Atlanta Bread roiled by CEO Couvaras’ arrest in S. Africa
SMYRNA, GA. — Atlanta Bread Co., stunned since late March by the arrest and detention of chief executive Jerry Couvaras in Johannesburg, South Africa, on investor fraud charges, is relying on interim president Rick Arras to pilot operations of the 167-unit chain.
Arras, named to the temporary leadership of the Smyrna-based bakery-care brand May 3, had been president of Perkins Family Restaurants from 1988 to 1998, after which he held presidential posts at Cracker Barrel Old Country Store and Shoney’s.
He said his focus would be on interacting with key Atlanta Bread executives for an indefinite period.
“I’m working to continue Atlanta Bread Co.’s growth,” Arras said during one of his first days on the job.
Earlier, Couvaras family spokeswoman Jane Langley confirmed that his brother, Basil Couvaras, remained Atlanta Bread’s vice president and chief operating officer while he reviewed with attorneys his options in light of related charges.
Jerry Couvaras reportedly was charged at the time of his arrest March 27 with the alleged swindling of South African investors out of $5.54 million in connection with the collapse and liquidation of two investment firms 12 years ago.
Spokeswoman Langley said an early-June court date had been set tentatively. She added that it was possible the charges against Couvaras were related to a previously settled lawsuit. In the early 1990s he was accused of fraud by a group of South African investors who allegedly had lost $6.5 million.
The South African-born Couvaras brothers bought into Atlanta Bread in 1995 and began franchising what now is a mostly franchisee-run chain.
Jason Shultz, president of the independent Association of Atlanta Bread Franchisees, said his group remained confident in the strength of Atlanta Bread’s operations, marketing and financial leadership under Arras.
Shultz was referring to three executives who had joined Atlanta Bread within the last three years: veteran chief financial officer Alan Sack, marketing vice president Kim Jenson-Pitts and operations director Jill Ashmore.
“We’re having conference calls on Monday nights to keep all of us posted,” said Shultz, a four-unit Atlanta Bread operator in Milwaukee, Madison and Appleton, Wis. “We’ve answered all of the ‘what if’ questions, and we’re very confidant in this group’s ability to run the system.”
While admitting that franchisees initially were “shocked” at the news of Jerry Couvaras” arrest, Shultz said he and his group’s attorney had met in Atlanta with Basil Couvaras, who was “very open and honest. The Couvaras brothers have a plan for everything–including the contingency of their having to leave the company.”
Shultz and Atlanta Bread spokeswoman Alice Coggin said Arras had been consulting for the company on strategic operations. Coggin added that Atlanta Bread’s intent was to conduct “business as usual” until the turmoil in Johannesburg was resolved. The company’s franchise convention, scheduled to begin in Miami May 15, will take place as planned, she said.
Arras said the term of his position is considered indefinite, presumably because it is impossible to predict the outcome of the Couvaras case.
“At this time it’s too early to speculate,” Arras said. “We have not established a time window for this role.”
Arras said his previous consultation for the company involved working with senior management to develop and facilitate a strategic business planning process for 2003.
He said Atlanta Bread would continue evaluating concept, operations, menu and marketing issues.
“Like any other business in the foodservice industry, we’re always evaluating our systems and always looking for ways to improve,” Arras added.
Indeed, the company has initiated continuous changes in recent years to better position itself against intensifying competition in the bakery-cafe segment. However, rivals show signs of accelerating their comparative rate of growth.
Franchisee Shultz acknowledged as an example that segment leader Panera Bread has signed multiunit area development deals with large operators, while Atlanta Bread’s focus has been on owner-operators.
“Though it may have happened in some cases, we’re not going after just anyone as a franchisee at this point,” Shultz said.
Asked about the recent shuttering of Atlanta Bread units in the Chicago market, Arras said it was a difficult but necessary decision.
“From time to time we have to do that in order to maintain a level of excellence,” he said but added that Atlanta Bread plans to open a new Chicago unit in suburban Warrenville late this year or early in 2005.
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