Arab's Restaurant Is Nearly Ruined
By Rumor of Celebration on Sept. 11


By Jeffrey Zaslow

Staff Reporter of THE WALL STREET JOURNAL

 

ORCHARD LAKE, Mich. -- At lunchtime at the Sheik, a big Middle Eastern restaurant, American flags hang in the windows and around the dining room. "I love America," says the owner, Dean Hachem, who arrived here from Lebanon 24 years ago and became a U.S. citizen in 1985. "Until you've been to the other side of the world, you don't know to appreciate the United States, to kiss the ground here."

Half a year ago, the Sheik would have been humming at this time of day, with customers waiting for tables or picking up takeout orders of lamb, tabbouli and baba ghannooj. But on a recent Wednesday, the place was silent. Just three of the 40 tables were occupied. "That e-mail destroyed my life," says Mr. Hachem.

The e-mail in question was written on Sept. 11. It told the story of a nurse at Henry Ford Hospital who came for lunch at the Sheik that day and saw Arabs who worked in the restaurant "cheering as they watched TV footage of our American tragedy." The e-mail's author wrote that her son-in-law is a doctor who heard the story from the nurse. It ended: "Do not patronize this restaurant, and please pass the word to everyone you know!"

The e-mail quickly spread to thousands of homes in Detroit suburbs. A stunned Mr. Hachem denied that the incident happened and invited people to see his security tapes, which showed some employees watching TV coverage of the attack. No one could be seen celebrating.

Local Jewish leaders in this largely Jewish community agreed that he and his employees had been slandered. They went on TV -- live from the restaurant -- to encourage customers to come back. But in the six months since, many residents are still boycotting the Sheik because of the possibility the rumor is true.

Business at the seven-year-old Sheik is down by 50%, Mr. Hachem says, and he has laid off 18 of his 30 workers. His wife had long planned to open a satellite restaurant at Detroit's new airport terminal. It, too, was to be called the Sheik, but airport authorities agreed with Mr. Hachem, who felt that the name was tainted. The restaurant opened last month, as the Mediterranean Grill.

The e-mail attacking the Sheik was similar to e-mails that hit other communities after Sept. 11. There was one about a Budweiser deliveryman who entered a convenience store in McFarland, Calif., and saw Arabs who worked there cheering the attacks. The angry deliveryman removed all of his company's products, then told "those horrible people" he would never service the store again. Or so said the e-mail. The area's Budweiser distributor says nothing of the sort ever happened.

Another e-mail claimed employees of a Dunkin' Donuts in Cedar Grove, N.J., celebrated the attacks. A company investigation found no proof of that. Through an outside crisis manager, and using e-mail-tracking software, Dunkin' Donuts was able to find the original e-mail's author, who admitted she hadn't actually witnessed the alleged incident and was passing on hearsay. The company was also able to get e-mail addresses for many people who had received the note. It then sent out thousands of its own e-mails to set things right. Sales at the store fell but quickly rebounded.

Mr. Hachem had no crisis manager and no media adviser. He says he was home at the time of the terrorist attacks but called and told his workers not to discuss it -- and to refrain from speaking Arabic in the dining room. He worried that customers would be suspicious of conversations they couldn't understand.

The Sheik is a well-appointed family restaurant decorated with Middle Eastern artifacts and scenes of the Sahara. It serves a suburban Detroit community with many homes that sell for $500,000 or more. "These are educated people," says Mr. Hachem, adding that he never thought they would "punish and judge" him without proof.

On the morning of Sept. 12, Mr. Hachem, 47, went out to buy American flags, he says. By the time he arrived at the restaurant, it was in turmoil. Hundreds of calls were coming in about the e-mail. He decided to call customers who had ordered food to take out on Sept. 11 -- he still had their phone numbers on their orders -- and ask them to tell him what they remember seeing. "They all told me, 'I saw only sad faces in your restaurant,' " he says.

The e-mail kept spreading. Someone taped copies of it to shopping carts at a nearby supermarket. The restaurateur contacted the physician named in the e-mail. "He tried to say he was a victim of this, too," says Mr. Hachem. The physician and his mother-in-law, the alleged author of the e-mail, declined to comment for this story, speaking through the physician's lawyer. The mother-in-law is now seriously ill.

A spokeswoman for Henry Ford Health System, which owns several hospitals in the area, says it investigated the incident quickly after it happened. She said the hospital concluded the incident was unrelated to the hospital but declined to discuss the investigation further.

    Such careful comments lead many in the community to assume that something must have happened at the Sheik on Sept. 11. People also point out that a flier was posted there on Sept. 10, advertising a rally celebrating the first anniversary of the Palestinian uprising against Israel. Mr. Hachem says that as soon as he saw the flier, he tore it down. "Do you really think I'd allow such a sign, telling my Jewish customers to go to this rally?" he asks. "I'd be out of my mind." As for Mr. Hachem's politics, he says he is a restaurant man and doesn't like discussing religion or politics.

The Detroit area is home to about 300,000 Arabs and 95,000 Jews, and great efforts have been made by both sides to forge understanding. The Jewish Anti-Defamation League and American Jewish Committee have issued a joint statement calling the rumors about the Sheik "just as evil as murder." Rabbis have spoken from the pulpit, encouraging congregants to return to the restaurant. Cantor Stephen Dubov of Temple Beth El in Bloomfield Hills appeared on a newscast, while having a meal at the Sheik. "We're taught as Jews that when we see someone who's hurt, we need to help," the cantor says. "This man is hurting."

Adds Rabbi Marla Feldman of the Jewish Community Council: "One of the Ten Commandments is, 'Don't bear false witness.' "

In the lobby of his restaurant, Mr. Hachem now posts supportive letters. One came from Elaine Newman, a West Bloomfield resident who says she ate at the Sheik on Sept. 11. "The waiters were just as solemn as we were," she says. "I saw no joy, no celebration." In fact, one waiter saw she was wearing an American Red Cross sticker because she had given blood and asked where he could donate, too. Ms. Newman tells people her story, she says, but "some don't believe me."

Before Sept. 11, Mr. Hachem says 80% of his customers were Jewish. Few of them have returned. Two miles away, La Shish, a competing Middle Eastern restaurant, says business is down only slightly.

For years, Mr. Hachem says he spent as much as $800 a week to advertise in the local Jewish News. Last month, he stopped advertising. "It wasn't helping," he says. Danny Raskin, the paper's restaurant reviewer, continues to encourage his readers to patronize the Sheik. He has been at the paper 60 years, and he has seen rumors hurt restaurants before. Thirty years ago, an untrue story spread that a server at a Detroit-area restaurant dressed up as Adolf Hitler for Halloween, then waited on a table of Holocaust survivors.

The restaurant suffered but recovered, and it is still in business. "That was in the days of word of mouth," says Mr. Raskin. "E-mail spreads rumors so much further."

At Detroit's Wayne State University, Janet Langlois teaches a course in folklore studies and has followed the Sheik incident. "Rumors are wedge drivers," she says. "If there's already tension, racially or ethnically, rumors are the sparks that light fires. This rumor may be a condensation of all the tensions between Arabs and Jews."

Mr. Hachem, meanwhile, has a request: If a nurse did see something in his restaurant, he wishes she would come to him. "I'll ask her, 'Who did it?' If someone really cheered, he should be in jail, because down the road, he could hurt our country more."

Some Arabs here feel the e-mail incident should be prosecuted as a hate crime. Dan Nelson, a spokesman for the Justice Department's Civil Rights Division, says the government did look into it but decided it wasn't "prosecutable based on evidence presented."

A few Arab leaders disagree. They point to the case of a California man who, after Sept. 11, sent a threatening e-mail to the Arab Community Center for Economic and Social Services in Dearborn, Mich. He was charged with a hate crime, and as part of a plea agreement, he flew to Detroit a few weeks ago to apologize and to do a week of community service at the center. "After that, he sent flowers, candy and e-mails indicating what a great experience it was," says Noel Saleh, an attorney for the organization.

Mr. Hachem doesn't expect such a happy ending for the Sheik. "The damage is done," he says, surveying his near-empty dining room. "It's like a glass. When you crack it, it cannot go back to what it was."




RELATED NOTES

    1. When a person 'thinks on the margin' they compare the incremental benefits of some course of action to the incremental costs.

    2. Rational behavior exists when a person engages in behavior where the incremental benefits are equal to the incremental costs.

    3. Opportunity cost is what must be given up to obtain some item.

    4. The demand for a good or service is the relationship between the price of an item and the quantity demanded.

    5. A major determinant of demand is consumer tastes.

    6. When the demand for a good or service decreases it causes a surplus of that good or service.

    7. A surplus exists when quantity supplied exceeds quantity demanded.

    8. When a surplus exists prices tend to fall and the quantity of the good or service demanded increases while quantity supplied falls.

    9. The shutdown decision for a competitive firm occurs when the price of their good or service falls below the average variable cost of production.

    10. Average variable cost is equal to total variable cost divided by total output.

    11. Variable costs are costs that change as output levels change.

    12. For more on how September 11th has impacted Arab businesses see http://www.hanania.com/arabizsuffer.htm and http://abcnews.go.com/sections/us/DailyNews/immigrants020106.html and http://www.ccmep.org/hotnews/race121101.html


RELATED QUESTIONS

  1. Was the sending of this email a rational act? Why or why not?

  2. Graphically illustrate and explain what happened to the Sheik restaurant.

  3. Would lowering prices help Mr. Hachem? Why or why not?

  4. Will Mr. Hachem have to shut the Sheik down? Why or why not?

  5. What should Mr. Hachem do next if he wants to save the Sheik?

POSSIBLE ANSWERS

  1. As horrible as false emails are, they are rational to send - economically speaking. To the person making up lies about a restaurant (assuming it was a lie), they have to weigh the benefits and costs of such an act. On the benefit side the person sending out the email must want to hurt the restaurant for some reason. Getting people to believe such an email accomplishes this purpose. On the cost side of the ledger, the direct cost of the email is very low. It is simply a matter of the time and money (virtually free) required to compose the message. Another cost is the probability of getting caught and punished. The opportunity cost of sending out such an email is the value of the next best thing the person could have done with their time. They could have read the newspaper, or gone for a walk or called a friend. Whatever else the person could have done rather than send out this email was given up at the time they sent the message. As long as the person felt that the benefits (chance of ruining the restaurant) were greater than the costs this was a rational act.

     

  2. As can be seen in the diagram below, the email caused a massive drop in the demand for food from the Sheik. The decrease in demand stemmed from a large drop in the tastes for Mr. Hachem's food and a decrease in the number of buyers in the market.

    When demand falls, the normal chain of causation indicates that a huge surplus of hummus would break out. The surplus would lead Mr. Hachem to lower prices and decrease the overall quantity of hummus supplied since fewer people are frequenting his establishment.

  3. Traditional economics might not be a good tool to explain his problem. Normally, when demand falls lower prices can be used to get rid of surpluses. In this case it is easy to envision no help being generated by lowering prices. If he lowers prices some people might come back and others who have never eaten there and do not know or care about the email might be enticed by the discounts. However, if most people are staying away because of the email, lowering prices will not bring them back. It is similar to the 'mad cow' disease in Europe not long ago. Demand for beef fell but lower prices did not help because people were scared to eat European beef. In this case people are angry and if they are angry enough even free hummus will not help his cause.

  4. The diagram below shows the predicament Mr. Hachem is in. If the price of his food does drop as demand drops he can only lower prices so much before he will be out of business. As long as Mr. Hachem can pay all of his variable costs of production (cost of labor, materials, food, electricity and other items that vary with consumer demand) he can survive for the time being. This would mean he is not paying his fixed costs (perhaps his rent or his salary).

    Businesses that can cover none of their fixed costs and not all of their variable costs shut down. For Mr. Hachem the key is finding a way to keep prices above the minimum point of his average variable cost curve. This will have to come from either lowering costs or…..

  5. …..trying to find a way to increase demand. There might be some room for Mr. Hachem to lower his costs - laying off workers has already been part of his attempts to keep costs down. However, there is also a limit as to how low his costs can go. Therefore, Mr. Hachem must continue to try to stimulate the demand for this food. Not naming his new restaurant 'the Sheik' is probably smart. Perhaps changing the name of his original place could help. Maybe a name and location change would be a good idea. He might consider stepping up his add campaign. Of course a successful prosecution and admission by the guilty party to the fraudulent email would be the biggest help to him of all. That and no more terrorist attacks.

     

This article is reprinted by permission of theWall Street Journal Interactive Edition. ©
2002 Dow Jones and Company , Inc. All Rights Reserved. Instructional materials by Jack A. Chambless, Valencia Community College.