Beloved San Francisco-born coffee chain Philz is being sold to a private equity firm. L.A.-based Freeman Spogli & Co. will reportedly buy Philz Coffee for $145 million in a deal that’s expected to close Aug. 8 and would render common stock held by current and former employees “effectively worthless,” according to Mission Local.
The sale would mark the final chapter in a roller-coaster journey for the homegrown company. Phil Jaber, a Palestinian immigrant who grew up in the Bay Area, started selling coffee in 2003 inside a bodega he ran at the corner of 24th and Folsom streets in the Mission.
His brews soon superseded the grocery business, and the shop, crammed with mismatched furniture and eclectic art, became popular for its strong pour-over brews, which were made to order, highly customizable, and came in flavors like mint mojito and gingersnap.
Phil’s son Jacob Jaber took over the business in 2005, and it became a favorite of the tech industry. Google, LinkedIn, and Twitter (RIP) stocked their offices with Philz beans, and the company opened a shop on Facebook’s Menlo Park campus. The Jabers even served drinks at Mark Zuckerberg’s 2012 wedding.
In those frothy days, consumer goods companies were attracting big investment. Philz joined the ranks of SF-based third-wave coffee shops that raised millions in venture funding, including Sightglass and Blue Bottle (the latter raised a stunning $120 million). All in, Philz accrued $75 million from a list of investors that included Snoop Dogg; its most recent round of funding was led by private equity firm TPG in 2016.
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In its heyday, Philz had more than 40 locations in California, Chicago, and Washington, D.C., and Jacob told Forbes he envisioned opening 1,000 shops nationwide.
But the caffeine-fueled expansion didn’t last. Both Jabers stepped away from day-to-day operations in 2021, and former Wingstop executive Mahesh Sadarangami took over as CEO. Philz closed the last of its D.C. locations in early 2023, and the original Mission location shuttered that summer. The company shut down its San Francisco headquarters in early 2024 and moved its offices to Oakland.
Former Philz employees told Mission Local they’re disappointed and frustrated that their stock holdings will be worthless if the deal goes through. In some cases, workers reportedly spent upward of $10,000 to purchase stock. (Holders of common stock are last in line to get paid out when a company gets sold.)
One former employee told The Standard she’s grateful she never exercised her options, but those who did “are really upset about what’s happening.”
Representatives of Philz and Freeman Spogli & Co. did not respond to requests for comment.
Philz’s trajectory echoes that of the other local chains that raised venture funding and have been described as “selling out.” Nestle bought a majority stake in Blue Bottle in 2017, and a former Starbucks executive took the reins at Sightglass last year, as its founders departed.