DaDong — the flashy Beijing-based roast duck import that fell flat in NYC and declared bankruptcy after two years — is attempting a mid-pandemic comeback in the city. To jumpstart the project, DaDong scooped up between $350,000 to $1 million in federal aid through the Paycheck Protection Program, according to PPP loan approval records and two people with knowledge of the loan proceedings who asked to remain anonymous.
But while DaDong’s new leadership team is hungry to try again, the move has sparked outrage among many of the restaurant’s former staff members, who were left with over $150,000 in unpaid wages after DaDong filed for bankruptcy protection in November last year, according to court documents.
Sixty-eight employees remained unpaid at the time of the bankruptcy filing, according to court documents, and 21 of those employees separately confirmed with Eater that staffers were never paid for the hours that they worked in the weeks before the restaurant shut down. DaDong was in such dire straits that it was unable to pay full rent or its food and alcohol suppliers, according to court documents.
“Honestly, I’m speechless that they would [apply for the loan],” says Alexandra Rovati, DaDong’s former wine director. “The lack of respect toward us — and then they go and disrespect everyone who is suffering from this pandemic and can actually benefit from the aid. It’s sad that they went so far as to apply for the aid and if they received it, just goes to show how messed up these PPP loans have been.”
Even after the bankruptcy auction earlier this year, many employees who were owed money remained unpaid, they say. The restaurant’s owners had invested over $28 million in building out the glitzy space, but the auction — which included pricey items like custom-built kitchen equipment and fancy decor from the three-story restaurant’s multitude of dining rooms — netted a paltry $120,000, according to court documents. The funds were vacuumed up instantly to pay the company’s bankruptcy lawyer and claims agent, and a small sum was set aside to partially cover the $500,000 that DaDong owed the state in unpaid taxes.
Some former employees who say they still haven’t been paid their back wages are now struggling to find work as the industry remains in free fall due to the pandemic.
“There [are] no jobs out there,” says Annie Lu, a former bartender and server at DaDong who says she is owed over $8,500 and is currently unemployed. “Some of my colleagues — they can’t pay rent.”
An investor involved with the revamp who asked to remain anonymous to speak freely says the company was absolved of its former debts when the bankruptcy case closed at the end of March.
“There’s an old restaurant and a new restaurant,” the investor says. “The old restaurant closed and failed. It has gone through bankruptcy. Now, under this tough environment, we still want to open a new restaurant. And we are willing to [support the economy] and create some new jobs.”
Two months after the bankruptcy case concluded, DaDong was approved for a PPP loan. The restaurant’s ability to get a loan — which is calculated based on a business’s employee headcount — left some staffers shocked given that DaDong ceased operations in late November. The Small Business Administration, which oversees the PPP loan program, states that a business must be able to certify that it was in operation and had employees on its payroll on February 15, 2020, in order to receive the money, unless it is a seasonal business.
An SBA spokesperson declined to comment on DaDong’s individual situation, but said generally that the SBA is not in charge of reviewing loans. Each business’s individual lender, or bank, is authorized “to act as agents of the government to disperse PPP funding,” the spokesperson says.
The investor involved in the revamp confirmed that the company received a PPP loan under its legal name, DaDong Catering LLC, which he says is still in operation.
“We closed the DaDong restaurant, but DaDong Catering LLC has been under operation for the whole time and went through the Chapter 11 bankruptcy protection process,” the investor says. “The team is still trying their best to continue running DaDong Catering LLC and looking for a new business opportunity to reopen DaDong. This is the purpose of the PPP loan application.”
The investor also added that DaDong’s management team “provided DaDong Catering LLC’s February payroll report, including all of the employees’ unpaid salaries” to JPMorgan Chase, the company’s lender for the PPP loan. The team reached out to all past employees about coming to work at the new restaurant, he says, but many employees say they haven’t heard anything about future jobs.
When reached for comment, JPMorgan Chase declined through a spokesperson to publicly disclose details about DaDong’s loan, but confirmed that it is now investigating the situation. “We can’t comment on client details, but we are looking into this matter,” the spokesperson said.
Despite the staff uproar over the loan situation, the team is moving forward with plans to open the new location, and the investor involved with the opening says the team has learned from its past missteps.
In its first stateside restaurant, the Dong Zhenxiang-led chain — known for its prized Peking duck, which has fueled expansion of more than 20 locations in China, four of which hold Michelin stars in Shanghai and Beijing — spent millions building out an extravagant, 440-seat restaurant at Bryant Park. When reservations went live for the highly anticipated opening, 2,500 seats were booked within two hours. The menu was a glossy 88-page book. It locked in major opening coverage from media outlets including Eater, Bloomberg, and the New York Times.
After it opened, the hammer fell fast. Top food critics in the city, including the New York Times’s Pete Wells and New York magazine’s Adam Platt, said it misfired on all fronts. Within two years, it was bleeding cash and was forced to file for bankruptcy or face losing its property in an eviction, according to court documents.
In this new iteration, though, different partners have come on board, the investor says, including an experienced U.S. operator. The leadership team knows where they went wrong, according to the investor, from menu development to marketing to renting out a colossal building that they couldn’t fill. They “underestimated” the NYC market the first time, the investor says, but, “the good thing here is that the core team brings a lot of experience from the failure.”
The investor says that the company is in the process of striking a deal for a new space in Midtown, but declined to disclose the exact location, citing ongoing negotiations. Though most former staffers have yet to be contacted about work opportunities, two former senior employees say the restaurant’s leadership team had reached out to them to discuss reopening plans in the city.
One of them was upbeat about the prospect. DaDong still has an attractive, Michelin-starred reputation in China, they say, and the leadership team has learned from DaDong’s many mistakes at the Bryant Park location.
The person, who asked to remain anonymous, was initially upset about DaDong’s failure to issue paychecks in its last weeks of NYC operations, they say, but the economy is too unstable to dwell on what happened. “Should we keep being angry or should we just let life move on to start a new job, a new journey?” the employee says. “I realize the restaurant job market will be very tough. You might not find the job that you prefer. You might have to accept a job with less pay. Life still needs to go on.”
If there’s a chance for former employees to finally get paid for their work, however, that would be like “winning the lottery,” they say.
Brand recognition or not, some were not so willing to overlook DaDong’s past mismanagement. The second former senior employee who was contacted about joining the new restaurant, but says they are still owed upward of $13,000 in back pay from the last restaurant, confirmed that they will not be rejoining DaDong.
Other employees were similarly frustrated to hear of the company’s attempts to rebuild after the first restaurant’s stunning failure.
“It baffles my mind that this can happen,” Lu, the former bartender and server, says. “We’re not getting paid from a company that filed for bankruptcy, and somehow we see that the company has received over $350,000 in PPP money? Isn’t that supposed to be for the employees? This is a scam. It’s just flawed.”