Editor’s Note: This article has been updated to correct the losses alleged to have been incurred with the bankruptcy of David Myers’ Sona restaurant. The $12 million said to have been lost was associated with restaurants Sona and Boule and operational costs of parent FoodArt Group. Losses came prior to the purchase of assets by Culinary Lab Partners.
An “L.A. food luminary,” gushed the New York Times Magazine. “One of the most talented young chefs in America,” effused Food & Wine magazine.
Those were just a taste of the encomiums that greeted David Myers, a Michelin-starred chef whose local restaurants have, over the last decade, been lauded by critics and foodies from around the globe.
But the good reviews belied a stale business plan that left his debut restaurant in bankruptcy. Now, he’s split with his financial partner, leading to a dispute over whether Myers raided the cupboard before he left to form a new venture focused on overseas eateries.
His departure earlier this year from David Myers Group – now called Culinary Lab Partners – led his former partner, Walter Schild, to allege that Myers took proprietary information, including financial documents, menus, recipes and other intellectual property and used them for his new venture. Schild, who first partnered with Myers in 2009, now claims that despite all the good reviews, the restaurant businesses he invested in were “multimillion-dollar failures.”
“Having a celebrity chef involved, it’s going to get attention right off the bat and it’s going to get press in the beginning,” said hospitality recruiter Brad Metzger, who has worked with several renowned cooks, including Myers. “But at the end of the day, it’s all about execution.”
Myers and Schild teamed in the wake of the closure of Myers’ first restaurant in Los Angeles, Sona. Sona opened in 2002 and filed for Chapter 11 bankruptcy protection in 2009.
Despite its failure, Sona was widely touted by foodies and even dubbed Restaurant of the Year by Angeleno magazine. Schild, a venture capitalist who sold his marketing agency Genex to Des Moines, Iowa-based publisher Meredith Corp. in 2007, saw potential in Myers and was confident he could be the difference maker to take the young star to the next level.
So with Sona in bankruptcy, Schild jumped in and purchased about $1 million in assets from its parent, FoodArt Group Inc. The package included majority stakes in two other Myers projects: West Hollywood’s Comme Ça, a French restaurant launched in 2007, and Pizzeria Ortica in Costa Mesa.
That’s when Schild and Myers formed David Myers Group. Together, the partners opened elegant Japanese restaurant Hinoki & the Bird (“part Bond-villain lair, part garden party,” said the Los Angeles Times) in Century City in 2012.
But the partnership came to an abrupt end in January when Myers resigned unexpectedly. Months later, he announced plans to open a restaurant and bar at the luxurious Marina Bay Sands hotel in Singapore.
Myers’ departure prompted Schild to say in the filings that Myers was incapable of executing the expansion plans without Schild’s business expertise. But more than indicting Myers’ business acumen, Schild has alleged in a filing last month in Los Angeles Superior Court that the chef took proprietary information when he left.
Rising status
Myers, raised in Cincinnati, found his way to Los Angeles nearly 15 years ago. He was armed with experience from working under the late Charlie Trotter in Chicago and the acclaimed New York chef-owner Daniel Boulud. It didn’t take long for him to land his first executive chef role at Jaan Restaurant (now called Livello Restaurant) at the L’Ermitage hotel in Beverly Hills.
Soon thereafter, the emerging chef enticed investors to help launch an independent restaurant group, FoodArt Group.
Sona, FoodArt’s first project, was an instant hit when it debuted. Food & Wine magazine included Myers on its annual list of best new chefs in 2003.
That was only the beginning. Myers and his investors opened Comme Ça and Pizzeria Ortica.
At the same time, Myers was cooking up his reputation beyond Los Angeles. He starred in “Shopping With Chefs” on Fine Living Network and made an appearance on Food Network’s “Iron Chef America.”
But in the complaint filed in court last month, Schild claims the outward appearance of the cook’s growing success was merely an illusion.
“Though seemingly well-regarded, these restaurants were multimillion-dollar failures,” the complaint says. Investors lost roughly $12 million from the bankrupt Sona restaurant alone, according to the court document.
However, Hinoki and Pizzeria Ortica are open and appear to be doing well. One evening last week around dinnertime at Hinoki, a modest crowd of about two dozen filed into the restaurant. Staffers said the restaurant fills up most evenings. Comme Ça is closed for renovations; a worker at the restaurant said it is to reopen in May.
Myers declined to comment on the dispute. But his attorney, Jeffrey Erdman, said his client was not to blame for Sona’s closure.
“Sona was an amazingly successful restaurant, but it got caught up in the economic downturn,” Erdman said. “In 2007 and 2008, nobody was doing well, especially high-end, expensive gourmet restaurants. David didn’t make the economy go down.”
Indeed, Schild says in court papers that he and Myers were on the same page about future plans up until the chef left the company earlier this year. The plan, the restaurateur said, was to expand the concepts into luxury hotels overseas, with Culinary Lab Partners investing more than $100,000 in travel and legal expenses to pursue deals with a Sands hotel in Singapore and a Marriott in Dubai.
Then Myers left.
“At the end of the day, business relationships sour. It doesn’t mean it wasn’t a good relationship when it was good,” said Erdman. “Many relationships – business or otherwise – can reach an end point where it appears to be in the parties’ best interest to part ways and pursue new endeavors, which is what happened here.”
Schild declined to comment, citing the pending litigation.
Although the company was originally a namesake to Myers, the chef never had an ownership interest. Instead, he was part of senior management, earning a $200,000 annual salary, the court document says. Myers was poised to obtain a 50 percent stake in the company after Schild had recovered his initial investment.
However, it’s unclear what effect Myers’ resignation might have on any claim to that ownership stake. Erdman said the court will likely determine whether his client is entitled to a revenue stream in the future.
Murky future
Myers registered a new business, Gypsy Chef Inc., in Nevada last year. In the court filing, Schild claims Myers used Gypsy Chef to negotiate a secret deal with the hotels in Singapore and Dubai. His filing also alleges that Myers convinced a then-employee at Culinary Lab Partners to send him proprietary documents.
Erdman denied those accusations, saying the Gypsy Chef concept is a marketing strategy Myers had been developing for years to distinguish a new brand.
“David is entitled to have identities separate from Walter (Schild) and even from David Myers Group,” he said. “Most people don’t have restrictions on their right to develop an identity independent of their work situation.”
Meantime, the status of the venture in Singapore is unclear. When Myers first announced his plans in June, the concept was slated to open early next year. But Erdman declined to comment on the development.
Jennifer Grady, business consultant and lawyer in Los Angeles, reviewed the complaint for the Business Journal and said it’s common for investors to butt heads with partners.
“When you have people with different types of work ethics, different financial backgrounds, you’re all coming in with your own biases and your own opinions on how things should work,” she said. “Lawsuits come the most when people’s expectations aren’t met.”
The best way to avoid conflict among investors, Grady said, is to communicate often about goals and expectations and, of course, perform due diligence before spending a dime.
“Nine out of 10 restaurants fail in the first year,” she said. “With those odds, you really need to know what you’re doing. Even with a celebrity chef who may bring a lot of charisma, that’s just one element.”
