On Friday, Xavier Cervera, the former owner of a group of nine Capitol Hill restaurants, expected one of two things to happen: either the current owners would make their regular payment on the note he holds, or they would turn the eateries back over to him.
Instead, the company — Barracks Row Entertainment — filed for bankruptcy. “We were blindsided,” Cervera says.
That means a murky future for the restaurants, which include the Hawk N’ Dove, the Chesapeake Room, Boxcar Tavern, Molly Malone’s, Park Tavern, Lola’s Barracks Bar & Grill, and Senart’s Oyster and Chop House. Barracks Row Entertainment, the company that filed for Chapter 11 bankruptcy in the District on Friday, insists it will continue to operate as usual. “We expect to emerge from this restructuring intact and with a manageable balance sheet,” William Nimmo, the managing member of the partnership that owns the company, said in a statement on Monday.
He cited declining margins since August of last year as the reason the company sought bankruptcy. Cerveras’s brother, Richard Cervera, has been brought back as CEO of the company and will oversee the bankruptcy, the statement said. See the petition here (or scroll down below this post); in it, the group lists liabilities between $1 million and $10 million and assets between $500,000 and $1 million.
It’s been a rocky path for the restaurant group, tinged with family conflict: Xavier Cervera and a partner sold the restaurants in late 2012 to Barracks Row Entertainment, which brought on Richard Cervera, a former CEO of companies including the House of Blues and Edun, the clothing company founded by U2 frontman Bono, to manage the properties.
Under Richard Cervera’s management, at least one of the restaurants took on a more upscale feel. He hired a fine-dining chef to overhaul the menu at the previously pubby Hawk N’ Dove, for example. But that chef was shown the door after only 10 days, as the management company sidelined Richard Cervera.
Theories on what went wrong vary:
Jamie Pericola, consultant for Barracks Row Entertainment, on Monday blamed declining margins on the perception that the properties are too similar. Neighborhood patrons couldn’t discern much difference between, say, Boxcar Tavern and Lola’s Barracks Bar & Grill, he said.
But Richard Cervera told us on Monday that he has no plans to make major changes in the concepts and says he just needs to tighten up operations to be successful.
“I don’t have any plans other than to enhance our efficiencies and get back to where we were,” he says.
Xavier Cervera, on the other hand, pins the problems not on a lack of differentiation but on the new management style overseen by his brother, though he wouldn’t criticize him directly. “Let’s just say that our management styles were very, very different,” he said. “We had a few hundred employees, but everyone felt like family, and we rarely lost employees.”
But now Richard Cervera is back in charge, and Xavier Cervera is waiting for the court to act. “At this point it’s in the hands of the lawyers and the bankruptcy court,” he says.