Taking too long? Close loading screen.
Connect with us

Business

The Halal Guys Once Drew Huge Crowds. Now It’s Pivoting for a Socially Distant World.

Published

on

October 8, 2020 15+ min read

This story appears in the October 2020 issue of Entrepreneur. Subscribe »

Patrick Mock used to fly across the country with takeout containers of chicken and gyro. “I’d smell up the whole cabin just so I could bring some platters back for my friends and family in California,” he says.

He was picking up those platters at The Halal Guys, a food cart on the corner of 53rd Street and Sixth Avenue in Manhattan. Mock ate there regularly when he lived in New York and worked as a management consultant. Then he moved to California, and the cart became a rare treat. Whenever he was back in town, he’d visit the cart, put in a big order, and stuff it all into a carry-on bag before heading to the airport. 

Mock’s friends, many of whom he had personally introduced to the brand, knew he was a Halal Guys devotee. So in 2014, when news broke that the business was franchising, they started texting him messages of encouragement. “I was in a meeting, and I started getting pinged on my phone,” he says. “It had never even crossed my mind to do a franchise.” 

But The Halal Guys wasn’t a typical company, and it wouldn’t be a typical franchise. To start, Mock was hardly the only person obsessed with it. The cart had become a beacon of culinary indulgence for street-cultured travelers and locals. It was dependable — closing only twice in its 30-year history — and wildly popular, especially at night, when people were spilling out of bars and clubs. The line was regularly down the block.

Related: How Many Franchise Locations Should You Own?

Mock saw the business opportunity, and not just because he was a fan. The food was delicious, replicable, and unlike anything else in the country. He figured The Halal Guys could do for halal food what Panda Express did for Chinese food, or Chipotle did for Mexican food. So a week later, he got on a plane to New York to meet with the brand — and then signed a multi-unit deal for 20 stores in Northern California. His first one opened on a sweltering summer day in 2016.

Even as The Halal Guys transitioned from a food cart into a franchise, it managed to maintain its hype. The industry publication Restaurant Business ranked it as the fastest-growing small concept in the country, and units started appearing around the U.S. as well as internationally, in cities like Toronto, Jakarta, and Seoul. Long lines, like the ones in Manhattan, were a regular feature — so much so that when a franchisee launched a Halal Guys Instagram channel in 2015, it posted a photo of a seemingly endless stretch of people at the cart. The caption read, “Tag your friends who have waited in this line for some delicious chicken and rice!”

That became the strategy: Capture the crowd and recycle the excitement. 

But then, trouble. Sales slowed. The buzz died down. A few locations were forced to close. And just as The Halal Guys was fixing the problem, COVID-19 came along and forced it to reconsider everything. Because in a time of social distancing, how can you run a brand that’s built on hype and crowds?

The Halal Guys has an answer: It’s going to get a little boring. But that’s a good thing.

From left: Founders Abdelbaset Elsayed, Ahmed Elsaka, and Mohamed Abouelenein.

Image Credit: Courtesy of The Halal Guys


The Halal Guys’ origin story could fill a chapter in a book on the American dream. In 1990, three Egyptian immigrants—Mohamed Abouelenein, Abdelbaset Elsayed, and Ahmed Elsaka — ditched their kitchen and cabdriving gigs to run a food cart. At first they sold hot dogs, but soon after, they switched to halal food, which is prepared in accordance with Muslim law.  

The partners recognized an underserved audience of Muslim cabbies, and as an homage, they decorated their cart taxicab yellow. But the audience turned out to be bigger than just drivers; it was also the passengers — hundreds of thousands of whom traveled by cab every day in New York City. If you were to ask your driver where to find a quick bite, there’s a decent chance you’d hear about midtown’s best chicken and gyro cart. “It’s one of these viral moments before viral existed,” says Greg Deligdisch, The Halal Guys’ VP of marketing. “It’s hard to imagine planning something like that.”

The cart was popular for its food, but it grew legendary for its lines, which came to stretch late into the night. Sameer Sarmast first visited the cart in the late ’90s as a teenager. “It wasn’t even called Halal Guys back then,” says Sarmast, now a financial planner. “It was just called the chicken-rice guy, or the platter guy.”

Related: 5 Expert Tips For Launching a Food or Consumer Products Business During a Downturn

Sarmast was just old enough to drive, and he used his freedom to eat halal. He and his brother would sneak out after curfew for the 25-minute drive from their home in New Jersey. They’d put their parents’ car in neutral, roll it down the driveway, and start the engine once they were out of earshot. 
For Sarmast, the adventure was never just about food. “It was about experiencing the city lights,” he says. “You’d park your car illegally and mingle with strangers. The line could be 60 people long, and everybody was in good spirits, or at least drunk.” They’d all agree that the chicken-rice guys’ secret white sauce was addictive — which is why every so often, someone would grab a bottle off the cart and sprint away.

Sarmast was a superfan, and he and his brother published the cart’s menu and hours on a fan website they called 53rdand6th.com. In 2006, The New York Times gave the site partial credit for the long lines. When the founders finally branded themselves as The Halal Guys, they included 53rdand6th.com on their T-shirts and to-go bags. It was the official unofficial website.  

By 2013, The Halal Guys had grown to three carts and a food-prep commissary in Queens. It was a culinary staple of New York. That’s when Dan Rowe, CEO of Fransmart, took notice. 

Fransmart is the franchise development company responsible for growing brands like Five Guys and Qdoba, and having spent a fair amount of time establishing U.S. brands in the Middle East, Rowe had started to wonder why there wasn’t a prominent Middle Eastern concept in the U.S. He’d approached a few brands in Dubai, but to no avail. Then it hit him: The Halal Guys. He’d walked past the carts for years but never stopped. “The lines were really long,” he says. “I couldn’t be bothered.” But the thing that had turned him away was drawing other people in. 

When Rowe finally faced the line, he discovered that the food wasn’t technically Middle Eastern. He saw it as vaguely Greek, with yellow rice, a creamy, mayo-based sauce, and loads of seasoning. (The cart’s owners agreed with that; chicken gyros aren’t exactly Egyptian. “Our food is American halal, born in New York City,” says Ahmed Abouelenein, Mohamed’s son, who is now CEO.) Still, it was delicious and original. Rowe reached out to 53rdand6th.com, and Sarmast put him in touch with the company’s operations manager. That kicked off a year of meetings.

“It took a while to get them comfortable with me,” Rowe says. The Halal Guys’ founders had never considered growing beyond New York City and were concerned about compromising the quality of the food. But Rowe was persistent, and in time he convinced the founders to make the leap.

Related: The Top Food Franchises of 2020

Abouelenein moved from executive manager to CEO, and Fransmart began recruiting, focusing on multi-unit franchisees. Bigger investors would be harder to recruit, but in theory, they’d be easier to manage. 

“With something like Subway, you’re selling 1,000 stores and you have to babysit 1,000 people,” says Paul Tran, who was a Fransmart senior consultant at the time. “That requires a big infrastructure.” The multi-unit model would instead allow the company to grow without building a massive corporate office. 

In shaping its brick-and-mortar concept, The Halal Guys modeled itself as the Chipotle of halal food, with counter service that lets patrons participate in the assembly process. Stainless steel counters would replicate the street-cart facade, and the signage would continue as taxicab yellow, now accented with more red. 

Two brick-and-mortar shops opened in Manhattan — and as a big sign of faith, Tran, the Fransmart consultant, decided to become a Halal Guys franchisee himself. He put together a team of partners to join him in a 30-unit development deal in Southern California. “I kind of double-dipped and did a bit of legal insider trading,” he says. “But I’ve always had a personal love for The Halal Guys.” 

In 2015, as Tran was preparing to open one of the company’s earliest franchise locations in Costa Mesa, Calif., excited fans started sharing photos of his branded building on social media. On opening day, Tran’s line stretched six hours long. A picture was posted to Instagram: “Get in line now to eat at The Halal Guys in Costa Mesa later.”

With just 1,440 feet of real estate, Tran’s store did $14,000 in opening-day sales, a number that increased slightly over the next month. As a Fransmart protégé, Tran knew what to do next. He and his partners rolled the profits back into the system to keep building stores while delivering returns to their investors. 

Not all early franchisees were as disciplined. Some franchisees saw the lines and expected to make easy money; they’d buy up inferior locations and resist proven advice. “We even had guys who, if they opened soft, wanted to put other stuff on the menu, which is the kiss of death in the restaurant business,” says Rowe. “They were not acknowledging that they were the reason it was slow.”

This took a toll. Sales at some restaurants started to slump. So in 2017, even though The Halal Guys was expanding rapidly, it effectively put a freeze on franchise recruitment. “We started to be very selective,” says Abouelenein. The company also studied its best and worst performers to figure out what was working and what wasn’t. It terminated agreements with franchisees who weren’t up to par, and it closed underperforming stores. 

The brand was solving what felt like its biggest crisis — but the trouble was actually just beginning. 

Image Credit: Courtesy of The Halal Guys


The first law of thermo­dynamics explains that energy is never created or destroyed. That’s why gas loses heat as it expands: All those excited molecules spread out over a bigger area. And as The Halal Guys expanded, it experienced its own version of that. The energy was still there, but it was no longer contained to a space the size of a food cart. 

“As you expand that quickly, you might lose a little traction with same-store sales,” says Aaron Allen, a Chicago-based restaurant consultant. “That would be one of the first things that happens as the irrational exuberance starts to fade.”

The Halal Guys doesn’t share its unit financials, but estimates from Allen’s firm put average sales, just prior to COVID-19, at $970,000 — down about 20 percent from the $1.2 million it hit in 2016. So the brand was cooling off even before COVID-19 hit it like a gale-force Arctic wind, driving sales down an additional 60 to 70 percent. 

The damage is roughly twice that experienced by the fast-food industry as a whole, according to the marketing firm Top Agency. Burger King was down just 25 percent for the second quarter of 2020, while its sister brand Popeyes actually saw a 24 percent spike. But those chains offer drive-through, which consumers likely viewed as less risky than The Halal Guys’ in-store pickup. 

“If you think about who [this pandemic will hurt] in particular, it’s those whose brand equity doesn’t sync with the current moment,” says Jonah Berger, Ph.D., a University of Pennsylvania Wharton School professor who wrote about The Halal Guys in his 2013 book, Contagious. “The Halal Guys is a great example of using scarcity and exclusivity to drive interest and attention.”

Scarcity and exclusivity synced well with 2016, but it definitely did not 
sync with 2020.

On the heels of its franchisee cleanup effort, COVID-19 forced The Halal Guys to shut down more stores in Texas and Arizona, along with one ghost kitchen in California. 

It also fundamentally changed the brand’s message.

Related: Creative and Practical Steps for Franchises to Survive the COVID-19 Crisis

The brand planned on launching a series of excitement-­building limited-­time promotions and new menu items. But the pandemic made that impossible. The cool, gritty New York City brand had to tell the same careful, cautious story as everybody else: Wear face masks, wash hands, and socially distance. Its buzzy social media now promotes delivery and order-ahead options. It’s experimenting with new store designs that limit guest interaction.

In interviews for this story, everybody at the company hammered the safety message. What they didn’t mention was how the pivot is somewhat awkward for a brand that has historically inspired people to sneak out of their houses to park illegally and eat food on the sidewalk. The cart is many things, but few people visit for its strict adherence to protocol. 

On a recent Sunday afternoon, I visited the original Halal Guys cart in Manhattan. Six employees shoveled steaming piles of chicken and meat across the grill; only one employee wore his mask properly, while the others had them pulled down below their noses or chins, and one was entirely mask-free. 

Foot traffic is down in Manhattan, so the line was thinner than usual — but it never let up. There were always five to seven people waiting to order, with others eating merrily on benches. Whatever draws people to The Halal Guys, it isn’t the expectation of safety. The brand’s value proposition to date has been something far more social, epicurean, and perhaps hard to deliver in a world defined by COVID-19. 


The pandemic has obviously impacted most businesses, but the outcome hasn’t always been predictable. Sometimes, instead of killing a business, it simply shoved that business into the future — and that may be the case with The Halal Guys. It always knew the long lines couldn’t last. Brands cool as they grow; it’s a fundamental law of expansion. “We saw the same thing with Five Guys,” says Rowe. “In the beginning, people would go crazy.” 

Dunkin’, by comparison, isn’t exactly a cult brand. Its global dominance stems from ubiquity and reliability, and that’s what The Halal Guys now wants to deliver. Says Rowe: “So the restaurants open probably with less fanfare, but then they hold their sales longer.” 

Today, The Halal Guys has more than 90 franchised locations, and after clearing out the underperformers, it still has roughly 250 in development. It’s recovering alongside the rest of the industry, reinforcing itself with a suite of initiatives like a new point-of-sale system and the introduction of family meals to feed those in quarantine. A sleek new website boasts a brand blog and an e-com store with hoodies and backpacks, and the restaurant is finally on track to start launching those new menu items that were put on pause earlier this year. (The details remain top secret.) 

More critically, the brand has a new set of criteria engineered to weed out impatient investors. In 2015, a multi-unit franchise deal included an $80,000 payment to The Halal Guys’ corporate office. Now that deal starts at $180,000. And the minimum sign-on includes five stores, according to franchise disclosure documents, rather than the previous three. 

Related: From Phone To Fork: Why The Restaurant Industry Is Equipped To Rapidly Adapt To A Remote World

Mock opened his sixth location in September, and The Halal Guys plans to open 25 new stores by early 2021. It will cross the 100-store threshold just after its 30th anniversary. A new development agreement in Alberta, Canada, will bring its 37th franchisee into the system — and officially put the brand back in growth mode.

Tran’s revenues in his California stores are up to 80 percent of where they were pre-pandemic, and he’s starting to hunt for real estate bargains. It’s a strategy he learned from watching his growth-minded Fransmart brands after the 2008 recession. “A lot of my clients were able to take over stores for half the price,” he says. “I expect us to have that same type of harvest next year.”

The Halal Guys may have stumbled, but it didn’t fall. And its ambition certainly didn’t waver. “We’re still a brand-new concept,” says Abouelenein. “And we’re excited, because we believe there are going to be a lot of great opportunities in the next five to 10 years.” In that time, he says, it will have 400 to 500 stores open globally. Most people will have a store nearby, so there will be no need to ever stand in line.    

loading…

Source

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Ant Challenged Beijing and Prospered. Now It Toes the Line.

Published

on

As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

Source

Continue Reading

Business

Good Is the New Cool When It Comes to a Successful Brand

Published

on

October 27, 2020 5 min read

Opinions expressed by Entrepreneur contributors are their own.

Afdhel Aziz is a thought leader, writer, speaker, consultant and board advisor with 20 years of experience working as a visionary marketer at companies like Procter & Gamble, Nokia, and Absolut Vodka. Despite creating world-class pop partnerships with everyone from Lady Gaga to the TED Conferences, he felt there was more he could be contributing to society. 

This search inspired him to co-write Good is the New Cool: Market Like You A Give a Damn. The book’s success led Aziz to quit his job and follow his own purpose. Now he is on a mission to help companies and individuals find purpose and meaning in their work and in their lives. 

An internationally acclaimed keynote speaker, Aziz is also the co-founder and Chief Purpose Officer of Conspiracy of Love. The purpose consultancy supports a long roster of clients, including iconic brands like Adidas, Red Bull, Oreo and Microsoft, to Fortune 500 companies like Unilever, AB Inbev, and .

“Goodisthenewcool.org is now a global movement of good, with events and podcasts in association with Soho House, conferences in LA, Sydney and Melbourne, and an online community of 20,000 purpose-driven leaders in and culture,” Aziz says.

Aziz spoke with Jessica Abo to discuss Conspiracy of Love, why businesses should take the “good is the new cool” approach and why it’s not too late for companies to do better. 

Jessica Abo: Tell us about your book Good is the New Cool: Market Like You A Give a Damn.

Afdhel Aziz: It’s an exploration of the whole world of purpose driven . Today, brands more than ever are asked to take stands. When you think about Nike with Colin Kaepernick, for example, consumers are asking brands to take positions in social issues. We wanted to explore that in this book that I co-wrote with Bobby Jones. The expectation for brands to help solve societal problems has never been more sky high.

In the wake of Covid-19 and Black Lives Matter, consumers are demanding that the brands in their lives stand up for their values. Consumers are voting with their wallets, we like to say, and making sure that if they’re going to invest in a ‘s products and services, that brand better be helping solve issues, whether they’re environmental issues or social issues. There is an incredibly high level of scrutiny at the moment that brands are under and expectations keep growing as well.

What are some of the biggest mistakes brands make?

Aziz: One of the biggest mistakes brands make when they venture into this territory of social impact is positioning themselves as the hero, riding in on a white horse to solve the problem. We like to preach to our clients the maxim “be the helper not the hero.” Brands who do this find a way to make the consumers the hero of the journey to give them platforms to help society at large. And this way you can avoid the trap of coming across as too egotistical when talking about how you’re going to attack this problem. 

Do brands have to be perfect to start doing good?

Aziz: Brands do not have to be perfect to do some good. In fact, I would say that no brand is perfect, just like no human being is perfect. It’s important not to be paralyzed by the lack of perfection. Every brand has its problem, has its issues. As long as they’re transparent about it and say, “Listen, here’s the plan that we’re putting into place to solve this problem, bear with us while we do it. But in the meantime, here’s another problem that we really want to solve in society, will you help us?” Taking that humble posture really helps people understand the genuineness of your intentions and that really makes a difference when asking people to participate. 

What advice do you have for brands that want to do some good in the world?

Aziz: The advice that we have for brands who want to do some good in the world is, first of all, listen. Listen to your employees, listen to your consumers, look at the culture in the world today and try and find a way of thinking of people as citizens, not just consumers. Think about the broad range of issues that they care about, and then figure out a way that you, as a brand can get involved in helping to solve some of those problems as well. We like to say brands should solve problems from the everyday to the epic. It doesn’t all have to be about climate change and racial inequality. Maybe there are everyday problems as well that you as a brand can get involved in to make people’s lives a little bit better.

Related: Fighting Zoom Fatigue? These Cards Can Help

Source

Continue Reading

Business

What Counts as Race Discrimination? A Suit Against JPMorgan Is a Test

Published

on

Over 18 years of working as a secretary at JPMorgan Chase, Wanda Wilson had learned to brush aside remarks directed at her race.

“Wanda, do you mind if I tell a Black joke?” a colleague once asked her. Another co-worker told her that she disliked Black people in general but made an exception for Ms. Wilson.

Ms. Wilson saw no reason to complain. JPMorgan had been a good employer, giving her opportunities to rise through the secretarial ranks and providing assistance during a fraught time in her personal life. She felt proud defending her career to her family, which included several prominent civil rights activists. (Her mother is the poet Amina Baraka, and her stepfather was Amiri Baraka, the playwright and poet. Her younger brother is Ras Baraka, the mayor of Newark.)

But things soured in 2016 after a new colleague began to bully Ms. Wilson and order her around, according to a lawsuit Ms. Wilson filed against JPMorgan and its chief executive, Jamie Dimon. For the first time, Ms. Wilson felt that she was not on equal footing with her white colleagues, according to the suit. She complained to JPMorgan officials, but the bank’s response shattered her faith in her employer, she said. After she was unable to find a different job within JPMorgan, the bank fired her. She then sued, alleging race discrimination and retaliation and seeking an unspecified amount in damages.

JPMorgan said its officials had done everything in their power to make things right for Ms. Wilson. “The firm denies that it engaged in any race discrimination or harassment or retaliation with respect to Ms. Wilson’s employment,” said Joe Evangelisti, a JPMorgan spokesman.

The bank tried to have the lawsuit, filed in 2018, dismissed. This month, a judge ruled that the two sides should engage in mediation instead.

Wall Street has come under growing scrutiny for how it treats people of color, and Black employees in particular. Last year, The New York Times detailed allegations of racism at Phoenix-area branches of JPMorgan. Recently, a former head of global diversity at Morgan Stanley, a Black woman, sued the bank for discrimination.

ImageTwo Black employees at JPMorgan said race was a constant undertone in their interactions with non-Black employees.
Credit…Seth Wenig/Associated Press

But while such cases claim broad and systemic discrimination involving banks, Ms. Wilson’s lawsuit tells the complicated story of interactions between co-workers that can carry racist undertones. It shows how allegations of racism in a workplace can be difficult to verify, even when a company conducts an investigation. That’s especially so in the absence of explicit language or actions — such as a racial slur or blackface — that are easily identifiable as racist.

“This isn’t the ’60s or the ’50s,” said David Carlor, a financial adviser who is Black. “No one’s going to tell you: ‘Because you’re Black, go get us coffee.’ You’re just going to find that you’re the one that’s being treated most disrespectfully in the office.”

At JPMorgan, Ms. Wilson was often the first to arrive and the last to leave, according to three of her former colleagues, who spoke on the condition of anonymity. She got lunch and coffee for her superiors and ran errands that seemed well outside her job description, like buying a mirror for her boss’s office.

In March 2016, Ms. Wilson joined the audit department as an executive administrative assistant — a coveted position among secretaries because it involved handling duties for one senior executive in that department.

Around the same time, Janet Jarnagin was also assigned to Ms. Wilson’s boss as a team leader. A midlevel executive, Ms. Jarnagin’s duties included helping the audit department prepare presentations and reports, according to a publicly available résumé.

Over the next few months, Ms. Jarnagin began ordering Ms. Wilson to hang coats, get coffee and lunch, or carry out requests — such as making photocopies — by visitors to the department, according to the lawsuit.

Once, Ms. Jarnagin stood up from her desk and announced that she was “sending Wanda out for coffee,” asking if anyone else wanted to place an order with her. Other Black secretaries who had overheard Ms. Jarnagin later teased Ms. Wilson about being treated like Kizzy, an enslaved character in the book and television mini-series “Roots.”

Ms. Wilson said that she asked Ms. Jarnagin not to use the term “sending” any more, but that Ms. Jarnagin ignored her. Ms. Wilson described the incident in a 2017 interview with a JPMorgan official, a recording of which she provided to The Times.

In her lawsuit, Ms. Wilson described how Ms. Jarnagin had been making these demands only of her — the lone Black secretary in the vicinity. She tried to distance herself. When she rearranged her desk so that the two women no longer had an unobstructed view of each other, Ms. Jarnagin mocked her for trying to build a “Mexican wall” out of a stack of folders on her desk, according to the lawsuit.

Ms. Wilson complained about Ms. Jarnagin to their boss, who told her to work things out on her own, according to the complaint. She then told a human resources representative that Ms. Jarnagin was ordering her around and bad-mouthing her work. JPMorgan’s Mr. Evangelisti said the bank had begun investigating Ms. Wilson’s complaints immediately.

Credit…Chang W. Lee/The New York Times

Henry Klingeman, a lawyer for Ms. Jarnagin, dismissed the allegations. “In the high-intensity, high-stress world of New York banking, Janet was no more rude than a male employee who is assertive,” he said in an email. “That she asked an administrative assistant to get coffee for senior management is one of the criticisms made against her. There is nothing to this, much less implied racism.”

Ms. Wilson eventually emailed Mr. Dimon: “I have followed the chain of command and have not received any assistance.” Mr. Dimon did not personally respond, but her complaint was promptly shared with senior bank officials who stepped up their investigation.

Bank officials interviewed people in the immediate vicinity of Ms. Wilson and Ms. Jarnagin, two people familiar with the investigation said. The investigators determined that Ms. Jarnagin had behaved rudely toward Ms. Wilson. However, since Ms. Jarnagin had been rude in the past to other employees who were not Black, they concluded that her behavior was not racially motivated, the people said.

Mr. Evangelisti said the officials’ conclusions had been “based on information provided by Ms. Wilson at the time.”

Ms. Jarnagin was given two “coaching” sessions, including one by her boss, the people said. She was never formally disciplined, but was advised to treat Ms. Wilson more gently, they said. Ms. Jarnagin left JPMorgan in November 2017.

JPMorgan officials also did a broader “climate study” of the area where Ms. Wilson worked, the people familiar with the matter said. The study concluded that there did not appear to be a problem with racism.

However, two Black employees interviewed for the study, who did not want to be identified for fear of retaliation, told The Times that race was a constant undertone in their interactions with non-Black employees. One said Black secretaries felt it was harder for them to get promotions, and they believed they were underpaid. But the Black employees said they downplayed the racism they witnessed to bank officials, partly because it wasn’t directed at them.

JPMorgan officials have recently acknowledged that some employees still do not feel safe speaking up. In March, the bank announced that it had reviewed its anti-discrimination practices and identified several areas for improvement.

Things didn’t improve for Ms. Wilson after her complaint.

Mr. Evangelisti said JPMorgan gave her nearly a year to search for a new job inside the bank as well as a raise and bonus during that time. Ms. Wilson said the only job the bank offered her was a role working for a man who had become enraged at her over a disagreement with her boss when she worked in the audit department.

Mr. Evangelisti said the role would have come with the same title, grade and compensation as her prior job, “but Ms. Wilson declined the role and refused to provide any context about an ‘unpleasant exchange’ she claims to have had.”

Source

Continue Reading

Trending