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From ‘Top Chef’ stardom to bankruptcy: The rise and fall of Mike Isabella

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  • From ‘Top Chef’ stardom to bankruptcy: The rise and fall of Mike Isabella

    By Tim Carman and Maura Judkis
    September 10 2018

    Sitting in a private dining room at Arroz, his Spanish-inspired restaurant, Mike Isabella wanted to explain his side of the story. It was the day before the chef and restaurateur would file for Chapter 11 bankruptcy, and he wanted to dispel what he said were mischaracterizations of his company in the days before and after a former manager’s lawsuit accused him and fellow executives of “extraordinary” sexual harassment.

    The only thing that stopped the growth of his restaurant empire, he said, was “bad press.” Under the terms of his May settlement with Chloe Caras, Isabella could not specifically discuss her or her allegations, but by “bad press,” he meant the media coverage that ensued.

    “People stopped giving me a chance,” Isabella said. “And it hurt.”

    The affidavit that Isabella would file the following day in U.S. Bankruptcy Court spelled out just how much. Graffiato, his first restaurant in Chinatown, saw its weekly revenue shrink from $50,000 to $5,000. At the chef’s most ambitious project, the nine-restaurant Isabella Eatery emporium at Tysons Galleria, monthly revenue dropped from $1 million to $300,000, according to Isabella’s affidavit.

    Top Chef All-Stars runner-up, Mike Isabella, opened his first restaurant, Graffiato, in D.C.'s Chinatown. (The Washington Post)

    Since Caras filed the complaint, the chef has closed more than a quarter of his restaurants. But some investors, former employees and managers say Mike Isabella Concepts was already overextended, launching four places in 2017 alone, including the Eatery, which they say opened with too few staff and too little money.

    “The problem is that you’re trying to run this many restaurants,” said Bob Rudderow, a supporter and longtime investor in Isabella restaurants who lost his $100,000 investment when the Eatery closed. “That was well beyond what was reasonable for the staff he had.”

    In 2009, Isabella, flanked by fellow “Top Chef: Las Vegas” contestants Ashley Merriman, left, and Mattin Noblia, cooks during a press tour presentation. (Matt Sayles/AP)

    To Isabella, the company was never overextended. “You know why I didn’t think it was too much? Because I had about 20 other f---ing deals on the table” before the lawsuit, he said. Eight of them were underway, including plans for more restaurants in the District, as well as in “Vegas, Houston, Atlanta, Philly. Some of them, multiple projects in a city.” Bankruptcy filings also mention a project in the Middle East.

    All of them would have been handled with the same small corporate team — Isabella; Johannes Allender, chief financial officer; Taha Ismail, service and beverage director; Nicholas Pagonis, director of operations; and George Pagonis, corporate chef — and no board of directors.

    One investor, who spoke on the condition of anonymity because he is still involved with Isabella’s businesses, said that whenever investors raised the idea of hiring an executive with multiunit restaurant experience, Isabella would say “he didn’t have the finances to support it, and the investors’ reply to that would be, ‘That is precisely why you need it.’ ”

    Isabella said he sees value in having a chief executive.
    However, he added, “hiring a CEO is expensive. Very expensive. So you have to be able to afford it first. We talked about it a lot last year. . . . We were definitely interviewing and talking to them. At that point, it was just very hard to give my control up.”

    Nonetheless, after the lawsuit, the deals on the table “all went away,” Isabella said. “Everyone was nervous.”
    And that was a turnaround for a chef who had no shortage of opportunities in the wake of television fame.

    Raised in New Jersey, Isabella, 43, was inspired to cook by his Italian grandmother and finessed his skills in the kitchen of José Andrés’s Zaytinya. His big break came when he was cast on Season 6 of Bravo’s “Top Chef” in 2009. In 2011, he came in second place on “Top Chef All-Stars.”

    Two months later, Isabella debuted his first restaurant, Graffiato in Chinatown, where his comforting, Jersey-style pizzas and pepperoni sauce made the place an instant hit.

    The next few years saw a rash of openings: Kapnos and G sandwich shop, then expansions of Kapnos to Bethesda, Arlington and Reagan National Airport. A New Jersey spinoff of G opened and closed within a year. Truncated versions of G and Kapnos became concession stands at Nationals Park. Pepita, a Mexican eatery, opened in Ballston.

    Fellow “Top Chef” contestant Jen Carroll partnered with him in Requin Brasserie but left months before two additional Requin openings, including one at the Wharf. His partnership with chef Jonah Kim at Yona, a Ballston noodle house, was also short lived. Through her publicist, Carroll declined to comment; Kim did not respond to multiple requests for comment.

    “Sometimes you shouldn’t get into business with your friends,” Isabella said.

    If Isabella’s company was overextended, it wasn’t showing it during much of 2017. That fall, Washington Post food critic Tom Sietsema awarded Arroz three stars and Requin on the Wharf 2½. At the same time, Mike Isabella Concepts was gearing up for its most demanding project: Isabella Eatery, a showcase of all of the chef’s restaurants and some new ones, such as Retro Creamery and Nonfiction Coffee.

    The Eatery would require MIC to add around 300 employees, nearly doubling the 400 that Isabella said he employed before its opening. To gear up, Isabella plucked Elliot Drew, executive chef at Graffiato in Chinatown, to oversee the Graffiato at the Eatery, and Caras, formerly the general manager over Isabella’s Arlington restaurants, to oversee the entire 41,000-square-foot operation.

    But even with experienced hands on board, the Eatery opened with too few employees, said a former manager who spoke on the condition of anonymity because he still works in the industry. The lack of staff was particularly acute in the back of the house, where each restaurant had its own full kitchen. As more restaurants debuted at the Eatery following the December launch, some would open, the manager said, with only a sous chef and an assistant in the kitchen.

    “It opened so chaotically,” he said. New employees would show up, and he wouldn’t know who hired them or where they were supposed to work. “We didn’t really have any structure.”
    Sara Hancock, a former pastry sous chef for the Eatery, said hourly staffers had their pay slashed in January, shortly after the opening. Two workers who spoke on the condition of anonymity — one because he signed a nondisclosure agreement and another because she is undocumented — confirmed Hancock’s account.

    Isabella disputed that. “In January, we were open for two weeks” and still hiring staff, he said, not cutting pay. “I didn’t have any issues with any bills until summertime.” He also said he had enough people, but “the experience level was hard to find.”

    Court documents suggest that some of Isabella’s other restaurants had financial problems months before Caras filed her complaint. The Hotel at the University of Maryland in College Park alleged that Kapnos Taverna, which opened a year ago, had stopped paying rent in January. On May 15, the landlord sued for back rent of $63,566.92, plus interest and fees.

    Isabella said that the landlord, Southern Management Corp., was “trying to evict me” and that he paid three months of back rent in June and tried to renegotiate his lease. The company did not respond to requests for comment.

    Eskridge (E&A), a company owned primarily by executives at real estate developer Edens, alleged that Isabella had not paid rent for Requin Brasserie in Fairfax since Dec. 30, 2015, four months into the lease. On May 22, Eskridge filed suit against Mike Isabella Concepts for more than $715,000 in unpaid rent plus other costs.

    Isabella said he had paid Requin Brasserie’s rent for at least eight months. He said the restaurant, which closed in April, did not generate enough revenue because structural and permitting issues prevented him from increasing capacity with a rooftop bar. He acknowledged that the brasserie would have closed even without the “bad press” about the lawsuit.

    On March 19, Caras’s lawsuit alleged that Isabella and his partners called her “*****” and “*****,” commented on the size of her buttocks and touched her without permission. She was fired, she said, on Dec. 5 after Isabella told a male sous chef to sleep with her. Caras declined to comment for this story through her lawyer because of her settlement agreement.

    “I didn’t call anybody names,” Isabella said, before declining to comment further on matters related to the lawsuit. He has previously denied Caras’s allegations.

    Caras was not the only woman to allege that Isabella’s restaurants were hostile, sexual environments. At the Graffiato in Washington, a server said that partner Nicholas Pagonis would frequently grab her and that cooks made lewd gestures at women. Pagonis has denied the allegations.

    Hancock, the pastry sous chef for the Eatery, said that Isabella kissed her cheek without her consent and that working for him was “degrading” for women. Other women alleged that Isabella engaged in harassing behavior outside the restaurants, too. Isabella has previously denied all the allegations.

    Two weeks later, Caras’s lawyers refiled the suit in federal court with expanded allegations: that the company had used broad nondisclosure agreements — covering, among other things, “details of the personal and business lives of Mike Isabella” — to silence employees from speaking out against sexual harassment. Each breach of the NDA carried a $500,000 penalty. In a previous statement, Isabella said the NDAs were used “to prevent any news about our restaurant openings from leaking to press. . . . NDAs were absolutely never used to intimidate employees.”

    Isabella and Caras settled the suit May 7. Financial terms were confidential, but the settlement included a “binding agreement obligating [MIC] to take corrective measures, including robust training, and to adopt policies to encourage a work environment free of sexual harassment,” attorney Debra Katz said in a statement.

    The chef’s reputation took an immediate hit after the lawsuit. He was disqualified from the RAMMY awards, he lost his concession stands at Nationals Park, and his chef de cuisine at Arroz and Requin at the Wharf departed.

    Requin in Merrifield was the first place to close, then Graffiato Richmond in June. By the end of July, Graffiato in the District had followed.

    Hancock said she has conflicting feelings about Isabella’s struggles.
    When she heard the Eatery had closed, “part of me was sort of happy, and the other part of me felt very sad for him, because I think he’s talented and I don’t know if he got lost along the way,” she said. “I never want to see anyone ever ruined, but I do want to see someone admit their faults and apologize.”

    That’s something she said Isabella hasn’t sufficiently done. His response has been “just very machismo and very reflective of his character in that he was trying to deny and engage in this smear campaign and take no responsibility,” Hancock said. “It was all about deflection.”

    Isabella responded that he is “taking full responsibility for everything that has happened.” He said he’s also reflecting on how his past experiences have not always served him.

    “I am old school. I did work in a kitchen 20 years ago. It’s a different world,” he said. “Obviously, everyone learns every day. I still learn . . . I’m always learning, and I always want to continue to learn and get better. That’s what it is. Nobody’s perfect in life.”

    In the wake of the lawsuit, Isabella said, he has made changes at his company. Employees still have to sign NDAs, but their scope has been limited. A no-drinking policy for staff, put in place a year ago, is now aggressively enforced, he said.

    When asked what other changes he had made, Isabella read a prepared statement.

    “We have instituted new training practices. To see that, you know, the impact” — he paused and sighed — “the detrimental impact such a culture can have on our business and employees, our employees being most important. . . . It is a people-centered business. And we must put our employees at the top of the ladder always.”

    Some other chefs who have faced allegations of sexual harassment in their restaurants, including John Besh in New Orleans, have stepped down from their companies. Mario Batali, who is under criminal investigation for alleged sexual assault, is divesting from his restaurants. Even though Isabella has not been accused of conduct approaching the severity of the allegations against Batali, some members of the public, judging by their social media comments, may not be eager for his comeback.

    Isabella insists he will have one.

    “It is going to get harder before it gets easier,” he said. “I’m going to put the work in and the time to get it back to where it needs to be.”

    He said he does have regrets. When he’s asked about them, his initial answer is broad and noncommittal. “There’s a million things I regret every day, whether it has to do with work or life or anything,” he said.

    But what’s one specific thing he regrets?
    “I regret what happened,” he said, his words vague for legal reasons. “For everybody.”

    Emily Codik contributed to this report.

    "To go bravely forward is to invite a miracle."

    "Worry is the darkroom where negatives are formed."

  • #2
    So in a nutshell, the restaurant business is the riskiest, most fickle business on Earth, and losing money in this business is not uncommon. It is highly unlikely that a "sexual harassment" lawsuit is to blame for the company's collapse, because customers don't care about that. No one is going to stop eating at a restaurant which they otherwise enjoy because the chef or owner is embroiled in a personal scandal.


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