Tuesday, June 14, 2011

Why Did Perkins Slam the Door?

The closure of Perkins Restaurants, including a half dozen here in West Michigan as well as 65 around the country, happened suddenly. A total of 2,500 employees showed up for work to find locked doors and a closure notice.

The restaurant chain has reasons for the large number of store closures. The Wall Street Journal reports they have filed for bankruptcy after struggling like everyone else in this economy. But a business that bills itself as 'family' -- Perkins Family Restaurant and Bakery -- may have seemed a little dysfunctional in closing its doors  to workers without warning. These are the people who tend to work paycheck to paycheck, and a little lead time would seem to be the compassionate deed in a 'family' business.

However, we've seen this sort  of thing before. When Cracker Barrel closes stores, including the one on Alpine near I-96 in Grand Rapids a few years ago, it was also done by note on the door. In retail, decisions like these are often made based on market share, competitive analysis and same-store sales (those that have been open more than a year and are not enjoying sales simply because they are new). It's a business, and it makes no sense to stay open if there's no profit.

But from a PR standpoint, how a business closes would seem to matter. Unfortunately, relationships have two sides. I know an investor in Cracker Barrel who was told at an annual meeting that when they used to announce store closures in advance they would see a rash of employees simply not show up as they looked for new jobs, many of them took store property with them on the way.

So, the sudden closures have become the norm to prevent further erosion of assets from employee shoplifting and reputation damage from bad customer service when employees don't show up.

It's unfortunate from a public relations perspective that a relationship with employees needs to be terminated so abruptly. The spokeswoman for Perkins was vague in statements given to local media about the closings and care for employees. I would hope that, after the fact and behind the scenes, management is giving employees some severance pay, and maybe a chance to say goodbye to each other. "Closure" has different connotations when it comes to relationships, and business reputation depends on that as well.

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