Dacha is facing outrage online after a recent report detailed a controversial but legal financial practice in which the company’s new sprawling waterfront restaurant and 700-person beer garden in Navy Yard claim automatic “gratuity” charges for the house.
Former employees’ claims that they were misled and underpaid make up just one component of several financial troubles outlined in an article Washingtonian published yesterday. Dacha owners Ilya Alter and Dmitri Chekaldin also face a lawsuit from restaurant supplier TriMark Adams-Burch alleging $277,453.53 in unpaid bills and an $83,524.90 lien from a contractor for unpaid electrical work and light fixtures.
Dacha expanded from a once-scrappy beer garden in Shaw to the massive Navy Yard complex in May. In June it instituted a “gratuity” policy at the ballpark-adjacent venue that charges 18 percent on most checks, which the business counts as revenue. After seeing they weren’t directly receiving gratuities, some workers reportedly quit and others claimed they had been fired because they raised the issue with management. Washingtonian kept the names of workers anonymous to protect their identities.
Using service charges is a legal practice, but Dacha employees told Washingtonian the owners promised a robust hourly wage plus tips. The menu says, “In lieu of tips, an 18 percent gratuity is added to all checks.”
A server inside the restaurant tells Washingtonian he was making about $20 per hour including tips, which felt low based on the traffic in the venue that sits across the street from Nationals Park. Two former bartenders told the magazine that Alter, a co-owner, promised them $25 per hour plus tips. One bartender at the beer garden told the magazine he racked up $3,000 in gratuities in a single day without getting a cut.
Alter tells Washingtonian that Dacha never promised employees a portion of the automatic gratuities, describing the charges as revenue for the business that allows it to pay out a “fair wage.” He called it “a progressive thing to do.”
The report spawned a backlash on social media, with some people accusing the business of lying to customers and employees and others saying Dacha’s policy would be defendable if it was communicated properly.
The episode also seemed to show how business would go if D.C. had passed Initiative 77, a ballot measure that would have established a higher minimum wage for service workers who rely on tips for the majority of their incomes.
If the allegations are true, I hope @DachaDC will shut down both locations, and the owners will never be able to open a hospitality business again. Not paying Adams Burch is bad, but embezzling from employees and stealing their tips? Much worse.— Mike Lastort (@MikeLastort) June 18, 2019
If Dacha was upfront with their pay structure, then there shouldn’t have been a problem. The problem is that Dacha appeared to have been lying to everyone; their staff and customers about it. Promising their staff even more money while misleading customers.— Casey Moore (@CaseyMo22o) June 18, 2019
Bars that pay $20/hour are clearly at a disadvantage but they should be transparent and clear to their customers. They maybe even meant to do the right thing but instead got a PR disaster.— Bobby Eubank (@bobbyeubank) June 18, 2019
The lawsuit from Adams-Burch accuses Dacha of routinely paying its bills late or not paying at all. According to Adams-Burch, Dacha committed fraud by granting the supplier the authority to charge a credit card, then having the credit card company reverse charges as fraudulent when Adams-Burch tried to recoup payment that way. Adams-Burch claims that by authorizing payments it knew it couldn’t make, Dacha conspired to get the equipment — which allegedly amounts to everything from forks to tables, ovens, and a walk-in freezer —without intending to pay.
Alter described the complaint to Washingtonian as a “fake” lawsuit that Adams-Burch is using as leverage in negotiations over pricing.