QSR Magazine

In the latest sign of a possible wage-dispute trend in the restaurant industry, five Houston-based restaurants agreed to fork over more than $334,000 in back pay to 154 current and former employees after the Department of Labor found minimum-wage and overtime violations of the Fair Labor Standards Act (FLSA).

The Department’s Wage and Hour Division discovered that non-exempt employees, entitled to “time-and-a-half” pay for overtime under the FLSA, “were being paid straight time for all hours worked, including those worked over 40 in a workweek,” according to a press release issued Friday. “Additionally, the companies did not maintain the required recordkeeping.”

“It is a top priority of this department to ensure that all workers receive the wages they have earned,” said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest, in the release. “In these cases, employees were found to be earning hourly rates that fell below the federal minimum wage. This is illegal.”

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One year since the economic collapse brought restaurant growth to a standstill, some quick serves have started to see signs of recovery.

The burst of the housing bubble last September, which sent the world economy crashing, made expansion nearly impossible. Businesses stopped investing and banks stopped lending. The fallout at Sandella’s Flatbread Café was typical.

“The pipeline didn’t just stop getting filled,” says CEO Mike Stimola. “The whole thing basically flew apart.”

Sandella’s, which is based in West Redding, Connecticut, and has more than 100 locations, averaged 50 franchise applications in each of the first three quarters of 2008. In the next two quarters, the company received close to zero.

“Things just fell off the table,” Stimola says.

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With much of the world focused on economic indicators, Juárez, Mexico, is experiencing trends of a grislier sort: Decapitations, arson, and homicide are all part of daily life in one of the world’s most dangerous cities.

Juárez’s drug war, which has claimed more than 1,000 lives in 2009, has ravaged the restaurant industry and sent franchises north into El Paso, Texas, to escape violence and extortion.

“There’s crazy people burning restaurants over there and they try to get money from the restaurants and bars,” says Antonio Rodriguez, general manager of one of the two Barrigas Restaurant locations in El Paso. Arson is a common punishment in Juárez if a restaurant refuses protection from drug cartels. As a result, Rodriguez sold his house and moved his family to El Paso in search of security.

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Though much of the hysteria surrounding Swine Flu, or H1N1 Virus, has died down, it is still a pressing concern at the 90th annual National Restaurant Association (NRA) Show that kicked off Saturday in Chicago.

The deadly influenza strain, which has infected about 4,700 people in the United States, killing 4, led the NRA to ask Ecolab Inc., a sanitization and food safety company, to set up more than 140 automatic hand-sanitization stations around McCormick Place convention center.

"There's not the same level of focus as there was two weeks ago, but there still a level of concern and intrigue," said Bob Sherwood, vice-president and general manager for EcoSure, an Ecolab business. "I think there's a lot of people thinking it's going to come back in the fall."

Sherwood took part in a seminar Saturday called "Learning from the H1N1 Flu outbreak," along with Yum! Brands Inc. director of quality assurance Scott Brooks. Yum, whose brands include KFC and Pizza Hut, has updated its pandemic plan since the outbreak, putting a greater emphasis on hygiene and keeping sick workers at home, Brooks said.

Responding to the competition, Yum has ordered face masks for its employees should another outbreak occur.

"If our competition starts going into masks, we don't want to be the only one who doesn't have them," Brooks said.

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