Sophie Bolich

Paper Table Delivered Meals, Not Results, Former Tenants Charge

Much turnover in food hall's first year, with tenants complaining about its leadership.

By - Jul 26th, 2023 12:30 pm
Paper Table sign. Photo taken Dec. 30, 2022 by Sophie Bolich.

Paper Table sign. Photo taken Dec. 30, 2022 by Sophie Bolich.

When Paper Table began work on its downtown Milwaukee location in 2021, the so-called virtual food hall arrived with plentiful promises.

Residents would get more than a dozen new restaurants to try, while aspiring restaurateurs would get the chance to try out their business with reduced overhead costs and support from knowledgeable mentors.

The food hall officially opened its doors in August of 2022 with one vendor, Blac Bistro. Since then, more than a dozen concepts, five run by one tenant, have come and gone — with most lasting no more than three months. After just under a year in business, the food hall’s turnover rate is more than 70%.

Several more secured food dealers licenses but parted ways with the food hall before opening.

Now, in the lead-up to Paper Table’s first anniversary, several former tenants say they feel that they were misled by corporate leadership who did not deliver on key commitments. Citing fear of retaliation, and a non-disclosure agreement they signed, most would only comment anonymously.

“They promise you a whole lot,” said one former tenant, who operated at the food hall for approximately six months. “It seems like they’re just targeting young minorities with a dollar and a dream who don’t really know what the future holds.”

Paper Table is one of 74 virtual food halls across the country that are operated by CloudKitchens, a stealth startup founded in 2016 by Diego Berdakin and Sky Dayton. It’s now under the leader of Travis Kalanick, founder and former CEO of Uber.

The company, which rents kitchen space to restaurants for delivery only, describes itself as a more affordable option than a brick-and-mortar buildout, telling business owners they can get started “with as little as $30,000” and “open a new kitchen in four weeks.”

CloudKitchens says it supports restaurant owners with technology, licensing, cleaning and other logistics. In simpler terms, “when it comes to CloudKitchens, all you’ve got to do is cook. We’ll handle the rest,” said an introductory video on the CloudKitchens website.

But four former tenants said that was not the case at Paper Table.

“They’re supposed to provide all the services for you — get you on all the delivery platforms and advertise — and they basically don’t do any of that,” said Yvonne Arvanitis, who was just days away from opening her restaurant, Urban Eats Fresh, when leadership at the food hall told her she could not continue.

Arvanitis said she tried again and again to remedy the situation, but rarely received responses from the CloudKitchens onboarding team, a group assigned to help her navigate the licensing process and other essential tasks.

“There were times when I got no communication,” she said, adding that she was left to fend for herself through the licensing process. “It’s hard when you have a whole party dropping the ball.”

Arvanitis began working with Paper Table in November 2022 and handed over an $8,000 deposit to the food hall in December. She originally planned to open on March 15, her birthday, but said the onboarding team never informed her that she needed to pick up her license at City Hall. The mix-up set the restaurant’s timeline back by more than a month.

“I had people telling me to my face, ‘don’t worry about this, this is all we need from you, we’ll take care of everything else,'” she said. All the while, Arvanitis says, she was missing deadlines that the team failed to share with her. In April, just a few days before her updated opening date, she received a termination notice from Paper Table.

The termination left her blindsided, she said, and with plenty of questions — all of which have gone unanswered.

Arvanitis speculates that Paper Table’s decision may have been tied to her outstanding payments, which totaled $23,000 at the time of the termination, though she was under the impression that payments would be suspended until the restaurant had been open for a month.

“In the contract, it says we must be open 30 days before you get any money from us,” she said. “That’s all part of the deal and the process that I went through with them.”

Two other tenants said they were asked to sign a nondisclosure agreement before beginning the onboarding process. At least one former tenant told Urban Milwaukee she was prohibited from speaking to the media until the company gave her the go-ahead.

An additional two tenants report owing upwards of $25,000 to the food hall. Both said the charges came as a surprise. One tenant, who “bowed out” of the food hall before opening, said he was promised one month of onboarding services at no cost. But without explanation, he says, the management continually delayed the opening of his restaurant. When the trial expired, Paper Table informed him that he owed $27,000.

Another former tenant owes $20,000 in back rent. He postulates that Paper Table leadership allowed the bills to pile up “because they knew they weren’t doing their part.”

Once his restaurants began to gain momentum and generate profit, the company “immediately got aggressive for the payment,” he said. The issue came to a head when Paper Table locked the tenant out of his kitchen and demanded 40% of the money. He didn’t have it.

“So it wasn’t even a decision. I was kind of forced out of there, unfortunately,” he said.

The same tenant also reported logistical issues at the food hall, which is designed to support up to 18 commercial kitchens. In particular, he said, there was not enough garbage cans relative to the number of occupants in the building.

“To me, it feels like they like to keep a revolving door,” he said. “Once they get your deposit, you’re on your own — good luck. They’re turning most people over within the three months.”

Milwaukee’s food hall isn’t the only CloudKitchens location facing backlash. Within the past year, numerous tenants from food halls throughout the country have come forward with similar stories.

In December 2021, Zena Powell of New Jersey filed a lawsuit against CloudKitchens parent company, City Storage Systems, and Otter, an online restaurant management platform. She claimed the companies engaged in deceptive business practices and is seeking $200,000 in damages.

According to online court records, Milwaukee’s food hall has yet to take any of its previous tenants to court, though most say they have no plans to pay their outstanding charges.

The downtown food hall is currently home to Adonis BurgerCorin’s CrabSpice N Rice, Temple Goddess and Wingstop. The latter, a national chain restaurant, is the longest-standing concept in the space. At least four additional restaurants are slated to join the lineup in the coming months.

A representative of CloudKitchens did not respond to a request for comment by the time of publication.

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Categories: Food & Drink

2 thoughts on “Paper Table Delivered Meals, Not Results, Former Tenants Charge”

  1. mkeumkenews09 says:

    Why would anyone do business with one of the worst, richest humans on the planet, i.e. Travis Kalanick. (He has been behind this company from the beginning, but hid that so people would not avoid the business.)

    And quite literally, this is a nice story on the man:

  2. Keith Prochnow says:

    As far as I can tell, no one at all gets food here. I found the concept interesting when I first read about it here on UM, and have asked around my circle and family since the place opened and not once has anyone responded that the even knew about the place, let alone had food from a vendor there. If they fold their tents, I don’t think anyone would notice, including me. I’m astonished.

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