From Chicagoist:
Getting Both Sides of the Mado Saga - Brandon Baltzley

Getting Both Sides of the Mado Saga - David Richards

Hello LTH Friends (and maybe a couple not so much)
First, Thanks for all your support to the restaurants over the years. I have make some great friends, many who participate on LTH.
Recently, and maybe not so recently, many things have been written about me as an employer. I'd like to set a few things straight.
Mado 1.0
Rob and Allie gave me no indication they were unhappy in their positions at Mado
I first found out Rob and Allie were leaving when Penny from Chicago Magazine called my PR agent requesting a comment on the situation. I later received a resignation email from Rob. I was totally blindsided to say the least.
The comments on the staff being relocated is not accurate, I have received a number of unemployment filings from Mado staff. When Mado staff came to Sweets to pick up checks, they were told they had jobs at Sweets or when Mado reopened. As I am not in communication with Rob directly, I do not know if he is employing anyone currently.
Rob has stated his departure was due to money issues with me.
Rob and Allie's salary represented 10-15% of total restaurant sales
Rob's food cost ranged from 20 to 45% of total sales averaging greater than 35% over 3 years
Rob's labor cost averaged 35%, not including Rob and Allie's salary, but including payroll taxes and unemployment insurance
Our model for operation is food cost at 25%, total labor at 25%, overhead at 25% and 25% for reinvestment and improvements
For the duration of Mado's operation, I was not able to draw a salary or dividends on my investment. An addition 40,000. was invested in Mado during the first year of operation.
Unfortunately, and due in part to the changing economy, Mado's revenue had decreased over the last 18 months 30% with a spike when opentable was introduced and from groupon offering.
It was stated that Rob had made sure all suppliers when current, this was a result of checks in the week prior to their departure totaling 120% of total sales that week. Check continued to be authorized by Rob and Allie 30 days after their resignation, putting Mado's accounts in peril.
Rob and Allie were also disappointed in the PR work being done on their behalf requesting more money be spent on an additional publicist.
I had always felt the investment in Mado was justified, both Rob and Allie are talented Chefs, and I was looking to the long term for return on this investment.
I see the Butcher shop as a great niche market for Rob, I have never seen anyone butcher a pig with so much passion.
Mado 2.0
This I'm going to be short and sweet with. I had an interview with Brandon the next day after Rob and Allie announced their resignation. He was from NYC and happened to be Chef at a restaurant literally one block from my apartment when I lived in NYC. I was impressed with the way he described menu, preparation and presentation. He was not interviewing for the position at Mado. I saw great potential and discussed what had happened at Mado with Rob and Allie and asked if he felt he was up for such a big and controversial step. He accepted the challenge. We updated the interior a bit and installed a much needed new floor.
Brandon was asked not to speak with press. The media silence lasted about 3 hours. He spoke with anyone who called and made some calls on his own.
I asserted that a low profile in the beginning would be beneficial as any problems would be attributed to me not him. I would never put a Chef forward who had been employed for 12 hours.
Brandon was employed for about 30 day, the last 2 weeks he worked he was out sick for 90% of the time.
The food and labor cost were very high, as expected. I discussed with him that we need to start bringing these cost inline. Part of the discussion was reducing labor by cutting staff on slower days. There were 6 to 7 Chefs and kitchen staff per shift, even on slow nights (a slow night being 10 covers). I suggested cutting hours and expressed who I felt were the strongest players in the kitchen. Brandon did note that there was a week when food cost was 18%, this is pretty close to accurate but happened to be the week of thanksgiving and most the the product was carryover from the previous week except for fish of course. A week with a 65% food cost.
There was no indication these changes presented any conflict.
The days before Brandon left, I was in kitchen with his crew. I was very upset with the condition of sanitation in the kitchen, I was downright pissed. there was spoiled food, improper labeling, a real mess. I expressed my disappointment and concern, without mincing words, it was full on Hell's Kitchen.
Brandon came in the next day, spoke with the staff and decided to walk, but not before he contacted media of his departure.
Brandon also spoke of suppliers not being paid which is in part accurate, there were several check that had not been distributed in his absence including cash payment that disappeared. He also noted that servers had checks returned which is accurate and a direct result of check authorized by Rob and Allie that overdrew account.
He also addressed the expiration of license. A new license application had been filed to remove Rob and Allie from any responsibility.

and Kenny, I would be happy to tell you the whole story at Mantou if you'd like to hear it. We are currently in litigation suing zk food for fraud.

After writing I almost just deleted it, but decided those of you who know me deserve to know me side.
As a side note, I was contacted by three media outlets. I gave my side to two of them, Chicago mag and Chicagoist. They made the call what to include in their editorials.

Now your welcome to respond to my posting but I'm not planning on revisiting this subject any further. I understand the politics of restaurants is kinda sexy to write about but please remember there are people behind each story, not just Chefs and owners but servers, dishwashers, window cleaners, host and even more directly affected by your comments.

Thank you for allowing me to post
David

Rob and Allie's salary represented 10-15% of total restaurant sales
Rob's food cost ranged from 20 to 45% of total sales averaging greater than 35% over 3 years
Rob's labor cost averaged 35%, not including Rob and Allie's salary, but including payroll taxes and unemployment insurance
Our model for operation is food cost at 25%, total labor at 25%, overhead at 25% and 25% for reinvestment and improvements

no offense intended, David, but it seems like your model for operation sucks, from the perspective of both an owner and an employee. perhaps you should consider re-thinking it and just paying your chefs an actual salary?

also, in all my years in the industry, I've never seen an owner publicly discuss a chef's numbers on an internet discussion board. that's a new one and, to my mind, a new low in terms of class and professionalism.

from what I've read, it seems like your current model is designed to take advantage of young, energetic chefs, allowing you to profit or make a name from their hard work and vision without paying them a fair market value for their ideas and labor.

It was stated that Rob had made sure all suppliers when current, this was a result of checks in the week prior to their departure totaling 120% of total sales that week. Check continued to be authorized by Rob and Allie 30 days after their resignation, putting Mado's accounts in peril.

this speaks highly of Rob, and badly of whoever was paying the vendors. measuring the payouts against that week's sales is a meaningless number. how'd they get so far behind in the first place? how many weeks were no vendors paid? good for Rob for trying to make sure you didn't also screw over the purveyors. that's the kind of class and professionalism that I was referring to above.

I couldn't disagree more regarding salary for a chef when you are funding a new venture. A chef needs to take part in the risk as well as the reward. Quite frankly, making good food is not all that hard, compared to running a profitable restaurant (keeping costs in line, bringing in customers, etc.). The chef needs to make ALL these elements work. If you think an investor who is laying out money for startup and expenses, and taking 0% for themselves until there is $ left over is "taking advantage" of a young chef by not throwing guaranteed salary at them, then we'll have to agree to disagree.

As a young chef you have two choices to earn your reputation. Get a salaried job with a chef who already has a reputation and excel at their vision, or have much more freedom and have someone fund your own. Why does the funding has no value to the chef because there is no salary guarantee? I speak from the point of view of the investor here. If you don't want the supervisory power of an investor hanging over your head, then fund the venture yourself.

Also, I don't know anything about the situation at Mado, other than the heresay from multiple sources, but paying suppliers after you no longer have signatory power is fraud, not an issue of right or wrong.

Lancelac wrote:I couldn't disagree more regarding salary for a chef when you are funding a new venture. A chef needs to take part in the risk as well as the reward.

If the chef is a partner in the enteprise, this is true. If the chef is merely an employee, then pay him/her what they are worth.

So, is Mado closed? What is the plan going forward?

I couldn't disagree more regarding salary for a chef when you are funding a new venture. A chef needs to take part in the risk as well as the reward. Quite frankly, making good food is not all that hard, compared to running a profitable restaurant (keeping costs in line, bringing in customers, etc.). The chef needs to make ALL these elements work. If you think an investor who is laying out money for startup and expenses, and taking 0% for themselves until there is $ left over is "taking advantage" of a young chef by not throwing guaranteed salary at them, then we'll have to agree to disagree.

interesting. well, in the world I occupy, unless the chef is also an owner, they get paid a set salary. and, usually, a chef gets a set salary even if they are also an owner, unless it's a sole proprietor type situation. if an owner is funding a new venture, they should ensure that they have enough money budgeted to hire a professional to serve in the role of chef and should pay them fair market value. if they don't have enough money in the budget to do that, they should consider re-thinking the scope or timing of the project.

paying people a variable salary based on performance is not unheard of in the restaurant industry, but it's usually done via bonuses tied to performance that supplement a steady paycheck.

there are a lot of very good reasons for this, besides that it's just the right way to treat people. folks who aren't sure how much their next paycheck is going to be for (or even if they'll get one) are not going to be able to function at their highest capacity, given the stresses of having to wonder how they'll make ends meet. they're also probably a lot more likely to steal from their employer, and are likely to always be looking for a new job that will offer them more security.

honestly, I assumed that this was commonly-accepted stuff. do I also need to explain why it's not ok to employ children or force employees to purchase their groceries from the company store?

I just found it interesting that the owner has only now decided to claim there were sanitation issues and that Rob ok'd checks after he left ... in all the multiple interviews the owner gave on the situation, he never made such accusations that I saw but now that clearly he's looking bad, suddenly there are new charges that are designed to make the chefs look really bad. It just really does not seem credible imho.

mattshafferHP wrote:So, is Mado closed? What is the plan going forward?

Sounds like it. We just received an email from Groupon today. They are refunding our money.

We asked for our money back from Groupon as soon as Mado 1.0 closed and they did it.

Having eaten at Mado several times- pre Rob and Allie departure- I can say that they will be missed.( although we're excited about their new venture) The inside story of what went down is just that and I'm not going to place any judgements on anyone because I haven't worked next to them. It does seem that Rob and Allie are both confident and intelligent people who are very capable of negotiating there own terms and renegotiating them if need be. Painting them as the "helpless victims" seems a bit silly if not melodramatic.

From Tues. article in the Tribune
http://www.chicagotribune.com/entertainment/ct-live-0607-baltzley-copy-20110606,0,6585896,full.story

A month after Alinea, Baltzley took over the head job at Mado in Bucktown. He didn't realize the mess he was in for: He was told he had 48 hours to open, so he scrambled and assembled a kitchen crew mostly of culinary school students. When squabbles with the owner over finances began to boil over, he and his staff walked out right before Thanksgiving.

Good luck to chef Brandon Baltzley on his road to recovery!

Thanks for posting this - a good read.