Unions embrace new tactics vs. operators; Riese, Local 100 battle reflects growing trend – labor unions’ new procedures in negotiating contracts with restaurant employers

Unions embrace new tactics vs. operators; Riese, Local 100 battle reflects growing trend – labor unions’ new procedures in negotiating contracts with restaurant employers – Riese Organization; Hotel Employees and Restaurant Employees Union, Local 100 of New York

Milford Prewitt

NEW YORK — At first glance the eight-page “Investor Alert” examining The Riese Organization easily could be mistaken for a Wall Street analyst’s report. Printed on heavy paper stock, the brochure seems to contain the charts and other financial data that investors are accustomed to finding in such documents.

But a closer examination quickly reveals this document is not what it appears to be. Bold-face, italicized headings pose such loaded questions as: “Can the Riese Organization survive?” “Why has the company lost so many profitable locations?” and “Is the Riese Organization neglecting the fundamentals?”

At the bottom of the unquestionably negative report, readers are invited to write or call for more information — but not from investment firms such as Montgomery Securities, Piper Jaffray or Alex. Brown & Sons. The information in the document was gathered and compiled by the Research Department of the Hotel Employees and Restaurant Employees Union, Local 100 of New York. The long-running battle between the New York-based multiunit Riese Organization and Local 100 has ignited a firestorm of union protests and a corporate smear campaign that reflects the new tactics unions are using to force restaurant employers nationwide to the bargaining table.

Foodservice operators who are perceived as anti-union or who are particularly intractable during contract negotiations can expect a range of highly effective nontraditional organizing efforts designed to embarrass or humiliate the company or its officers among consumers, lenders, investors and even charity and civic groups with which the operators are publicly or socially associated The new means of unionizing — referred to as “corporate campaigns” — can include such tactics as:

* Sending alarming alerts to potential investors that question the solvency of the targeted company.

* Staging rallies during peak business hours.

* Intruding in the targeted company’s efforts to secure loans.

* Forwarding letters to charitable groups, claiming that the targeted company’s executives involved with the group are hypocritical in their pro-charitable stances.

* Leafleting customers about alleged safety and healthcode violations of the restaurant or company.

* Informing the Securities and Exchange Commission of alleged filing improprieties.

* Blanketing local business reporters with unfavorable memos and other internal documents to stimulate unflattering stories about the targeted company’s finances.

“There’s little you can do about it once a union sets its sights on you with a corporate campaign,” said Richard Berman, executive director of the Employment Policies Institute in Washington, D.C. “The old traditional ways of what was a fair campaign to organize through the National Labor Relations Board are over. The unions don’t care about fair campaigns, and because most operators are focused on what’s going on inside the four walls of their restaurants, they don’t see it coming until it’s too late.

“The unions have been very successful with these corporate campaigns, and I’m advising people that if they won in the past, they’re going to need a different strategy because the nature of the fight is entirely different,” Berman said. “Employers don’t realize that their defense is terribly outmoded, while the offense has changed dramatically.”

Berman claims that unions are resorting to corporate smear campaigns to offset the steep decline in union membership over the past two decades.

According to the Bureau of Labor Statistics, of the 112 million workers in the economy in 1996, 16.2 million, or 14.5 percent, were in unions. In 1977, by contrast, 19.3 million workers of a national work force of 81.3 million were in unions, or 23.8 percent. The government lumps foodservice into retail and the service fields, making it difficult to tally the extent of union membership among restaurant workers. But Ron Richardson, vice president of the Hotel Employees and Restaurant Employees International Union AFL/CIO, said his union represents about 250,000 workers in foodservice, only a slight decline from the figures in previous years.

More than 9 million workers are employed by restaurateurs, according to the National Restaurant Association.

Richardson is unapologetic about corporate campaigns. He contended that restaurateurs are the most unenlightened employers in the country when it comes to workers’ rights. More emphatically, he said no business segment of the economy is in more dire need of unionization and job protection for its workers than is foodservice.

Richardson said the NRA’s recent history of resisting minimum-wage increases, parental leave and universal health care speaks volumes about an industry trapped in the 18th century where the “bottom line matters more than people.”

“Who’s saying corporate campaigns are unfair?” Richardson asked. “Is it fair to exploit immigrants 18 hours a day who don’t speak English and can’t defend themselves? Is it fair to fire workers who want to join the union? Is it fair to fight minimum-wage increases for workers with no health care? Is it fair to fight OSHA or sanitation laws?

“Up until now, employers had all the advantages and now the only way to fight back is to hit them in the pocketbook, and they have the nerve to cry the union is being unfair.

“The restaurant industry hires docile, defenseless people like those forced off welfare or immigrants because they don’t want people to fight back.”

Just recently, the Culinary Workers Union Local 226 asked the SEC to investigate Ark Restaurants, also in New York, for allegedly misinforming its investors in quarterly filings about its relationship with three Primadonna Resorts hotel properties in Las Vegas. But the culinary union’s motive was not shareholder rights. The union is upset that Ark has not signed a bargaining agreement to cover the 300 foodservice employees at the sprawling food-court complex the company operates at the New York-New York Resort & Casino.

The union wants the SEC to determine if Ark misled its investors in its 1996 10-K report when it described an “agreement in principal” to manage other Primadonna food operations but in more recent private communication refers to its role as a “consultant.”

Nowhere have corporate campaigns been more apparent than at the Riese Organization. The multiunit and multiconcept Riese Organization and the Hotel Employees and Restaurant Employees International Union, Local 100, have been at loggerheads ever since contract negotiations broke down in February, almost a year after the union contract expired in January 1996.

The union charges that the Riese Organization, one of the nation’s oldest and most diversified restaurant groups, has used the impasse to shut down union restaurants and reopen them as new concepts with out union workers, all in an undisguised attempt to become union free. Besides a series of boisterous demonstrations, publicizing of alleged health code violations and a letter-writing campaign to civic groups and CityMeals On Wheels — a charity in which Dennis Riese, president of the Riese Organization, is a major financial backer — the union’s chief weapon has been to challenge the Riese Organization’s claims to financial well-being.

The union has distributed its Investor Alert to lenders, investors and financial conferences where Riese representatives may be looking for financing. A key element of the report is the Riese Organization’s contraction, from a mid-1980s peak of 350 restaurants and sales of about $300 million to a company with about a third the size in units and half the size in sales. Among its stable of operations are such fast-food concepts as Roy Rogers and Dunkin’ Donuts and franchised table-service operations like Houlihan’s and T.G.I. Friday’s. It has a string of proprietary concepts, such as Charlie O’s and Tequila Willie’s and recently added two more start-ups, Martini’s, an upscale Italian restaurant, and the Java Shop, a midscale coffee concept.

The union’s investor alert contends that the company is plagued by an overleveraged balance sheet unit evictions, loan defaults poor franchisor relations, failure to fulfill previously announced restaurant development goals and a host of legal disputes.

Brooks Bitterman, a Local 100 research director disagreed with the argument that a damaging report like his Investor Alert is equally perilous for the membership’s future.

“Right now the workers don’t have a future because of how the Riese Organization has treated them,” he said. “Over the past few years the issue of job security and health insurance has become key because this is a company that has closed or converted somewhere in the neighborhood of 20 union restaurants and has put hundreds of workers out on the street.”

Bitterman said Local 100 represents about 15 restaurants of 130 restaurants.

Dennis Riese said he was not sure how many unionized restaurants are in the company, but he did say it operates 150 outlets, conceding that the company is a smaller entity. Riese also said he resents the union’s efforts to impugn his character in the press and in the charitable groups he supports. He contended that it is the union and not the company that has been the biggest impediment in negotiating a new contract.

Moreover, he dismisses much of the union’s Investor Alert as “slander,” insisting that the company has had to contract in order to grow. He conceded that the company has been evicted from some locations. He said in some cases it made economic sense to lose a site, most notably a Beefsteak Charlie’s in Times Square, where the landlord was demanding nearly $2 million in back rent and various penalties before it would negotiate a new lease.

But he strenuously denied that the Riese Organization is closing restaurants just to become union free.

“We have never, ever in the history of this company closed a union shop just to kick the union out,” he asserted. “This has been a union company since my father and uncle formed it 50 years ago.

“I have conceded on everything they want, and they keep coming up with new points they want added to the contract. They wanted severance pay; I gave them severance pay. I’m even paying into the health-and-welfare fund even though the contract has long expired. They would have let this drift into a crisis and put workers at risk had we not threatened to sue them to make their contribution.”

Local 100 contends that even though the contract expired, both the union and the company are obligated to continue to support the health-and-welfare fund even if the bargaining agreement ended. Riese said part of the problem is that the union does not appreciate the higher skill sets he demands from his workers when he closes a restaurant and reopens it as a higher-end concept.

“A coffee shop waiter does not have the skills of a Lutece waiter,” he said. “A cook in coffee shop cannot cook the food in a Lutece. I can tell you that people from Charlie O’s or a Roy Rogers may not have the same experiences of a worker at Martini’s.

“If I close a Charlie O’s and reopen it as a Martini’s I cannot promise the Charlie O’s workers their jobs back. But if I converted a Lindy’s into a Java Shop, it would be the same crew.”

Riese said that he has converted just as many restaurants into union shops, a statements the union blasted as an outright lie. But Bitterman said Riese has not abided by his own formula. He said that when the Riese Organization closed a Charlie O’s at 50th and Seventh Avenue and reopened it a few days later as “America’s largest T.G.I. Friday’s,” no union workers were rehired even though the two concepts compete in the same segment.

“This is an organization that throws its workers out on the street, and they are getting away with it,” Bitterman said. “This is what we are fighting about. We want job security, and the workers want to know that if the company continues to shrink the way that it has over the past decade, there is a job for them with this company.”

Riese said the corporate campaign against him is going to backfire on the union.

“They picked on the wrong guy,” he said. “I’m a good guy. I’m not a Box Tree owner [a reference to another restaurant-union fracas]. When the truth comes out, I believe I am the one that’s going to be seen protecting the workers more than the union leadership. When the truth comes out, the facts are going to be 180 degrees from what the union presents.

“They are using this corporate campaign for their own agenda, but they’ve picked on the wrong guy.”

There are no current plans or dates on either side to resume negotiations.

Berman, the employment adviser, said corporate campaigns like the one against Riese are on the upswing for a number of reasons.

“The union movement is being re-energized,” Berman said. “They are not focusing on steel or auto industries they are looking at the service field, where you have young, unorganized workers.

“They are not interested organizing through conventional methods through a legal process called an election. They are organizing through business pressure tactics. This is labor relations through intimidation and economic pressure.”

But John Stan, another Local 100 representative, said corporate campaigns are nothing more than a means to give workers a chance to have a voice in their employer’s actions.

“We recognize that corporations exist not as a lone entity, but they exist in a web,” he said. “They depend on a number of relationships with landlords, banks, investors, tenants, in addition to the workers whom we represent.

“Those workers, therefore, have relationships with those other entities in the web, and they should participate in those relationships.”

COPYRIGHT 1997 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.

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