Skip navigation

Even abrupt closures leave room for compassionate layoffs

Aphone call, an e-mail or just a curt sign on the locked front door when they showed up for work was how hundreds of Bennigan’s Grill & Tavern and Steak and Ale employees learned they were out of a job when the long-time brand owner went bankrupt late last month.

Though shocked by Plano, Texas-based S&A Restaurant Corp.’s sudden closure of about 200 company-owned units, industry insiders say such abrupt action is considered standard operating procedure when it comes to shutting down a business.

“You really can’t give advance notice,” said crisis management consultant Rick Van Warner, president of the Parquet Group in Orlando, Fla.

Alerting employees of a pending closure can destroy morale, prompt many to leave prematurely and put operators at risk for retaliation by disgruntled workers or angry customers.

“If you announce and give lead time on a restaurant closing, you are not going to have enough staff show up the next day,” Van Warner said. “And you put yourself at risk if someone decides to contaminate food or just do something really stupid out of spite. Any risk is too big when it comes to someone intentionally doing something to harm the public.”

However, Van Warner and other industry veterans point out there are ways to close quickly yet still demonstrate compassion for employees.

“The nature of restaurants is they are communities inside the communities they serve,” said Christopher Muller, professor and director of the Center for Multi-Unit Restaurant Management in the Rosen School of Hospitality Management at the University of Central Florida in Orlando.

“We tend to forget that there was more than a promise of a paycheck,” explained Muller, who closed his own restaurant, Za Bistro, two years ago. “You made a promise to people, and they committed their lives to help you support your business. Keep that in mind when there are hard business decisions that have to be made.”

Ideally, when a restaurant must be closed, management should bring employees together, tell them at all at once and offer referrals and outplacement help for other jobs, as well as a final paycheck or, if possible, severance pay.

“The normal practice is to have a final team meeting to hear first hand from the company why the restaurant is closing, and what sort of assistance the company is offering—on the spot—such as whether there are any opportunities to transfer to remaining open locations in the chain,” Van Warner said.

In May, Dallas-based Brinker International Inc. sent human resource and operations managers to Portland, Ore., and Bellevue, Wash., to assist employees of six franchised Chili’s Grill & Bar branches. The franchisee, Scottsdale, Ariz.-based Quality Restaurants, suddenly closed the Oregon and Washington stores, locking out employees. Brinker set up a hotline for the displaced employees, and Brinker officials in the area worked on helping the employees find other jobs.

According to a Brinker spokeswoman, the franchisee’s closing was not consistent with Brinker’s polices and procedures.

An exception to immediate closures was Seattle-based Starbucks Corp.’s June announcement that it planned to close more than 600 coffeehouses over the next nine months. In July Starbucks even posted the addresses of each closing branches on its website.

In the aftermath, customers and employees have complained about the shutdowns in online blogs and chat rooms. But Starbucks also announced it would assist employees in finding positions at other Starbucks units.

“There is no good way to do this because closing a restaurant has a negative impact on employees and customers,” Muller said. “But you can still take the high road, even in a downturn, and make arrangements for people.”

For independent operators, closing a restaurant signifies the end of a dream, and it can be very difficult to pull the plug on the business, said restaurant consultant Bill Marvin, based in Gig Harbor, Wash.

“They are dead, but they just don’t know enough to lie down,” he said.

Often restaurateurs wait too long to close their restaurant, and by then they are out of cash and unable to assist their employees. Waiting too long also eliminates the possibility of selling the business to another operator, explained Marvin, who has advised numerous clients about how to close their restaurants.

“That entrepreneurial spirit says never give up, never give up, never give up,” he said. “That’s admirable up to a point. But people will hang in long after they are exhausted. You didn’t fail; the business did. Don’t take it personally.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.