Restaurant Closings: Should the staff get advanced notice or be left "high & dry"?

In my local area (Portland, OR), there has been a rash of restaurant closings at both chain and independent operations. With these tough economic times for our industry, this comes as no surprise.

Except for those who work at the restaurants being closed.

A common scenario with the closings is the staff having no advanced notice that the restaurant is going to be shutdown. Often the scenario is staff showing up for their shift only to find the doors locked, lights out, and maybe a handwritten note on the front door saying something like, "closed for remodeling".

Our industry has been struggling for years to create an image of an industry of choice with multiple careers of choice. We also have a record of massive turnover, low retention in both hourly and management positions, and escalated competition for a dwindling labor pool.

Should operators planning to close a unit give their hourly staff some reasonable advance notice so they can prepare their families, finances, employment alternatives, unemployment alternatives, or networking them with other local restaurant operations , etc?

It does not enhance out image as an industry when staff are left “high and dry”. Are there other alternative processes to consider that would provide support instead of abandonment of so many available and valuable employees?

Your thoughts would be appreciated.


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Not providing this notice to employees tells me much about why these businesses may be closing in the first place. It's a shady practice, and it's probably just the tip of the iceberg. There are so many other beneficial courses of action to take that it's difficult to understand the justification of leaving the staff "high and dry."

As a side note: customer satisfaction and employee satisfaction share an unbreakable bond...the behavior of these restaurants simply shows that they couldn't manage to satisfy either party.
Paul, first of all great post!

Like any business practice there are two sides. I've been on both sides of the coin, as staff and as the ax man.

The labor conundrum as it exists today is a two edged sword. As a whole, there is little or no loyalty on the employees side, and an at-will doctrine for both the employer and employee. Of course, there are shining exceptions with employees and employers.

Best practice? There isn't one. This is as messy as an unchanged diaper.

Ethically the best I've been able to do is this: I've divided my staff into A, & B's. A = Stars & Rising Stars; B = Average & Falling Stars. A's were transfered to new locations. Those that used public transportation were given a transit pass good for one month to offset the pain. If they used an auto a gas card good for the same amount as a transit pass. If they turned the transfer down were put in with the B's.

B's were given on-the-spot outplacement. Resumes and cover letters developed, and thumb drive (cost $5 each) with the resume and cover letter given to the employee along with job listings with similar skills.

On hand for consultation were HR and a librarian to sign people up for computer and internet access via the library system.

Closing a store is never easy. For the safety and well-being of employees and guests the most efficient way is to serve the last guest, close the doors and call a all-hands-on-deck meeting. Announcing it early is demoralizing, counter-productive and poses multiple risks.

Personally I say, shame on the management who does not take care of those who have taken care of them! Any effort to help is better than "Sorry. Here's your check. Good luck..."
Well said!

One of the most onerous closings this year was a chain that closed in Florida. They shifted their payday from Tuesday to Thursday and then closed on Wednesday. FOH employees were not paid, nor was BOH.

The dirty ethics of this situation tremendously upsets me. Hourly wage employees often work paycheck to paycheck and while it's not much, many of them lost through the dirty schemings of this chain.

I really do like your outplacement and support program and providing employees with resume and help at least got them going in the right direction. In the whole picture, when we look at the cost of writing resumes, providing thumbdrives the cost is prohibitive versus the goodwill and ultimately savings on unemployment costs.
Hi Paul,

I'm not sure if I understand the reasoning behind not giving someone fair notice of a closing, including the guests. These associates have bills to pay, and it takes some time to find another position elsewhere. Even if you have a severance check in your hand, just locking up without notice is cruel, heartless, and gutless, regardless of the industry.

These are RELATIONSHIPS, not REVENUE. Treat them respectfully, and you just may have some of your biggest fans ready to 'Raise a Barn' later on down the road. -Andi
Unfortunately, Numerous restaurants in the industry just close the restaurant on the day, and leaves their staff "high and dry". This is the best/safest practice, to prevent sabotage, theft, and disgruntled employees.

Fortunately, in my brand, RIF (Reduction in Force) is announced a month in advance, and all team members are given a severance pay if they stay through and leave on a good note. We also set up job fairs in our restaurant for local restaurants in order to find new positions for our staff. Although we may loose more money this way, we can ensure our team members will not be left stranded without a job.
Bennigan’s… WOW! How ironic I asked this question and now the news is flooded with their collapse.

It will be telling and sobering to see how this plays out for all the people now out of work.

To be successful will require some new thinking on the relationship between owners and employees. There could be new definitions for job descriptions to enable the restaurant players to broaden their contributions in order to sustain a viable restaurant operation.

There will be new relationships conceived between employees and owners that will benefit eachother to make it through these tough times. This will be a painful evolution on how to survive as a restaurant worker and owner.

If you have decided to pull the plug, you inform everyone when you are going to close and give them some time to get another job. If they all quit before that day, what will it really matter? Your closing, now or in three weeks. Do the right thing, and treat everyone as you would want to be treated in this situation.

As an employee you should always be aware of your store's economic condition, or as informed as you can be! Many employees today are amazed when things don't go well for the store, or even close. We share our company goals with all employees and they know if the goals are being achieved. It's a team game and it takes the team to insure profit!
Bennigan's: A Ft. Worth news media reports, "Employees say they found themselves jobless by mass text-message. It reads: "All the Bennigans closed today."

Below is the link to the article.
Bennigan's staff react to chain's closure
By JANET ST. JAMES / WFAA-TV July 30, 2008
A continuation of the discussion!

Employers caught between silence and false alarm
Some DHL Express drivers learned they'd be losing their jobs next year only second hand, because the company told its customers it was pulling out of the U.S. delivery market before telling employees. A new survey finds U.S. workers want their companies to tell them more about how the downturn will affect them. But employers have to find the right line between honest disclosure and setting off needless panic. The Boston Globe (11/15)

For employers, a quandary: speak of woes or wait?
By Robert Weisman Globe Staff / November 15, 2008

Drivers for DHL Express recently learned they would be losing their jobs next year, but many of them didn't learn it from their employer. They heard the news while dropping off packages in the Boston area.

"You know how a lot of our members found out what's happening?" asked Sean O'Brien, president of Local 25 of the International Brotherhood of Teamsters in Charlestown, which represents DHL drivers. "They found out from their customers. The company told customers they were terminating their accounts."

At a time when the financial outlook has darkened for businesses large and small, employees are anxious to know what the intensifying economic downturn will mean for their companies and their jobs. But in many cases, they are hearing only silence.

Fifty-four percent of American workers said they've heard nothing from their employers about the economy and how it is affecting business, and 71 percent said they want to hear more from the top in this moment of uncertainty, according to a national survey conducted last month by the global public relations firm Weber Shandwick. The vast majority, 70 percent, think the deteriorating environment will weaken their companies in the coming year.

Many workers say they would prefer candor from their bosses, even if the outlook is bleak, so they can prepare for tough times.

This even is notable because there are some specific laws about prior notice to employees for businesses in California.

3 TGI Friday's restaurants close without notice
Tom Abate December 17, 2008

A skeleton crew boxed up the booze at the TGI Friday's in San Bruno Tuesday after their Florida-based employer abruptly closed that restaurant and two others in San Mateo and Cupertino, firing dozens of people without warning.

"We went from contributors to liabilities in about one minute. I guess that is the new way," said Cesar Arguello, who had been bar manager at the San Bruno restaurant until he and several dozen fellow workers were handed their final paychecks Tuesday morning.

The closures come at a time when employers are handing out pink slips instead of Christmas bonuses amid a global recession.

The closures also stunned Sherwin Chin, who had worked at the San Bruno restaurant for 25 years. "Basically I was a lifer here," said Chin, who was a host.
The three TGI Friday's were closed by their owner, CNL International of Orlando, according to property owner Eric Brandenburg, who had leased the San Bruno location to the Florida firm.

"A hundred families have now gotten about the worst Christmas present I can imagine," said Brandenburg, who said he hopes to find a new operator to reopen the restaurant.

Calls to CNL's Florida office were not returned. The three closed locations were franchises of TGI Friday's, a restaurant concept that began in New York in 1965 and has spread to more than 900 locations in 62 countries. The franchise is ultimately owned by Carlson Cos. of Minnetonka, Minn.

Some of my contacts in this part of the country said that one of the operations notified the staff by text message. I see in the article that one of the owners of the closed restaurants was not available as he was "out of the country". What a gutless coward that he didn't even bother to leave a sliver of guidance such as the contact information to the state unemployment office.

2 Popular Albuquerque Businesses Close
Tough Economy Forces Restaurants Out Of Business January 8, 2009

ALBUQUERQUE, N.M. -- Tough times just hit some of Albuquerque's favorite restaurants. Two popular dining locations went under without advance notice.

Whisque Mesquite Bar and Grill was widely popular when it opened about a year and a half ago, but Jan. 4 was the last night anyone ate there.

The business was established 2007 and out of business by 2009 and nobody seemed to know why.

Whisque Mesquite Bar and Grill appealed to an upscale diner with drinks and dinner. It was easy for a couple to rack up $100.

"We loved it here. We are extremely sad. The atmosphere was wonderful. The drinks were great," said Rick Wells.

When calling the business' number a message said, "Hi, we regret to inform you that due to financial difficulties, Mesquite Bar and Grill will no longer be open for business."

"It would be really nice to get the economy back up to help us out, but its tough times for everybody," said Leroy Garley.

Employees said they were caught off guard too. One, who wished to stay off camera, said management said the restaurant would be shut down for maintenance. But a sign on the door is what she found when she returned.


I feel for them. I just saw the other blog about the text messaging. I know in Missouri, we're seeing quite a few places (including restaurants) close.

A timeshare vacation call center here closed a week before Christmas w/o any warning.
Folks showed up to work and saw a sign on the door.
People couldn't even get in to retrieve personal belongings. The tv news report said, someone
changed the locks. Very sad.





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