The controversial Dacha beer garden is back in headlines this week.

In a long story on Monday, Washingtonian outlined several of the company’s financial woes, which include a lawsuit for nonpayment of a restaurant supply company and accusations of wage theft from some employees. Dacha has a popular beer garden in Shaw and another sprawling Navy Yard location that opened up in May. The problems appear to be concentrated at the new location, which has a fancy indoor restaurant and a large outdoor patio that serves beer and snacks.

At the same time, the company has suspended plans for a new location on 14th Street, which were initially stalled by complaints from neighbors who objected to the potential for noise and crowding (the Shaw location was issued a huge fine and a 21-day alcohol license suspension for regularly allowing the space to overcrowd).

That’s a lot of stuff. Here’s a breakdown of what’s going on with Dacha.

So, what’s up with this lawsuit?

A restaurant supply company called TriMark Adams-Burch is suing Dacha and its two owners, Ilya Alter and Dmitri Chekaldin, for allegedly failing to pay for hundreds of thousands of dollars worth of food service equipment (like ovens, walk-in freezers, and beer taps), small ware, and flatware. Adams-Burch provides specialized equipment of this kind for restaurants, resorts, hospitals, prisons, and other establishments.

According to the lawsuit, Dacha owes Adams-Burch $277,453 in unpaid bills, which continue to accrue interest at 1.5 percent per month for lateness.

The two companies signed a contract in July, and Adams-Burch began delivering Dacha’s supply orders (which went both to the new Navy Yard location and the original location in Shaw). But Dacha’s payments for the fulfilled orders were routinely late or never came at all, according to the complaint. When Adams-Burch raised an issue with the late payments, Alter provided them with a credit card payment authorization, allowing the company to draw payment directly from a credit card bearing Alter’s name. In May, Adams-Burch charged $23,614 to that card to pay down part of Dacha’s outstanding balance. Alter accused Adams-Burch of committing fraud, had the charges reversed, and revoked the company’s permission to charge his card, the complaint states.

“It is clear, based on their acts, that each of the Defendants fraudulently misrepresented that they would pay for products and services ordered from Adams-Burch with
the express intent and purpose of securing hundreds of thousands of dollars in products and services from Adams-Burch despite having no intent on paying,” reads the lawsuit.

On Tuesday, Alter and Chekaldin released a statement responding to the various accusations against them in the Washingtonian article. This is what they had to say about the suit: “This suit includes a frivolous claim of fraud, that arises out of nothing more than a contractual dispute concerning amounts allegedly due for kitchen equipment,” the statement reads. “The supplier has overcharged Dacha for what was provided, and when Dacha simply requested support for the charges, the supplier hired a national law firm to sue Dacha and its owners for fraud. Dacha expects it will prevail on the unfounded fraud claim and will vigorously defend the underlying breach of contract action which seeks recovery of amounts not due.”

There is also currently an $83,524.90 lien on Dacha’s Navy Yard building, placed there by Consolidated Electrical Contributors for unpaid electrical work, according to Washingtonian. Alter told the outlet that the lien would be quickly resolved: “We just finished construction on this big project, and there are always some people who haven’t yet got paid, but they will. It’ll be resolved in the next couple of weeks,” he said.

And I heard something about wage theft?

The controversy centers around Dacha’s automatic gratuity system, which it instituted in Shaw last year and in Navy Yard about a month after opening, according to Washingtonian. The beer garden/restaurant adds an 18 percent gratuity charge to all checks. Some bartenders in the outdoor portion of the Navy Yard location told Washingtonian they were verbally promised a pay rate of $25 per hour plus tips on top. But when payday rolled around, they were shocked to see that they weren’t getting paid as much as they thought—the 18 percent gratuity wasn’t showing up in their checks.

One outdoor bartender told the magazine that he made $3,000 in personal gratuities on a particularly busy day, when the house was packed for a Nationals game. That $3,000 did not show up in his check. Dacha owner Alter told Washingtonian that the gratuity charge isn’t like a normal tip, and servers were never supposed to expect they would get the full 18 percent charge added to their checks.

The servers who spoke to the magazine said that policy wasn’t made clear to them. “In my opinion, they’re getting away with stealing from the workers and the guests,” one former bartender told Washingtonian. “You think the gratuities are going to the workers, and they’re not.”

Dacha’s menu states “in lieu of tips, an 18% gratuity is added to all checks.”

Here is what Dacha owners Chekaldin and Alter said in a Tuesday statement on the issue: “There are misleading quotes in the [Washingtonian] article, and some have taken these to mean that Dacha is collecting and keeping ‘tips’ for management or owners. This is not true. Our back of the house employees can attest that this auto-gratuity or ‘service charge’ is an equitable system that benefits all, even if our description of it as an automatic gratuity may have mistakenly led the public or employees to believe that this is not the case,” the statement reads. “Also, unlike the traditional tip system, this system allows our public-facing staff to earn performance related bonuses which have replaced tips in addition to at least $15 an hour rain or shine, summer or winter.”

Chekaldin tells DCist that all of the 18 percent gratuity charge goes back to staff in their paychecks, but servers and bartenders don’t receive all of it—back-of-the-house staff receive the rest. Also, the amount any individual staff member receives in gratuities is based on performance, Chekaldin says.

Chekaldin was particularly incensed by the bartender who described personally earning $3,000 in gratuities. “He processed all those orders, but he did not serve them all himself,” Chekaldin tells DCist. “There was a runner, a whole bunch of support staff that would actually service and deliver. So in this case the bartender cannot be expecting to be paid $25 an hour and expect to also receive all $3,000 he’s cashiering. What about the people who work to deliver the food?”

However, Chekaldin admits that Dacha clearly made a mistake in not properly communicating the gratuity policy to staff and customers. He said they will stop calling it a “gratuity” and instead call it a “service charge” in an attempt to make things clearer.

How about that 14th Street location?

In 2017, Dacha announced plans for a new location on 14th Street NW near the intersection with S Street. That location was quickly mired in controversy as neighbors in the area took up opposition, arguing that the new location would be too noisy and crowded. Their worries weren’t unfounded: the D.C. Alcohol Beverage Control Board had previously fined Dacha’s Shaw location $42,500 and suspended its license for 21 days because it continually allowed the outdoor space to fill up past capacity (generating lots of noise in turn). Shaw neighbors continued to complain that Dacha wasn’t keeping noise and crowding down even after the penalty was paid.

Dacha presented a new design for the 14th Street space to quell neighbors’ fears, enclosing a larger part of it indoors. The neighborhood was unmoved by the plan, according to Chekaldin, and continued to oppose the construction of the space. But the ABRA board granted them a liquor license—albeit one for a very small outdoor patio that could fit only 50 people.

The economics of building out a large indoor space with such a small patio threw the project into question, Chekaldin says. They still have possession of the lease for the space, but decided to put the project on hold pending the opening of their Navy Yard location. The Dacha owners have an agreement in place with the landlord in which he may end up leasing the space out to another tenant before the Dacha project is underway, Chekaldin says. If that happens, they may seek another spot on 14th Street, but for now, he says he and Alter largely remain focused on rolling out the Navy Yard location.

Anything else?

You’re all caught up on the Dacha drama.