Paper Table Leaves Tenants Owing Thousands With Shuttered Restaurants, Broken Dreams

Site of Paper Table, 733-737 N. Milwaukee St. Photo taken Oct. 31, 2022 by Sophie Bolich.

Throughout Paper Table‘s year-long tenure in downtown Milwaukee, more than a dozen restaurateurs have entered into contracts with the delivery-focused food hall, eager to launch and grow their business in the city and beyond. But interviews with five current and former tenants reveal that the company routinely fails to deliver on its lofty promises and often leaves business owners owing tens of thousands of dollars. The food hall’s business model, based on public licensing data and an ever-evolving tenant roster, appears to emphasize turnover versus growing small businesses.

Last week, Gregory Cilmi and Eve Savva, the owners of Temple Goddess and Adonis Burger Co., were informed that their contract would be terminated — effective immediately. In an email delivered at 7 p.m. on July 27, Paper Table demanded more than $4,000 to be paid the following day. Within 30 days, the food hall asked for $42,000 — the supposed remaining balance on their contract, though Cilmi said that the math doesn’t add up.

“Even if I were to stay throughout the rest of my contract, it would not add up to $42,000,” he said.

Unable to make the payments, Cilmi and Savva were forced to leave the food hall with just a day’s notice.

Temple Goddess and Adonis Burger Co. were the two longest-standing small businesses at Paper Table, 733 N. Milwaukee St. The owners were on a payment plan with the company and made regular contributions. The notice, they observed, was delivered just as a wave of incoming tenants were preparing to open.

The demand for thousands of dollars on short notice is one several tenants have faced.

No public court records indicate that the company has moved to sue its former tenants, but the experience has not been without consequences. One former tenant is now facing foreclosure on their home. Another is living out of their car. Others still have found success in new locations, but are weighed down by outstanding charges.

“They overpromise and underdeliver,” said one tenant who, along with others, was interviewed on the condition of anonymity, citing a fear of retaliation and a non-disclosure agreement they signed. “They overcharge and do not provide you with the services that they say they’re going to.”

After six months in operation, the tenant’s restaurant had yet to break even — a circumstance they attribute to a lack of marketing and signage, as well as technology failures. Under a new policy, operators at the food hall are prohibited from displaying signage to promote their restaurants. The social media pages for Paper Table, which are supposed to market the restaurants, have been inactive for several months.

CloudKitchens says it supports restaurant owners with technology, licensing, cleaning and other logistics. “When it comes to CloudKitchens, all you’ve got to do is cook. We’ll handle the rest,” says an introductory video on the CloudKitchens website. But that model breaks down.

Sometimes, the food hall’s restaurant management software, Otter, goes down for up to a week at a time. When the software fails, restaurants disappear from their online platforms. “We’re not allowed to sell outside of that technology,” a tenant said. “And there are multiple times during a month where that technology goes down.”

Once back online, restaurant owners must re-establish connections with third-party delivery platforms before returning to business, which can take an entire day. Operators have not received credit for the missed revenue.

“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 began working with Paper Table in November 2022. In December, Arvantis handed over an $8,000 deposit to the food hall, with plans to open her restaurant, Urban Eats Fresh, on March 15.

But Arvantis said a lack of communication from the CloudKitchens onboarding team set that back by more than a month. In April, Arvantis was again ready to open, but was blindsided by a termination notice just 72 hours before the opening.

Arvanitis speculates that Paper Table’s decision may have been tied to her outstanding payments, which jumped to $23,000 the day her termination notice was delivered. She said was under the impression that payments would be suspended until the restaurant had been open for a month.

Two additional tenants told similar stories of unexpected fees and enormous outstanding payments. One, who reports owing upwards of $25,000, said they were promised one month of onboarding services at no cost. But without explanation, management continually delayed the opening of the restaurant. When the trial expired, the tenant was informed that he owed $27,000.

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

Several tenants also raised the topic of cleanliness — or lack thereof — in the building, noting an insufficient number of garbage cans, and said that cleaning staff often no-show, leaving the floors dirty and the trash overflowing.

One tenant said the cold water faucet often runs hot, and that the kitchen equipment has been broken for months, while requests for repairs have gone unanswered.

These are all services that tenants supposedly pay for as part of the Paper Table experience. On its website, Paper Table parent company, CloudKitchens, claims to handle order pickup,  processing, courier handoff, cleaning and maintenance, safety and health inspections, delivery logistics, extraction and ventilation, on-site support staff and delivery software. The latter, said one tenant, seems to be dominating the company’s focus.

“They are a technology company investing in real estate in order to market that said technology,” the tenant said of CloudKitchens and its chosen software, Otter, suggesting that the food halls are designed as “testing grounds” rather than restaurant incubators.

In the long term, the technology could allow CloudKitchens to expand its operating margins and provide a complete solution — encompassing every step of the process from order to delivery.

Paper Table is one of 74 virtual food halls across the country that are operated by CloudKitchens. The stealth startup was 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’s reputation for stealth and questionable business practices preceded its arrival in Milwaukee. Publications across the country have shared numerous accounts of small businesses that fell victim to its auspicious promises.

Even amid the latest wave of negative reviews, new tenants continue to bring their business to Paper Table. After a brief lull, said one tenant, the kitchens are filling up again, with at least four new concepts on the way.

“I feel horrible for them,” the tenant said. “Because I’ve spoken with them all. They’re all really good people.”

Multiple representatives of CloudKitchens did not respond to a request for comment.