Posted: Apr 20, 2018
In a total of six lawsuits, food suppliers, investors, and a landlord accused the chef of shorting them moneyIron Chef Jose Garces is in trouble.
Since fall, a litany of lawsuits have charged the chef and restaurateur with underpaying food suppliers, a landlord, and investors in his restaurants, the Philadelphia Inquirer reports. And just this week, one of the chef’s earliest investors added to the pile for a total of six lawsuits: the firm owned by food vendor and early investor Jim Sorkin is suing Garces and seven of his businesses for $858,000 in unpaid bills for food.
Garces opened Spanish tapas restaurant Amada in Philadelphia in 2005, and would gain celebrity chef status when he was named an Iron Chef on the Food Network’s competition series in 2010. In the following years, he went on to open or manage 29 restaurants in Philadelphia, Manhattan, Chicago, Washington DC, Palm Springs, Scottsdale, and Atlantic City. (According to the Inquirer, he’s still involved in around half of those.) But, in recent years, his widespread restaurant empire has been plagued with financial troubles.
As a Philadelphia magazine profile outlined this week, Garces restaurants in D.C., Chicago, and Scottsdale have failed. In 2014, four of Garces’s more-profitable restaurants, located inside of an Atlantic City casino, closed at once when the casino shuttered. And just last month, his New York City restaurant Amada (which ran $1.3 million over its construction budget) closed. At the time, Garces said in a statement, “This business is not an easy one and we have certainly learned from this venture.”
The Garces restaurant empire has shown signs of trouble for some time. In summer 2017, a bank asked Garces to bring in a financial advisor who would have the power to make financial decisions for his restaurants, according to Philadelphia. Around that time, Garces let go of his CEO and CFO for undisclosed reasons.
And Garces has faced what the Inquirer calls a “rash of litigation” since fall 2017. In one lawsuit, a couple who invested $2.5 million in Garces restaurants liken his enterprise to a Ponzi scheme. They say Garces asked for money with no intention of paying them back and that the restaurateur took out a $9 million line of credit to pay off debt and open new businesses, putting the restaurants up as collateral, without notifying them. In addition to Sorkin’s company, three other food vendors and purveyors have filed suit. And in one suit settled in January, a landlord alleged that Garces failed to pay $110,000 on the restaurant property that opened as Chifa before changing to Rosa Blanca.
In a statement this week to the Inquirer, Garces said he was finalizing plans to fix “financial challenges,” and that those challenges have no effect on the service at his restaurants. “Our ratings and reviews remain as strong as ever, as has our overall commitment to a quality experience for our guests. Those guests continue to be loyal and our revenues are consistent,” Garces said.
Garces is still opening restaurants, the Inquirer reports, with two new openings planned for Atlantic City this summer.
By Monica Burton
April 19, 2018
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