated. I suppose they didn’t earn enough to get real excited about their jobs. The store management was pitiful. There were a couple of employees at the CompUSA I frequented the most who did work hard, and I felt very badly for them losing their jobs when that store closed.

I recently posted this article about rebate scams. I had more than my share of problems with rebates on items I purchased at CompUSA. I complained a number of times, both to the CompUSA store where I purchased the items, and to their customer service phone number. There were many rebates on items I purchased at CompUSA that I got cheated out of, and never received.

You know, to be honest, CompUSA was never my favorite computer store anyway. I preferred the Computer City chain, which closed circa 1998 or 1999, if memory serves me correctly. Computer City was purchased by CompUSA. They closed some Computer City stores and turned the rest into CompUSA stores. Egghead Software was also pretty good, although they operated much smaller stores and did not carry a lot of hardware. Today, Egghead is strictly an online retailer. The newest chain to open in my neck of the woods is Micro Center, which started out in Ohio, and has expanded to almost two dozen stores. Micro Center is a pretty cool store. It looks like there are a lot more good deals to be had there, and they claim that they have prices as good as you’ll find on the web. They sell brand name (Dell, IBM, Compaq, etc.) brown-box “refurbished” computer systems alongside their big selection of new systems. They cater to system builders and gamers and have a pretty large Apple department. They also have a nice computer book and magazine section, nearly as large as you’ll find at Barnes & Noble or Borders Books. On several occasions I’ve picked up some bargain-priced (not-current edition) but otherwise new books for under five bucks each. They even have free Internet access kiosks, so you can comparison shop without leaving the store! There’s little in the way of computer hardware that they don’t carry. If there’s a Micro Center near you, you have little reason left to buy stuff online.

Life goes on. Other computer retailers will come and go, to be sure. Perhaps my opinion of CompUSA will mellow as the memories fade to black.