It’s rare that a restaurant runs into trouble less than two months after opening.

The Fourth Street Live site of what’s known as Mozzaria, at least until Saturday night.

Even rarer is when one business partner sues the other over said trouble without killing the business.

Rarer still is when that same restaurant manages not only to survive such turmoil, it rebounds from those woes.

But positively unusual is when the remaining partners—who never wanted an ownership stake in the thing to begin with—invest in the restaurant to give it a new direction and identity.

Such summarizes the brief life and soon to be death of Mozzaria, the grandly planned, ill-conceived and grossly mismanaged Italian restaurant that opened on Fourth Street Live in May.

As of Saturday, Dec. 8, Mozzaria will close, undergo a makeover and reemerge in January under the name Quattro (Italian for “four”). The contemporary Italian restaurant will be co-owned by the current and reluctant owners of Mozzaria, Pallas Partners, and Josh Hillyard, who is leaving his post at Standard Country Club to serve as executive chef.

In August, Pallas Partners severed ties with Matthew Antonovich, a talented chef whose glossy vision and blustery predictions for Mozzaria’s success included everything but honesty and financial commitment.

A press release issued that month by Pallas claimed the firm and Antonovich parted ways favorably. But anyone close to the situation knew the separation didn’t end with a chorus of Kumbaya.

In their agreement, both parties agreed to a 90-day quiet period during which neither could speak publicly about their toxic past or their optimistic futures apart from each other. With that term now ended, Matt Saltzman, CEO and managing director of Pallas Partners, spoke to Insider Louisville about why Mozzaria nearly imploded, what transpired to save it, and what to expect in the coming weeks.

Hard lesson learned

“Sometimes you learn that you’re not as smart as you think you are, as smart as you want to be in this world,” said Matt Saltzman, his soft chuckle failing to mask the obvious regret in his voice. “And this was one of those times.”

In 2011, a year after the opening of Mozz, a dramatic and celebrated modern Italian restaurant in NuLu owned by Matthew Antonovich and his partners, Dr. Mushtaque Juneja and Michael Cooper, the trio approached Pallas Partners about investing in a new restaurant to be located in the basement of Cincinnati’s soaring riverfront icon, the Great American Tower.

Back then, Saltzman was a regular at Mozz and taken with its food and service. He said he couldn’t help being impressed that Western Southern, owner of Cincy’s new sleek and silvery edifice, thought enough of Mozz and its owners to inquire about opening a restaurant in its grand, tiara-topped tower.

While that deal never materialized, Antonovich lobbied for a second option: the Fourth Street Live spot vacated by Red Star Tavern. Property manager, The Cordish Cos., not only wanted the empty space filled, it sought a local restaurant to take root and grow among the tightly planted row of chain establishments. By the time Pallas was invited to the conversation, Antonovich was already friendly with Cordish and gained tacit approval for the lease.

Again, Pallas Partners was impressed.

Matthew Antonovich

“You see all these people interested in having him involved, and so the dots are aligning … as all these smart people talking about the same person who they believe has some ability to do well,” Saltzman said.

And why not? Pallas assumed that Cordish—some of the shrewdest of real estate players anywhere—had vetted the Mozz men. So with nothing negative to say, he must be good, right?

When Pallas did its own search of local sources for any trouble tied to Mozz or its partners, the feedback was always good.

Yet unbeknownst to Pallas, criticism and industry talk about Antonovich’s management of Mozz was a well-worn subject. Numerous vendors grumbled that the restaurant was consistently late paying bills, and excessive turnover in Mozz’s kitchen was commonly blamed on Antonovich’s volatile personality.

The consistent chaos was called everything from “Louisville’s own Hell’s Kitchen” to a “daily episode of the Maury Povich Show.”

Pallas knew nothing about it.

Surprisingly, Pallas neglected to cast its due diligence net nationally, where it would have found numerous articles about problems with restaurants Antonovich mismanaged in Texas.

“Nobody’s saying anything when we’re looking around, so it seemed good,” Saltzman said. Mozz’s financials, which Pallas requested, appeared kosher, “but let’s face it, you can write those numbers any way you like.

“In business, there’s an assumption those numbers are truly reflective of where things are. But in this case, the information we got was not exactly reflecting all that it should have.”

At the outset, Pallas intended to help launch Mozzaria by providing the business a bridge loan: “We only wanted to be on board the train for a couple of stops; we didn’t want to own the train,” Saltzman said.

By June, however, it appeared no one was at the controls, and Pallas’s office began receiving calls from vendors claiming the restaurant wasn’t paying them.

The claims puzzled Saltzman, who believed the business was bringing in sufficient revenue to cover its costs. According to Saltzman, when he confronted Antonovich about the calls, the chef was indignant.

“We started asking for information, and he didn’t want to disclose it,” Saltzman said. “We had a sit down with him at a table and I basically said to him that this was not acceptable, that I wanted access to the financial reports.”

Saltzman said Antonovich informed him that as the creator and founder of Mozzaria, he alone would decide when and with whom to share the numbers.

“That was the end for me,” Saltzman said, who reminded Antonovich that having no financial stake in the business diminished his authority considerably. “Once I heard what I heard from him, we talked to our own general counsel about what to do to protect us.”

(Insider attempted to contact Antonovich for comment using his long-time personal mobile phone number, which was still active in August. It now rings the phone of a Colorado woman who said, “I can’t believe how many calls I get about this guy. It’s almost every day. … Since you’re a reporter, I hope you’re nice to the guy. It’s the holidays and all, and it sounds like he’s done some things wrong.”)

In July, Pallas sued Antonovich for using funds from Mozzaria to pay the bills at Mozz. (Vendors who spoke off the record with Insider Louisville verified their sales to Mozz were funded from Mozzaria’s account.)

Cordish called next. Seeking unpaid rent, it moved to evict the restaurant. Knowing the extent to which it was on the hook for Mozzaria’s obligations, Pallas staved off the eviction with a commitment to bring the business current on its rent. It also infused the business with cash to fulfill payroll obligations and keep it running.

The balance sheet “was very red because they owed an enormous amount of money,” Saltzman said. “I have never been able to get a true understanding of where it all went.”

In August, Pallas and Antonovich parted ways, leaving Antonovich fully focused on the failing Mozz.

By mid-September, however, Mozz was closed and Antonovich was out of business.

Today, Saltzman said Pallas has stabilized Mozzaria’s mess by getting current with Cordish and following scheduled plans to catch up with vendors.

“Some are totally paid off and caught up, and some others are still out there being worked down,” Saltzman said. “People are nearly always willing to work with you if you show them you have a plan.”

This fall, Pallas decided Mozzaria’s reputation was too damaged to extend the life of the concept. A new restaurant, dubbed Quattro, was created, it received landlord Cordish’s blessing and it’s moving forward.

The operation’s overhaul will include most everything ranging from glassware to kitchen equipment. New signage is on the way and a logo is being finalized. Patio updates, such as new lighting, are in the works, and the bar will be reconfigured to make it more a destination spot for drinkers.

The plan is to open for dinner service first, let the staff learn its new menu for about 10 days and then open for lunch.

“We’re wanting this to be a place for people who are 30-plus, people who want to go out and have a good dining experience … but nothing as formal as Vincenzo’s,” Saltzman said. “We want to turn the bar into a place that provides a nice social experience, a destination place that Louisvillians will come downtown to enjoy.”

Saltzman is excited to give Hillyard “his first real shot at his own restaurant. We’re just the financial guys behind it now,” he said. Insider sought Hillyard for comment, but didn’t hear from him by presstime.

A native New Yorker, Saltzman moved to Louisville eight years ago and said he enjoys living and doing business here. With the madness of Mozzaria largely behind them, Saltzman said Pallas is still working to ensure its firm suffers no related ill effects.

“We’ve established a good reputation here, and we want to keep it by doing good things in the town,” Saltzman said. “The chance to start with a new concept and a new chef is the right direction to be headed.”

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Steve Coomes
Steve Coomes is a restaurant veteran turned award-winning food, spirits and travel writer. In his 24-year career, he has edited and written for multiple national trade and consumer publications including Nation's Restaurant News and Southern Living. He is a feature writer for Louisville magazine, Edible Louisville & The Bluegrass and Food & Dining Magazine. The author of two books, "Country Ham: A Southern Tradition of Hogs, Salt & Smoke," and the "Home Distiller's Guide to Spirits," he also serves as a ghostwriter for multiple clients.

13 thoughts on “Cautionary tale: Investor reveals the madness behind Mozzaria meltdown

  1. I personally question as to whether we have too many restaurants crowded into a very small area – all drawing from the same customer base at lunch. I was in Mozzaria last week (unusual for me to be downtown at lunch, on a weekday) and I noted that several places were totally packed, such as Zoup, Potbelly, Smashburger, etc. We ended up at Mozzaria to be honest, because it was virtually empty and we could find a place to sit down. The food was good, the service was good, but there weren’t a dozen people in the place. Realistically, how many people can spend the time and money for a true “sit-down” lunch that is more than soup and a sandwich anyway?

  2. I personally question as to whether we have too many restaurants crowded into a very small area – all drawing from the same customer base at lunch. I was in Mozzaria last week (unusual for me to be downtown at lunch, on a weekday) and I noted that several places were totally packed, such as Zoup, Potbelly, Smashburger, etc. We ended up at Mozzaria to be honest, because it was virtually empty and we could find a place to sit down. The food was good, the service was good, but there weren’t a dozen people in the place. Realistically, how many people can spend the time and money for a true “sit-down” lunch that is more than soup and a sandwich anyway?

  3. Hmmm, I have a question speaking of meltdowns. How about the meltdown that is going on with the former Avalon property? Apparently some plans have hit a snag as not so much as the dustpan in the window has been moved. The Silver Dollar folks indicated the place would be ready to go by the end of November.

    Looks like getting 1.9 million dollars together and another $700,000 to renovate wasn’t as easy as they thought. Have to say paying that much these days for a space (good as it is) that may or may not pay dividends is very unwise with the current variety Louisville has in the dining industry. There’s more than Bardstown Road for choices in 2012 vs. 2002. Traffic is down in this neighborhood with the re-imagining of downtown and the birth of Frankfort Avenue and Springhurst as major players in the game.

    Can you get some information on what’s going on Steve?

  4. Hmmm, I have a question speaking of meltdowns. How about the meltdown that is going on with the former Avalon property? Apparently some plans have hit a snag as not so much as the dustpan in the window has been moved. The Silver Dollar folks indicated the place would be ready to go by the end of November.

    Looks like getting 1.9 million dollars together and another $700,000 to renovate wasn’t as easy as they thought. Have to say paying that much these days for a space (good as it is) that may or may not pay dividends is very unwise with the current variety Louisville has in the dining industry. There’s more than Bardstown Road for choices in 2012 vs. 2002. Traffic is down in this neighborhood with the re-imagining of downtown and the birth of Frankfort Avenue and Springhurst as major players in the game.

    Can you get some information on what’s going on Steve?

  5. I’ve talked to Larry Rice briefly about it, and he said it’s delayed until March. I didn’t ask why since nearly EVERY restaurant project faces delays. The numbers you mentioned above are not the real numbers. What those are, we don’t know yet, but we were assured, those are far too high.

  6. I’ve talked to Larry Rice briefly about it, and he said it’s delayed until March. I didn’t ask why since nearly EVERY restaurant project faces delays. The numbers you mentioned above are not the real numbers. What those are, we don’t know yet, but we were assured, those are far too high.

  7. Those numbers were posted on this very website Steve! Anyway thanks for answering my questions. You’re right about delays but I’ll believe it when I see it.

  8. Those figures come from this web site from an article by Terry Boyd. I tried to post the link to it but my reply was subsequently deleted (can’t post links I guess). Anyone who wants to read it just type “Avalon” in the search box, not hard to find. At any rate, again thanks for the answer. Delays happen but they are going to let that place sit for 4 more months? Hmmmm…

  9. Those figures come from this web site from an article by Terry Boyd. I tried to post the link to it but my reply was subsequently deleted (can’t post links I guess). Anyone who wants to read it just type “Avalon” in the search box, not hard to find. At any rate, again thanks for the answer. Delays happen but they are going to let that place sit for 4 more months? Hmmmm…

  10. Pingback: Investor reveals the madness behind Mozzaria meltdown | Food & Dining Magazine

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