C4 WEDNESDAY, MARCH 11, 2020 LATIMES.COM/BUSINESS
Stocks on Tuesday re-
couped most of their historic
losses from Monday as
hopes rose, faded and then
rose again on Wall Street
that the U.S. government
will try to cushion the econo-
mic pain from the co-
ronavirus.
The day’s moves were a
microcosm of the severe
swings that have dominated
recent weeks, and market
watchers say they are likely
to continue until the number
of infections stops accelerat-
ing.
In the meantime, in-
vestors want to see a big, co-
ordinated response from
governments and central
banks to shore up the virus-
weakened economy.
The Standard & Poor’s
500 index surged as much as
3.7% in the morning, only to
see the gains evaporate by
midday. The index then
bounced up and down be-
fore turning decisively
higher after President
Trump pitched his ideas for
a break on payroll taxes and
other economic relief to Sen-
ate Republicans.
By the end of trading, the
S&P 500 was up 135.67
points, or 4.9%, to 2,882.23 —
erasing three-fifths of Mon-
day’s loss, which was the
sharpest since 2008. The
Dow Jones industrial aver-
age rose 1,167.14 points, or
4.9%, to 25,018.16, and the
Nasdaq composite jumped
393.58, or 5%, to 8,344.25.
The recovery is pulling
the stock market a bit fur-
ther from the edge of a bear
market, signified by a drop
of 20% from a record. TheS&P 500 is down 14.9% from
its high. If it can rally back to
that point, it would extend
the longest-ever bull mar-
ket, which began its climb af-
ter the market hit bottom
March 9, 2009.
Tuesday’s volatility re-
flected the mood of a market
just as preoccupied with the
virus as the rest of the world.
Since U.S. stocks set their
record high just a few weeks
ago, traders have crossed
over from dismissing the
economic pain created by
COVID-19 — thinking it’s
similar to the flu and could
stay mostly contained inChina — to being in thrall to
it — worrying that it may
cause a worldwide reces-
sion.
Although they won’t cure
illnesses or get quarantined
workers back into factories,
spending and stimulus pro-
grams would put cash into
the hands of households and
businesses while health ex-
perts try to corral the virus.
That could stave off or at
least moderate a possible re-
cession.
Investors saw glimmers
of a coordinated response,
which led to Tuesday’s opti-
mism.
At a White House news
briefing Monday night,
Trump said his administra-
tion would be asking Con-
gress to cut payroll taxes
and pass other quick mea-
sures aimed at easing the ef-
fect of the coronavirus on
workers.
But as markets waited
Tuesday for details about
Trump’s plan, prices oscil-
lated sharply.
After a meeting with ma-
jor health insurers, Trump
said the government is work-ing with the cruise line in-
dustry, one of the hardest hit
by the virus. That helped lift
the market, which had earli-
er flipped to losses amid
doubts that the government
would announce anything
soon.
Perhaps the most nota-
ble move in markets Tues-
day was that Treasury yields
pushed higher. The bond
market rang warning bells
about the virus long before
the stock market, and a rise
in yields is a sign that fear
has receded a bit.
The 10-year Treasury
yield rose to 0.79% from
0.49% late Monday. A week
ago, it had never been below
1%.
Brent crude, the interna-
tional standard, rose $2.86,
or 8.3%, to $37.22 a barrel,
while benchmark U.S. crude
rose $3.23, or 10.4%, to $34.36
a barrel.
Oil prices plunged 25% on
Monday amid a price war be-
tween producers, who are
pulling more oil out of the
ground even though de-
mand is falling because of
the virus.MARKET ROUNDUP
Stocks jump 5%, buoyed by U.S. virus efforts
associated press
Index
Dow industrials
S&P 500
Nasdaq composite
S&P 400
Russell 2000
EuroStoxx 50
Nikkei(Japan)
Hang Seng(Hong Kong)CloseDaily
changeDaily % YTD %25,018.16 +1,167.14 +4.89 -12.34
2,882.23 +135.67 +4.94 -10.79
8,344.25 +393.58 +4.95 -7.00
1,696.67 +63.03 +3.86 -17.76
1,350.90 +37.46 +2.85 -19.03
2,764.46 -24.19 -0.87 -18.76
19,867.12 +168.36 +0.85 -16.02
25,392.51 +352.05 +1.41 -9.92Major stock indexes
change changeAssociated Presscompany’s business model
appears to be focused on ex-
tracting value from strug-
gling restaurants — not on
their long-term viability.
“I don’t think they are in
the business of operating
restaurants — I think they
are in the business of trying
to make money, but doing so
in ways that are probably
less than scrupulous and do-
ing so in ways that take ad-
vantage of employees and
loopholes,” said Jeff Ding-
wall, a lawyer who unsuc-
cessfully tried a case against
Food Management Partners
over allegedly improper lay-
offs in 2015. “They do it in
ways that are very calcu-
lated. They aren’t open with
the employees when they
come and take over.”
Food Management Part-
ners declined to make execu-
tives available for interviews
but provided The Times
with a two-page statement
from Chief Executive Larry
F. Harris that described the
company as a longtime
restaurant owner and fran-
chisee that has also acted as
a “managing operator”
brought in by others “to help
salvage troubled brands.”
He said the company does
not enter a business rela-
tionship unless it believes it
“can accomplish the pri-
mary goals of saving jobs
and returning the brand to
health.”
“In some instances, the
situations are more dire
than expected, and the dam-
age too severe for an effec-
tive turnaround,” Harris
said. “These severe cases
call for immediate action to
preserve any tangible value
and save jobs that are im-
portant for the communities
in which we operate.”
Many industries — print
media and mall retail among
them — have seen the effects
of so-called vulture investors
that seek out distressed as-
sets and dramatically cut
costs or liquidate.
In the restaurant space,
Barington Capital Group
has built a reputation as an
activist investor, acquiring
stakes in the parent compa-
nies of Red Lobster and Out-
back Steakhouse and push-
ing for management
shake-ups andspinoffs. But
its efforts have involved pub-
licly traded firms, ensuring a
measure of regulatory over-
sight.
According to legal docu-
ments, in addition to nine
Curry House locations in
California, Food Manage-
ment Partners has, over the
last five years, closed more
than 200 restaurants shortly
after acquiring them:
In 2015, the company
closed about 75 locations of
Carrows Restaurants and
Coco’s Bakery Restaurant
the day after it bought their
parent. A year later, the com-
pany shut down 166 related
eateries, including outposts
of HomeTown Buffet and
Ryan’s, about six months af-
ter purchase.
Industry experts said
Food Management Partners
might see more value in a
distressed chain’s real es-
tate, cooking equipment,
leases and intellectual prop-
erty than in its restaurant
operations, a notoriously
low-margin business.
Alex Susskind, professor
of food and beverage man-
agement at Cornell Uni-
versity, was unfamiliar with
Food Management Part-
ners, but noted he’d heard of
other companies that ap-
peared to use similar busi-
ness models. They typically
“operate [restaurants] as
long as they need to in order
to extract all of the value and
then they move on.”
“Their intention is al-
most never to let the chain
operate or to resell the chain
— it is to basically take it
apart,” he said.
Longtime restaurant in-
dustry executive Frank
Guidara said chains such as
Coco’s and HomeTown Buf-
fet have struggled for some
time, making them attrac-
tive buyout targets.
“There are a lot of con-
cepts that are virtually dead
— they’ve been around for a
long time and they’ve had a
strong run, [but] it’s on life
support,” he said. “Finally, it
gets to the point where you
have some — call them ma-
rauders — who see it and fig-
ure out how to make some
money out of it. The landlord
gets hurt, the employees get
hurt, and the customers, it’s
part of their life, they get
hurt.”
With Curry House, the
company’s actions have
struck a nerve. As word of
the Feb. 24 closure rippled
across social media, fans la-
mented the loss of a chain
that was founded in Little
Tokyo in 1983 and served in-
expensive Western-influ-
enced Japanese food.
And the unexpected job
losses have left workers with
few options. Tyus Hotta, 23,
a former server at the com-
pany’s Torrance location,
found out he’d been laid off
the morning after working a
Sunday evening shift.
“Nobody had any warn-
ing,” said Hotta, who is
studying journalism at El
Camino College. “I have
fears and anxieties, I have
credit card bills — I have to
cut back on a lot. I have beenapplying to [jobs] and look-
ing around, but without a
car, even getting around
hurts my funds since I don’t
have a paycheck.”
Harris, the CEO, blamed
Curry House’s closure on an
“unimaginable employment
situation” discovered after
the purchase of the chain
from House Foods America.
He said that the “workforce
[was] comprised of nearly
75% undocumented work-
ers” and that the restau-
rants were closed for several
weeks last year so that “legal
workers could be hired and
trained.”
“Guests went elsewhere,
and the brand lost its mo-
mentum, making it impos-
sible for the restaurants to
remain open,” he said.
In the days since the clo-
sure, Hotta and other for-
mer employees have ques-
tioned whether Food Man-
agement Partners violated
labor laws. In California,
under the state’s Worker Ad-
justment and Retraining
Notification Act, a business
with 75 or more employees
must give 60 days’ notice to
workers and file paperwork
with the state if it is going to
lay off 50 or more workers at
a single establishment
within a 30-day period. A
federal law of the same name
offers similar protections
nationwide.
It’s unclear how many
workers lost their jobs, and
the California Employment
Development Department
has no record of a layoff no-
tice filed under the state’s
WARN Act, according to a
spokesman.‘A sophisticated
company’
Food Management Part-
ners’ executives rarely give
interviews, and the com-
pany generally only appears
in newspaper stories about
its acquisitions, closures or
lawsuits.
The Hollywood Park,Texas, company’s Facebook
page says that its portfolio
includes about 500 restau-
rants generating more than
$1 billion in annual sales.
And an archived version
of the company’s website
from 2019 lists the company’s
divisions, including 35
HomeTown Buffet eateries
in four states, 20 Old Coun-
try Buffet restaurants in 10
states and 18 Furr’s Fresh
Buffet locations in four
states.
In recent years — as the
company has bought and
closed restaurants — it’s
been hit with several labor-
related lawsuits seeking
class-action status, most of
which it has successfully
fended off. After the closure
of 166 eateries that Food
Management Partners ac-
quired via its purchase of
Ovation Brands, four em-
ployees at an Old Country
Buffet in Chicago brought a
lawsuit over the alleged vio-
lation of the federal WARN
Act. Similar to the California
law, it requires that employ-
ees at companies of 100 or
more people be given 60
days’ notice before a layoff
involving at least 50 jobs at a
single site.
The 2016 complaint al-
leged the restaurant had
more than 50 employees who
lost their jobs “without any
prior notice.” Food Manage-
ment Partners denied the
claims, and the case was lat-
er dismissed.
After Food Management
Partners closed about 75 of
the 149 Carrows and Coco’s it
acquired when it bought
Catalina Restaurant Group,
former restaurant workers
filed three lawsuits over the
company’s alleged violation
of the state and federal
WARN acts. They were ulti-
mately consolidated into
one case.
Food Management Part-
ners argued that the eat-
eries were operated sepa-
rately and none had more
than 41 employees. The com-pany also said that its turn-
around plan dictated it
“close half the restaurants,”
and that the operation was
being “restructured for a
sale,” which later occurred.
In the end, a judge ruled
in part that the number of
employees in each restau-
rant could not be aggre-
gated, and therefore the
company did not violate the
federal or state WARN acts.
In a related matter, an
employee at Catalina’s cor-
porate headquarters in
Carlsbad sued Food Man-
agement Partners in 2015 for
allegedly laying off more
than 50 people there without
proper notice. Dingwall, one
of the attorneys represent-
ing the plaintiff, said that he
repeatedly tried to depose
executives, but they “re-
fused to show up.”
Food Management Part-
ners contended it laid off
only 47 people in the corpo-
rate office — below the
WARN act threshold — and
a federal judge sided with
the company.
Dingwall’s co-counsel in
the matter, Trang Tran,
called Food Management
Partners a “very sophis-
ticated company.”
“They know the status of
these assets before they
even purchase them,” he
said.
Guidara, the industry
executive, has experience
turning around restaurant
companies — he resusci-
tated the Au Bon Pain chain
in the early 2000s — and said
Food Management Part-
ners’ move to close half of its
Coco’s and Carrows restau-
rants before selling the
brand seemed like an ac-
ceptable strategy. But own-
ers should be transparent,
he said.
“If they are going to buy a
company, they have to be
square with employees,”
Guidara said. If not, “even-
tually their reputation
catches up with them.”
For its part, Food Man-agement Partners considers
its ownership of Catalina
Restaurant Group a success
story. Harris said the com-
pany acquired the Carrows
and Coco’s parent “while it
was dealing with severe fi-
nancial and operational
struggles.” Although restau-
rants were closed and peo-
ple were put out of work,
Harris said that “countless
other jobs were saved” and
that the company was “posi-
tioned for the growth it is ex-
periencing today.”What happened
at Curry House
In the aftermath of the
controversial Curry House
closure, Food Management
Partners has tried to dis-
tance itself from the chain.
Last week, the compa-
ny’s spokeswoman sent The
Times an email saying it
“does not, and has never,
owned or operated” Curry
House, noting that it did,
however, provide “back-of-
fice functions like account-
ing and IT support.” The
same day, a company called
CH Acquisitions issued a
news release saying it owned
the chain.
But corporate filings and
online records databases
show that CH Acquisitions
has the same address, regis-
tered agent and executives
as Food Management Part-
ners. And five former Curry
House employees also said
they were told by their
bosses that Food Manage-
ment Partners owned Curry
House. During its three dec-
ades in operation, the chain
developed a following for its
affordable and filling set
meals, which included Japa-
nese curry rice or spaghetti
with creamy corn potage or a
green salad drizzled with
ginger-miso dressing. Many
locations evolved into infor-
mal gathering places for fans
of Japanese cars, comics and
culture.
Admirers of the chain in-
clude comedian Jenny Yang
and streetwear designer
Bobby Kim, both of whom
have spoken publicly about
their affection for the brand.
Porridge + Puffs chef Minh
Phan recently featured a
dish titled Curry House
Homage at her Historic Fil-
ipinotown restaurant. But
interviews with former work-
ers at the chain suggest
things had turned bleak.
Hotta and two other for-
mer Curry House workers in
Torrance described a pre-
carious work environment in
the months before the clo-
sure, explaining that items
were permanently removed
from the menu, and the eat-
ery was sometimes under-
staffed and under-supplied.
“We would have so many
moments where we would
run out of materials, and one
of us would have to make a
run to the Smart & Final
across the street to get pack-
aging or utensils,” said
Theadore John Balaschak,
22, who worked as a busser
at the Torrance location.
But some former employ-
ees said Food Management
Partners’ assertion about
undocumented workers
rang true.
“During the month of
July, Torrance was the only
store that really stayed
open,” said Richard Chong,
who was a server at the Tor-
rance location. “My store
manager trained staff, so
they could reopen many of
the other closed locations.”
However, Chong said
that the chain lost “key staff
at many locations” and that
those workers were replaced
by new undertrained ones.
“Many customers were
turned off by the inconsis-
tent quality ... and service,”
he said.
If the Curry House
restaurants were destined
to be shut down, one thing is
almost assured: There were
financial benefits to a sud-
den closure.
“If they were upfront
about it and ... gave everyone
notice and did all those
things, that would be great,
but that would probably
cost them more and prevent
them from doing the stuff
they do,” Susskind, of Cor-
nell, said. “They are doing
this for a very specific rea-
son: to fly under the radar.”
Harris, though, cau-
tioned that although it is hu-
man nature to disparage un-
popular decisions, Food
Management Partners has
“saved many jobs and re-
stored financial viability to
troubled companies.”
But that’s not true in ev-
ery case, as Curry House
workers learned.Times researcher Scott
Wilson contributed to this
report.Curry House closures are familiar
THE CURRY HOUSE CHAINgrew from the opening of its first restaurant in Los Angeles’ Little Tokyo in- Its new operator blamed the closure on an “unimaginable employment situation.”
Irfan KhanLos Angeles Times[Curry House,from C1]