SF coffee vets weigh in on the risks of ‘selling out’

Lauren Crabbe got her first business card from an investor around the time she and her husband opened up their third Andytown Coffee location. 

The interaction felt quintessentially SF, where it’s not uncommon to receive pitches about potential funding while handing over an espresso or discover that one of the regulars is a big-shot financier. 

“Those are the kinds of conversations you can have casually in San Francisco,” Crabbe recalled with a laugh. “In any other city, you’d have to really seek it out.” 

VCs typically back fast-growth tech startups, not cafes, but the simple proximity of investors to San Francisco’s historically high-quality coffee culture could explain the glut of funding that local caffeine peddlers have received over the years. Blue Bottle, Philz, Peet’s, La Boulange and Sightglass are among some of the more notable Bay Area cafes to raise millions of dollars from outside investors or get bought out.

But the funding infusions aren’t universally celebrated. Gobs of cash or new management have spurred customer complaints ranging from declining coffee quality to a loss of charm. Most recently, coffee lovers have started wringing their hands over a former Starbucks exec taking the helm at Sightglass as the founders step down.    

After the news broke, The Standard tapped Crabbe and other small-batch Sightglass contemporaries who started around the early 2010s to hear their takes on whether VC funding clashes with the ethos of small-batch beans and what’s currently driving the local coffee scene. 

Despite a handful of investment pitches over the years, Andytown has expanded to six locations around the Bay Area without taking any of that funding. “We’re very proud of that—and of our scrappiness,” Crabbe said. 

For her, there’s a joy in not having to justify to an investor how her values play into how she runs Andytown. That spans major decisions on wages or staffing to minor ones, like keeping extra whipped cream free. 

“We wanted to grow our company our own way, and that way might not meet the standards or expectations of some big firm,” she said. “There are certain ways that we run our business that make sense on a barista level, that wouldn’t make sense on a VC level. And I love not having to explain things.”

Grand Coffee founder Nabeel Silmi echoed Crabbe’s point with blunter language: “Specialty coffee doesn’t scale well.”

The way that his team runs their two Mission District cafes wouldn’t mesh with an investment-fueled growth spurt, he said. Simli believes those expectations would tarnish Grand’s commitment to being a community hub (it describes itself as “The Stoop of the neighborhood”) and strain its relationships with sustainable coffee suppliers. 

“We value our connection to the coffee owners and producers that we work with,” Silmi said, “And we can’t scale that and pay the prices that we pay.”

Grand tends to work with smaller operations, with a focus on eco-friendly production. A big, fast expansion can necessitate bigger suppliers, which could affect your coffee’s flavor profile, according to Grand’s co-owner, Adrian Lopez. 

“Sometimes as companies grow, you notice that they start to cut corners,” Lopez said. “Because they’re trying to save a penny or two or because they’ve reached a scale where there are only so many places you can get enough coffee from.”

In that vein, Ritual Coffee founder Eileen Rinaldi said that the idea of faster growth through investment funding hasn’t aligned with her values. 

“Generally what happens when PE invests in companies is they look at how they can scale, become more efficient and cut costs,” she said. That can lead to coffee prices that are below the cost of production for farmers, which isn’t sustainable, particularly as climate change affects crops. 

“Shops like us pay more,” Rinaldi said. “I want coffee farmers to see a future in coffee farming.” 

Andrew Barnett, a self-described “coffee freak” and the founder of Linea, which runs its roastery in Potrero Hill, believes both customers and employees care about a company’s impact on the planet these days. 

If someone’s buying a cup of specialty coffee—versus swinging by Starbucks—they want to feel good about who they’re supporting. “It’s important that our coffee is really great, but also that we have purpose,” he said. “If you don’t have a real mission, you’re a dead-end street.” 

Grand’s Silmi also believes that workers and customers care about being grounded in values and community: “It’s very intimate, the relationship that cafes build with their customer base and their community,” he said. You can’t scale that authenticity, he added: “It’s called, ‘selling out.’ And the question, at the end of the day, is who’s willing to sell out and for how much?”

Although local cafe owners shared similar reasons for embracing slower growth and avoiding outside funding, they all insisted that they don’t begrudge anyone who takes the opposite tack. Frankly, San Francisco is a damn hard place to run a coffee company. 

Costs for rent and adequate wages—as well as inflation’s effect on everything from milk to cups—have continued to balloon.

“It’s just such an expensive place to have a small business,” Rinaldi said. “It’s an expensive place to live.” Juggling costs and profitability while trying to avoid selling “outrageously priced” drinks is a constant struggle, she said. 

Still, the founders say they’re energized by the latest crop of coffee entrepreneurs breaking new ground in San Francisco, including through creative ingredients or South Asian-inspired brews. 

Another bright spot, financially, has been the ascent of shared roasting facilities like CoRo and Pulley Collective, which allow people to rent time on machines, without hundreds of thousands of dollars in upfront costs. Cooperatives have made it possible for “micro-roasters” to pop-up and experiment, Grand’s Simli said. 

Having relied on that kind of roasting co-op itself for years, Grand is now weighing the possibility of opening up its own facility, given its recent growth. And it will do so without looking for a big outside investment—or at least that’s the plan as it stands today.

“When a big multinational comes up and makes a billion-dollar offer to us, maybe we’ll want to change our minds,” Lopez quipped.