Geoffrey Stackhouse, Managing Director, Clarity Solutions
Cult British burger chain Byron Burgers has outraged customers, triggering boycotts and store closures, and put the future of the £100m business at risk.
Seeking to avoid a possible fine of up to £700k, management lured employees to a fake OH&S meeting as cover for an immigration raid, resulting in 35 employees being arrested and at least one deported.
Understandably customers and activist groups are outraged at the inhumanity of a business choosing to trap its workers rather than help them.
While avoiding potential fines of up to £700k seems like a good idea, they may have trashed a £100m brand by failing to value the chain's reputation and the impact the actions would have on customers.
The Holborn store has been forced to close and another is under threat. There's a nationwide boycott of the chain and activists are releasing boxes of cockroaches into stores, forcing them to close for fumigation.
Byron Burgers, known as the the bourgeois Burger King, is owned by a private equity firm Hutton Collins Partners, so figures are hard to come by.
But based on its 2013 sale price, each store was valued at around £3m, so losing one, if not two could be a £6m mistake.
And when you factor in a probable revenue hit on the remaining 50 stores, the potential £700k fine was looking like a really good deal.
If the outrage persists there's a good chance that the chain will suffer terminal brand damage and be wound up.
Two insights jump out at me from this crisis:
1. Focus on your customers and how your brand values (expressed though your actions) will affect them. Simplistic economic analysis tends not to value reputation, and cost savings can come at a very high price.
2. If you do outrage your customers, listen to what they have to say, apologise and try to fix it. Otherwise they will vote with their feet - particularly if you offer a 'want' rather than a 'need'.
But back to Byron Burgers.
To make the crisis worse, management offered an offensive apology which inflamed the angry hordes because it failed to address their feelings and focussed on justifying their actions rather than genuinely apologising.
"We apologise to customers and staff for any irritation, however, we had to act as forced deportations such as this and others are unacceptable, we must defend these people and their families from such dehumanised treatment."
Dismissing people's horror at the idea of tricking employees so they could be rounded up and imprisoned as mere 'irritation' is foolish. But trying to spin their actions as 'for the employees own good' is insane.
The outrage will continue until Byron Burgers acknowledges their mistakes, shows what they have learned and makes a commitment to respecting their employees.
And unless they do it soon, owner Hutton Collins Partners may face a £100m write down on their investment.