How 2 Firms Coped With Riots : Arco Followed a Disaster Plan; Black Dining Chain Ad-Libbed

At the height of the recent riots, when fires were raging uncontrolled and looters were taking just about whatever struck their fancy, merchants throughout Los Angeles raced to preserve what they could of their piece of the American dream.

Some were following carefully laid disaster plans, but many, many more were frantically flying by the seat of their pants.

“Very few small businesses have these plans. They don’t have the resources; it’s a luxury,” explained Ian Mitroff, director of the Crisis Management Center at the University of Southern California. “Further, only a few large operations have the broad-based crisis planning that is increasingly being needed.”

Late last week, two businesses--one, a unit of the giant Arco petroleum company responsible for operating its gas stations and mini-marts, and the other, a chain of 12 fried chicken restaurants operated by an African-American family in the Los Angeles inner city for 35 years--detailed how they responded as the rioting engulfed their operations.

When the unrest started on the evening of April 29, Arco Products Vice President Tom Murphy was in Seattle on business. But his team of four managers at the company’s Cerritos headquarters knew what to do. It had been spelled out in the crisis management plan--originally designed to handle mega-disasters like refinery fires, natural gas explosions and major earthquakes--and the managers began to methodically execute it.

As the hours and days unfolded, rolls of chain link fencing were unfurled around most of the 12 burned-out and 10 severely damaged stations; pumps were removed at less-damaged outlets to spare them from looters; armies of contractors, some under protection of private security guards, were brought in to begin repairs; and teams of video and still photographers were hired from Hollywood to capture it all for the company’s archives.

“The riots didn’t exceed our crisis planning,” a relieved, but still weary, Murphy explained. “Our plan calls for people to be working out of their houses if that’s what is necessary.”

But big-time crisis management plans don’t protect against everything. Because Arco’s plans are designed for major crises, the company carries a $20-million deductible on its insurance policy. The company’s current damage estimate: $6.5 million, not including lost sales and inventory losses to dozens of its franchise and contract operators.

At the peak of the unrest, the afternoon of April 30, all 132 Arco stations in Los Angeles were closed--more than a quarter of the chain’s 500 outlets throughout Southern California. Most closed because gas tankers couldn’t get through the streets to deliver their 9,500-gallon loads.

But many stations had been hit hard by the unruly crowds. According to inspection and assessment records that were updated hourly at the beginning of the crisis and every six hours by the end of last week, 51 stations sustained damage ranging from broken windows and minor looting to full-blown torching. Of that number, about 30 have already been reopened.

Special attention was given underground gasoline storage tanks because of fears of explosions as well as concerns that arsonists could tap into them as a source of fuel. At the 21 stations still closed, the tanks have been fitted with threaded caps that cannot be removed without proper equipment.

The company is also fighting to receive the necessary demolition permits to bulldoze its burned stations. The first came in Thursday. But more will be required, including building permits and clearances from up to a half-dozen government agencies regulating everything from the environment to restaurant operations.

Because most of the stations in the region are operated by franchise holders, Arco plans to offer its dealers assistance in securing loans to replenish their supplies. The average AM/PM Mini Mart contains $50,000 to $70,000 worth of food and equipment.

Murphy said the company is also looking for creative ways to induce looters to return equipment. A station’s basic smog testing equipment can cost up to $30,000 to replace. Dispenser pump nozzles carry a $600 price tag, and an Arco electronic cash register can cost up to $18,000.

Late last week, Richard Spake, the manager of field engineering and maintenance, received a call from a man claiming to have one of the cash registers. “He wanted to sell it back to us,” Spake said, “and we’re going to buy it.”

The payment, he added, would probably be considered a “finder’s fee.”

While some executives can turn to crisis management blueprints to guide their responses, others are forced to rely on their wits. Consider Michael Stennis, the 34-year-old president of Golden Bird, a chain of 12 fried chicken fast-food restaurants founded in 1957 by his parents, Willie and Zelma.

Although the Stennis family is a prominent member of the African-American business community, and family members hang out with such big names as Magic Johnson and Mayor Tom Bradley, Golden Bird outlets were hard hit by the vandals. Nine were trashed, and two were burned to the ground. By the end of last week, eight had reopened, testimony to fast thinking and fancy footwork by the younger Stennis.

Aided by nothing more than a single yellow legal pad and a head full of information, Stennis spent 10 days zipping to and from his stores, single-handedly directing Golden Bird’s rebound.

On May 1, just as the level of violence began to ebb, Stennis and his lone maintenance manager raced to a nearby home supply store for plywood and then, when supplies ran out in Los Angeles, to Gardena for nuts and bolts. Then the two started boarding up the windows themselves.

Last Wednesday morning he climbed through rotting and maggot-infested chicken to find the cash safe in the burned-out restaurant at Pico and San Vicente boulevards. Later in the day, he purchased reconditioned batter and fry machines--probably, he suspects, equipment that was stolen from him and fenced to secondhand shops--for the restaurant that reopened a day later on Manchester Boulevard and Western Avenue.

“I am numb,” Stennis said, his eyes heavy from lack of sleep and the horror of what he has seen. “I haven’t even had a chance to think about what I have gone through.”

Stennis also has been unable to catch up with his insurance agent either. Although he believes that his losses are covered--minus a deductible he can’t remember--he has been unable to pin down that important detail.

In the meantime, he has concentrated on reopening restaurants.

With lost sales mounting at the rate of $20,000 per day in the initial days of the riot, then tapering to half that amount as restaurants reopened, Stennis leaned hard on repair crews and suppliers to replace stolen and damaged equipment.

Kim’s Business Machines in Koreatown supplied the three cash registers he needed, although that business had been trashed and looted by vandals as well. For kitchen equipment, he turned to secondhand shops, although he said he’s willing to buy supplies “no questions asked” off the streets if he can find them.

Getting food deliveries initially proved nettlesome.

Since drop-offs are normally made on Wednesday afternoon, each restaurant had been freshly stocked with about $2,000 worth of food when the riot erupted that day. Most of the food either rotted or was stolen, and Stennis was forced to seek a fresh delivery Monday morning when he wanted to reopen his first restaurant at the Kenneth Hahn Plaza.

But last Monday his suppliers’ truck drivers balked at making deliveries in South-Central Los Angeles. Stennis said he had to push hard to get the companies to replace the drivers with people willing to make the trip. Finally, they came--but in pairs.

Although most of the Golden Bird restaurants are back in business or about to be reopened, Stennis remains concerned about obstacles to rebuilding the two burned-out locations. Getting a construction loan, he predicts, will be difficult--and maybe impossible.

“If you only knew the problems we face. Although we have been in business in this town for 35 years, there is no banker I can call and say I need money,” he complains. “That’s the reality of black business in this town.”