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9/10/96

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Faculty club employees laid off to make room for new management

STANFORD -- After years of financial difficulties, the Stanford Faculty Club was closed Sept. 5 and its operations were turned over to a private company, TDS of Redwood City.

The move resulted in the layoff of 11 union workers, five nonunion workers and 60 part-time workers who consisted mostly of students paid by the club on an hourly basis.

"By bringing [TDS] on board, we will gain not only their considerable experience in innovative and exceptional dining, but a new general manager and a professionally trained executive chef to head our kitchen operations," law Professor Barton Thompson, president of the Faculty Club board, wrote in a letter to club members.

As part of the change, the club's dining rooms and kitchen will be revamped, the menu will be updated and a new, expanded buffet will be served. The club will be reopened for regular luncheon service on Sept. 23 and a grand opening will be held on Sept. 30.

The switch to outside management is intended to revitalize the financially plagued club and make it competitive with upscale Palo Alto restaurants, Thompson said in a recent interview.

"With a company like TDS, we can take advantage of some economies of scale ­ for example, in the purchase of food ­ that should help lower our costs," he said.

Club showed signs of improvement

The move, which ha been considered by the board since April, came as a major disappointment to many club employees who have worked hard for the past two and a half years to improve the club's finances and operations under a new manager, Hessen Ghazal.

Ghazal was appointed manager in the spring of 1994, when the club was in serious financial trouble. An Internal Revenue Service review of the club's records from 1989 to 1992 left the club owing thousands of dollars in back taxes and penalties.

That setback, combined with costly building repairs and a hefty reduction in the club's annual subsidy from the university, took its toll on the club's operations, said financial consultant Don Price.

"Things got pretty bad," Price said. "Hessen came in at a low point and she started turning it around."

Over the past two and a half years, the club has reduced expenses by omitting revenue-losing services such as evening dinners and by cutting a number of staff positions. Additional steps, such as new vegetarian and pasta dishes, a new wine list, an expanded selection of salads and personalized catering menus, also were taken to diversify the service and enhance the overall image of the club.

As of July, the club had accumulated a net profit of $50,000 for fiscal year 1995-96. While that was a step in the right direction, Price said, the club still had a long way to go toward paying off the more than $500,000 debt it owes the university.

The limited clientele (the club is open to faculty and higher level staff who pay a membership fee) and limited hours of service made it difficult to turn things around overnight, he said.

Ghazal says she could have put the club on stable ground if she had been given sufficient time and resources.

"I did the best that I could given the circumstances," she said last week, as she flipped through a thick binder filled with complimentary notes from customers who enjoyed the club's services under her management.

"Unfortunately, I was caught in the middle."

Employees laid off

So were the workers, claims Lenny McBride, field representative for the United Stanford Workers union.

"All of these folks are in their forties or fifties and they are not going to have an easy time finding employment elsewhere," said McBride, who spoke on behalf of the union workers. "They are pretty outraged and shocked."

Thompson said the board took a number of steps on behalf of the employees to help soften the blow. The management contract with TDS, for example, calls for the company to interview any former employee who is interested in becoming a part of the new Faculty Club.

McBride countered that even if a prior employee is fortunate enough to land a job at the new club, TDS' benefits are not comparable to Stanford's. Several of the dismissed employees, for example, were counting on the college tuition reimbursement that Stanford provides for children of longtime staff, he said.

All of the club's unionized workers, with the exception of one, have enough seniority to get another Stanford job by "bumping" workers with less seniority elsewhere on campus, said Don Slaughter of personnel services.

But Jose DeAnda, 46, of Sunnyvale, a chef who has worked at the club for almost 20 years, said that doesn't make him feel any better.

"I'm going to look for another job because I don't think it's right to bump someone. It isn't their fault that I got laid off," Deanda said.

Nonunion workers don't have "bumping rights." But if they do find a job opening at Stanford for which they are qualified, they will be considered before candidates from outside the university, Slaughter said. The servers are likely to be rehired by TDS when the club re-opens, he said.

Bottom line was economic

Thompson said the board weighed all of its options before coming to the unanimous conclusion that turning the club's management over to a private company was the best choice in the long run.

"The bottom line for the board was that we were not enjoying the same level of business as we had been 10 years before and we were concerned about the club's long-term viability if we didn't change," Thompson said.

At the same time, he acknowledged the progress that the club has made during the past two years.

"The employees worked hard and did a good job," he said. "We, however, as a board, decided that we needed to do an even better job if we wanted to remain a viable operation. We must be as good as any of the competition and hopefully even better."

The club will continue to receive an annual subsidy of about $140,000 from the university, said Tim Warner of the budget office. University officials hope the changes at the club will generate sufficient surpluses to retire the more than $500,000 debt, he said.

Members of the club will have a chance to meet the new management staff at the annual membership meeting on Sept. 30 at 5 p.m. At the meeting, a new board of directors will be selected for the 1996-97 academic year.

-mic-

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