PORT ANGELES — When a Port Angeles East Boat Haven restaurant was sold March 12, 2016, to Vancouver-based Art and Soul Hospitality LLC, new owners Stephen Fofanoff and Chris Warnock of Port Angeles dreamed of turning their newly named Jig & Lure Fish Co. into a new kind of restaurant.
On Friday afternoon, Fofanoff sat in crisis mode in the heatless 826 East Boat Haven eatery as he prepared to depart the premises for good Monday.
Customers were buying now-surplus kitchen equipment, dishes and utensils stacked on tables where food should instead have been served and those customers should have been spending money.
Those profits were intended to pay for decent wages for his employees, he said on the menu, and contribute to worthy community causes by way of contributions that customers left instead of tips for servers.
Over the past year, Fofanoff has raised more than $23,000 for groups including Serenity House of Clallam County and the Boys & Girls Clubs of the Olympic Peninsula, he said Saturday in an email.
That includes $2,464 pledged in December to Habitat for Humanity of Clallam County “that we’re working on completing,” he said.
But a year after opening, rather than basking in the glow of good works and open warmth from the community, Fofanoff, 45, is facing potential bankruptcy and wage complaints, he said Friday.
He vowed not to pay $1,917 in back rent plus late fees for January and February under a five-year lease with the Port of Port Angeles, which he insists pledged to install a new heating, air conditioning and ventilation system in the restaurant, something a port official said was not true.
The port, which depends on tenant rentals for 25 percent of its operating revenue, served him with a pay-or-vacate notice March 2 after not hearing from him on his plans to pay January and February’s rent, port Executive Director Karen Goschen said last week.
A Port Angeles resident for three years, Fofanoff said he does not know what he will do next but that he is facing possible bankruptcy under the weight of a $125,000 Intuit loan with a 32 percent interest rate.
Fofanoff said the terms require him to make payments of $600 a day, five days a week.
He said he took out the loan to get Jig & Lure through the winter.
“We are currently not paying that loan, so that’s the way it is,” Fofanoff said.
In addition, five employees have filed wage complaints with the state Department of Labor and Industries between Sept. 7 and Tuesday, L&I spokesman Matthew Erlich said Friday.
Two complaints were resolved, two were assigned to an L&I agent and the one filed Tuesday was still in a “submitted” status as of Friday, Erlich said.
Fofanoff said Friday he had not been notified of the complaints by L&I. Erlich said it is standard procedure to notify targets of wage complaints.
Fofanoff said after calling L&I on Friday that he was working with former workers to pay them back wages.
“We’re doing our best to make sure every one of those employees is made whole,” he said. “I don’t know how this is going to play out.
“There’s no one person to blame.”
Fofanoff on Monday taped a two-page notice about the closure on the door of the restaurant and posted it on the restaurant’s Facebook page, where it had garnered 121 likes, 41 shares and 80 mostly sympathetic comments as of noon Saturday.
“We were forced to close because of the high cost of doing business coupled with internal theft by employees,” he said in the notice.
Assistant Port Angeles Police Chief Jason Viada said last week the only instance of reported theft from Jig & Lure is a current case of theft of liquor and kitchen equipment that remains under investigation.
Fofanoff said the theft occurred earlier this year when he was out of town and involved at least $2,500 worth of kitchen equipment and beer.
In addition, he suspected that $10,000 to $15,000 in cash was “systematically taken all the way back to November” but did not file any police reports.
“I can’t press charges for something I can’t prove,” he said.
Former Jig & Lure Manager Christina Fenner said Jig & Lure’s failure was Fofanoff’s fault.
“He does not want to take responsibility for the closure,” she said. “He closed because he missed four pay periods. It was a mass exodus after a couple of days.”
Fenner said Fofanoff initially paid workers about $14 an hour, then paid them $11.50 an hour with the option of paying them more if total wages stayed under 25 percent of sales in a plan akin to profit sharing.
Under the plan, employees were to share whatever amount was under the percentage ceiling that did not go toward wages.
If wages exceeded 25 percent of gross sales, employees would receive only the hourly wage, Fofanoff said.
If wages were less, employees would receive a bonus.
Fofanoff said his profits suffered because of poor food and service, making it difficult to pay employees more than their hourly wage.
“I did not count on issues happening in the kitchen staff that would affect food quality,” he said.
“If I had it to do over again, I would have let employees go much sooner.”
But Fenner said the model was unrealistic.
“We were told we had to tell customers we were making a living wage,” she said. “It was difficult for me to say that because that was not the case.”
Former employee Jeana Johnson, who had worked for Fofanoff since the end of January, said she never made more than $11.50 an hour.
“I don’t know if that’s a living wage for anybody,” she said.
She said she was never notified of the closure.
Fofanoff also blamed “the hard truth of the widespread nature of addiction in our community.”
He said he could not prove that his employees were addicted.
“They would freely disclose [drug use] to each other and to me,” he said.
“You try to be compassionate about it.”
Fenner said Fofanoff was making excuses: “Everyone that quit was some kind of addict, everyone who walked out was an alcoholic, everything was not his fault.”
He said in the March 6 notice on his door that the $150,000 investment he needed to bring the building up to current standards for commercial occupation was affordable for the port but not him.
Fofanoff said former port Property Manager Tanya Kerr, who has since left the port, promised him the port would pay for and install an HVAC system, which was needed because of extreme temperatures at the restaurant during the summer and winter.
Kerr did not return a call for comment late Saturday afternoon.
But Goschen said Kerr told Fofanoff that the port could not make that commitment.
“She did not promise it,” Goschen said.
Goschen said the property was leased to Fofanoff and Warnock — in line with standard port practice — as is, without the condition that the port would make the improvement, which would have been factored into the lease if it were made.
Goschen said the port posted the rare notice-to-vacate on the property March 2 after the restaurant had already closed and after Fofanoff did not contact the port to make arrangements for payment of the back rent.
“How we respond is dependent on the tenant and what the tenant is planning to do,” she said.
During its brief lifespan, Jig & Lure did raise money for community causes.
Fofanoff said $23,879.87 was raised for the Boys & Girls Clubs, Captain Joseph House, Clallam Mosaic, Serenity House, Volunteers in Medicine of the Olympics, the Port Angeles Food Bank and Habitat for Humanity.
Christy Smith, United Way’s former resource development manager and the nonprofit’s new newly named CEO, said Friday the organization had hoped Fofanoff’s business model would catch on locally.
“He was a very generous person,” Smith said Friday.
“I think he really cared about the community.”
Fofanoff was “trying to do great things for the community,” Goschen said.
“But a person still has a business to run.
“I think he had a good intent and ideas, but not everyone is successful unfortunately.”
Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or at firstname.lastname@example.org.