Ted's and Theodore's: Family shake-up in hot dog heaven

The Theodore's team: Richard Mobarak, Beth Liaros, Ted Liaros, and Chuck Spalla

Two things are instantly clear on a visit to Ted’s Hot Dogs: It’s run like clockwork, and family history is as crucial an element of its raison d’etre as ketchup and mustard. A cartoony illustration of founder Theodore Spiro Liaros—who opened his first hot dog shack by the Peace Bridge in 1927—appears front and center at every location. It’s long been thought of as the best place for charbroiled dogs in town, winning Spree’s Best Hot Dog award in every year the category was included, and making the cover of the July/August 2007 issue. Ted’s fascinates us, and with good reason.

But now the back story of the iconic establishment has a new and contentious twist.

On September 24, 2010, vice president and part owner Ted Liaros (grandson of the original "Ted"), chief financial officer Beth Liaros (Ted’s wife), and vice president of operations Richard Mobarak were fired. [Mobarak is the father of Spree graphic designer Jared Mobarak.] Soon after, general manager Chuck Spalla was, in Beth Liaros’s words, "locked out." In other words, the foursome most directly involved in running day-to-day operations over the last twenty years is no longer employed by the company. They are starting their own hot dog business, Theodore’s Red Hots, with a location in Grand Island open now and another in Amherst planned by the end of the summer. And thus a classic family schism takes shape, complete with cease-and-desist orders and a bitterly argued dispute over the use of the name that has been a household word here for decades.

The original Ted’s is making its case by dipping a bit farther into its past; recent ads published in the Buffalo News Sunday coupon section showcase the face of the founding Ted, with the words: "Once upon a time, there lived a Greek immigrant named Theodore Spiro Liaros. He started serving the good people of Buffalo delicious, affordable hot dogs. And to this day … everyone eats happily after."

This is probably true enough, as far as the customers are concerned. But Ted’s namesake and his three fellow former employees have questions: Why were they let go? How long was it in the works? Who made the call? What was the motivation? And could the relationship have been salvaged? The current managing body of Ted’s did not respond to Spree’s questions, but did send a written statement that reads (in part):

April 18, 2011

    Ted’s Hot Dogs has been owned and operated by the Liaros family since 1927 and will continue in that tradition for years to come as Spiro and Peter Liaros, sons of founder Ted Liaros, and Spiro’s daughter, Thecly Liaros Ortolani, work closely together to manage the company.

    Some executive-level changes were made last year to ensure the business would remain strong, thriving and family owned for at least another generation. What does not change is that Western New Yorkers will continue to enjoy the delicious food and outstanding service that has made Ted’s a beloved local institution …

    Ted’s Hot Dogs declines any further comment other than to extend best wishes to Ted Liaros in his new venture.   

With locally owned mom-and-pop restaurants becoming as rare as independent book stores, this discord among the family behind one of Buffalo’s most iconic establishments is newsworthy by definition. Some—the current Ted’s managers, especially—might argue it’s no one’s business but the family’s. But try telling that to Ted Liaros.

A family tradition

Two decades after the 1927 opening of the Peace Bridge shack, a second location opened on Sheridan Drive in 1948. Today, there are seven locations in WNY and one in Arizona, where Spiro Liaros, Ted’s president and the son of founder Theodore Spiro Liaros, has lived since the 1980s. As he contemplates his ouster and plans his new business, Spiro’s son remembers spending his teenage years behind the grills, alongside the man he later made vice president of operations, Richard Mobarak.

"I started working for Ted’s at fourteen, and Richard worked for Ted’s for most of his life as well," says Ted Liaros. "Richard was actually my manager when I officially started at the company. We did go to Florida for a brief period of time and worked with my mother and her brothers-in-law, who opened some restaurants in south Florida [called Char-Hut]. So Richard and I were there for a few years, helping open stores and manage the company. I came back to Ted’s in 1990 at my father’s, their current attorney’s, and my sister’s request to help my father facilitate what was the removal of the management team that was in place when we were in Florida. My father has been in Arizona for thirty years, so he had one of his cousins and another longtime employee of the company managing operations in New York and basically overseeing the company."

Liaros then describes his experience with an earlier corporate shake-up at Ted’s: "In 1989, he [Spiro Liaros] decided to terminate them [the WNY management team]. So I got a call."

What led to the ousting of the management team at that time has some parallels to what took place in 2010. "I was told, and certainly saw when I came back, that the management had a desire to expand the company, and had put together a proposal to form a new corporation," Liaros says. "It was my opinion that my father viewed this as a hostile gesture to squeeze him out of the company; he didn’t respond to it well. I think he had a knee-jerk reaction … I was certainly surprised [to hear from him]."

According to Liaros, things were not going well at Ted’s when he arrived—it had a well-known name and fine sales, but poor management and considerable debt. "When I came back, the company wasn’t in a very good financial position. It had eight stores—counting one in Arizona—only one of which it owned. In my estimation, it had more debt than the company wanted to carry, certainly the largest debt that the company carried after 1990." Liaros adds the book value was at a low point.

"The operations weren’t being managed properly. So our main focus initially was to right the ship. I came back in April, and Richard [Mobarak] came back in August and assumed the position of general manager. He did what he did best—overseeing stores and the management of the operations. We worked hard to solidify the management, and we got our team in place—Chuck came on board early on." Spalla began his time at Ted’s in 1991 as a store manager, and in 1998 was promoted to Mobarak’s previous position, general manager.

"Richard and I had worked together years before," Spalla says, "and had similar philosophies in dealing with people, and morality and integrity. It was a great opportunity for me. The generosity Ted has displayed over the years to managers, employees, myself—I think it’s unheard of." Two of Spalla’s daughters were working as managers at the time his employment ended; they didn’t stay for the new management.

A successful transition

With the team in place—including his wife, Beth, who began working for Ted’s in 1995 as controller and as CFO in 2001—Liaros turned to trying to steady the ship. "Over the last twenty years, what I did strategically was put a lot of the profits from my years of running the company back into the corporation, so the day we were terminated we had eight stores, we owned six of them outright, and had minimal-to-no outstanding debt to the bank. Actually, there was more money in the checking account the day we were terminated than had ever been in the account in the history of Ted’s. So the company was definitely—and I think this is inarguable—in the best financial position it had been in [in] its history. Probably ninety percent of the value of Ted’s as it stands today was generated over the twenty years of my tenure."

After a Union Road location and the original Porter Avenue shop were closed during those years, "we started looking to put up some stores," Liaros says. Restaurants went up in Depew, North Tonawanda, and Lockport, and the Orchard Park location was purchased. "Orchard Park became a company asset, as opposed to a lease," Liaros adds. Eventually, the lease for the Transit Road in Williamsville location was purchased, and parking expanded.

The goal of paying down the debt and creating more value in the company by building more stores and buying leases was, Liaros believes, a success: "The plan worked well. Many of our accountants at the time advised me that there were other approaches we could take, with purchasing brick-and-mortar assets. But I saw there wasn’t a real good relationship with my father and his brother [Peter Liaros] as working partners over the years—actually, there was no relationship that I could see, other than a hostile one. … My philosophy was to enrich the value of the corporation by decreasing the debt and increasing the profitability. I have to say, I think we did that—with the work of Richard, Chuck, and Beth. The four of us were the senior management of Ted’s."

The ax comes down

Cut to 2010, and a dramatic series of events. Ted Liaros recalls: "In a general sense, my father’s behavior became somewhat concerning to me with regard to the succession plan in place for Ted’s. I always went on the assurances that he gave me that [I would eventually take over] his control of the company and his half interest in Sheridan Drive—[with] his brother, Peter Liaros, the other shareholder. [But, there were] two conversations I had with my father that I would deem out of character. At that time, I became somewhat concerned. I tried to offer up solutions. For whatever reason, I got no response to my offer to address my father’s concerns. And that’s actually the last time I spoke with my father directly."

The younger Liaros was advised that he would have to retain an attorney for further communications. One suggestion made through those channels was that he buy some of his father’s shares as a way to help resolve the situation.

According to Liaros, his father was facing major health issues and had second thoughts about how his estate would be distributed. "He did give me a call and expressed his wish to have funds available to distribute to his second ex-wife’s adult children," Liaros says. "I simply told him at that time, ‘Dad, I don’t think that’s what you should be focusing on right now. You should focus on having your treatments. Everybody’s fine—it’s not an emergency situation.’ I was more focused on him taking care of his health."

Richard Mobarak says 1990 and 2010 were not the first times Spiro Liaros demanded large-scale changes. In 1976, as Mobarak was working for Ted’s, Spiro’s brothers-in-law decided to move to Florida and begin a new operation, Char-Hut, which is still open and successful. "When Spiro got mad at them, I was told that I was terminated. I asked, ‘What for?’ ‘Because you were friends with Joe’—one of his brothers-in-law. After that, he told someone to fire everyone at the last location I had been working at, because that was the location Joe had been running. So that’s the kind of pattern—it was always, ‘You do it,’ and somebody else [had to] pick up the pieces afterwards."

In 1990, when Ted Liaros returned to WNY, Mobarak also moved north and rejoined the company. "I felt okay," he says. "Ted was there; I wouldn’t have come up if Ted wasn’t there. So for twenty years, everything was going so well—business, situations at the stores. Everyone was getting along. The next thing I knew I got the letter in the mail saying I was terminated. For no reason at all. I never talked to the man; he’s never said anything other than how great I was over the years. When the lawyers started communicating with me about these silly severance packages he wanted us to sign, I asked, ‘Why was I terminated?’ ‘Because you were friends with Ted.’ So I guess I was too close to his brother-in-law [in 1976], and now I was too close to his son."

A new regime

The termination letters arrived on September 24, 2010, with no direct communication from the elder Liaros.

"We were absolutely never given an alternative course of action that we could take to avoid this," says Ted Liaros. "Someone was brought in to talk to the parties and mediate things by their counsel, but I don’t think that actually helped. I think it inflamed the situation … But through that mediation—there were no direct talks with any of my family members, and their counsel was being very unresponsive—that’s when it came up that a solution might be to proffer an offer to buy my father’s shares. I was surprised. I actually said to my attorney, ‘It’s uncharacteristic of my father, and I don’t want to go down this road unless we’re sure this is what they want.’ That was really the rest of the summer.

"We did find out after our termination that six weeks prior there were interviews being conducted for our replacements one day at the Buffalo Club by my sister [Thecly Liaros Ortolani], their counsel, and my uncle. So apparently six weeks prior to being fired, they were set on the path to terminate us. But we were never given the heads-up."

"My position was shock"

Right now, Ted Liaros still holds a majority ownership in the equity of Ted’s. "To date, we’ve received no formal offer to purchase my shares," he says. "I was terminated with no warning, with no alternative action provided for me to take to avoid the situation, [and it] really came as a shock and surprise to all of us. We were under the impression over the summer that we were negotiating—at my father’s lawyer’s request to my attorney—to make an offer to purchase his interest in the company. It was literally while we were waiting for them to respond to that offer that we discovered there was an emergency board meeting where at least Richard, Beth, and I were going to be terminated.

"My position was shock. … We made a request to see books and records, and basically we weren’t getting any cooperation from their side at all, and had to go to court to establish my shareholder rights, so we could see what was going on in the company with regard to my investment and my interest." [According to Beth Liaros, they were given access to books and records following the judge’s ruling.]

Ted Liaros’s status as a majority owner—still—makes this a particularly odd situation, for both sides. "I would feel comfortable if I felt that the company was being properly managed, and everyone was upholding their fiduciary responsibilities to all the shareholders," he says. "I would say right now I have some reason to believe that may not be the case … "

The elder Liaros has the majority of the voting stock, "and control of the board, which gave him the authority to terminate me," Liaros adds.

"There is great sorrow"

Even in the wake of their sudden ejection from the company, the Liaroses, Spalla, and Mobarak maintain that they want to see the iconic establishment stay a success, and, especially, stay local.

"Going forward with our new venture is more out of necessity than any desire to harm Ted’s or the Ted’s brand," Liaros maintains. "We certainly do feel from a business standpoint, a Ted’s standpoint, and even a family standpoint, when the history of Ted’s is written, [it will be clear that] this certainly wouldn’t have been the course I would have taken. … Looking back on any family business, terminating the grandson and namesake of the founder under the circumstances with which I was terminated cannot in any way be a positive thing for the legacy of Ted’s.

"When I asked my father who was going to run the company, he said they were going to go out and hire professionals. We don’t wish them ill. Again, I’m a majority shareholder, so that is my asset. I think, speaking for myself, there is great sorrow."

Liaros believes that expansion, perhaps out of WNY, is part of the plan: "One of the reasons that was given for our termination was [that] the new management team wanted to take the company in a new direction. Franchising is something that’s been bandied about. …  the bigger picture would be taking Ted’s out of Buffalo, possibly, and beyond."

Mobarak concludes: "The philosophy is different. [I’m not saying] good, bad—just different." Ted Liaros adds: "We were intimately involved in the day-to-day frontline operations of the stores. Our philosophy was more to micromanage the stores, and it seemed to be to the benefit of all. … Things can easily deteriorate. Sometimes they’re subtle and not noticed by customers; they can be little things."

Back to work

Liaros and company are now turning their attention to a new venture, Theodore’s Red Hots. The first location, at 1752 Grand Island Boulevard in Grand Island, opened on May 21, while a second, at 3980 Bailey Avenue in Amherst, is scheduled for a late-summer opening. Liaros says a third is already in the works, but again stresses that opening a competing business was "never our intention." It was something, he says, that he was forced to do. "I certainly had every expectation that I would be running Ted’s into the next generation, based on all of the assurances that were given to me over my lifetime and certainly the twenty years I was running the company."

After the termination, he says, "We were told we were going to be getting a generous severance package in a couple days and a reasonable offer to purchase my stock within a week. That didn’t happen. The first person to be contacted, eventually, was Richard, and the severance package was bundled in a way that would really have tied his hands as far as his ability to go forward and earn a living as quickly as he needed to, so those agreements couldn’t be made. …  We [then] knew we had no options other than to go out and do what we do. None of us were in a position to sit back and retire; we had to get back to work."

Hence, Theodore’s. (Theodore’s Original Charcoal-Broiled Hot Dogs is the corporate name.) As Liaros puts it: "Our plans are to provide WNYers with the best charcoal hot dog experience they can have in an environment they find friendly, with service they find consistent and superb, as well as to serve other char-broiled sandwiches and fast food items. That’s what we plan to do, and we plan to do it as aggressively and successfully as we can."

As to whether or not the current Ted’s management team—and his own family members—are surprised by his new business, Liaros thinks not: "I don’t think they’re surprised at our efforts. I think they’re going to be surprised at our results."

Liaros is unconcerned about people seeing the name, or the whole affair, as spiteful. "It’s not our philosophy to try to open across the street from Ted’s, or engage in some direct competition to take away business from their existing locations. But as to people’s opinions, it’s a small city, and when the story is told, I’m sure there will be different versions, whether it’s the uppity son who wants to open up his own stores, or something else. It’s out of my control." As Beth Liaros adds, "It’s something he never wanted to do … They backed Ted into a corner and left him no choice. He has to earn a living."

On April 20, two days after Ted’s supplied Spree with its written statement, Liaros received a cease-and-desist letter from Ted’s attorneys; Beth Liaros says their attorneys researched the claims and felt that none were actionable, and the Grand Island location opened as planned. (The restaurant’s placemat includes the line: "Theodore’s is not affiliated with Ted’s Hot Dogs.")

"We do not back off"

In the end, it probably comes down to the hot dogs; if the food is good and people want to buy it, there’s room for everyone. The Theodore’s foursome believes in their food, and that—even with the seven local Ted’s, not to mention other popular local hot dog spots—there is a market for more. Ted Liaros speaks for the group, saying, "I think Western New York can support a lot of restaurants. Anybody who gives the people what they want can be successful. It’s not one wins; one loses. We know what we do, and we do it well. I have every reason to believe we’re going to be successful. And the more of this story that is told, as unfortunate as it may be for the family involved, we do not back off of it."

Beth Liaros adds, "We want to let people know we’re not spiteful. Here’s the story."



EDITOR’S NOTE: Repeated attempts were made to elicit specific responses from Ted’s management in addition to the submitted statement, but those efforts were unsuccessful.

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