Cafe owners overcoming troubled past

Hotelier and business owner Gordon Elliott wants to distance the Ziggie’s Cafe of today from the Springfield-area eatery owned and operated by Agim Zendeli.

On Jan. 20, Zendeli, a former owner and son of the Ziggie’s founder, pleaded guilty in federal court to withholding more than $1.3 million in payroll taxes owed to the IRS. He awaits a sentence that could result in five years in prison without parole, plus a $250,000 fine.

Elliott finds himself caught in the middle. Again.

“All of these other locations were subject to bad press. If they didn’t pay their taxes, if they didn’t abide by rules, then it would hurt all of the Ziggie’s,” he said.

Through Elliott Lodging Ltd., Elliott has owned the licensing rights to Ziggie’s Cafe since September 2011, when he acquired the trademark through a trustee as part of Zendeli’s bankruptcy proceedings. That move prompted name changes for a few Ziggie’s restaurants, including the renamed Springfield Family Restaurant operated by Zendeli at 2222 S. Campbell Ave.

Elliott also converted the seven-cafe brand to a licensing model.

At the time of Zendeli’s bankruptcy, there were two Ziggie’s connected to Elliott’s hotels: the Lamplighter Inn at 1722 S. Glenstone Ave. and the Best Western Coach House Inn at 2515 N. Glenstone Ave. Those stores, Ziggie’s officials say, have recorded significant sales growth under the new ownership.

“We knew the operators we had in these two were solid. So the rest, we just didn’t relicense them,” Elliott said.

Strict decisions
Elliott cut ties with four stores and closed another. The immediate motive was to keep food service available to his hotel guests, but he also wanted to revive the family restaurant brand and give owner-operators a chance to succeed under his business model.

The moves have paid dividends, and Elliott’s team since the 2011 bankruptcy situation have opened two new Ziggie’s – one on Republic Road and one in Monett – and they’re negotiating property for a fifth restaurant.

“It will probably be similar to what we did in Monett, where we purchased a restaurant and rebranded it as Ziggie’s,” said Scott Bussard, director of leasing for the Ziggie’s brand. “We are in no hurry to expand. It’s not one of our goals to just open up as many as possible. We look at each individual we license to.”

At the Lamplighter Inn, the owner-operator is a former busboy.

Jose Luis Bolanos said he’s pleased with the progress of the Lamplighter Ziggie’s since Elliott took him from cook to owner after securing licensing rights. In 2015, the restaurant generated roughly $1.4 million in revenue, nearly tripling its 2011 sales.

“We’re not getting rich with this one, but we’re trying to make a good living,” Bolanos said.

With that track record, Bolanos invested about $100,000 in restaurant renovations to open Ziggie’s Monett in August.

Daniel Hernandez owns the North Glenstone restaurant, and Jose Luis Pedron, a local rental property owner, owns the 2127 W. Republic Road cafe, Bussard said. Hernandez ran the Ziggie’s inside Price Cutter on South National Avenue before the licensing change, and he was charged with turning around the struggling Best Western cafe.

At the time, annual sales were around $370,000. Last year, they exceeded $800,000, Bussard said.

Cleanup jobs
The new operators are working to clean up a decade of fraudulent management.

Zendeli since 1998 had built the Ziggie’s name to stretch from Springfield to Republic, Willard, Marshfield, Nevada, West Plains, Rolla, Carthage and Poplar Bluff, as well as Fort Scott and Pittsburg, Kan.

But from March 2004 through December 2014, Zendeli opened and closed 18 companies used to operate the Ziggie’s chain, according to the office of Tammy Dickinson, U.S. attorney for the Western District of Missouri. Once a company accumulated a large sum of debt with the IRS, he would shutter it and open a new entity, often in the name of a family member, partner or employee; however, he continued to maintain custody and control of the chain, according to the U.S. attorney.

For each of the companies, the IRS found he withheld federal income taxes and Social Security and Medicare taxes from his employees’ pay without their knowledge.

According to an employee at Springfield Family Restaurant, Zendeli no longer works at the South Campbell establishment and is working at the Springfield Ave Cafe in Bolivar. Zendeli declined to comment for this article through Joy Gaston, office manager of Springfield Ave Cafe.

According to investigators, Zendeli used the money to gamble and purchase vacations and vehicles, including three BMWs, two Cadillac Escalades, two Infiniti QX56s, a 2009 Mercedes, a 2008 Acura and a 2004 Land Rover. Under the terms of his guilty plea, Zendeli must pay restitution of $1.33 million, plus interest, to the federal government.

Dickinson’s office said Zendeli also attempted to avoid paying $654,260 in past due state and federal employment taxes by filing bankruptcy in March 2010. Prior to filing, Zendeli transferred the Ziggie’s name to his father, a move later determined as a fraudulent transfer of assets.

Don Ledford, public affairs officer for the U.S. Attorney’s Office in the Western District of Missouri, said a sentencing hearing date had not been set as of press time.

For Elliott, the restaurant reversal comes down to closely monitoring quality and implementing best practices.

“The former owner of it had the attitude that he was taking all he could out of it,” Elliott said. “Our attitude would be that the licensees have to make money. If they make money, and treat their employees right, then the business will do good for them and also look good on us.”

Under the current model, owner-operators pay a licensing fee of 3 percent of sales, which is half of what Zendeli charged.

“Instead of dictating price, we dictate quality on our end,” Bussard said. “We’ll go through and do quality audits and things like that instead of a traditional franchise that would say, ‘This is your price. These are your products.’”

As important, Elliott said the new approach has succeeded in separating from Zendeli but remaining true to the featured breakfast products.

“What we’ve got with Ziggie’s today has nothing to do with him,” he said.