Dean & DeLuca, the debt-ridden Thai-owned chain of luxury food shops, has defaulted on government-mandated payments to former employees and stalled payments to current employees in the United States, according to accounts from employees and documents received by <i>The New York Times</i>.
The parent company, Pace Development in Bangkok, did not respond to repeated requests for comment.
In recent weeks, four Dean & DeLuca cafes have closed, including Stage, the company’s expensive new showpiece in the fashionable Meatpacking district of Manhattan in New York; it had been open for just three months.
Only four stores are left in the United States, and nearly bare shelves are stocked with supermarket products rather than the delicacies the chain relied on to build its brand. When Pace bought Dean & DeLuca in 2014, there were more than 40 locations in the United States.
The Wichita Eagle also reported that there were layoffs this week at the company’s American headquarters in Wichita, Kansas. And the San Francisco Chronicle reported that laid-off workers from the shuttered store in the Napa Valley, who have not received final payouts, are considering a class-action lawsuit against the company.
Pace chief executive Sorapoj Techakraisri last month announced a plan to revamp the ailing gourmet grocer business by splitting operations in Asia and the US for business restructuring.
The US Dean & DeLuca operation, he said, was undergoing a “rightsize” strategy through cost control and merging of operations to minimise losses from unprofitable branches. The aim is stop losses for the US chain by the end of this year, he added.
Meanwhile, Mr Sorapoj has been touting the chain’s growth in Asia and the Middle East, where the company has about 70 stores, many of them licensed franchises. According to Retail News Asia, he said at a news conference that 90 more stores in Thailand would open in the next five years, and that the brand would be launched in five more Asian capitals.
About the American stores, he said, “We are adjusting the Dean & DeLuca business to a more appropriate size by controlling expenditures both at its office and stores.”
Meanwhile, American vendors of artisanal baguettes, smoked fish, hot sauce, chocolates and more, owed hundreds of thousands of dollars, have cut off the chain’s credit. According to multiple employees, both former and current, landlords served eviction notices at two New York stores that have now closed, citing hundreds of thousands of dollars in unpaid rent.
One former employee, who requested anonymity to avoid retaliation by the company, said that the laundry service had stopped delivering clean uniforms, so workers were competing to grab the least-soiled jackets from the previous shift.
Now it seems those employees will also be paying for the chain’s financial collapse.
Although the chain has been in financial free fall for months, Mr Sorapoj said through a representative last month that current employees would continue to be paid. However, weekly paycheques have repeatedly been delayed, including on Friday, when employees said they were told they would instead receive cheques on Monday.
Mr Sorapoj also reiterated that the approximately 180 former employees who lost their jobs in July when the stores closed would be “taken care of”. Letters sent to those employees at the time told them that they would be paid in compliance with the 1988 federal Worker Adjustment and Retraining Notification Act (WARN Act).
The act requires large employers to compensate workers who lose their jobs when a business closes with less than 60 days’ notice. Employees of stores in St Helena, California, New York City’s Upper East Side and Stage, were told that they would receive compensation for up to 10 weeks of workdays, all unused vacation days, benefit deductions, retirement fund deductions and final paycheques.
But this week, the same employees received a letter acknowledging that the company would not be making those payments “because it is a faltering company and due to unforeseeable circumstances”. It also states that Dean & DeLuca is no longer being funded by its parent company and that the owner made a recent attempt to sell the business, which was fruitless.
The language of the letter indicates that the company plans to claim that the closing does not fall under the WARN Act, which in 2017 was modified to make exceptions for employers who can prove that the closing is due to natural disaster or unforeseeable business circumstances, and who have made a good-faith effort to procure funding.
Those employees were directed to address any future questions to an in-house attorney in Wichita. Phone calls to the number provided in the letter go directly to voicemail.