Restaurant And Hospitality News – January 16, 2017
By Christine Kern, contributing writer
In news this week, all eyes are on President-elect Donald Trump as he negotiates the future of his empire; and Papa Murphy’s takes a new course towards recovery under interim CEO Jean Birch.
President-elect Donald Trump Hands Over Control Of Business To His Sons
In a recent press conference, President-elect Donald Trump said that he was resigning from all positions of leadership across his global business empire, maintaining ownership but handing off control to his two oldest sons while he is in office. As part of the announcement, he stated that he plans to move his assets into a trust to help guarantee that his business will not benefit personally from his actions as president.
"Together, Don, Eric, and Allen will have the authority to manage the Trump Organization and will make decisions for the duration of the presidency without any involvement whatsoever by President-elect Trump," said Dillon, whose firm Morgan, Lewis and Bockius has been instructed by president-elect Trump to draw up a structure to keep his business interests separate.
Dillon added that an ethics adviser would be appointed to the management board of the trust to oversee any potential conflicts of interest.
Trump stated, “I could actually run my business and run government at the same time. I don’t like the way that looks, but I would be able to do that if I wanted to.” Ethics watchdogs disagree, and think that the steps Trump is taking do not go far enough to preclude conflicts of interest while in office.
Former White House ethics advisor Norm Eisen asserted that “Mr. Trump’s ill-advised course will precipitate scandal and corruption.” Other experts have advised that the president-elect should establish a blind trust for his assets, in which the owner does not know what his holdings are or how the assets are being managed. With Trump’s sons running the business, the arrangement does not meet the standards of a blind trust.
Sheri A. Dillon, a lawyer for the Trump Organization, called many of these alternatives such as selling off Mr. Trump’s business assets entirely or putting them in a blind trust that would be managed by an independent party impractical. Pointing out flaws in a blind trust, she said, “President Trump can’t unknow he owns Trump Tower, and the press will make sure that any new developments at the Trump Organization are well publicized.”
Under New CEO, Papa Murphy’s Develops Comeback Plan
In the wake of CEO Ken Calwell’s resignation, Papa Murphy’s will launch a new comeback plan under the leadership of Jean Birch, interim CEO. CEO since 2011, Calwell resigned to pursue other interests. While Papa Murphy’s has initiated a search for a permanent chief executive, it seems that the company is in good hands in the interim. With over 26 years of restaurant leadership experience,
The recovery plans, which include delivery service and the sale of 100 units to franchisees, were revealed at an investors presentation, where Papa Murphy’s CFO Mark Hutchens explained, “We have an opportunity to do delivery different than anybody else does it, with no quality compromise whatsoever.”
While Papa Murphy’s is certainly not the only chain to move into delivery, the service would change things up for the company. According to a company survey, 72 percent of its customers would use delivery, while 53 percent said they would order pizza more often, representing strong consumer demand. And since Papa Murphy’s pizzas are “take and bake,” the delivered pizzas would not fall victim to the reduction in quality that can hamper cooked pizza delivery.
Birch also is focusing on another key strategy in the recovery: refranchising, with aims to get Papa Murphy’s back to the 95-percent mark by selling roughly 100 units to operators. The company would then use the proceeds of the sales to pay down debt. We’re traditionally 95-percent owned, and we’ll be getting back there in the next few years,” Birch said. “We make our money through the franchise business model.”
"While the general climate in the quarter continued to be challenging, we believe we are at a key inflection point at Papa Murphy's, having successfully laid the groundwork for many of our long term strategic initiatives," stated Ms. Birch.