OPA agrees to five-year lease with Touch of Italy to manage food and beverage venues
Association to reap first year rental income of $384,000 and 6.5 percent of food sales, with no operating expenses
By TOM STAUSS Publisher
The Ocean Pines Association Board of Directors has approved a five-year lease with the Touch of Italy (TOI) Group to oversee its food and beverage operations, including the Yacht Club, the Beach Club, and the Clubhouse Grille.
The OPA will be entitled to a percentage of net food sales at the three venues, but will not share in alcohol sales.
Director of Finance/Controller Steve Phillips said in a Jan. 9 email that TOI will apply for liquor licenses, including the Class C club license at the Beach Club that restricts alcohol sales to OPA members and Ocean Pines residents, a category that includes renters.
Because the liquor licenses will be held by TOI, the OPA can’t share in alcohol sales the way it can for food. There’s a county law on the books that restricts profit-taking on alcohol to the license holder, dating back to the era in Ocean City when organized crime was rumored to be raking in profits from alcohol sales at establishments with liquor licenses held in the names of frontmen.
“You can’t profit from booze if you’re not on the liquor license,” a source told the Progress, “and in any lease it’s the lessee who holds the liquor license, not the landlord.”
The five-year lease that includes revenue-sharing of food sales was approved in a special meeting of the Board of Directors on the afternoon of Jan. 8. Phillips in his Jan. 9 email said the lease covering all three payments
is $32,000 per month, with an escalation in years two through five. That works out to $384,000 in lease payments for 2025-26.
The Progress has learned that the escalation percentage is three percent per year. That works out to an increase in rent of $11,520 in year two.
Phillips declined to disclose the percentage to be used in the monthly calculation of revenue-sharing for food sales.
An informed source on the Board said the percentage is 6.5 percent. General Manager John Viola later confirmed the percentage.
Viola provided some information on what he said would be a new OPA Food and Beverage Department.
It will recognize revenue only, since the OPA will incur no operating expenses in this department. As the lessee, TOI will be responsible for all operating expenses at the three venues.
The department’s two revenue streams will be rent and food revenue-sharing.
So far, Viola and Phillips have not released a budget providing details predicting how well this department will perform next year. It’s possible that one will be created before the Board votes to approve a budget for next year, action that normally takes place at the February Board meeting.
Nor have Viola and Phillips released a prediction for food sales under TOI management.
So far in the 2025-26 budget, they’ve released a departmental summary predicting $562,315 in net proceeds to the OPA based on gross revenues at all three venues of $4.7 million, including both food and alcohol sales. If gross revenues would jump to $6 million, the net for the three venues would be $711,441, according to a budget worksheet.
Either would be a significant jump from the $333,757 in net proceeds they are predicting for the current fiscal year. That’s based on a $103,55 profit for the Clubhouse Grille and a $247,177 profit the Beach Club, together with a loss of $16,975 at the Beach Club.
During his Jan. 2 budget presentation to the Budget and Finance Committee, Viola said he and Phillips might release a new combined food and beverage budget for the three venues reflecting details in the new TOI lease. Later Viola told the Progress that he might not change the numbers in the initial budget draft that showed the three venues earning $562,315 in net proceeds for the OPA.
As this special report edition of the Progress was in the final stages of assembly, it seemed as if Viola might still be making up his mind.
In his email to the Progress, Phillips said that TOI is responsible for maintaining these facilities. Should TOI propose capital improvements to the three venues, “any new additions are basically paid for by the lessee unless agreed upon otherwise,” Phillips said.
There is a termination clause in the new contract. Phillips didn’t disclose terms, but it’s standard in many restaurant leases that either party would need to give the other three months notice if it wanted to terminate the
contract, according to an informed source.
While the Progress reported that Sodel Concepts of Rehoboth Beach was the leading contender for the contract in its November and December editions, that was hedged in the December edition, when it was reported that Touch of Italy was still a contender for the contract.
There are two competing narratives for how TOI ended up as the winning bidder.
The two narratives originated with two OPA directors, neither of whom want to be the identified as the source of information cited in Progress reporting.
Viola also is declining to describe the process that ended up with TOI as the lessee of three Ocean Pines food and beverage venues.
One source said Sodel was the front-runner throughout most of the process only to lose the contract when lawyers for the company failed to deliver a contract consistent with its initial proposal.
That would have given TOI’s proposal a new lease on life.
Another narrative has emerged that conflicts with the version that says Sodel was the front-runner and only had to deliver a contract consistent with original contract terms.
That narrative says it was not Sodel Concepts with which the Board authorized Viola to enter into contract negotiations this past November.
Touch of Italy was the top contender all along, not Sodel, this source told the Progress.
Are these narratives mutually exclusive or is there some truth to both of them? u
The Ocean Pines Association Board of Directors voted in a special meeting Jan. 8 to approve a lease agreement with Touch of Italy Group, under which the Rehoboth Beach-based restaurateurs will operate OPA’s three food and beverage venues. Pictured, front row, left to right, are Ocean Pines directors Steve Jacobs, Monica Rakowski, Elaine Brady and John Latham. Back row, left to right, OPA Director of Finance/Controller Steve Phillips, OPA General Manager John Viola, OPA Director of Business Operations Linda Martin, OPA Director Rick Farr, TOI Owner Robert Ciprietti, TOI Financial Manager Rick Lawrence, OPA President Stuart Lakernick, OPA Director Jeff Heavner, and OPA Counsel Bruce Bright.
“It’s possible that Viola as a sharp negotiator was talking to both sides throughout the process,” the first source said. “It would not be unusual for him to have done that.” Viola so far has not discussed the process that led to the deal with TOI.
There are essentially two narratives regarding the process. One says that Sodel’s proposal was the one selected for contract negotiations, the other says it was Touch of Italy.
Viola has said he presented three proposals for Board consideration at a special meeting in November. Without naming the vendors, he presented details of Proposal A, Proposal B and Proposal C, with Proposal B the one for which contract negotiations were authorized. Proposal B was either from Sodel or TOI, with at least two directors perhaps drawing different conclusions about which entity had submitted Proposal B.
The Board action authorizing negotiations to commence with the Proposal B vendor did not preclude Viola from engaging in negotiations with the other two if he saw fit to do so.
Since it was Viola who was authorized to negotiate and finalize a contract, it might be presumed that he would have kept in contact with both TOI and Sodel, perhaps less so with MOC if he thought the other two proposals would result in better financial outcomes for the OPA.
In any event, the Progress also reported on the front page of its January edition that Touch of Italy was in the running for the contract, and that MOC would be given an opportunity to amend its proposal on the Monday of the week when the contract was due to be voted on by the Board.
By then, Matt Ortt of MOC had already said goodbye to staff and had prepared to depart the Yacht Club. A meeting with Viola on Monday, Jan. 6, to discuss options apparently never occurred and perhaps was not too likely to have occurred in the first place.
There is now a more or less official transition from MOC to TOI under way, with MOC still under contract through April 30 of this year. The Progress has been told that there is interest among some employees of the three venues in returning to work in Ocean Pines under TOI.
That is perhaps one of the questions that TOI will be asked during a townhall meeting that has been scheduled for noon on Jan. 16 at the Community Center to introduce TOI and its ideas for the Ocean Pines venues it will be managing for the OPA. The meeting was not specifically set for the Community Center’s Assateague Room, which could leave open the possibility it would be moved to the gymnasium.
MOC communicated with families who had contracted with the OPA for wedding or other banquet events in a Jan. 9 email from Angie Ortt, a principal in MOC with her husband Matt, and Lia Isel, the latter of whom is the banquet manager for MOC’s Ocean Pines operations. [See separate article in this special edition for details.]
The theme of the email was that MOC would no longer be food and beverage manager in Ocean Pines and that
those who had contracted with MOC’s Venues at Ocean Pines for wedding and other banquets should contact the OPA at 410-641-7717 to ask questions about the status of their events. That phone number is the main number for the OPA.
A source told the Progress that after that email was sent out, more than ten worried families responded on the first day with questions. Since the email had not included a contact person within the OPA who might have answers to questions, some within the association have regarded the email as an unfriendly act.
With the Yacht Club closed until at least mid-February and the Beach Club with a traditional reopening Memorial Day weekend, MOC is currently only managing the Clubhouse Grille for the OPA.
One transition question likely to gain traction is whether MOC will be asked to manage a mid-February reopening of the Yacht Club.
However the transition from MOC to TOI is managed, those who visit Ocean Pines’ three primary food and beverage venues are likely to see changes in operations.
According to the OPA press releaee, TOI is known for its signature Italian cuisine and hospitality and “plans to expand Ocean Pines’ menus with fresh seafood and American fare, while preserving beloved local traditions like free summer concerts on the Yacht Club patio.”
The company operates three Touch of Italy locations, plus the Royal Prime Steakhouse at Bally’s in Dover, De., and Sunset Island Bar and Grille on 67th Street in Ocean City.
TOI also manages wedding, banquet, and conference services for Bally’s Resort and Casino in Dover, showcasing its capability to produce both casual dining and largescale events.
Additionally, Chef’s Table at Touch of Italy in Rehoboth Beach features acclaimed local Chef Hari Cameron and a vibrant blend of fine dining and educational experiences, and TOI operates its own dedicated commissary kitchen and bakery.
Rick Lawrence, who oversees financial operations for TOI, said the company is embracing the challenge of expanding further by delivering exceptional results in Ocean Pines.
“This is an exciting opportunity for us to raise the bar in Ocean Pines,” Lawrence said. “The pressure’s on, but we’re confident we’ll deliver.”
Lawrence said TOI founder Robert Ciprietti, who launched the first Touch of Italy in 2010, has built a reputation for culinary excellence.
“[Ciprietti] is deeply passionate about getting every flavor right and ensuring a high standard for every dish,” Lawrence said. “That’s why we’re so confident we can elevate the dining experience in Ocean Pines.”
Viola is quoted in the press release as saying that “TOI has flourished in several competitive markets, and understands the importance of delivering menu options that appeal to all tastes and are consistently of high quality. u
Financial details of Touch of Italy lease deal sketchy so far
But here’s a taste of what first year results could look like
By TOM STAUSS Publisher
Ocean Pines Association members who would like to know how the first year of management of Ocean Pines’ three food and beverage venues by Touch of Italy might affect OPA finances don’t have enough information on which to base a firm conclusion, at least so far in the 2025-26 budget process.
There are some clues, however, that point to a yearover-year improvement in food and beverage results.
What has been revealed is a start. OPA General Manager John Viola and Director of Finance/Controller Steve Phillips have announced that the lease with TOI approved by the Board of Directors in a Jan. 8 special meeting includes two revenue streams to the OPA.
The first is the annual lease payment of $32,000 per month, applying in the aggregate to the Yacht Club, the Clubhouse Grille, and the Ocean Pines Beach Club. That works out to $384,000 per year. There’s a three percent per year escalator clause in the contract, which increases the rent in 2026-27 and every year thereafter during the five-year lease period.
The second revenue stream is a percentage of monthly gross food sales at all three venues at what one Board member told the Progress is 6.5 percent. That’s a key
Touch of Italy lease
From Page 3
“TOI has successfully managed a tiki bar operation in Ocean City, several thriving local restaurants, and a major banquet operation in Dover. We expect they will bring all that expertise to Ocean Pines, making them an ideal fit for our community,” he said.
TOI officials pledged to make Ocean Pines a go-to dining destination.
“We want to be responsive, deliver exceptional quality, and earn the loyalty of Ocean Pines,” Lawrence said. “Our goal isn’t just to be the convenient choice – we want to be the first choice.”
A Jan. 16 townhall meeting at noon in the Ocean Pines Community Center will be the company’s first opportunity to make a good first impression on the Ocean Pines community.
Normally, Community Center events such as townhalls are held in the Assateague Room. Since the OPA press release didn’t mention the Assateague Room or any of the other smaller meeting spaces in the building, it’s possible that the OPA is anticipating a larger than usual attendance that could be accommodated in the Community Center gymnasium.
number, which Viola later confirmed as accurate.
According to a Progress calculation, if TOI generates in 2025-26 the same amount of food sales generated by the Matt Ortt Companies in 2023-24, the fiscal year ending April 30 of 2024 and the last full year that food sales have been recorded, at 6.5 percent OPA would be receiving $182,140 in food revenue-sharing from TOI.
It’s not generally known nor commented upon, but monthly financials prepared by Phillips include a graphic itemizing year-to-date food sales.
According to the April 2024 financial report published on the OPA Website, the last month of fisczl 2023-24, the three venues brought in $2,802,154 in food sales that year. That total was comprised of $292,888 at the Clubhouse Grille, $348,882 at the Beach Club, $499,581 in Yacht Club banquet food sales, and $1,660,803 in non-banquet sales at the Yacht Club.
The math isn’t complicated; 6.5 percent of $2,802,154 works out to $182,140.01.
When added to the rent of $384,000, $182,140 in food revenue-sharing totals $566,140, which represents the total return to the OPA if TOI would generate the same in food revenue as MOC did in 2023-24.
How does $566,140 compare to the aggregate results at the three venues under MOC management, which is governed by a fee-based contract with a bonus provision that in 2023-24 produced more than $500,000 in profits for MOC? In that year at least, OPA’s return on investment at the three venues was less than MOC’s. Years prior to that would require an even deeper dive. OPA sources generally say that OPA’s earnings from the three venues are less than MOC’s.
The numbers that begin to answer that question are available in the annual reports published on the OPA Website.
In 2023-24, the Yacht Club netted the OPA $158,442, the Clubhouse Grille $113,625, and the Beach Club $134,389, totaling $406,456 for the year.
In 2022-23, the Yacht Club netted the OPA $188,980, the Clubhouse Grille $46,750, and the Beach Club $205,097, totaling $440,827 for the year.
In 2021-22, the Yacht Club netted the OPA $212,142, the Clubhouse Grille $31,120 and the Beach Club $159.292, totaling $403,555 for the year.
But the more significant take-away is that OPA’s earnings from the three venues could improve under the new lease arrangement.
According to a graphic in the 2025-26 budget binder, the OPA’s return at the three venues for 2024-25 would be $305,842, with a projected $16,975 loss at the Yacht Club,
$247,177 in net earnings at the Beach Club, and $75,640 at the Clubhouse Grille. A $566,140 revenue result for 2025-26 would exceed that by more than $260,000, a very robust year-over-year improvement.
If TOI in 2025-26 is able to at least match MOC’s performance in 2023-24 in generating food sales, the new vendor should be conveying at least $100,000 more for the OPA in rental and food-sharing income than MOC did in 2023-24 under the current fee-based and bonus structure.
Viola and Phillips seem to be hoping for more, though how much can’t be gleaned from the numbers released so far in the budget process.
Under a best case scenario, Viola and Phillips are hoping for $6 million in total sales at the three venues in 2025-2026. Nowhere in the initial budget draft or in the two budget review meetings held so far has a number been identified for gross food sales. So far in the cycle, they are taking a more conservative approach for budgetary purposes, estimating about $4.8 million in total sales at the three venues, again with no food revenue estimate provided as of the end of the week of Jan. 5-11.
It might be a difficult number to forecast, since TOI doesn’t have a track record in Ocean Pines upon which to base an estimate. Based on initial comments by a TOI executive, it would seem the new managers are hoping to reinvigorate the three venues and one measure of that effort would be an increase in food sales.
However, the request for proposals that TOI responded to did ask for a revenue forecast, so perhaps a food sales estimate is included in materials already supplied by the vendor.
Whatever the final budget includes for what Viola is
calling the new Department of Food and Beverage, TOI will outperform food and beverage results in the current fiscal year if it does at least as well as MOC did in 202324.
According to the year-end forecast for 2024-25 that Viola and Phillips prepared for inclusion in the draft budget for 2025-26, the three venues will generate total sales of $3,258,083 this year, much less than the $4.8 million “conservatively” forecast for 2024-25.
The best case scenario projection of $6 million would be almost double this year’s estimated $333,757 in net food and beverage earnings for the OPA. The Yacht Club is projected to lose $16,975 this year, an all-around disappointing result, while the Clubhouse Grille is on a path to earn $103,555 and the Beach Club $247,177.
Overwhelmed by the numbers? Understandable, but here’s more detail.
The year-end estimate of $3,258,083 for the current year, 2024-25, reflects simple arithmetic, adding $454,908 at the Clubhouse Grille, $538,167 at the Beach Club, and $2,265,008 at the Yacht Club to reach a sum of $3,258,083.
Bottom line is that Viola and Phillips are hoping for a much better bottom line for the OPA in 2025-26 under the new management of Touch of Italy. That’s the key takeaway from this deep dive into the numbers.
An even deeper dive that includes food sale projections would provide much greater insights into the hopes and expectations of the OPA’s leading number crunchers.
It remains to be seen whether anyone on the Board of Directors asks for those projections before the 2025-26 budget is approved, presumably at the Board’s February monthly meeting.
Viola asked to revise boat slips fees
Racquet Sports memberships may be sold in a three-sport option, along with individual sport choices for seniors
By TOM STAUSS Publisher
The Board of Directors apparently won’t be making a lot of changes to the proposed 2025-26
Ocean Pines Association budget released in late December by General Manager John Viola, but two changes discussed during the Board’s Jan. 8 budget review meeting will be noticed, especially by those who rent boat slips at the Yacht Club Marina or buy individual Racquet Sport memberships.
Most of the review of proposed departmental budgets went by quickly without any debate, more or less ratifying what the draft budget proposes.
There was no disagreement over proposed membership rates in golf, aquatics and beach parking. [See article in the January edition of the Progress for details.]
The directors by consensus in effect instructed Viola and Director of Finance/Controller Steve Phillips to in-
crease marina boat slip rental fees by 12 percent, while Director Steve Jacobs advocated for 15 percent.
“Why aren’t we being more aggressive on boat slips,” he said, opening a discussion on boat slip fees during the Jan. 8 budget review.
In the original budget draft, Yacht Club slip fees for boats under 26 feet would increase from $2,170 to $2400 (10.6 percent), from $2,950 for $3,250 for boats from 26 to to under 40 feet (10.17 percent), and from $4,170 to $4,500 for boats over 40 feet and live-aboards (7.91 percent).
At the Swim and Racquet Club Marina, boat slip fees would increase from $1,570 to $1,730 (10.19 percent).
New at the Swim and Racquet Club are jet ski rental slips, priced at $1,000 for OPA members. There was no discussion of increasing this rate during the Jan. 8 meeting, so it’s likely the $1,000 fee will be approved
as part of the 2025-26 budget when the Board votes in February.
Phillips said the rates as proposed were benchmarked to other marinas in the area, with Ocean Pines still lower than other marinas.
Directors then offered their views of what the percentage increase should be, with OPA President Stuart Lakernick countering Jacobs’ support for 15 percent.
“I’m not OK with 15 percent. I’m OK with 12 percent,” he said.
Director Elaine Brady said ten percent would be a good number in some of the categories. It turns out that two of the categories were already slated for ten percent increases, while the largest boats and live-aboards were almost 8 percent.
Viola said that he and Phillips would revise the proposed fee increases and bring them back to the Board for review, suggesting that there perhaps needed to be less focus on percentage increases and more focus on actual dollar amounts.
The discussion over eliminating individual racquet sport memberships in favor of a single one was launched by Brady, who said it was time to go with bold change.
The OPA “should be going to one membership,” she said. “We keep kicking the can down the road. It’s time to bite the bullet and go with one rate.”
The Board briefly tried to go that route last year early in the budget process, opting for a single rate, but member opposition resulted in the Board reversing course and going back to individual rates.
At the time, directors said they might reintroduce the one-membership-only option in this year’s budget process, and that’s what they’ve done.
In Viola’s proposed budget for 2025-26, multi-sport racquet sport memberships would increase $690 to $800 for families (15.94 percent) and from $440 to $500 for individuals (13.64 percent).
Pickleball memberships for families would increase from $325 to $404 (24.62 percent) and from $200 to $250 for individuals (25 percent).
Proposed platform tennis memberships for families and individuals are the same as for pickleball.
Tennis memberships would increase from $465 to $550 for families (18.3 percent), while the family after 12 category would be eliminated.
Individual tennis memberships would increase from $295 to $350 (18.64 percent increase), while here, too, the individual after 12 category would be eliminated.
Daily OPA member drop-in rates for tennis would increase from $11 to $15, while pickleball and platform tennis would remain unchanged at $8.
For non-OPA members, drop-in rates would increase from $16 to $20 for tennis, platform tennis from $9 to $11, with the pickleball rate remaining unchanged at $11.
After Brady’s initial comments in support of a single racquet sports rate, Viola responded that “nobody disagrees.”
But sentiment on the Board isn’t unanimous.
“I disagree,” said Monica Rakowski, treasurer of the OPA.
She asked how many members only play one sport, making the point that pickleball members in their 70s aren’t interested in playing tennis and platform tennis available at the Racquet Sports complex in South Ocean Pines.
A single rate allowing members to play tennis, platform tennis and pickleball would force those who only want to play a single sport to pay more than they would for single sport memberships, she said.
“We’d be shooting ourselves in the foot,” she said, predicting a drop in memberships and revenues if the Board proceeds with the single membership option.
Terry Underkoffler, the Ocean Pines racquet sports director, said members who don’t like a single rate membership could choose to pay a “highly reasonable” drop-in fee instead.
He was asked his recommendation for racquet sports memberships in 2025-26, and without reservation said he supports the single rate concept.
He said it’s the best way for the OPA to raise sufficient funds to keep the Ocean Pines racquet sports complex the best on the Eastern Shore and continue to make improvements.
Whatever the new rates turn out to be, he predicted that playing racquet sports in Ocean Pines will “still be a bargain” compared to other venues in the region.
Several other ideas emerged from the discussion.
Rakowski suggested that if a decision is made to go with a three-sport membership, one way to mitigate the impact on older members would be to adopt a senior rate.
Director Elaine Brady expressed support for Rakowski’s senior rate proposal, but suggested that it should be structured as senior memberships for all three individual sports, leaving the current options for more elderly racquet sport members in place as a way of abating potential opposition to the combined rate.
Director Steve Jacobs said he has problems with “3, 2 or 1 memberships” and that the larger issue facing the OPA is how to provide “good service, giving everyone as much choice as possible.
“The community doesn’t want a three-sport-membership only [option],” he said, not commenting on whether the senior rate ideas of Brady and Rakowski would mitigate member opposition to a single rate.
OPA President Stuart Lakernick suggested that if the membership rate issue is handled well it could result in a racquet center “with something for everyone.”
Discussion migrated to a possible rate structure.
Viola, tasked by the Board to revise his initial budget proposal for racquet sports, said some sort of blended rate for a three-sport option could be devised that wouldn’t result in a major decline in memberships and revenues.
He didn’t say when he would present a new racquet sports membership rate structure, but it might be at the Jan. 25 regular monthly meeting of the Board of Directors.