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.