'The biggest mess': His restaurant empire is dead, but Hunter Smith won't quit

Charlottesville’s embattled restaurateur and beer brewer Hunter Smith isn’t finished yet.

He’s lost his restaurant empire, his flagship brewpub and the trust of his former employees and partners, but Smith says he plans to keep his brewery business alive at another location — even though the landlord there holds a nearly $400,000 judgment against the operation.

“We going to focus on what we’re good at: making drinks,” Smith told The Daily Progress.

Smith said that although he has shut down all his restaurants and pubs, he plans to continue brewing Champion beers as well as beers and other beverages for third parties. Smith said that he and a new business partner have struck a deal with a North Carolina-based firm called Bevana, which will market the beverages.

“We’re going to be doing what we’re good at, which is putting drinks in a can or a keg and then letting other folks focus on the sales and distribution,” Smith said.

Although he sold off some small beer vats from his Champion brewpub, Smith said he retains the heavy-duty brewing hardware at his former Reason Beer location, where he said he plans to focus his future brewing operation.

It’s inside a low-slung industrial structure along U.S. 29 between Lenox Avenue and Greenbrier Drive, a place that longtime locals call the old Comdial building. The property is owned by a company that won a court judgment in May of nearly $373,000 plus more than $93,000 in attorney’s fees for unpaid rent.

“We’ve been in communication with them all year long trying to come up with a plan that makes everybody happy and to continue to use the space,” said Smith.

While other businesses have gone bankrupt owing far less, Smith said he plans to stay there and brew. The facility’s capacity is 15,000 barrels per year.

“We want to brew as much Champion beer as we can, but we’re also going to fill every tank with anything that folks want to make, whether that’s a canned cocktail or CBD beverage or a hard seltzer.”

Smith said that purchase orders are already beginning to stream in from prospective customers who fall into two camps.

“That can either be a new entrant that wants to get their brand out in the marketplace for the first time without making a huge commitment capital-wise,” said Smith. “Or that can be someone who’s in a predicament kind of like Champion is, where they’ve got a brand that’s got sales demand they’d like to meet but they may no longer be able to justify the status quo of their production brewery.”

Two weeks’ notice

“It is with a heavy heart that we announce that Friday, 6/30/23 will be our last day of operations.” So reads the June 16 Facebook and Instagram posts in which Smith announced that Champion Brewing’s taproom, his first and flagship location, would be closing.

In the single-story wing of a nondescript brick building, a former office, at the southwestern side of the Belmont Bridge, Smith opened Champion in 2012. Over the years, the place wove its way into the local culture, particularly after a tent and picnic tables transformed the adjacent 12-space parking lot into an outdoor beer hall and concert venue.

This outdoor area played host to film screenings, women’s arm-wrestling tournaments and concerts featuring the likes of the Head and the Heart, which plays at the Ting Pavilion next week. There were even campaign stops from politicians including Democratic presidential contender Beto O’Rourke.

“Even if you’re not a regular, it’s been very communal,” said José Fleming, as he nursed a stein of Missile Beer on Friday night. “All walks of life and great beer. I’m going to miss that.”

Fleming said he was a member of the Champion Run Club, a group that would meet Wednesdays for jogs and quaffs. Ditto for conservation forester Ben Rifkin, who walked over after work for one last Friday to sip his favorite: Shower Beer.

“It’s a little sad and empty with all the tables gone, but it’s kind of fun to be here for the last night,” said Rifkin.

While die-hard customers were sitting on the low concrete perimeter wall or on a chair of their own, a group of aggrieved employees from another piece of the Champion empire was marching that way.

“My heart and soul is in there,” said Charles Walker, casting a glance at the now-closed Brasserie Saison restaurant on the Downtown Mall. “We’re the ones who clean, who do the dishes, who sweep the floors, who greet the customers and who serve the customers.”

Walker was among 10 former employees of Franco-Belgian Brasserie Saison and Latin-inspired Passiflora restaurants left without their final paychecks when the restaurants abruptly closed last month.

Payroll protest organizer Michael Flessner, the former Brasserie Saison bar manager, said he just wanted his colleagues to get paid.

“You can’t do this to people,” Flessner told The Daily Progress. “In the restaurant business, we live day by day.”

Flessner concluded his protest not with chants or signs but just with the presence of the erstwhile employees in the Champion beer garden.

“Peaceful but point-of-fact,” he said.

The investor

In recent weeks, Smith has been referring to his “chief financial officer.” He is Jonathan Cross of Shefford Capital Partners, a New York-based private equity firm. Cross said that he left his North Carolina home in December to find a path forward for Champion.

“I signed on to turn it around,” Cross told The Daily Progress. “The problem was the red ink was becoming more and more evident on a weekly basis.”

Cross offered some advice that was not immediately accepted.

“My recommendation in January was to shut everything down because it was just hemorrhaging money at the restaurants, but he wanted to keep his employees employed,” said Cross. “His whole thing was, ‘My employees, my employees.’ So I went ahead and let him stay open.”

Smith’s recollection is similar.

“I was kind of thinking with my my heart, not my head, and trying to hang on to any jobs for employees,” said Smith. “But really in hindsight, it was game over at the end of last year.”

Partnerships with Siren, a Mediterranean seafood restaurant in downtown Charlottesville, and Gordonsville Ice House, a bar and restaurant in Gordonsville, ended earlier this year. When the closing of Brasserie Saison and Passiflora came in June, Cross said, it was when local and state tax authorities cleared out company bank accounts to pay down tax bills.

“When the company closed, it closed because there was no money,” Cross said.

Cross said he’s trying to get a loan to cover the final paychecks for employee.

“They will get paid,” said Cross. “I’m trying to keep it out of bankruptcy so I can pay them quicker.”

Cross noted that when a firm files for federal bankruptcy protection, unsecured vendors typically get nothing. That fact, Cross said, is a key reason why he’s involved: to avoid bankruptcy by negotiating partial payments with landlords and other vendors.

“Everybody’s got to work together to resolve this situation,” said Cross. “We don’t want to hurt a small business.”

Cross said that he’s been doing mergers and acquisitions for 30 years and helping distressed firms for the past 15.

“Champion is the biggest mess that I’ve seen in the last 15 years,” said Cross.

Besides the nearly $400,000 owed at the old Comdial building, where Cross and Smith want to remain in business, there’s the Passiflora space, where they do not. Property owner Virginia Pacific Investments has sued for $189,000 in back rent and $350,000 in punitive damages. Landlord Allan Cadgene told The Daily Progress that he was open to the idea of negotiating.

“We had a deal with Jonathan, but something fell apart on his end that would have settled everything up,” said Cadgene.

Now, Cadgene says that he’s trying to re-rent the space.

“If we enter into a new deal, that certainly helps Hunter with the future rent,” said Cadgene.

Bad timing

Hunter Smith mixed some social conscience into his brewing company in 2017. He made a point of refusing service to White nationalists, and shortly after that year’s deadly Unite the Right rally-turned-riot, Champion joined a lawsuit against neo-Nazi and militia groups that sought to prevent their return to Charlottesville.

Smith won not only some consent decrees in the lawsuit but also awards for his beer.

Champion’s Shower Beer won a gold medal in the 2015 Great American Beer Festival. More recently, True Love, a Mexican-style lager, won a bronze at the 2019 Brussels Beer Challenge.

“He created a great beer brand,” said Cross. “If he’d stuck with brewing beer, he’d have been fine. All the destruction came in 2019 when he decided to go into all these restaurants.”

Smith acknowledged it was terrible timing.

“The strategy we chose to embark on right before the pandemic hit was pretty challenging to pull off,” said Smith. “Keg sales basically disappeared during COVID when all the bars shuttered and we lost half of our revenue, and distribution to our own restaurants didn’t scratch the surface.”

He expanded during what are widely seen as the worst two years in restaurant history, with government-mandated stay-at-home orders, breaks in the supply chain and worker shortages.

“The Champion brand has value if you can rehabilitate the name,” said Cross, citing the example of Pabst Blue Ribbon which virtually disappeared before an early 2000s revival as a popular national brand.

“Clear up the problems and build up the brand going forward,” said Cross.

Last Friday

Last Friday was a busy day for Smith. It was the last day for the Champion Brewing taproom. It was the day that 10 employees told media that they hadn’t gotten paid. And it was the day that his family gathered for the funeral of his paternal grandmother.

“I don’t know if there’s a good way to run out of money and go out of business, but ours was a challenging way to do it,” said Smith.

Source: www.dailyprogress.com