Before social media, the episode might have played out as a private joke, a photo or a VHS video shared among friends. But in 2018, the viral video of the grilled rat turned into a worldwide punking of Teddy’s, a beloved midsize burger chain with locations not just in Hawaii but on the U.S. mainland and in Saudi Arabia. Co-founder and President Richard Stula told The Washington Post that the immediate financial damages from the prank top $100,000. The long-term costs — in terms of potentially lost franchise deals — are far higher, he added.
And here’s the zinger: Teddy’s recently converted to an employee stock ownership plan. “Our employees own the company, so this was a direct attack on their fellow employees,” Stula said. “It hits home to a lot of people.”
In a 30-minute interview with The Post, his first one-on-one chat with any media, Stula talked about the grilled-rat incident, its effects on the 26-unit chain and what the 20-year-old company has done to address the fallout. Below is an excerpt of the interview, edited for clarity and length.
How much impact has the prank had on your business?
For that restaurant, it shut them down. That particular restaurant is a franchise unit. We were surprised by the publicity nationwide by such a stupid video, but when we found out about it, we shut the store right away. The store has been shut down ever since, and the employees were let go. Mostly, it’s been contained to that store.
Did you get rid of everyone at the restaurant, including managers?
Not everybody, but all the people who were associated with the videotape and the general manager for the store. The general manager was kind of the last thing to fall. We just felt like we needed to move on with new representation in that store.
Were just the two boys involved, or were there others?
It was the two in the video. That’s all we know who were directly involved.
Have you learned more about how the prank came about and why?
We’re clueless, to be quite honest. The kids have gone totally silent. The main perpetrator sent his girlfriend in for his check. He wouldn’t even come in. He wouldn’t sign anything even acknowledging that he did it. What we’re hearing from some of our other employees, they’re saying the rat wasn’t real. We have no reason to believe that, one way or another.
They’re in a lot of trouble. We haven’t got a statement from them. They won’t sign a statement, so we’re pursuing legal avenues because there is a lot of defamation, a lot of damage to our brand. We’re pursuing that, and we’re hoping we can at least get together with the kids’ parents and get an apology and a statement.
Are you looking for compensation from them, or do you just want them to come clean?
Honestly, it’s up in the air. These kids were employees of the franchisee, and we’re directing him to pursue legal action. So he’s basically accumulating information. He is, of course, still shut down, so his ultimate damages aren’t fully assessed yet. Honestly, we’d love to just get a full explanation and see where we go from there. But we’ve been unable to do that. We’ve reached out to the kids via phone calls and text messages, and they’ve been completely unresponsive. They’ve been unapologetic to this point, and I think a lot of it could have been addressed if we could just get together with them.
When we think of damages, if someone’s apologetic and empathetic, it makes you think one way. But if they’re totally unapologetic and unresponsive, then you think another way. I really don’t know the direction that the lawsuits are going to take at this point.
I do know that we’ve had heavy, heavy damages. We’ve actually been pursuing expansion on the mainland, and of course this is a mainland story and it’s not positive. We may be losing very large development deals on the mainland.
Can you lay out so far what the damages have been and what you think they could be in the future?
The closed-down store is going to be a minimum of $100,000 in damages, just from lost revenue. As far as damage to the brand and if we lose a development deal over it, I have a hard time assessing, but it could rack up into the millions, easily.
Have other locations seen a drop in sales since the incident?
We did an evaluation, weekend over weekend for our corporate stores in Hawaii only. We didn’t poll our other stores. We basically took the weekend before Thanksgiving and the weekend after Thanksgiving, and we haven’t had a marked decline in sales at our corporate stores. It’s impactful on our brand, but I think locally, we’re so known or maybe it’s so fresh because it just came out on the Wednesday before Thanksgiving. But so far, so good.
It sounds like you’ve updated the employee handbook following the prank?
Yes, they can’t do certain things in the kitchen. They can’t film things unless they’re asked to do so or have permission to do so. We can’t write a policy and just say, “Hey, don’t put a rodent on the grill,” right?
Did you hire anyone in the social media world to help you deal with this crisis?
Yeah, we have a local company that helped us monitor it, post-incident. We actually posted something recently on our personal social media, thanking our fans for their support. Then we also have a company that we’re engaging for damage-control-type of PR. They’re going to help us going forward. We didn’t have an in-house PR company prior to this.
Did you have a plan in place on how to deal with this?
Not prior to it happening. It kind of caught us off-guard. But I would say within an hour, with back-and-forth on the phone with everyone, we had a very good plan in place on how to address it. We brought our systems support guys in, and they came and spent the whole day down there. We shut it down and just started tearing it out. We went to local restaurant equipment places and replaced every utensil in the whole store. We went and bought grates and replaced those and then just cleaned the place, top to bottom. Then we got the health department in there.
The store is 100 percent able to reopen. It’s just mostly personnel now and letting it kind of blow over. Also, there’s the awkwardness to reopen so fast even though it’s 100 percent food-safe. We could reopen it right now, if we want to, but we want to get all new staff. There will be some carryout from the existing team, but we’re going to get a lot of new staff in and new management and approach it real pragmatically. Anything that happens won’t happen until probably at least a month.
Did you find any evidence of rodent infestation?
I wouldn’t say infestation, but every food court in Hawaii has rodent issues that they have to stay ahead of. It’s a very important part of how we manage and operate restaurants.
Do you want to name the two employees who did this?
I do, but I’d like to check with our legal team first. [Note: Stula emailed back to say that both were minors and that he wouldn’t name them.]
What advice would you give to other restaurateurs who might face a similar crisis?
Don’t try to ignore it, because it’s not going to go away. Be proactive and be very transparent and honest. Don’t try to hide, because it will steamroll you. We’ve just stood up, straightened our shoulders and said, “Let’s do this.”
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