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YORKTOWN GRILL – A TOTAL LACK OF FINANCIAL ACCOUNTABILITY
By: Nelson Orth
ACCOUNTABILITY:
On May 23, 2022 SCA and the Western Hospitality Group (WHG) signed two agreements. The first is titled the General Restaurant Start-Up Consulting Agreement. This agreement became effective 90 days before the opening of the Yorktown Grill which was April 15. The second is titled Food and Beverage Management Services Agreement.
On June 21 I I sent Steve Anderson the following email:
“Section VII. Payment: of the General Restaurant Start-Up Consulting Agreement states:
WHG shall invoice Association monthly for services. Payment for services rendered is due no later than thirty (30) days from the date Association is invoiced.
Within the past 90 days WHG has hired:
- F&B Manager
- A Chef
- A Sous Chef
- Restaurant Manager
In addition, Robert Heath, at a rate of $200/hour, per Section II of the General Restaurant Start-Up Agreement has provided services to SCA since last October.
I am requesting the contracts of the four people listed above, and all of the payment invoices provided by Robert Heath to SCA.”
On June 21 Mr. Anderson responded.
His response was for me to submit a Document Request Form for the contracts which I know SCA does not have.
He also stated, “Since all employees are hired by, work for, and are paid by WHG we would not have access to the contracts or employment records of the four individuals you identified.”
On Page 1 of the Food and Beverage Management Services Agreement, it states: “:SCACAI owns the restaurant facility”. That means that SCA pays for every aspect of the operation and management of the Yorktown Grill.
If I am incorrect in that statement, I challenge Mr. Anderson to prove me incorrect. We know that SCA has invested at least $700,000 in the renovation of the restaurant. This does not include the $33,500 dollars that SCA paid the City of Henderson for the Business/Alcohol License which was approved by the City Council on January 10. However, it has not been issued until all inspections have been completed and approved. And until that occurs, the Yorktown Grill cannot open.
So where does that leave the homeowners of SCA? In my opinion, we are in trouble. The General Restaurant Start-Up Consulting Agreement terms and conditions have not been adhered to, and there are no indications from the board that any financial transparency is on the horizon.
My hope is that a board member will ask to replace Paul Perlstein as the one person on the board that will track all the expenses and payments to WHG, and expenses to the renovation of the Yorktown Grill, and then report those expenses at the monthly board meeting.
As an aside, Forrest Quinn a few days ago wrote a terrific article on the lack of SCA management financial transparency.
So where does this leave the homeowners of SCA?
Mr. Orth:
Let me correct some of your facts. First, in your email to me you asked me for the invoices covering what we have paid to WHG to date and second you asked for the contracts of the four individuals you mentioned above. My response to you was to fill out a document request form for copies of the invoices you were requesting and since the four individuals listed were WHG employees that we would not have access to their contracts.
Thus, I did not tell you to fill out a document request for the contracts for which both you and I knew SCA did not have. I told you to fill out a document request for the invoices. If you are going to tell a story then get the story correct.
Your challenge to me is a bit odd as why would you challenge me to say that you are incorrect when we both know that the Yorktown Grill is owned by SCA and that yes we pay for WHG to operate the restaurant for us.
You are also correct that the Liquor License has not been issued and will not be issued until we obtain the Certificate of Occupancy. This will be issued after the final fire inspection has been passed. There is nothing unusual here as that is pretty much how the final steps go.
You make a very vague and generalized statement that the “General Restaurant Start-Up Consulting Agreement terms and conditions have not been adhered to.” Without any specifics it is hard to respond to this other than to say “Yes” the Agreement terms and conditions have been followed.
As to the charge of lack of financial transparency, all of the expenses have been reported. You can find what has been charged to operating, the reserves and AEF. Paul Perlstein is no longer on the Board and does not have any oversight responsibilities for the restaurant. Board Treasurer, Greg Swenson has been appointed as chair of a workgroup that will monitor and report on restaurant performance once it opens. This will be done openly and available to all.
In the end, I am puzzled by the purpose of your post other than to continue to trumpet “YORKTOWN GRILL – A TOTAL LACK OF FINANCIAL ACCOUNTABILITY”. All I can say is that you must not be looking at all of the financial information that has been provided to date with no intent to hide anything. Of course I know that it may not be presented in the way to your liking or to the liking of others who toss out general negative statements without any substance to back up those charges. Just because data is not presented to your liking does not mean that the data is wrong or hiding something.
All the members of the Board and especially our Treasurer are all committed to very transparent financial accountability for the performance of the Yorktown Grill. To do any less would be ignoring our duties to the Association.
Mr. Orth, come join me sometime during Happy Hour at the Yorktown Grill and I will be happy to buy you a drink and we can talk about all of the above.
Mr. Anderson: I am confused by the “conversation” between you and Mr. Orth. I seem to recall that the Grill employees were to be directly employed by SCA but perhaps my memory is not what it used to be. If I am mistaken and they are directly employed and/or contracted with WHG then I would imagine SCA will ultimately be responsible to reimburse WHG for those expenses just as SCA will pay ALL bills for the restaurant, including utilities, supplies, replacements and repairs. My understanding of the agreement with WHG is that they will submit invoices to SCA. Will that hold true in the case of employees as well? Will we be reimbursing WHG salaries and benefits, Social Security, taxes, etc.? If SCA is ultimately footing the bill shouldn’t we know how much we will be paying each employee and if those salaries or hourly rates are in line with industry standards or will WHG just submit one bill for employees and SCA pay without knowing details?
Thank you in advance for your time in responding.Hi
All of the employees are hired by and work for WHG. WHG submits invoices to us for all of their expenses including the employees. If we wanted to see the information you have outlined above, we could request to see it but it is their record and not ours. Our Treasurer, Greg Swenson, is taking leadership on a small restaurant work group that will monitor the restaurant performance per the WHG business plan that shows moving towards the restaurant becoming revenue neutral. Greg will also be tracking not just the WHG costs, but also the related costs pertaining to utilities and insurance. WHG knows their business far better than anyone at SCA and this is why we hired them to manage the restaurant for us. Our primary focus is the focus on their performance in meeting the business plan. The restaurant belongs to SCA and is managed by WHG. Our key focus is to become revenue neutral within five years.
Thank you for your response and pardon my late reply (been a bit under the weather). I appreciate the arrangement with WHG – that they incur all the expenses and SCA reimburses. Am I correct that Mr. Swenson and/or the “small work group” and/or the Board will be interested in how much we are reimbursing for things including, but not limited to, employee salaries? That was the main focus of my original question – are expenses monitored or would we just take them at their word since they “know their business far better than anyone at SCA” that they are paying appropriate market prices and salaries?
In your response, you also mention more than once about being “revenue neutral” within 5 years. I have heard that comment before and am curious if by revenue neutral you mean that in the year that would occur, the SCA homeowners would not have to supplement ANY expenses including but not limited to the $9,000.00 + monthly management fee? If that is not what you mean, can you please tell me your definition of “revenue neutral” as it applies to the restaurant”?
Thank you again for your time.
Mr Anderson:
if you could find time to respond to my questions of July 18, I would be very grateful.
Thank you.Elizabeth, I apologize for my lateness in answering your very excellent question above. Let me address your question in two parts.
- Mr. Swenson and his small group will be monitoring performance of the restaurant to ensure that it is moving in the direction outlined by the business plan. This will include an analysis of how much the restaurant is costing us not only in terms of what we are paying WHG, but also looking at the costs SCA will incur such as utilities, insurance, etc. Our Finance Department monitors the reimbursement requests by WHG that are accompanied by backup documentation such as invoices for purchases.
- The business plan submitted by WHG outlining the restaurant becoming revenue neutral in year five was based on the operational costs of the restaurant by WHG and includes their $9000 monthly management fee. These calculations were based on the restaurant only and did not include catering. Including catering could result in achieving becoming revenue neutral earlier. The estimated cost to each home owner for the five year period comes to about $93. This amount does not include the cost of utilities, insurance, and other costs SCA would incur that are outside the scope of what WHG is contracted to do. The contract signed with WHG does have a provision that when we enter into the 50/50 revenue sharing phase of the contract that the first $45,000 will be paid to SCA as a way to reimburse at least some of those costs.
I hope that this answers the questions that you posed. At this point I am eager to get the restaurant open and that the community works for its success. Everything at this point is based on what we hope will happen. Only by being in operation will we get concrete results and know whether we were more right or more wrong in making this decision. When I first ran for the Board, I stated during the campaign that I would be in favor of a restaurant if I could be convinced that it would not become an ever increasing money pit. I supported the contract with WHG and the reopening of the restaurant because I believed that the overall five year project subsidy was reasonable and that being run in the way that WHG envisions that it would be an attractive amenity for the community. At the tasting event held for the Board I was impressed that we are going to have excellent tasting food for a reasonable price all delivered with excellent service. It is the task of the board to make certain that the financial, food and service goals happen.
Mr. Anderson: Mr. Anderson: I am curious, will the Yorktown grill provide support or accommodations for SCA residents with food allegories, such as milk, garlic, eggs, fish, shellfish, tree nuts, peanuts, wheat, soybean, and sesame, many of which can have serious ramifications and possible fatal response for those effected.
Thank you
John F.
Anyone with serious food allergies should always ask the server about problem ingredients. I know that one of the pasta dishes has shellfish. However, there are also other alternatives on the menu. I have discussed with them better identification of gluten free items and to have gluten free buns available for the smash burgers. They could also be served without a bun in a lettuce wrap. As I have talked with WHG, I believe that they will consider requests to leave out ingredients if they can or to do a substitute ingredient if possible. I believe that the Yorktown Grill will be sensitive to the issue and do their best to accommodate within reason. However, in the end it is up to the individual to ask and to request an accommodation.
I am not sure what you mean by providing support or accommodations for residents with food allergies. My belief is that they will do what any good restaurant in the community would do if asked. Will they have a special gluten free kitchen where no cross contamination is possible? I would say to that the answer would be no.
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