Burj Al Hamam
2020|Case No.E689| Length 36 pgs.
Burj Al Hamam
Burj Al Hamam was one of the oldest oriental restaurants in Lebanon. The restaurant was founded by Fawzi El Khoury in 1958 and has been in the family ever since. The company was passed down to the second generation as a single-high-end restaurant. More than 60 years later, it had 14 locations across the Middle East and North Africa. At its height, the business boasted 170 full-time employees and revenues of $6 million, nearly $5 million of which were generated in Lebanon. The El Khoury family remained its sole owners.
Between 2015 and 2018, Burj Al Hamam faced steep declines driven by operational and investment losses. The effects of these losses were exacerbated by deteriorating economic conditions, social unrest, and an increasingly intense competitive environment in Lebanon. The El Khoury’s had to act fast if the business was going to survive these headwinds. Complicating matters was the delicate dance required by the intermixing family and business. Some members of the El Khoury’s third generation believed it was time for a transition in both the leadership and ownership of the company. They pushed to create a plan for succession, stronger governance, immediate cash relief, and ultimately growth. The generation in charge was not just going to let go of the institution they had built over the last forty years.
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The goal is for students to understand the conflicts lurking in the background of most family-owned businesses. These conflicts are often caused by improper governance, relationship-based decision-making at the expense of prudence, and the intergenerational transfer of authority. When business is good, people tend to overlook these structural issues. However, when a business is in crisis heighted by external forces outside of its control, it is critical to have the right systems in place to be able to weather the storm.