Splitting Heirs
In which two brothers take over the third-generation family wine-selling business. They quarrel, as brothers do. And now it isn't a family business anymore.
Jeff Sciortino
Then There Was One Brian Rosen restructured the family business: more business, less family.
Courtesy Sam’s Wines and Spirits
Case History The original Sam’s store in Chicago’s Lincoln Park in 1954, when the neighborhood was on the wrong side of the tracks
Chicago Sun-Times
Hanging Tough Darryl and Brian Rosen keep up appearances in a demonstration kitchen at their Highland Park store in early 2006.
This family-business story starts, as many American stories do, with an immigrant. The details are hazy; it was 1905, or maybe 1910, and he came because he was Jewish and facing persecution in Russia, or to avoid the aftermath of the Russo-Japanese war. His name was Sam Rosen, and he ended up in Chicago. Sam started sweeping floors and clerking at liquor stores, and around 1942 bought his first bar, on Chicago and Ashland. Twelve years later, one mile east and one mile north, he bought four corners of a block for a bar called Sam's in the rapidly deteriorating neighborhood of Lincoln Park. It had five bartenders working there at 7 in the morning, armed with guns. It had 160 seats along a huge counter and a rotting wood floor. Sam worked hard and was quiet; he never mentioned that he fought in World War I until a year before his death, even when his son Fred joined the Army.
Fred started working at the bar when he was 10 and worked there all of his youth, except for the summer when he was sent to a camp for underprivileged Jewish boys during a polio scare. The bar was a few blocks from the crime-ridden Cabrini-Green housing projects and a few blocks from Chicago's rich Gold Coast. When Fred took over the business in 1956, he figured he could sell to residents of both neighborhoods. He hired a wine consultant and ordered him to buy inventory, establishing a reputation for Sam's as a place to find rare wines. This led to a curious mix of customers--fur-swathed women asking for Bordeaux alongside bums straddling stools and sucking on half pints.
Fred's boys, Darryl and Brian, were born in 1966 and 1970, respectively, and grew up as their father had, working weekends as the bar evolved into a package store. "If I wanted to ever see my father, it was at work. He was at work seven days a week," Brian says. Brian would climb the ladder behind the bar to retrieve a Mad Dog 20/20, or descend into the basement to retrieve a fine wine, or charm customers for tips as he carried purchases to their cars. Darryl, too, liked the feel of Sam's. "I liked coming down with my dad, liked helping him out. I felt a sense of owing him that much," Darryl says. He would sort invoices, load trucks, take deliveries, and work at the register.
This is a tough family, one where the boys' mother died in 1985, where Brian and Darryl call their father "Fred," where Fred says things like "We run a tough ship. There's no wimps in my family," where Brian and Darryl have each run 12 marathons, where Fred plays 70-and-over basketball despite two knee operations and a hernia operation. When the boys joined the business for good in their twenties, the store was pulling in about $13 million a year. The three Rosens expanded the company quickly from there, building on the foundation of Sam's Wines and Spirits as a family business. "It was a benefit to the family to have people you can trust on the payroll watching the dollars, watching the decisions. Family trusts family," Brian says.
Until it doesn't.
Family is the element of succession planning that can't be planned for. For all the paperwork covering who gets what shares and at what price, and who becomes president and who chief layabout, the family part gets everyone stuck. Fathers choose favorites. Siblings remember rivalries. Sisters get infuriated that they're being passed over for their brothers, brothers get riled up that daddy's girl is being anointed, parents refuse to retire. Even well-funded dynasties with the best counsel on retainer mess it up: the Bronfmans of Seagram's, the Murdochs, the Pritzkers of the Hyatt hotel chain, and the Shoens of U-Haul, whose succession issues included a murder, are a few examples of how succession plans can go wrong.
Statistics show the same thing. One recent study reported that while 80 percent of the older generation of family businesses wanted the business to stay in the family, less than 30 percent had a succession plan in place and 25 percent deemed the next generation incompetent to take over. That's from a recent survey of 800 family-owned businesses by Laird Norton Tyee, a wealth-management firm. The Family Firm Institute, a research group in Boston, says that only 30 percent of family-owned businesses make it to the second generation, 10 percent to the third generation, and 3 percent to the fourth.
That can't surprise anyone who's sat through a tense Thanksgiving dinner. Family is tough enough to survive without the money, career, and power struggles involved in a family business.
The exterior of Sam's today is scrubbed and suburban, and yuppie chain stores share its parking lot. The staff is sharp. One worker on the retail floor turns out to have an M.B.A., a long career directing advertising at Joseph Magnin, and a degree from the Parisian cooking school Escoffier. It's an upmarket superstore. Sam's Wines sells 24 kinds of Puligny Montrachet, but you have to click across cement floors and navigate around beeping forklifts to reach them.
It wasn't such a big operation when Darryl and Brian joined Sam's Wines after college. There were 20 employees, crusty old fellows who'd worked there for ages, not the 200 or so who work there now. There was a no-frills approach to the business, too. Fred Rosen was a guy who wore sweatshirts and made sure an order had the correct number of bottles, not one who cared about fancy-pants financial analysis. Darryl, a CPA, added some rigor when he came to Sam's, setting up accounts-payable and cash-management systems and buying a scanning system; he went to night school at Northwestern University's Kellogg business school to get a master's in management. Largely, though, all three Rosens just did what they liked. "Fred would organize day-to-day orders, Darryl was behind the scenes, and Brian was outside the store. Brian's very, very good at networking…but they never really had defined boundaries," says Terence Leninger, an employee who's worked there 10 years.
