Tag: Food & Drink

By Shea Gibbs and Catie Ratliff

When Champion Brewing Company announced on social media that June 30 would be its “last day of operations” just two weeks before the scheduled closure, the post’s comments—from both fans and company owner Hunter Smith— made it clear that “last day” referred to that of Champion’s Sixth Street brewpub.

With few other details available, news outlets ran with the top line: Champion Brewing would cease operations. 

But the truth was more complicated. Jonathan Cross, a private equity fund manager Smith hired last year to be Champion’s chief financial officer, said simply, “The record is straight,” while Smith offered more detail.

“We have plans to retain the facility on [Route] 29, where all the equipment still is. And we are actively negotiating terms for that space,” Smith said at the time. “We have every intention of brewing and continuing the brand.”

The wave of bad news for Smith and Champion Hospitality Group had not yet crested. A news story quoting Smith about his plans for the future complicated matters. Champion’s landlords in the building on Route 29 told him the publicity—highlighting the hundreds of thousands CHG owed them—put the deal in jeopardy.

Then on July 19, CHG’s most vocal critic from behind the scenes jumped in front of the camera. Laura Fonnner, award-winning local chef and owner of seafood restaurant Siren (previously co-owned by CHG), had been cryptically criticizing Smith and his restaurant group on social media for almost a year. This time, Fonner left nothing to the imagination. She posted an image of herself, two middle fingers raised, standing next to a note announcing Siren’s closure. The note placed all blame squarely on Smith.

Fonner wasn’t finished. In a lengthy interview with C-VILLE Weekly, she laid out everything she believed CHG had done, from the ignorant to the neglectful to the outright illegal, to bring about her beloved restaurant’s downfall.

Smith forcefully denied any intentional wrongdoing.

So what’s the truth behind the he-said-she said? And more importantly, why did Charlottesville’s most well-known brewing company, and Smith himself (who’s now struggling to find a way forward both personally and professionally), so swiftly crash and burn?

Understanding CHG

Smith says his goal today is simple: “a return to focus.” He says he has “zero plans to get back into restaurants.” His side of the story? He’s made mistakes but deserves a chance to move ahead as an entrepreneur.

The other side comes from various parties—not just Fonner, but CHG’s employees, partners, and investors in Passiflora, Brasserie Saison, Champion Grill, and Champion’s Lynchburg and Richmond brewpubs. In other words, all the restaurants opened under the CHG umbrella, each now closed, most with unsettled balance sheets.

Smith and Cross now admit CHG’s downfall was a long time coming. Cross says Champion Brewing Company “never really made any money because everything was cannibalizing everything else.” That may not apply to the earliest days, he clarifies, when Champion produced and sold beer only out of its Sixth Street taproom. But Champion began to expand quickly, scattering would-be cannibals across Central Virginia.

Champion and Smith were foundational in Charlottesville’s second wave of modern craft beer growth. While South Street Brewery and Starr Hill came first, Champion exploded onto the scene in 2012, a time when craft beer was booming across the country in a way it never had before. In Virginia Beer, historian Lee Graves writes, “Hunter Smith chose to name his brewery’s flagship IPA after a missile; turns out that has been an apt symbol for the company’s growth.”

Graves’ argument relied on Champion’s footprint expansion—its 30-barrel Missile Factory, which opened in Woolen Mills only a few years after launch, its Richmond brewpub, and a slew of restaurants—as well as its distribution growth. At its height, Champion’s flagship beers like Missile IPA could be purchased off shelves as far from home as Chicago.

A mythos quickly came to surround Champion. Tucked in its nook behind the Belmont Bridge and across the street from the affordable housing complex formerly known as Friendship Court, the Sixth Street pub grew to be a clubhouse for hipsters, hosting concerts for bands with nowhere else to play and other off-the-wall events. It was an ideally situated headquarters for Smith’s own social justice projects. Affordable housing in Charlottesville became his passion, along with his long-held loves: beer and music.

But breweries and brewpubs operate on slim margins even during good times, according to Smith. “Working in a tough business like craft beer, even before we ever heard of COVID, was still really hard,” he says.  The Sixth Street taproom “struggled the whole time.”

Despite the slim margins, Smith decided to expand from brewing into restaurants.

In 2017, Champion opened its first eatery. Brasserie Saison seemed like the perfect concept for a brewpub-led hospitality group. Offering mostly Belgian-style beers like its eponymous saisons and European-esque fare like mussels and pâté, it was the apple of patrons’ and critics’ eyes.

Will Richey was a key early partner for Smith and Champion. As Brasserie Saison co-owner, he brought significant experience as a restaurateur. Through his Ten Course Hospitality group, he now owns and operates seven restaurants, a number that’s ebbed and flowed over the years, and consults on an ever-changing set of projects. In an August 2018 interview, Richey said: “Not to pat myself on the back, but I think [Brasserie Saison] is one of the finest restaurants in town.”

Speaking about his work at Brasserie, Richey says “[it] was a two-year contract, after it ended I handed over our creation and did not stay on the project. The brewery had not been built by that time. … That is the only work I ever did with Hunter. He did not form a hospitality group until later. We opened Brasserie in 2017 and I left the project in 2019 I believe.”

Teaming up with Richey turned into a sort of template for CHG. Smith and his group weren’t restaurant folks. They were beer folks. So while they wanted to go into the restaurant business—in part to sell more beer—they didn’t want to make all the crucial decisions that allow an eatery to function day-in and day-out. By partnering with more established restaurateurs, CHG was able to expand rapidly, despite the group’s inexperience.

When Smith had an idea for a late-night concept, for example, he connected with Jay Pun, who’d been successfully selling banh mi sandwiches as a special at his restaurant Chimm.

“It was a nice meeting. He was very respectful,” Pun says. “He listened to my ideas and, ultimately, we just didn’t meet again. In retrospect, I’m glad I didn’t do it, not just because of what is going on, but at that time, I was reserved about reopening after COVID.”

When CHG opened Champion Ice House in 2020, Smith teamed with area barbecue celeb Craig Hartman to give the chef a vehicle for his renowned fried chicken. Today, the restaurant known as Gordonsville Ice House has a message posted all over its website: “Gordonsville Ice House has no affiliation to the Champion Brewing Company and/or Hunter Smith.”

Laura’s song

Like Hartman, Fonner is one of Charlottesville’s most well-known chefs. After 21 years working in restaurants and 17 years climbing the ranks to executive chef at the acclaimed Ivy restaurant Duner’s, 2020 brought major change to Fonner’s life. 

That’s the year she won the Tournament of Champions on Food Network’s “Guy’s Grocery Games.”

That’s also the year COVID-19 cut a swath through the nation’s restaurant and hospitality business.

And that’s the year Fonner started her partnership with CHG and Smith.

Fonner had known Smith through their connection to the food and bev biz for years. The two were friends. When Fonner decided she wanted to leave Duner’s and go out on her own, she met with several potential partners, including Richey, Smith, and others. Smith stood out, she says. Of all the partners and investors she met with, he was the only one who asked, “What can I do for you?”

The partnership started slowly. With COVID-induced closures racking the restaurant industry, Smith and Fonner decided to launch a food truck business. Dumplin’ would focus on a dish Fonner had made during her first appearance on “Guy’s Grocery Games.” The food would be driven by Fonner; CHG would provide administrative and financial support. 

The truck and its savory dumplings were well received, but the business didn’t operate for long. The truck itself was reportedly in disrepair, and Fonner moved into a consulting role for CHG, contributing to locations like the Ice House and Brasserie Saison, while Smith and his team sought a buyer.

One potential buyer was Pun, who recalls discussing the deal with Fonner. 

“I knew it was not in the best shape, but we needed something,” Pun says. “The night before we were going to cut a check to buy it … something tickled my inner conscience and I emailed Laura. She goes, ‘Do not buy it.’”

Fonner describes her time working in the truck as “probably the worst job [she’s] ever had.” 

“It was a rinky-dink truck with electrical issues. It blew my face up; it lit on fire at King Family Vineyards,” she says. “There were so many issues with it. They never would get it fixed.” 

Exhausted with the food truck and consulting, Fonner decided it was time to forge ahead with her passion project, Siren. “I sat Hunter down and told him that I was going to open a restaurant up and I would do it with or without him, and if it was without him, then consider it my notice,” she says. 

Smith told her he was with her. Siren would be part of the CHG family. According to Fonner, she was in charge of Siren’s in-house operations, while CHG managed the restaurant’s marketing, accounting, bookkeeping—everything beyond the day-to-day.

During Siren’s renovation process, Fonner started to uncover red flags when several businesses were hesitant to work with her due to CHG’s involvement. She says she paid workers directly during the reno, but then things changed. “As soon as we opened the doors in December, nobody got paid,” Fonner says.

From that point on, Siren’s financial situation spiraled.

“In January or February … I got a letter saying that we were $40,000 behind in rent,” Fonner says.

Financial issues continued to pop up while CHG managed the new restaurant’s accounting. With more than five accountants managing Siren’s finances over one year, numerous bills went unpaid, according to Fonner. “We’ve had our gas turned off twice, we’ve had the electric turned off, we’ve lost our health insurance,” she says. “I had the City of Charlottesville come here and tell me we didn’t have our business license.”

When she confronted CHG, Fonner alleges that Smith suggested she stop opening the mail addressed to Siren. Smith denies the allegation.

While it was the accounting department managing Siren’s financials, Fonner ultimately believes Smith is responsible for CHG’s disorganization. “At the end of the day, they are Champion employees, which means that it’s Hunter’s responsibility [to oversee] that they’re doing their job correctly,” Fonner says.

Smith agrees, though he says none of the mismanagement was intentionally deceptive. Things were so disorganized, he says, that it was impossible even for him to see an accurate picture of CHG’s financials. What’s more, Smith says Siren was never as successful as its positive critical reception and booked weekend nights might have suggested. “It is easy to think that all is going well, when sometimes it’s not,” he says. “That doesn’t do anything to take away from the fact that I feel personally like we let Laura and Siren down.”

After dealing with months of messy accounting work and repeated breakdowns in communication, Fonner wanted out of her partnership with Smith and CHG. Smith agreed to end the relationship, and the two partners sat for a meeting in October 2022. Fonner says she believed Smith was genuine when he apologized for Siren’s troubles and discussed her moving forward as sole owner. But it took months of negotiation for Fonner to gain full ownership of the restaurant. 

On December 1, 2022, Fonner became sole owner of her flagship restaurant. But Siren’s financial woes were not over.

Despite opening the restaurant with minimal debt, Fonner and her General Manager Erin McGowan claim they uncovered bungled financial reports and more unpaid bills when they took over Siren’s accounting. Combing through sources of potential debt was stressful, as a seemingly unending wave of unpaid bills accrued during the CHG partnership continued to arise.

“I need to know what else is out there, because these surprises can’t keep happening,” McGowan said in her initial meeting with C-VILLE.

Less than a week after that first interview, Fonner and McGowan say they were blindsided again, this time with unpaid unemployment taxes from 2021 to 2022. Fonner ultimately made the decision to close Siren on July 18.

“I’m just so angry right now. I’ve never been this angry,” Fonner said after the closure. “This place was supposed to be my safe space.”

Internet rumor and reality

It all initially hit the fan for CHG on Reddit. On December 14, 2022, Reddit user 0urL0veF0rTheW0rld dropped a post that became the talk of the local hospitality industry. CHG wasn’t paying its employees, the anonymous poster alleged. The same went for vendors and landlords.

Smith and CHG Vice President of Food and Beverage Stephen Kelly were at fault, the Reddit poster said. Smith’s response today, after all the dust has settled? It was all true—although he is mostly willing to take the blame himself.

At the time of the post, firing back seemed counterproductive. Smith says he was like a duck trying to stay afloat: calm above water, but paddling like crazy below.

“What can I say?” he says. “It’s extremely disappointing to everyone involved, and it is really hard to be in that scenario. To address the social media stuff head on, I was not going to get in there and get in a firefight with everything people said. The challenging thing was, I started working with Mr. Cross behind the scenes since the beginning of the year to create a solution, and we haven’t been ready to talk to folks … until we had that solution finalized.”

Cross has since confirmed the late payments to employees and vendors. In a June 21 interview, the CFO said he was finalizing a loan to distribute CHG’s final paycheck. The loan would also take care of some creditors, he said at the time, and a brewing equipment sale would satisfy some more.

“For many, many years, there have been missed and late paychecks and so on and so forth,” Cross says. “It was unfortunate, but it was poorly managed. The strategy was poor. I am not talking behind Hunter’s back. The rumors are true. Everything has been run kind of slipshod, and there is a lot of creditor money still to be paid.”

Indeed, Fonner and Siren are far from the only folks reeling from CHG’s downfall. Employees at nearly every restaurant operated by CHG have alleged at some point that they went uncompensated.

On June 30, a group of the workers banded together outside the shuttered Brasserie Saison in protest of the missing payments. At the time, more than 50 former employees reported at least one missing paycheck.

Speaking to CBS19 at the protest with her son acting as interpreter, Yolanda Hernandez told the outlet that her family needed the money for “rent, food, everything.” For families living paycheck to paycheck, Cross’s claim that the company is working to send workers their money is little consolation.

Several vendors are also still in arrears with CHG. Although details are scarce, at least seven active civil cases are pending against LLCs connected to CHG—including Champion Brewing Company and 422 Champs—in the Charlottesville and Albemarle Circuit Court. Smith is directly named as a defendant in multiple suits. Passiflora, CHG’s Mexican restaurant on the Downtown Mall, is engaged in one of the lawsuits.

Dozens of individuals involved in CHG’s restaurants, from employees to investors, have declined to comment as the situation has played out. But many of those same folks continue to circulate rumors and accusations about Smith’s actions, not to mention his own finances. They suggest he’s been fueled by family money, gotten over-leveraged on loans, and pocketed proceeds that should’ve gone to taxpayers, employees, or vendors.

Still, no concrete evidence has emerged that points to outright deception or illegal activity on Smith’s part. It is clear that CHG was mismanaged, and that mistakes were made with respect to who to pay, who not to pay, and when. But Smith maintains that any claim that he did anything intentionally to defraud stakeholders and pad his own pockets is “hogwash.”

“As far as any insinuations or outright comments about our wrongdoing, there is nothing there,” he says.

Back to beer

One of the more baffling episodes in the CHG saga involves Reason Beer. Smith maintains that restaurants—and specifically, opening restaurants during a global pandemic—was almost entirely at fault for bringing down his empire. He and his team are beer folks, he repeatedly says, and they can be successful as long as they stick to beer.

In November 2021, Champion and Reason announced they would merge, a major development in the closely watched Charlottesville beer scene. At the time, both brands were calm ducks above water—indeed, they seemed like two of the most resplendent ducks in the flock. Maybe CHG had opened too many restaurants in the face of COVID, but the company was still garnering critical praise for its beer and food, and a year out from any public accusation of wrongdoing. Reason was ascendent. With a head brewer hailing from the acclaimed Maine Brewing Company, the small firm had burst onto the scene and quickly acquired a faithful following among beer geeks.

Then, Reason unexpectedly closed in December 2022, just one year after the merger.

Many in the local hospitality industry viewed the short-lived merger—which left both brands essentially untouched as standalone entities but coupled the beermakers’ production capacities—with skepticism. As with so many in the CHG circle, legal entanglements have kept most interested parties from speaking openly about the falling out. Smith says the merger stumbled out of the block. 

“I can only give my perspective, but I think that our facility merger at the beginning of last year was so snake-bitten from the start when it comes to lead times and supply chain issues unbeknownst to us going into it,” he says. “It was a project that was supposed to take a quarter to a half of a year, and it took all of last year. It was a major drain.”

Reason Marketing Director Patrick Adair and his partners have been mostly positive about the relationship, which was intended to widen Reason’s distribution and increase production capacity.

“We had a great partnership with Champion,” Adair says. “But as they changed their direction, we decided on a conscientious decoupling.”

According to Adair, the companies were well aligned during their year-long collaboration, and the divorce was amicable as the two parties decided who went away with what. And behind the scenes, the Reason team has been planning a rebirth. The process of divorcing from Champion and moving forward is taking longer than anyone expected, Adair says, but Reason is “staying the course.” The course will be navigated, though, without one of Reason’s key contributors. Mark Fulton, the beer industry darling who’d come over from Maine Brewing to launch the brand, has announced he’s opening Högwaller Brewing, with none other than Will Richey.

When talking about the Reason breakup several months ago, Smith was likewise optimistic. Looking back now, he calls the first six months of 2022 the most intense part of CHG’s downfall, a time when he was “executing that brewery merger while giving up alcohol personally.” Indeed, sobriety has been something Smith has been public about over the last year and a half.

The former Reason location is no longer central to the way forward for CHG, if one still exists. Champion Brewing had entered into a contract with distribution platform Bevana to distribute its beer in December 2022. Smith wanted to use that arrangement to keep chugging along and making beer. Out of the small brewing facility on Route 29, he hoped to satisfy demand from Bevana and contract out the rest of the brewhouse’s capacity. 

Now, Smith says the deal for the facility is officially off. 

This is the way

Smith admits electing not to address CHG’s troubles and his internet detractors early on “fanned the flames.” And while he and Cross have both publicly recognized how hard it is to turn a profit at a brewpub, Smith can’t help but wonder if the bad publicity surrounding his restaurants contributed to Champion’s Sixth Street taproom’s struggles.

Cross is a straight shooter, and Smith has put a lot of faith in his ability to help him turn his embattled brand around. For Cross, it’s a simple project: sell off assets, pay off creditors. 

“Hunter is going to stay out of the restaurant business and stay in the brewing business,” he says. “We want to reemerge the brand—that is the only thing left of value because there is so much owed to tax authorities and creditors.”

To keep the brand solvent, Cross wants Champion to liquidate its assets outside of bankruptcy. Smith says there is still considerable debt to address. And while that’s put a lot of people in difficult positions, he insists he too has no cash to show for his efforts.

Cross is optimistic the group can find a way out. “People are already reaching out to us,” he says. “My firm’s expertise is M&A. We do turnarounds. We are shopping the assets. I spoke with the landlord at Passiflora. He already has other buyers and other tenants that would like to move in. And at Brasserie, there are certainly other people looking at that location … I think there is a possibility we could move things very quickly.”

While Cross is new to the craft beer market, he believes it’s entering an upcycle. The coming years will offer a respite if Cross is right.

“John and I are still putting together and finalizing our business plan, and we have shared everything with the Champion investors,” Smith says. “We are working on a second opportunity for everyone. Where that is based and exactly what we are doing are still TBD. There is still a lot in the works [but] we are still working on a private equity-backed craft beer play.”

At any rate, Smith says Champion will no longer operate in this city or be “run like a Charlottesville mom and pop.” That characterization is one that Smith’s detractors would likely take issue with. Fonner says she was deceived, swindled out of her dream restaurant. Others out there, silent due to active lawsuits and their own reasons, likely feel the same way.

Pun, who’s highly plugged into the local restaurant scene, says he believes the idea that the financials simply spiraled out of Smith’s control. “He seemed to be in a mindset where the more things opened, the more his product would sell, and that’s a good thing,” Pun says. “But I think it just kind of grew and grew so fast, and he had his hands dipped in so many things, and it was too hard to take care of. We don’t know how it works when something like that is happening … but the first and foremost thing is, we have to take care of one another.”

Plenty of social media lurkers have offered their own questions for Smith. Why didn’t he take care of his employees first? Why didn’t he dip into his own pockets to make sure no one else was hurt by CHG’s mismanagement? And why hasn’t he come forward to take the blame for what he did head on?

While many questions remain unanswered, Smith says he’s ready to accept his share of the blame.

“I feel bad … I want to take as many arrows as is appropriate,” he says. “But I draw lines between where Champion made mistakes and where Hunter did things for my own personal benefit.”

Editor’s note: A previous version of this story incorrectly included Gordonsville Ice House in a list of closed businesses.