Grand Central Oyster Bar, the century-old seafood restaurant in New York City’s Grand Central Terminal, is iconic. Diners revere the New York City landmark as much for its intricately tiled ceiling and oyster pan roast as its longevity, but the Oyster Bar, which won the Design Icon Award at Monday’s James Beard Awards, deserves recognition for another aspect of its legacy: It’s one of the few restaurants in the country that is owned entirely by its employees — 14 employees, at the moment.
Since 1999, an Employee Stock Ownership Program, or ESOP, has owned the Oyster Bar. The somewhat unusual arrangement for a restaurant of this stature came about thanks to the loyalty of former owner Jerome Brody, according to Oyster Bar executive chef and ESOP participant Sandy Ingber.
A successful restaurateur known for his work with other New York City icons the Rainbow Room and the Four Seasons, Brody took over the Oyster Bar on a request from the Metropolitan Transit Authority in 1974. After falling ill in the late 1990s, he began looking for buyers. He found some takers, but the ones who bit wanted to get rid of the union, and to Brody, employee satisfaction was essential. “These people worked for [Brody] for years; he loved them,” Ingber says. “He just couldn’t bear someone getting rid of the union.” Instead of selling the restaurant to a buyer, Brody opted to transfer ownership to an ESOP, preserving the union and the management staff.
The ESOP owns the restaurant, and all non-union, management staff members are participants in the ESOP. Although union employees aren’t eligible to join the ESOP, the union would likely not exist if Brody had sold the Oyster Bar to an outside buyer. In 1999 when the ESOP first formed, the initial group of 14 or 15 management employees took on a five-year loan to purchase 49 percent of the restaurant stock. They paid that off in a year and a half, and took on the remaining 51 percent of the restaurant’s stock in 2004, paying it off to become full owners in 2008, seven years after Brody died.
Ingber estimates there are around 100 restaurants with ESOPs across the country. In New York, the Heartland Brewery bills itself as the “only restaurant group in New York that is 100% employee owned, with more than 750 [ESOP] participants.” Similarly, the Washington-based Ram Restaurant & Brewery has more than 2,000 ESOP participants across its 30-plus locations. Harder to come by are restaurants with an ESOP, a union, and an award-winning pedigree.
Ingber likens the ESOP to a government-controlled retirement plan, a description that may sound dull, but nods to benefits that can’t be overstated. According to a 2014 Economic Policy Institute study, only 8.4 percent of restaurant employees are included in a pension plan, compared to 41.8 percent outside of the industry. Ingber, who has worked at the Oyster Bar since 1990, says, “It was like manna from heaven because in the restaurant business, there’s usually no such thing as a retirement. This is a retirement that I never would have gotten probably in my whole life.”
The number of employees with a stake in the Grand Central Oyster Bar has fluctuated as management staff comes and goes. There have been as few as 11 and as many as 16 ESOP participants in the years since Brody decided that the future of the Oyster Bar would be most secure under the stewardship of his employees. And those employees have Brody to thank for their own secure futures — a rarity in the restaurant industry.