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. Last Updated: 07/27/2016

Doug and His Steakhouse Facing the Chop

For MTSteele at Doug's Steakhouse in February. The restaurant closed this week.
Very few expats can remember a time when Moscow was without a bar or restaurant run by Doug Steele, the founder of the Moosehead, Chesterfield's and, of course, the pinnacle of 1990s debauchery, the Hungry Duck.

But that looks likely to happen after Steele's two restaurants, Doug's Steakhouse and La Hacienda, abruptly closed their doors this week amid an ownership shakeup. Steele's sports bar, Bleachers, remains open but is operating under new management.

While the three establishments could easily get lost among the city's hundreds of glitzy bars and restaurants, they and the other places that Steele has opened, closed or sold off since 1994 have left an indelible mark on the expatriate community. Expat web sites are buzzing with speculation this week that Steele was being forced out -- perhaps, as one anonymous chat room user put it, by Russian mafia.

What went wrong, however, is a simple story of mismanagement.

"We were underfinanced and undermanaged -- that's it in a nutshell," Steele said. "That's why we had to go after more investment. That's what's led to all this."

Under a deal agreed to late Wednesday, Doug's Steakhouse will be bought by German investment banker Wolfgang Zulauf, while a consortium of 12 expat investors will run La Hacienda and Bleachers, representatives of both sides said.

"Essentially we are dividing the business between two investor groups," said Charles Borden, a representative for the expat consortium.

"They go to the left, and I go to the right," Zulauf said.

Zulauf said Doug's Steakhouse would reopen Monday but then be shut down for good in the near future because the building it is in will be turned into an entertainment complex.

La Hacienda is to reopen under new management in about 10 days, after some renovations.

Bleachers may be shut down and relocated when its lease expires in a few months, Borden said.

The restaurants were closed down without warning after a tentative investment deal collapsed last Friday. That deal would have seen Zulauf and the expat consortium as co-owners of the three establishments.

The investment was needed after mismanagement left employees complaining about delayed salaries and the places falling into disrepair.

"I think it's fair to say that there was mismanagement. If not at the individual restaurants, then on the corporate level of the business," Borden said.

Tim Freeman, who quit as executive chef at Doug's Steakhouse last month, said that during his nine months with the company, he had never been paid on time, went for up to four months without pay and that he was now owed $18,000.

"It was the worst nine months of my life. Nine months of being broke in one of the biggest cities in the world," Freeman said by telephone from Portugal. "There are other employees who are in a far worse situation than I am."

He accused restaurant management of other wrongdoing.

Steele, originally from Nova Scotia, denied acting illegally and said Freeman's statements were motivated by personal animosity.

Asked about accusations that staff were mistreated, Steele put the problems down to the lack of proper financing.

Two months ago, Steele said in an upbeat interview about his restaurants that he paid special attention to the needs of foreign employees working at his establishments. To keep foreigners from being disillusioned by a city that can "eat you up and spit you out," he said, a restaurateur had to take new foreign staff under a wing as they adjusted to life here.

He also warned up-and-coming restaurateurs to keep a sharp eye on customer service. "We call this Doug's Steakhouse for a reason, so people know it's not Vladislav's joint," he said. "That's the most difficult thing, that Western service level. The country still, from the point of view of the restaurant business, is only 13 or 14 years old."

Borden moved to quash speculation that Steele or any of the investors was being squeezed out. "What's not correct is that it's some sort of Russian mafia buyout pressure deal. That's not the case," he said.

Steele said his role in the establishments he founded was to be decided at a meeting of the expat shareholders Thursday evening.

"Truthfully, I'd still like to have control of all the restaurants," Steele said.

Borden said he could see Steele staying involved with Bleachers in some capacity.

"Doug is an excellent promoter and marketer, but that does not mean that he is a financier or an operations person. That was where the failure was," Borden said.

Steele opened his first bar, the Moosehead, with several Canadian and Chechen investors in 1994. The bar was sold to the Chechens amid a dispute.

Steele made national headlines with his best-known venture, the Hungry Duck, which started as a restaurant but evolved into a venue synonymous with debauchery in 1996 and 1997.

The elderly landlady raised a fuss when she learned what was going on in her building, and the police got involved.

The last straw came when Communists in the State Duma heard that the Soviet national anthem was being sung by scantily clad Muscovites between double vodka shots.

"I'm sure we're the only bar ever to have some presence in a Duma debate," Steele said in February.