Charles Sarkis, the eponymous owner of Charley’s Eating and Drinking Saloon and the Back Bay Restaurant Group, has built a formidable restaurant empire here in the Boston area over the past 40 years, with 33 restaurants and 3400 employees. Sarkis is reportedly one smart, tough business owner, but it appears that his unwillingness to address succession planning issues may lead to the demise of a company that has been his life’s work.
According to a recent article in the Boston Globe, Sarkis is negotiating the sale of a large portion of his legendary restaurant chain to a private equity firm, in part to pay a $10 million debt owed by Sarkis’ other major holding, the Wonderland Greyhound Park in Revere. The Globe reports that the deal is contingent on getting Sarkis’ grown children who have been active in the company to sign non-compete agreements.
So what’s the problem? Despite the fact that Sarkis’ children Charles, Paul, Patrick and Amy have been involved in the business for most of their adult lives, and are credited with much of the company’s success over the past 15 years, Sarkis reportedly doesn’t believe that his children are “serious enough” to run the company. He rebuffed at least one offer five years ago from Charles and Paul to buy the company for $70 million. Of the current deal, Sarkis’ son Paul, who left the company in 2002 after 12 years, says that the entire process “was a charade, so that he (Sarkis) could say he offered us a chance to buy (the company).”
To make matters worse, according to the Globe, “his children balked at the non-compete provision (of the agreement to purchase the company) because it meant giving up their chosen careers without compensation for the loss.” Under pressure, Charles walked away from his job as operations manager this February, and Amy was suspended without pay when she refused to give up her restaurant career as a condition of the sale. Only Patrick, who serves as the company’s recruiting director, remains employed by the company.
According to the Globe report, Sarkis’ deal with Tavistock was expected to close sometime this month.
A strong-willed, first-generation business owner builds a successful company. He brings his children into the business, and they build their own careers by making important contributions to the company’s growth and success. But the father fails to acknowledge their contributions, and doesn’t engage in constructive discussions about the future leadership of the company or map out a strategy until pressing circumstances cloud everyone’s judgment. It’s a sad case, made all the more unfortunate because it is so common.
You can read the complete text of the Globe article about Sarkis and his family by going to our Resources page at www.bestpracticesforbusiness.com/resources, and clicking on the first link under “Succession Planning.”
