In Business This Week: HEADLINER: BOSTON CHICKEN
COMING HOME TO ROOST
The feathers are flying at Scott Beck's Boston Chicken. On May 30, Larry Zwain, a top lieutenant of CEO Beck, stepped down after months of losses at more than 1,000 Boston Market outlets. Many investors are flying the coop: Boston Chicken's share price has swooned by more than half, to roughly 15, in recent months.
Beck first made a name for himself as a vice chairman of Blockbuster Video. And in its early days, Boston Chicken reported robust profits from royalty fees and interest on loans from franchisees. But those profits haven't held up: The chain's consolidated losses totalled $166 million from 1994 through 1996. And a costly promotional campaign has failed to boost sales. Now Beck has laid off 115 employees.
Beck needs to move fast to fix Boston Chicken's problems. "Boston Chicken has been given more time and money than any other retailer on this planet to develop a concept," says independent restaurant-industry analyst Roger Lipton. In the past, Beck has vowed to triple the number of stores, to more than 3,000, by 2003. First, he'll have to get his existing henhouses in order.EDITED BY KELLEY HOLLAND By Eric SchineReturn to top
AHMANSON GIVES UP ON GREAT WESTERN
H.F. AHMANSON IS FINALLY throwing in the towel. After a costly and acrimonious four-month battle for Great Western Financial, the giant California thrift decided on June 4 not to increase its hostile $6.7 billion bid for its crosstown rival for a second time. That means Great Western is free to merge with Washington Mutual, which made a friendly offer for it in March. Over the past month, Washington Mutual's stock has risen as CEO Kerry Killinger worked his charm on Wall Street, and that drove the value of its stock bid above Ahmanson's. The last straw came on June 3, when Ahmanson lost a court battle over the timing of the merger vote. Now, banking-industry sources say Ahmanson could itself become a target--perhaps, one day, of Washington Mutual.EDITED BY KELLEY HOLLANDReturn to top
A WHITE HOUSE NOD FOR A MEDICARE FIX
SIDESTEPPING A LAND MINE that could have blown up the bipartisan budget deal, President Clinton signaled on June 3 that he would accept a GOP plan to let 500,000 elderly Americans try out Medicare medical savings accounts (MSAs) as part of the plan. The seniors would get vouchers for health insurance for serious illnesses, plus a savings account to pay routine bills. Backers say MSA users will spend health-care money more carefully because they can keep what's left at yearend. But MSA foes--including Clinton--say the accounts will work only for relatively healthy beneficiaries.EDITED BY KELLEY HOLLANDReturn to top
CROSS-BORDER BANK SHOPPING
CANADIAN IMPERIAL BANK OF Commerce is in the final stages of talks to buy New York's Oppenheimer & Co., according to Wall Street sources. The Toronto bank already has a presence in the U.S. market through its CIBC Wood Gundy Securities unit. But Oppenheimer's 600 retail brokers and the $11 billion in assets they have under management would expand CIBC's U.S. presence. The CIBC talks come in the wake of failed negotiations between Oppenheimer and PNC Bank. Both Oppenheimer and CIBC declined to comment.EDITED BY KELLEY HOLLANDReturn to top