What’s going on with Secret Sandwich Society?

A licensing dispute that involves the alleged use of an “unauthorized bun” is threatening to shutter one of Richmond’s popular sandwich shops.

Over Valentine’s Day weekend, two eyebrow-raising posts appeared on the Instagram account of Secret Sandwich Society, a restaurant at 501 East Grace Street that has been serving high-end sandwiches and cocktails to Richmonders since 2016. 

“We wish to inform our valued customers and the surrounding community that, as the brand founders and owners, we have recently terminated the license for the Richmond Secret Sandwich Society location, and demanded that they cease operating as a SSS branded restaurant as a result of that license termination,” read the first. “They have thus far refused to comply with that demand.” 

Despite the beef, the Richmond restaurant remains unquestionably open. Over the weekend, lines were out the door for Saturday brunch, and on Tuesday when a reporter from The Richmonder stopped by, a pair of men were having a peaceful afternoon lunch. 

On the record, no one is talking. A manager at the East Grace Street location said he had no comment when asked about the situation. So did Gibson Wright, an attorney with McCandlish Holton who is representing David and Tashia Bailey, the original owners of Secret Sandwich Society who still own the brand and license its use to restaurateurs in Richmond and Fayetteville, West Virginia. 

But court documents reveal many of the details in an acrimonious, months-long disagreement between the Baileys and Michael and Nicole Sloane, the couple who in August 2022 bought a 70% interest in the Richmond location through TLT Group, a limited liability company they control. 

“As we both know, TLT has not operated the Richmond Secret Sandwich Society (‘SSS’) store in a way that has us feeling confident about its financial continuity and success,” wrote David Bailey to Michael Sloane in a June 5, 2024 certified letter. 

The Richmond attorney for the Sloanes did not immediately respond to an email and a call from The Richmonder Tuesday.  

Since June, the Baileys have filed two separate suits against the Sloanes. In the most recent, filed Feb. 13, they asked the Richmond Circuit Court to halt the operations of the Richmond location, saying the Sloanes violated their licensing agreement by using the wrong buns for burgers, failing to pay required royalties and cutting off the Baileys’ access to weekly sales data used to calculate the royalties.

Earlier court documents reveal the buns in question were Martin’s brand buns, which the Baileys said are “not approved as part of the SSS Concept, as set forth” in the licensing agreement.

“The Richmond store should immediately return to using the approved split top buns from USFoods … for all burger offerings except the vegan buns from PFG for the vegan burger offering,” wrote David Bailey in a Nov. 15, 2024 certified letter to Michael Sloane. 

According to the other allegations in the February suit, the Sloanes on Nov. 21 cut off the Baileys’ access to the Toast financial platform that is used to track weekly sales, information that is used to determine the royalties owed to the Baileys for use of the Secret Sandwich Society brand. Nor, the lawsuit says, have the Sloanes paid any required royalties to the Baileys since April 21. 

Graze, LLC — the company the Baileys set up for the Secret Sandwich Society brand — “has lawfully terminated” the license the Sloanes hold through a separate company called Society Hospitality, LLC to operate the Richmond location, the lawsuit said. However, it continues, Society Hospitality under the Sloanes “continues to unlawfully operate the restaurant in direct contravention of cease-and-desist letters Graze has sent.” 

The February legal action is the latest expression of disapproval from the Baileys, who filed their first suit against the Sloanes in July. 

In that case, which remains unresolved, the Baileys sought to force the Sloanes to immediately pay the remainder of a $412,000 promissory note associated with the August 2022 sale of the Richmond location. 

While the original note called for monthly payments toward the sale price, the Baileys argued that various alleged failures by the Sloanes in their operation of the Richmond restaurant allowed them to speed up the repayment schedule under the terms of the agreement. 

Specifically, they charged that the Sloanes had failed to pay late fees for delayed monthly payments, owed the city over $50,000 in back taxes and fees, weren’t making required payments to investors even though “the Richmond store has enjoyed sufficient profitability” and weren’t paying Tashia Bailey a contractually required $400 per month auto allowance. 

In addition, they said the Sloanes had violated their agreement because their LLC, TLT Group, had not maintained its limited liability company registration with the state of Tennessee — a charge the Sloanes dispute in their own filings, where they claim their LLC was reinstated just over two weeks after its registration lapsed. 

“My clients are current on the Promissory Note payment schedule and tell us they are in the process of complying with Tennessee corporate requirements for TLT Group, LLC, and are complying with and have paid all vendor and administrative costs,” wrote an attorney for the Sloanes in an Aug. 14 letter where they also claimed to have overpaid previous royalties. “There is no basis for any declaration of default under the Promissory Note.” 

In court records, both parties appear open to a settlement, with two proposals floated by the Baileys over the course of the summer and fall. But delays in communication and further legal proceedings seem to have stymied any resolution. 

In December, the Baileys asked the court to appoint a receiver for the Richmond location or require the Sloanes to deposit their profits into an escrow account, saying the situation had become “much more dire.” In addition to not making their October and November monthly payments, the Baileys alleged the Sloanes were racking up fees for not funding their employee tip account, were using the wrong burger buns, had cut off their access to financial records and had withdrawn $325,000 from the restaurant. 

As the cases wind through the courts, the Richmond location has been removed from the Secret Sandwich Society website. 

“The situation with Richmond has nothing to do with the Fayetteville store, or the owner of that store,” wrote the Baileys on the brand’s Instagram account last week. “The founders continue to operate and own the brand, and they are in litigation with the RVA operator involving contractual breaches.”