Mövenpick workers accept stock as entrée

The employees of Mövenpick restaurants in North America have agreed to accept shares in lieu of some wages from the financially troubled company that operates the chain.

The Toronto Star
February 13, 2002

Mövenpick workers accept stock as entrée
Some overtime will be paid in company shares
Dana Flavelle

The employees of Mövenpick restaurants in North America have agreed to accept shares in lieu of some wages from the financially troubled company that operates the chain.

The deal is part of a complex rescue package that was given the green light yesterday by shareholders at the annual general meeting of Richtree Inc., master franchiser for North America, and was the last stumbling block to implementing the plan.

The package is designed to help the Toronto-based company both cut costs and settle its long-running dispute with the Swiss parent company, Mövenpick AG, and its subsidiary, Movel Restaurant Holding AG, Richtree said.

Richtree employs 1,300 people at 14 restaurants, including seven in Toronto, under several banners, including the traditional Mövenpick format and the newer self-serve Marché and Marchelino formats.

Starting Feb. 26, hourly-paid employees will work 15 per cent more hours every Tuesday for Richtree shares rather than pay, Richtree president Jörg Reichert said.

Management is also participating, with Reichert contributing 30 per cent of his pay and the other six senior executives kicking in 15 per cent each, he said.

The forgone wages will be used to buy out Movel, a division of Mövenpick AG, Switzerland's largest restaurant and hotel company, which owns 1 million Richtree shares. The shares will be distributed to the employees on a pro-rated basis.

The program is voluntary, Reichert said, but 75 per cent of the staff has signed up. The Service Employees International Union and the Hotel Employees Restaurant International Union, which each represent groups of Richtree works, has approved the plan, he said.

Since the terrorist attacks in the United States on Sept. 11, Toronto-based Richtree has had to cut $3 million in annual costs, Reichert said.

Its sole U.S. location, a corporate building in Boston, lost 40 per cent of its business in the first month after the attacks while the company as a whole saw business drop 17 per cent, he said.

In response, the company negotiated deferred payments with its landlords and suppliers, he said.

In its first quarter, which ended Oct. 28, the company lost $1.28 million, or 10 cents a share, on sales of $18.1 million, compared to a year-earlier loss of $139,000, or 1 cent a share, on sales of $21.5 million.

The company's future also depends on settling a long-standing dispute with the baron who bought Mövenpick AG from its founder in 1997, said Reichert, a German who joined the company in Europe 35 years ago. Baron August von Finck is the world's 74th richest person, according to Forbes magazine.

Besides cutting costs, the employee share-purchase plan is designed to settle a dispute with Movel, which claims Richtree failed to meet a previous deadline to purchase the 1 million Richtree shares Movel owns.

In a separate dispute, Mövenpick AG claims Richtree breached its franchise agreement when it failed to open a specified number of U.S. outlets within a certain time frame. For his part, Reichert alleges the baron prevented him from successfully completing a U.S. expansion plan four years ago.

Richtree, which went public in February, 1997, at $6 a share, closed yesterday unchanged at 70 cents a share on the Toronto Stock Exchange. The company has rarely traded above its initial offering price.


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