TURNING the TABLES: Owners of some of Greensboro's favorite restaurants and hotels share equity in the business with loyal staffers.

AuthorBurritt, Chris
PositionCover story

Back in 1978, Sister Sledge's "We Are Family" reverberated through Dennis Quaintance's first restaurant in Greensboro. Franklin's Off Friendly had just opened, and the disco music was intended to pump up the waitstaff.

A year ago, Quaintance dusted off the '70s hit for an even bigger employee gathering. He and his partners had decided to sell their company, Quaintance-Weaver Restaurants &. Hotels, operator of some of Greensboro's best-known upscale establishments. The O.Henry Hotel is attached to the Green Valley Grill, while Print Works Bistro adjoins another boutique hotel, the Proximity. Lucky 32 Southern Kitchen operates two restaurants, one in Greensboro and the other in Cary, after closing eateries in Winston-Salem and Raleigh about nine years ago.

Quaintance, 60, was planning for the future--and not just his own. Rebuffing queries from larger hospitality companies wanting to buy the businesses--if they had followed that course, the partners could have pocketed a higher valuation, he says--Quaintance and his partners had something different in mind.

One morning last November, after the Sister Sledge tune had revved up the standing-room-only crowd of employees, Quaintance said they were now the owners of the company he and his wife, Nancy, had started 28 years earlier with Greensboro real-estate developer and business investor Mike Weaver. The three had sold the business to an employee stock ownership plan, with the trust borrowing 100% of the transaction's value. The owners collected no money at closing, while no bank financing was involved.

Authorized by Congress in 1974, ESOPs enable employees to own the companies where they work. The upside for workers is that company profits are plowed into employee retirement plans, while avoiding conventional corporate income tax.

"Every time we do something to make the company worth $ 1 more, we all share in it," says Quaintance, who heads operations, while Nancy is part of the marketing, sales, operations and culinary teams. "Every time the value of the company goes down, we all share in that. Our interests are 100% aligned."

ESOPs remain rarities in a business world dominated by closely held, family-owned companies. Only one of the 100 largest ESOPs in the U.S. is based in North Carolina: hardwood-veneer and plywood maker Columbia Forest Products Inc., of Greensboro, according to the nonprofit National Center for Employee Ownership. Many public companies encourage workers to hold shares. But the center defines ESOPs as businesses in which at least half of all employees are eligible to participate in plans --and those employees collectively hold at least 50% ownership.

To take part, workers must be 18 years or older, have worked for the company for more than a year and gotten paid for at least 1,000 hours yearly. Vesting occurs after three years. (Weaver can't participate in the ESOP because he's not an employee.) How quickly retirement benefits accumulate for Quaintance-Weaver's 620 employees--from managers to porters, cooks to housekeepers--depends upon the company's profitability. The more money generated by operations, the...

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