ST. LOUIS 鈥 The owners of popular restaurants Baileys鈥 Range and Rooster failed to pay back a $1 million loan聽to open a restaurant in Midtown 果酱视频, defaulting on the loan, according to a lawsuit filed this week.
Midwest Regional Bank聽claims that prolific restaurateurs David and Kara Bailey have not paid back a loan they took out in 2015 for Hugo's Pizzeria, on Olive Street across from 果酱视频 University, which closed years ago.聽
But David Bailey said that they're not behind on payments and the bank doesn鈥檛 have paperwork from his accountant yet.
鈥淚t鈥檚 unfortunate that the bank chose to go this route but I seriously expect this to be resolved in the coming days so it should not be an ongoing issue,鈥 he said on Wednesday.
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The Baileys head a restaurant group that has operated more than a dozen local eateries around the region, often opening in neighborhoods that other business owners shy away from.
They opened their first spot, Baileys鈥 Chocolate Bar in Lafayette Square, in聽. Two years later, brunch spot Rooster debuted downtown. The two eventually opened Bridge Tap House & Wine Bar and Baileys鈥 Range, also downtown, in 2010 and 2011, respectively, starting a parade of new eateries in the years that followed.
The Baileys opened The Fifth Wheel Catering in Lafayette Square in 2012, Midtown's Small Batch in 2013, downtown's Shift, Test Kitchen & Takeout in 2016 and South Grand's Rooster, plus two downtown event spaces, Willow and Slate, in 2016.
Then came Hugo's and southern restaurant L鈥橝cadiane in Lafayette Square, both in 2017, champagne bar Pop in Lafayette Square and Knockout BBQ in Tower Grove East, both in 2019, ghost kitchen Wing Ding Dong in 2020 and Baileys' Range in Shaw in 2022. And, last year, they opened a third Rooster location in Clayton.
About half of their projects remain operational.
Shift, Pop, L鈥橝cadiane, Hugo's, Wing Ding Dong and Knockout BBQ all closed. The downtown Baileys' Range location stopped service in 2023; Small Batch shuttered in May.
Bailey, however, said he viewed some of their concepts as pop-ups or experiments, not meant to last. The closures weren't because the businesses saw poor sales or low foot traffic, he said. The downtown location of Baileys' Range closed, for example, because they planned to move it to Shaw.
鈥淭hose were just pragmatic decisions or things that we had planned for something to be temporary,鈥 Bailey said of the closed restaurants. 鈥淚 would have you talk to any restaurateur and ask them if their business is cyclical.鈥
Trey Meyers, director of marketing and communication for the Missouri Restaurant Association, said only 60% of new restaurants make it past the five-year mark. Liquor licenses, crime plus food and labor costs can be hard to navigate. And margins are low.
鈥淲ith a 3% to 6% profit margin, there鈥檚 not much wiggle room,鈥 he said.
When restaurants begin to fail, restaurateurs try to pivot by opening another location, but that just creates more financial strain, Meyers said.
鈥淢any have the mindset, 'Oh, this location isn鈥檛 doing too hot. Let me open another,'鈥 Meyers said. 鈥淥pening up additional locations is never the answer.鈥
The trouble with the Midwest Bank loan hit the Baileys last month, when they failed to pay it off by its deadline, according to the suit.
The suit says the two borrowed $856,000 from the bank in 2015 so that the Baileys could buy 3131-3137 Olive Street, where they later opened Hugo's.
The loan grew to $1,038,000 in 2016 with a maturity date of July 23 of this year.
Hugo's opened in 2017 and closed two years later. Bailey said a potential buyer offered to acquire the building for more than the Baileys paid for, but the deal fell through. The Baileys are currently leasing the space to a tenant.
The bank alleges that both David Bailey and Kara Bailey guaranteed payment of the loan and David Bailey further secured their promise of repayment with a commercial security agreement and a deed of trust to the bank.
But聽the lawsuit says聽the Baileys failed to pay the loan by its July due date, defaulting on the agreement.
Up until July 6, the Baileys were paying interest on the loan, according to the suit.
The couple currently owes $796,786 on the loan. The lender said it notified the Baileys of their default, but the two had not made the payment.
As a result of the default, interest rose from 9.25% to 14.25% on July 24, the lawsuit says.
Midwest Regional Bank, based in Jefferson County, did not comment for this story.
Earlier this year, David Bailey was sued by his landlord for failing to pay $192,862 in rent for his Rooster location at 178 Carondelet Plaza.
And in , a Central West End building owner sued Bailey for $121,792 over unpaid rent at 4590 Laclede Avenue. The Baileys planned to open another Rooster location there, but never did.
