How not to run a steakhouse company

 
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"Ruth's Chris CEO ousted: 'I'm shocked'" That headline in the Orlando Sentinel stopped me in my tracks. That isn't the usual fare when a CEO is ousted. Usually we hear that the CEO "left to pursue other interests" or "spend more time with her family."

So I have two questions. The first one is, "Why did they do it?'

That seems pretty obvious, really, Ruth's Cris went public in 2005. Craig Miller, the CEO who was just given his walking papers oversaw that.

Its stock topped out on March 31, 2006 at $23.81 per share. Since then it's been going down, down, down. Today it was trading around $7.

True, there were lots of things going on. The chain's New Orleans headquarters and flagship restaurant were destroyed by Hurricane Katrina. They moved to Orlando. They acquired a chain of seafood restaurants.

And this is not the best time to be in the steakhouse business. Consumers are getting a little skittish and they're cutting back on all kinds of luxuries that they used to allow themselves. $150 per person dinners out are pretty high on the cut list. The company's own revenues at restaurants open at least a year were down 5.6 percent from a year earlier.

That leads me to my second question: "Why was the CEO 'shocked?'"

It was more than shocked. According to the Sentinel, Miller said that "It's not every day you get terminated without cause."

I understand that Miller might have thought he was doing as well as expected. I understand that he probably felt there were big challenges. But it's hard to believe that watching the stock tank didn't give him cause for concern.

So I have a third question, "Did these people not talk to each other?" How could a board come to the point of firing a CEO without some kind of discussion?

Miller will ride off into the sunset with whatever severance package he's entitled to by his employment contract. He'll lick his wounds for a while and then probably get back in the game.

And Ruth's Cris? They're doing what too many companies do too often. They're going savior-hunting. According to the Sentinel, "the company said it had retained a firm to begin an immediate search for Miller's successor."

The reality is that Ruth's Cris will be effectively without a CEO for the next year or more. In that time it's likely that quality people will leave for a company where the CEO and board talk to each other.

Wally's Working Supervisor's Support Kit is a collection of information and tools to help working supervisors do a better job. It's based on what Wally's learned in over twenty years of supervisory skills training. Click here to check it out.

 
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Wally Bock has helped people learn to be great bosses for more than a quarter century. His latest book, Performance Talk: The One-on-One Part of Leadership, makes learning key leadership principles almost effortless by teaching through a story and providing lists of resources for further growth.

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Comments

  • 5/4/2008 12:30 PM Tom Magness wrote:
    Wally,

    It's not just the board. You've got to wonder if he surrounded himself with "yes men" who never told the emperor he had no clothes! At some point, we all need to have some sort of close council that can tell us the ship is sinking. For this guy to be "shocked" tells me he wasn't communicating with anyone! Interesting.
    TM
    Reply to this
    1. 5/4/2008 1:26 PM Wally Bock wrote:

      Good point, Tom. Thanks for stopping by and sharing it.


      Reply to this
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