How a Prominent Restaurant Owner Is Bouncing Back After a Public Staff Exodus

Pure Food & Wine's Sarma Melngailis.
Pure Food & Wine’s Sarma Melngailis. Photo: Erica Michelsen

In January, the staff at Pure Food & Wine walked out of the 11-year-old raw-vegan restaurant over a labor dispute. Employees claimed that owner Sarma Melngailis hand’t paid them in weeks, and that she hadn’t been around in months. The restaurant closed soon after, but on April 10, Melngailis reopened it, with much of her original staff onboard.

So what really happened? During its 11-year run, Pure Food & Wine has frequently appeared to be a popular, bustling place, but the truth is that even seemingly successful restaurants might not necessarily make a lot of money. “People always have this perception that if I have a busy restaurant and I wrote two cookbooks, then I must have two vacation homes and a closet full of designer clothes,” Melngailis says. “That couldn’t be further from the truth. It’s the opposite, really. But people don’t know that.” Grub sat down with her to learn how things got of control, and what she’s done to save and rebuild her restaurant.

To start, can you tell me how you got off track?
There are moments when it feels like a really bad dream. It is amazing to have everything back, and it is not quite there yet, but we’re getting there. I had a pretty terrible year. Running this restaurant by myself, for mostly ten years, was not remotely sustainable for many reasons.

When the restaurant opened, we started out with a giant handicap, but people don’t know that. I was in a giant hole, and then the restaurant was in a hole, and I was always trying to find solutions over the years. At the same time, I was terrified of partnerships — opportunities where companies would come in and want to buy and grow it and put like juice bars all over the country. I used to work in private equity, so I know when that kind of funding comes into play, it is a totally different ball game. I feel so protective of this place, and I didn’t want to turn into something commercialized. My goal is to build this and grow it and have it outlast me, because I’m not ever going to do anything else.

If a restaurant is popular, why can it still struggle financially?
Restaurants run on such tight margins, and so if you are not on top of everything, then things can quickly get out of hand. You know when Joaquin Phoenix made I’m Still Here? There’s a part where he goes to meet with P. Diddy, and I think he is talking about how he wants to make a music video. P. Diddy is saying how it’s really expensive, and he gets all worked up and is like, “motherfuckin’ craft services,” and then, “lights motherfucker, lights!” I always think of that. Organic ingredients! Payroll! Garbage collection! Linens! Electricity!

At what point did it become clear to you that your problems were getting out of control? Were you surprised when your employees started picketing?
The thing is, I was out there chasing a solution. I was trying to find the big fix. It wasn’t like a day-to-day issue — it just sort of came apart. There were these tragic ironies in the timing of it all, but what happened with the staff was entirely my fault, in terms of not communicating. That was entirely fear-based. I don’t like being one of those people who says, “I promise this” unless I’m set. So I wasn’t saying what I was working on, or what I was doing, and I didn’t realize until after the fact that not communicating was the worst thing I could have done. And then, the things I had been working on started falling apart, because the restaurant closed. I had to start all over again.

I existed in a state of massive terror for a long time. But I also knew if there was a way I could fix it, I’d die trying. There is nothing else.

When you talk about chasing solutions, do you mean pursuing outside investors?
Yes. You know, people say everything happens for a reason. It makes sense that the way that I was constantly running, running, running, that everything would finally come apart, and only then I would be able to lift the burdens and bring in really nice people, and get the solution I always wanted. We have this fresh start, and all this, like, weird energy is out of here.

Have your employees come back to work?
They know that I wasn’t doing anything bad, or trying to hurt them. So those images that were on Eater of the protest, if you like pull them up, it’s like, “Oh, this person’s back, this person’s back, this person’s back, this person’s back.” The whole prep staff, juice-bar staff, and front-of-house has returned. All hugs … Although, I wanted to be like, “Really, guys?” They were making what I was trying to do a thousand times harder. You know what I mean? Like I get it, you’re angry, you’re hurt, and you want to express it, but that made it even harder.

After seeing those images, and coming back to a closed restaurant, what happened next? How did you make amends?
I gave out a whole bunch of checks right after that happened — whatever I was able to get ahold of. People criticized me for going silent on Twitter, Facebook, whatever. I was spending 100 percent of every waking moment trying to find a solution, and as quickly as possible. I was always under this, like, ticking clock of my landlord.

How much debt did you have?
That’ll be in my memoirs.

Are you writing a memoir?
Well, actually, people are always telling me that I should write a book! … Like ten years ago, when I split with my partner who I opened the restaurant with, so much craziness happened.

Are you the sole owner now, or was part of the solution bringing on a co-owner?
Part of the solution was bringing in investors, but the nice thing is they’re all people that really care about the restaurant, and people that have all been customers and want to see this place grow. It’s ideal. In my fantasy world, I always envision the ideal situation being able to have employee ownership, so that as the company grows, the guy who’s been a daytime porter for eight years could have his little piece, and then go retire. Having customers be part owners is like the next best thing.

There were a lot of options that would have not been good in the long term, a lot of fixes. I almost sold to this company in Europe, and it might have come in with a lot of resources, but it wouldn’t have been right. I’m still bringing in investors here and there, but now from this place of knowing that everything’s safe and fine

Is the plan to open more locations? What does the future look like for the company?
I mean, I always had big plans. That’s part of why I wanted the right foundation. I almost worked with some people on opening in Los Angeles last spring, and of course, I was like, “Oh sorry, I can’t do this now because I have all this stuff in New York I have to figure out.” The plan is definitely to do a lot more stuff, and ideally for me to be freed up enough to focus on growing the ecommerce business, then eventually opening locations somewhere else.

When you’re running something by yourself, there are a million things going on, and I can’t stop everything and go have a conversation about licensing in some other country, because that’s almost like a full-time job. I have no corporate staff, and when you’re in that in-between phase of growth, it’s really hard to manage. I was was stuck in that in-between phase for a really long time and had all these burdens from the past, but yet was always completely preoccupied with the day-to-day of everything. I wasted a lot of time on what seemed like magical solutions. That’s another thing about running a business alone — it’s harder to defend against that kind of a thing,

It’s nice to hear that the restaurant is stable, and that you’re in a good place. This is really one of the best outdoor spaces in the city, so it’s nice timing.
I should really sleep out here before it gets too warm. I used to do that. I lived across the street for five years, and I would bring a pillow and blankets and a comforter and a teddy bear and sleep out here. The prep cooks would show up like at 7 a.m., and I’d be asleep out here with a teddy bear.

How a Prominent Restaurant Owner Is Bouncing Back After a Public Staff Exodus