Dick McLaughlin: ‘We wanted to retire, but not this way’

Bankruptcy ends Lobster Pound Restaurant’s 90 years in business at Lincolnville Beach

Tue, 12/13/2016 - 12:30pm

    LINCOLNVILLE — Closing night for the season on Oct. 22 at Lincolnville's beach-side Lobster Pound Restaurant and Andy's Brew Pub should have been a night to bid adieu for the winter and make plans to return again in the spring to prepare for the summer tourist season. Instead, 10 days later, three of restaurant owner Richard "Dick" McLaughlin's investors - Andy and Ben Hazen, and Jim Tyler - were removing all of the equipment they had purchased to run the pub, ahead of First National Bank calling the note on the building.

    One month later, on Nov. 22, McLaughlin and his wife, Patricia, filed a Petition for Individual Chapter 7 bankruptcy in U.S. District Court in Bangor. They also filed a bankruptcy petition for their business, Lobster Pound Restaurant Inc.

    "I am 74 and Patty is 73," said McLaughlin, sitting at a small table with his wife in the couple's kitchen on McKay Road in Lincolnville. "We wanted to retire, but not this way. It should have worked, but it didn't."

    What "should have worked" is the addition of Andy's Brew Pub to the restaurant in 2014, along with cash to make that happen, in the way of seven new investor/directors. McLaughlin said that in addition to brewing beer to serve at the restaurant and pub, the plan also included brewing beer for wholesale and retail sale. And the addition of the pub would bring more patrons, and hopefully give it viability to stay open year-round as well.

    The influx of new revenue sources was needed, McLaughlin said, because of the restaurant's continuing high cost for sewer service. He cited the loss of 26 parking spaces, following the state's reconfiguration of the beach lot in the early- to mid-2000s, for causing continued loss of customers over the years.

    "People would drive up and see the lot was full, and drive on to somewhere else," said McLaughlin.

    The investors in the renovation and brew pub, with the McLaughlins, included the Hazens of Lincolnville, Tyler of Searsmont, Sean Duffelmeyer of Northport, Joe McLaughlin of Lincolnville, Richard Sproul of Swanville and David Perkins. Their individual investments ranged from $100,000 - invested by Andy Hazen - to smaller amounts by the others.

    "We were supposed to raise a total of about $350,000 for this project, but we ended up raising just $160,000," said McLaughlin.

    The money was to be used to enhance the Lobster Pound and get Andy's Brew Pub put together. Tyler, a woodworker, invested time and labor into handcrafting the bar top out of slabs of rough-edged logs, which were also used as the back-splash on the walls for a dozen keg taps. They set up seating in the pub area, where they occasionally hosted live music, and created a pub menu, with pub prices.

    “Jim Tyler did a beautiful job in there,” said Patty McLaughlin.

    Dick McLaughlin said that everything they raised went into the renovation project, with nothing going back to the directors, during what ended up being just three tourist-seasons before they closed for good, it turns out, this fall.

    As the McLaughlins see it, they gave up a lot in bringing in the pub. Their gift shop was cut by two-thirds to accommodate the pub, they gave up $80,000-$90,000 in take-out revenue and with the reorganization to include the pub, the brewery never generated the $50,000-$60,000 it was "supposed to."

    "We generated nothing," said Dick McLaughlin. "And as our loan with Finance Authority of Maine started to be jeopardized, I decided to try and stay open one more year. I took the opportunity to take money out on all my credit cards to survive and in hindsight, that was a downfall, because we should have filed for bankruptcy the year before instead of waiting another year. And under this whole situation, the brewery was a bad move."

    According to the documents filed in court in Bangor, the McLaughlins list $447,355 in total assets and $1,566,739 in total liabilities. Of their liabilities, $316,011 is for a mortgage on the couple's home on McKay Road. The other assets subject to claims are a 1978 34-foot Mainship Trawler and a 2004 Honda Odyssey with 144,000 miles on it. The balance, $1,250,728, is owed to creditors with unsecured claims, such as credit cards, lines of credit, a mortgage taken out for a home on Lily Lane and personal loans, according to the court documents.

    The Lobster Pound Restaurant is listed as having total assets of $990,190 and total liabilities of $1,072,593. The creditors with claims secured by property include Finance Authority of Maine ($52,984), First National Bank ($822,138 mortgage) and Machias Savings Bank ($16,692 mortgage). The remaining $180,799 is comprised of amounts owed to 30 creditors with unsecured claims, according to the documents.

    "We also didn't generate a lot of bar business like you did down in Camden, because everybody had to get in their car and drive seven miles back home. People don't want to sit down in a bar and drink for an hour and half or two hours and then get in the car and drive home to Belfast," said McLaughlin. "We had a lot of people come over from Islesboro, but all they had to do was get on the boat."

    They also said that the media, namely local magazines, failed to give Andy's Brew Pub the write-ups they should have, with Patty saying that, "Camden wants people to stay in Camden, and that's been the focus forever."

    Dick McLaughlin said he doesn't lay all the blame on Andy's Brew Pub, adding that for a short while it was good and things were working.

    "They helped us stay open another year," said McLaughlin. "The Bangor Daily News in their story said 'Even Andy's couldn't save the Lobster Pound,' and that was a bad quote. I don't believe it and it's not right."

    Early in January 2014, the plan to open Andy's Brew Pub in the restaurant began to gel, with a goal to open that spring. McLaughlin said the partnership with Hazen, of Andrews Brewing, also in Lincolnville, on High Street, came about by happenstance. He said he and his son were talking to Hazen, and then one thing led to another, and they all agreed there ought to be a brewpub at the Lobster Pound, an institution alongside Lincolnville Beach since the early 1920s.

    The Lobster Pound came into the McLaughlin family in 1956, when Barney and Ruth McLaughlin bought it from Inga Chase. In the 1970s, an addition increased the seating capacity from 60 to 120, and in 1973, siblings Richard and Lynn McLaughlin bought the corporation from their parents.

    Six years later, a flood that severely damaged the original gift shop at the back of the building prompted rebuilding and another addition, increasing seating capacity this time to 260. In 1980, a fire again destroyed the back of the building, and it was rebuilt to its present proportions.

    First publicly discussed in January 2014, Andy's Brew Pub in the Lobster Pound Restaurant held a soft opening on May 1, 2014. The Pub was open all summer along with the restaurant, and then both closed in the fall of 2014, despite talk of remaining open at least 10 months, if not all 12. Andy's Pub and the Lobster Pound reopened April 15, 2015, then both again closed in the fall of 2015, before reopening May 1, 2016.

    "Last year, we talked about staying open, but the economy was down for us and it didn't look like we could do it after September and October came around. We didn't dare stay open for any longer than we did, so we closed until this spring [2016]," said McLaughlin. "And we had a good year that year, it was a year we did more money than we had in the previous three years."

    This year, McLaughlin said they started production of beer and had opportunities to "do all the wholesale beer we could make." But that never materialized.

    Hazen said that while he made plenty of beer, and could have made more, he wasn't seeing any payment for what he was, or had brewed, so stopped making more.

    "I didn't brew for about five weeks last June," said Andy Hazen. "I filled all my tanks up full, and once my tanks are full, what am I going to do? If there isn't a place for it to go, it just sits there and ferments and it's no good in there."

    Hazen said he has an $86,000 note with the bank for the new brewing equipment he bought for down at the pub. He said he is working with F.A.M.E. to clear the $53,000 owed on that loan, which would also pull that debt off McLaughlin's balance sheet, and then Hazen said he hopes to sell the equipment to satisfy the debt.

    With that equipment, Hazen said he brewed beer six or eight times this year, and did not get paid for the work, or the product. He said somebody finally realized the beer man wasn't coming back until they paid him, and that's when he finally saw money for his product.

    "My pay was $250 for a batch of beer, and that's for 10 days worth of work, so you figure that one out. That is 10-hour, 12-hour brew days, and then it is basically watching the beer until it's ready, moving the beer, cleaning out the tanks, it is a lot of effort, and I wasn't getting paid," said Hazen. "Every time I filled up a tank down there, I personally wrote down what we made each year there. We made and sold more than $75,000 worth of beer the three years we were there and that would have been enough to pay off my equipment three times over. But I never got a dime, or even a penny, from those sales."

    Hazen admits he made mistakes on the pub side, which was a separate business from the restaurant in terms of liability, and one of them had to do with the idea of selling beer wholesale.

    For another, he said he didn't push McLaughlin when it came to things like getting paid for the beer he was brewing, for the work he was doing.

    "Why? I just don't think the money was there," said Hazen. "I didn't push it, because I wanted the corporation to do well, but we could not have saved the place down there, because he was chasing people away, chasing both the customers and the staff away."

    "Also, Dick wanted me to keg beer, but nobody wanted to buy it. Where was the market? Nobody offered to buy them, and nobody offered to help fill and deliver them if even they were sold. I'm 72 years old, and I'm not going to go lifting kegs around myself," said Hazen.

    Now that Andy’s Brew Pub is closed, and the equipment has been moved out, Ben Hazen finds the whole experience a bummer.

    “Our investment shares are all gone. The equipment is still ours, but we are going to lose some beers that people really liked, as they were the ones we brewed there, not on High Street,” said Ben Hazen. “If somebody wanted to buy the stuff and set it up somewhere else, I would gladly brew their beer for them. But I don’t think I want to get involved in a pub again, in fact, I know I don’t, not now.”

    Before he filed for bankruptcy, McLaughlin said he went to the bank, which had been allowing him to pay the interest only his mortgage, and asked them to participate in helping him out. In surviving. He said they had allowed him to pay interest-only for three or four years, and now they needed to start getting the principal paid down.

    "I questioned them about it, because I felt like they weren't losing any money. But they explained that they had to put money in reserves, in case something happens, like it has," said McLaughlin. "So they weren't willing to let us reorganize, and they sent us to a consulting company in Auburn and they went through all of our records, did projections, everything and gave us three options. Chapter 11, which would cost us $80,000 up front or Chapter 13, which costs about $12,000. And the projections did not show we could make it, so in the end, the only option was to go with Chapter 7."

    He said that the consulting company determined that the high sewer payments, the loss of parking, the increasing cost of flood insurance, and the debt they had accumulated, a lot now on credit cards, all combined to paint a bleak picture. So bleak, in fact, that bankruptcy was their only option.

    Last summer, the Lobster Pound employed 48 people. This past summer, the number was 36, with 16 or 17 during the off season. He said he paid his cooks as much as anybody, and that many of his wait staff made more money that he did last summer.

    "We kept going through the whole summer this year because we didn't want our help to lose their income," said Patty McLaughlin. "We didn't want to shut down, because of them."

    Dick McLaughlin said he wants to make sure it gets out that they are very pleased with everybody who supported them over the years. He said once news started getting out that they were closed for good, they received notes on social media about fond memories of dining at the Lobster Pound year after year.

    "Even the man who came from the bank to change the locks, he said his wife was really upset, so I told him to take a memento and he took her an apron," said Patty.

    Over the years, the Lobster Pound has been the go-to spot for groups like the Oldtimers, the Knox County Retired Teacher's Association, the Maine Republican Women's Group, Our Lady of Good Hope and other church groups.

    They are all groups, and individuals, the McLaughlins said they want to write personal notes to, thanking them for their business and loyalty over the years.

    "We want people to know we have enjoyed having them come and serving them," said Patty. "The banquets, the individual reservations, people who had special places that they liked to sit when they came. Different requests too. We enjoyed them all."

    About their employees, Dick said with a laugh, "Would like to thank all our loyal employees over the years, and forgive the ones who weren't loyal, they know who they are."

    Reach Editorial Director Holly S. Edwards at hollyedwards@penbaypilot.com and 207-706-6655.