Fin & Fork founders suing new owners for breach of contract, 'poor management'

The founders of downtown Pensacola seafood and steak restaurant Fin & Fork are suing the businesses' prospective new owners for an alleged breach of contract.

Matt Shipp and his wife, Regina, were the long-time owners and operators of Fin & Fork before they made the decision to sell their company to K&O Patriots LLC – which includes John Mendoza as the manager, and his son, Christian Mendoza – in October 2022 under a lease-to-own model.

However, the Shipps allege the Mendozas stopped making payments a few months into the $216,000 restaurant sale. Additionally, the Shipps claim they saw "a tremendous loss of revenue, goodwill and value” of the restaurant because of the Mendozas’ “poor management during their tenure of operation and ownership,” per the lawsuit.

The Mendozas could not be reached for comment. Court records indicate they have not yet filed a response to the complaint or designated an attorney to represent them in the lawsuit.

How did the business arrangement go wrong?

The restaurant first opened in Orange Beach, Alabama, and Matt Shipp doubled as the restaurant’s owner and head chef.

Fin & Fork moved into downtown Pensacola in 2020.

Shipp had a working relationship with Christian Mendoza that started back at his other restaurant, Shipp’s Harbour Grill, in Orange Beach, Alabama, a decade ago. Shipp said he hired Christian, who worked his way up from prep cook to head chef.

The Shipps made the decision last year to sell to the Mendozas with the agreement they operate the restaurant, make monthly payments to the Shipps that counted toward owning the company, as well as make rent payments to the property’s landlord, Murray Wadsworth Jr., according to the lawsuit.

Problems began almost immediately, Shipp told the News Journal.

“They only ran it for five months, from November through March. During that time, they basically didn’t do due diligence to run an operation of a restaurant. They didn’t follow protocol with regards to how the restaurant supply and how to deal with customer service,” Matt Shipp said. “I taught him all my recipes, I taught him my skill set of how to prepare, properly order and do all the aspects of operations. But I guess when he went on his own – I don’t know.”

When the ownership change happened, the quality of the restaurant went down by 50% compared to where they were the year before, Shipp alleges, noting the difference was noticeable for customers.

Shipp said payments stopped coming in around April. The Shipps say they have been fronting the costs and the rent since.

After purportedly spending a month trying to meet to work out a payment plan with the Mendozas to catch up on missed payments, the Shipps felt they were out of options but to pursue legal action.

“They refused to discuss or negotiate, so we filed a lawsuit,” Shipp said.

How much are the Fin & Fork founders suing for?

The Shipps lawsuit, filed on Sept. 29, seeks damages in excess of $50,000, exclusive of attorney fees and court costs.

According to the asset purchase agreement, the Shipps own the restaurant and all the equipment inside, such as furniture, equipment and supplies, but don’t own the land that the restaurant sits on. The Shipps entered a lease with Wadsworth on May 1, 2020.

Per the Asset Purchase Agreement, K&O and John Mendoza agreed to purchase the non-real estate assets for $216,577, which the Mendozas would be paying in equal monthly installments with 4% interest over the course of 71 months. The first installment was due Dec. 1, 2022.

When the payments from the Mendozas allegedly ended, the Shipps were still obligated to pay rent for the property under the lease, which they have done since April 2023. They have not been reimbursed by the Mendozas and have suffered damages by satisfying their unpaid dues, the lawsuit claims.

Moving in: Fin & Fork bringing its seafood, steak and Sunday brunch to Pensacola from Orange Beach

The Mendozas eventually “surrendered possession” of the restaurant and its assets, when the Shipps took back the restaurant “in an effort to mitigate their damages,” according to the lawsuit.

“I’m not going to walk away from our landlord, so we had to, in order to mitigate those damages, step back in and take back over and we’re trying to bring the business back to where it was prior to them taking over,” Matt Shipp said.

What is the future of Fin & Fork?

Shipp said he is looking to restore the reputation that he brought to Pensacola with Fin & Fork.

He added he is starting to see regulars return, he is in good standing with the landlord, and the restaurant’s location in Pensacola is secure. Now that Shipp is back in the business, he is looking into a second location in Alabama.

“We’re fully back into it. We are building our brand back. We’re committed to the restaurant,” Matt Shipp said.

This article originally appeared on Pensacola News Journal: Pensacola restaurant Fin & Fork subject of Escambia legal battle