Last week, highly popular pan-Asian restaurant Chubby Noodle celebrated its relocation in North Beach, marking a move to a new storefront with a noodle- and bun-filled opening party attended by press and Instagram influencers. But not everyone is celebrating. Several investors in each of Chubby Noodle’s two San Francisco restaurants, which have separate LLCs, tell Eater that they believe the business has failed to properly distribute investor profits — tens of thousands of dollars in some cases, as each location generates millions in annual revenue.
“In theory, there should be an investor revolt,” one investor tells Eater.
Investors claim that chef and majority owner Boutros Mrabe, who goes by Pete, seems to be playing fast and loose with his restaurant properties, liquidating the previous North Beach Chubby Noodle location in part to bail out a separate, unsuccessful business venture: nearby Pete’s on Green, where the new Chubby Noodle reopened. Mrabe also owns Don Pisto’s, a Mexican restaurant in North Beach, and retains the lease on another now-closed Mexican place, Pisto’s Tequila Bar in the Marina.
Now Chubby Noodle’s original brick-and-mortar location, an even more popular branch in the Marina, is closing too, following the playbook set out at the North Beach location. Mrabe has just informed Marina Chubby Noodle investors that the perennially mobbed restaurant will shutter by the end of the year, reopening — without them — at an as-yet-unannounced location. Pisto’s Tacos, just down the street, is a potential new home.
“It’s a slap in the face,” says one dismayed Chubby Noodle Marina investor. But rather than speak out, Mrabe’s financial backers are reluctant to use their names publicly — nervous to confront the chef in part because of a pair of incidents, one in which he allegedly punched a bar owner, and another in which he allegedly destroyed a former associate’s property, then slapped a barista.
Mrabe, 33, is a large, burly man who speaks in a low, rumbling voice. In an oft-cited incident from 2016, he entered North Beach neighborhood bar Gino & Carlo while shirtless and began “yelling profanities,” according to a police report summary. When he was asked to leave, he “sucker punched” a victim identified as the bar owner, according to the report. In response to questions about the event, Mrabe tells Eater the matter was “settled” and “everything was dismissed.”
In January, after a former colleague named Nick Floulis filed a breach-of-contract lawsuit against Mrabe and Chubby Noodle, Mrabe appeared to retaliate physically, damaging property and intimidating employees at a North beach cafe owned by Floulis, according to a police report summary of the incident. Mrabe approached the cafe, Hole in the Wall Coffee, while Floulis was absent, per the report, removing a pole supporting a table, ripping down a shelf, and allegedly damaging other property. Witnesses told police that Mrabe appeared intoxicated, and in video of the incident reviewed by Eater, Mrabe appears to slap one worker in the face.
“He tried to verbally intimidate me, saying things like, ‘Who are you,’ and called me a pussy,” one Hole in the Wall barista recounted to Eater. “He walked over to [another employee] and slapped him in the side of the head, and then he stumbled down the street.”
Another witness to the Hole in the Wall incident, a former North Beach resident who wished to remain anonymous, says, “I don’t know why he does it; he picks on kids half his size,” referring to Mrabe’s large stature. “That’s how he acts. Like a bully... he goes around and starts these altercations. Nobody needs that in the neighborhood.”
In response, Mrabe tells Eater that “the proof’s in the pudding. I wasn’t charged with anything. That’s water under the bridge. If it happened, I would’ve been in jail, or I would have gotten arrested.”
Neither the barista nor Floulis pressed charges.
Pete Mrabe started Chubby Noodle in 2011 as a pop-up at North Beach bar Amante’s, not far from his first restaurant, Mexican spot Don Pisto’s. What began as a weekly one-off became a nightly routine.
“I had a pretty extensive background in Asian food, and I worked at a lot of Asian restaurants growing up,” Mrabe tells Eater. He first cooked at a Vietnamese and Chinese restaurant on Irving Street, near his childhood home, then at Cecilia Chiang’s Mandarin Restaurant in Ghirardelli Square, and later at Momofuku in New York City and Betelnut back in San Francisco.
Nick Floulis — who declined to speak to Eater on the record for this story — claims in his breach-of-contract lawsuit to have met Mrabe during the Chubby Noodle pop-up. A restaurant operator turned winemaker who was supplying the pop-up’s bar, Floulis claims in his lawsuit that he entered into an oral agreement to start Chubby Noodle’s brick-and-mortar business with Mrabe. They supposedly agreed to Floulis taking charge of business operations, with Mrabe in charge of the food. Early coverage of Chubby Noodle consistently refers to Floulis and Mrabe as partners.
Floulis claims to have designed Chubby Noodle’s decor and playlists (though Mrabe disputes this), which are vibrant elements of its atmosphere key to its popularity. According to the lawsuit, Floulis also contributed more than $50,000 in loans and waived his salary under a verbal agreement that he would receive an ownership stake in the business (or, rather, that Floulis’s mother would receive the ownership stake, in a somewhat confusing agreement allegedly reached with Mrabe).
When Chubby Noodle’s location opened in the Marina — hip-hop blaring and sake cocktails flowing — it was a near-instant hit. A positive Chronicle review praised Mrabe’s fried chicken and pan-fried noodles as ideal drinking snacks. In particular, diners gathered in droves — as they still do — for boozy weekend brunches: three 90-minute seatings per day of all-you-can-eat dim sum and all-you-can-drink mimosas decorated with floating rubber ducks.
Building on the success of Chubby Noodle Marina, Mrabe was eager to add a second permanent location in North Beach. Floulis and Mrabe agreed to the same unwritten terms as before, according to the lawsuit, with Floulis’s mother again to be credited as an owner of the second Chubby Noodle LLC. The team even used her credit card for daily expenses, the suit claimed.
Floulis signed up North Beach investors who were eager to join in the success of Chubby Noodle Marina, paying $20,000 per share. But, according to the lawsuit, the duo began to feud when Mrabe demanded that the new Chubby Noodle North Beach entity purchase his struggling Grant Street restaurant, Pisto’s Tacos (a short-lived spinoff of Don Pisto’s) for $250,000, and assume its space. Floulis objected to the idea, according to his lawsuit, arguing that buying Pisto’s Tacos would unfairly saddle Chubby Noodle North Beach with debt. But eventually they agreed, with Chubby Noodle North Beach purchasing Pisto’s Tacos in installments.
After the fight, however, Mrabe ousted Floulis from the business, per the lawsuit. He never received his salary, the loans, or the equity allegedly promised to his mother, the lawsuit claims. Mrabe and Floulis settled out of court earlier this year for undisclosed terms. The matter was “resolved amicably,” a lawyer for Pete Mrabe tells Eater. “At this point, we have a mutually agreed upon settlement, and everyone is trying to go their separate ways and walk away from it now.”
Investors who spoke to Eater say their main point of contact was Floulis, so they were surprised to learn of his departure — and some heard he was leaving only when they reached out to him to inquire about distribution payments, which had stopped arriving, they claim. While investors in both the Marina and North Beach Chubby Noodle locations recouped their initial investments, several allege they haven’t received their shares of the restaurants’ profits for over a year — or in some cases, at all.
“We’ve paid taxes on profit above and beyond our original principal, but haven’t actually received it,” one furious investor, who is considering a lawsuit against the business, tells Eater.
Another investor has retained the services of a forensic accountant to examine the matter.
A lawyer for Mrabe concedes that some distributions haven’t been made, but offers an explanation. “Distributions were made for many years [to the investors],” Mrabe’s lawyer says — up until the lawsuit with Floulis, when “the decision [was] made to withhold distribution during litigation.”
This summer, Chubby Noodle North Beach investors were startled to receive an investor ballot from Mrabe asking them to vote to liquidate Chubby Noodle North Beach: closing the business, selling its assets, and licensing the “Chubby Noodle” name and concept to Mrabe’s closed bar, Pete’s on Green, essentially bailing out the bar with the new Chubby Noodle location.
To investors, Chubby Noodle’s original North Beach location appeared successful, their allegedly unpaid profit distributions notwithstanding. The letter claimed otherwise: Chubby Noodle North Beach was no longer sustainable, it explained. The move, Mrabe told investors, fulfilled the restaurant’s need for increased space, and the new location included a full liquor license, which means more revenue.
But instead of carrying over investors’ shares of the original North Beach business to the new location, Chubby Noodle’s North Beach investors would be given diluted shares of the new business, or receive a one-time buyout payment of $16,500 per one percent share, paid out over five years. The problem: That’s less than the initial $20,000 share cost, and it doesn’t include the allegedly unpaid profit at all.
The North Beach shuffle, Mrabe claims, was also prompted by the demands of the SF Department of Public Health. According to Mrabe’s letter to investors, the Department of Public Health called the current Chubby Noodle’s prep area “hazardous.” But documents from the Department of Public Health show no such concern. “There is no connection between the inspection report and the allegations made,” says a spokesperson for the Department of Public Health. Instead, “it may be that the inspection findings are being mischaracterized, or miscommunication may have occurred.”
Mrabe says the warnings he received from the Department of Public Health were given verbally. “The reason the Health Department score was good was because we’re utilizing all my other spaces [for food prep],” he says. ”I wish I didn’t have to [move]. It was either closing Chubby Noodle North Beach or closing Pete’s on Green, and I felt like Chubby Noodle needed the space.”
According to Mrabe, most investors are happy with the move. “98 percent of the investors in Chubby North Beach are happy,” he says, and those with qualms are merely disgruntled.
Observing the fate of Chubby Noodle North Beach, some investors in Chubby Noodle’s Marina location predicted they’d be next. Another of Mrabe’s failed business ventures, Don Pisto’s Tequila Bar, is closed down the block, and the restaurateur has hinted at plans to move the bustling Chubby Noodle Marina location to that empty space.
This week, Marina investors got the news confirming their suspicions: The Marina Chubby Noodle will close by the end of the month, and investors’ shares will be liquidated — not diluted, as in North Beach. “If it wasn’t so immoral, I’d be impressed,” one aggrieved investor in Chubby Noodle Marina says of Mrabe’s business plans.
Mrabe says he’s still considering his options for a new Chubby Noodle Marina location. Meanwhile, investors speculate that he could eventually expand Chubby Noodle nationally. “Maybe sometime down the line,” says Mrabe.
But Mrabe has already begun by expanding beyond the U.S., opening a Chubby Noodle location in Cabo San Lucas, where he increasingly spends his time. Financial problems appear to have followed him there, too. In June, restaurant equipment company Trimark sued Mrabe for more than $23,000 in unpaid balances for a laundry list of items, from ovens to pots and pans. “We’re dealing with that, and it’s not of much significance,” says Mrabe, who chalked it up to a change in Trimark’s ownership. Trimark’s lawyers declined to comment on the lawsuit.
When responding to questions regarding his business conduct and character, Mrabe is careful to distinguish between the two. “I have a personal life, and I have a business life,” he says. He also expresses dismay that anonymous sources would be permitted to criticize him. “I think there’s a lot more people that have good things to say about me than bad things to say about me.”
Finally, Mrabe suggests another possible reason for the criticism he’s received. “Do you ever think that people are jealous?” he asks.