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Restaurant franchise to cut jobs

Thomas & King is eliminating 17 positions at its Lexington headquarters and making other cuts "to reduce costs and create economic efficiency" in a weakening economy.

About 73 employees will remain at the privately-owned company's headquarters on East Main Street after the downsizing.

Thomas & King is the nation's 8th largest restaurant franchise company, according to its Web site. It has 7,500 employees and operates 90 Applebee's and seven Carino's Italian Grill restaurants in Arizona, Indiana, Kentucky, Ohio and Pennsylvania. Twelve of those Applebee's and three Carino's are in Central Kentucky.

In the statement to employees on Wednesday, Thomas & King also said it has "disposed of several non-core assets and reduced the salary and benefit package for its chief executive officer," who is former Lexington Vice Mayor Mike Scanlon. A bonus program for home office employees also is being scaled back.

"We have been closely watching developments in the economy over the past year and we know these steps are necessary to continue the long-term strength of our company," Scanlon said in the statement.

Stacy Roof, president and CEO of the Kentucky Restaurant Association, said Thomas & King's downsizing is the first she has heard of by a major restaurant company in Kentucky, but lots of individual restaurants have cut back or closed.

"Commodity prices have skyrocketed the last year or two," Roof said. "They (restaurants) are paying way more than they ever have (for food), and they are paying all their suppliers fuel surcharges to deliver those things, and they have less guests — it's a big hit."

The National Restaurant Association says "eating and drinking place" sales dropped 0.5 percent in September to the lowest level since April, while wholesale food costs jumped 1 percent.

On Tuesday, DineEquity Inc., the national parent company of the Applebee's chain, said it will sell 66 company-owned restaurants in Texas and New Mexico to ease financial pressures.

Meanwhile, the Louisville-based Texas Roadhouse chain reported an 18 percent drop in profit Tuesday and said it will slash its expansion plans.

In his statement, Scanlon called 2008 "a difficult year due to the deep economic slowdown."

He said Thomas & King has "focused on creating new operating efficiencies while improving guest and employee service. We have seen significant improvements in consumer satisfaction ... because of these efforts."

He said the employees whose jobs are being eliminated will be given severance benefits, counseling and career transition assistance.

"The company deeply regrets the economic necessity of this action," Scanlon said.