Black Dog Cafe Will Be Closing for Winter; Move Comes After Summer of Expansion

Capping off a year of intense expansion and its first foray into the mainland marketplace, the Black Dog Tavern, Inc. is now trimming back one of its three Island food outlets - shutting down the cafe on State road in Vineyard Haven for the off-season.

The decision to close the cafe and lay off more than a dozen employees comes after a year that saw the Black Dog - one of the Island's largest private employers - shift much of its focus away from food and onto four new storefronts, including a new retail presence off-Island.

"As the Black Dog has tried to expand off-Island, we have had to be very strategic about it and address expenses," said Robert Douglas, Jr., the chief operating officer and one of four sons who now help run the business their father started back in 1971.

Year-round work force at the Black Dog numbers between 65 and 80 people, but not all of them work on the Vineyard. Mr. Douglas could not provide a breakdown.

But clearly, the Black Dog team is no longer 100 per cent Island-grown.

Just over three months ago, the Black Dog opened general stores in Falmouth and Provincetown, its first on the mainland. In a cost-cutting measure executed last May, the Black Dog also moved its warehouse operation off the Vineyard to Middleborough.

Meanwhile, the retail empire on the Island also grew this year as the Black Dog added two new stores - one called Whitefoot for Kids and the other BD Gear - to its waterfront complex in Vineyard Haven. Last year, the Black Dog opened a second clothing and dry goods outlet in Oak Bluffs.

Add in the general store on Summer street in Edgartown, and the Black Dog now operates a total of six outlets on the Island, devoted solely to peddling an inventory of some 600 different items - everything from T-shirts to dog dishes and baseball caps emblazoned with the now famous silhouette of a black Labrador retriever.

Just a year and a half ago, the Black Dog was in financial trouble, announcing that gross sales in 2001 had fallen from $10 million to $8 million and that it had either fired or lost five of its top executives.

But yesterday, Mr. Douglas told the Gazette that his corporation was on the rebound. In 2002, sales were $10.7 million. And so far this year?

"The company had the strongest August in its history," Mr. Douglas said.

Last November, Mr. Douglas hired a merchandising expert named Alan Shapiro - a former general manager at the clothing retailer, Laura Ashley - and charged him with mapping the growth of the Black Dog.

The goal is to go national, to open a slew of Black Dog stores in other tourist destinations along the Eastern Seaboard and boost sales from $15 million to $75 million a year within five years.

Backed by a $5 million loan signed last spring, Mr. Douglas and Mr. Shapiro are already looking at store locations in Bar Harbor, Me. and Newport, R.I.

"We want to keep our nautical, coastal roots," said Mr. Douglas. "If the Alabama [one of two schooners owned by the Douglas family] can sail to the town, that's a good prerequisite for a store location."

Mr. Shapiro, who could not be reached for comment, told the Boston Business Journal earlier this summer that he wants to position the Black Dog brand in the same market as Patagonia, Ralph Lauren and The Gap.

But amidst all the optimism and targets for sales growth, the Black Dog has also been fighting. There are legal battles, but there are also battles to retain its Vineyard ties as it reaches for the mainland.

On the legal front, lawyers for the Black Dog are citing trademark infringement as they try to stop a woman in Northampton from using the image of a black dog on T-shirts she sells. The business, called Precious Paws, Inc., donates ten per cent of sales to breast cancer research and humane societies.

Mr. Douglas is tough about the brand. "She is trying to register her trademark and the Black Dog is trying to defend its trademark," he said.

Meanwhile, the U.S. Department of Labor is investigating a complaint that the Black Dog may have violated federal pension laws. Some former employees allege that the Black Dog waited as long as three months to deposit their 401(k) contributions.

Federal law requires that 401(k) deposits be made within three weeks after the month they were deducted.

"It's hard to tell how much money is at stake," said Antoinette Cutrer, the former information technology manager who left the Black Dog last year. But she argues that the Black Dog was diverting money for much of 2001.

"They may have been using it for our payroll, who knows?" she said.

The labor department investigation is still active, and Mr. Douglas said he cooperated with investigators when they came to the Island in April.

"As of today, I have not been told that the Black Dog did anything wrong," he said.

The Black Dog did settle one lawsuit in June - an out-of-court deal with the terms undisclosed - ending its stand-off with Joe Hall, the man who had run the company for 22 years and then sued his employers in the fall of 2001.

In his lawsuit, Mr. Hall was seeking at least $1 million in compensation while accusing the Douglas family of skimming off hundreds of thousands of dollars from the Black Dog enterprise. A countersuit filed by the Black Dog charged Mr. Hall with mismanaging the company and racking up debt that totaled $1.6 million.

One thing was clear: The paychecks at the top of the Black Dog food chain were hefty. Over six years, the Douglases had pulled in $1.75 million in profit compared to $990,000 for Mr. Hall, according to the lawsuits on file in Dukes County Superior Court.

But the firestorm of the last two years signaled a huge shift at the Black Dog, leaving some to charge that the company had strayed from its Island roots and long ago lost the cool factor that came with wearing one of its T-shirts.

But Mr. Douglas bristles at the charge.

"We're totally confident that we have just scratched the surface with this brand, and the vision of the company is going to stay nautically connected, in coastal towns, in towns that represent the Martha's Vineyard lifestyle," he said.

Even if Islanders aren't lining up for the Black Dog brand the way they used to, the appetite for the product shows no signs of waning, Mr. Douglas argued.

"Fifteen years ago, we were selling between 2,000 and 3,000 T-shirts," he said. This year, he expects sales of the old standby to reach 120,000. "Our performance off-Island has been great," he said.