They’re dead men walking—three longtime CEOs, all with unusual backgrounds for a restaurant official, all having served for considerable stretches in the corner office.
Each still has his job for the time being, with no indication they’re backing off the charge of captaining chains through the Great Recession. Yet for Dennis Mullen of Red Robin, Nelson Marchioli of Denny’s, and Andrew Puzder of Carl’s Jr. and Hardee’s, it’s just a matter of time until they’re sitting with an HR representative, going over their exit packages and stock options.
Each is the victim of a peculiar time warp. Two pronounced trends of the pre-Recession industry have popped back up like spring crocuses to undermine their tenure. Private equity firms are back on the prowl for restaurant bargains, and, suddenly, activist investors are barking orders again to the management of publicly owned chains, as Mullen and Marchioli can readily attest.
In Mullen’s case, the dissatisfied shareholders already have goaded his company to form the committee that will select the next CEO. Meanwhile, the company is publicly saying that it expects Mullen to continue serving as chief of the casual-dining chain until his contract expires in December—of 2012.
It’s like the warden coming to size up a condemned man’s bunk while the gallows is still being built, then asking if the guy can put in a few hours on the license-plate line the morning of his hanging.
But that’s hardly the only weirdness to the situations. On Feb. 26, CKE Restaurants announced that it’d agreed to be acquired by Thomas H. Lee Partners, the private-equity company that also owns a big stake in Dunkin’ Donuts. The announcement was immediately followed by speculation that the buyer would give Puzder the heave-ho because of the weak recent performance of CKE, particularly its Carl’s chain.
On the very same day, Puzder was named the 2010 winner of the Silver Plate Award for the quick-service sector. One of the industry’s most celebrated honor, the Silver Plate recognizes the executive who’s done the most outstanding job within his or her respective market segment. In short, Puzder was being named the best in his field on the same day the internet buzzed with certainty that he was about to feel a silvery axe.
Meanwhile, as one of nine Silver Plate winners, Puzder could still be named the industry’s operator of the year, the winner of the Gold Plate Award, in May. The voting for that honor was conducted earlier in February. So he could get a pink slip and a Gold Plate almost simultaneously.
Interestingly, all three of the marked executives hail from decidedly non-traditional backgrounds for restaurant chain leaders. Puzder, for instance, was a lawyer who came to the business after the holding company that owned Carl’s Jr. went out and added Hardee’s to its portfolio. Involvement on the legal side led to broader executive responsibilities and ultimately a top-level executive post.
Mullen started his career with PricewaterhouseCoopers, one of the nation’s largest accounting firms. He also logged time with Boston Chicken, serving as its CFO, as well as the brands that now constitute Eateries Inc. He’s been CEO of Red Robin for four-and-a-half years.
Marchioli is the only restaurant CEO to my knowledge who climbed to that post through purchasing and quality assurance, the nitty-gritty operations that are critical to a company’s viability, but seldom get any appreciation from outsiders. He was a bug hunter.
He may find himself grappling with a different sort of nuisance, at least from his standpoint. Two investment groups have demanded that they be given three seats on Denny’s board. In making that demand, the stakeholders provided a list of complaints about the company’s management, including its breakfast giveaway.
That program has been one of Marchioli’s most publicized undertakings. Some might say it’s one of the things he’ll be remembered for.