Who Wants to Run A Coffeehouse in Austin, Texas?
By Wayne Alan Brenner, August 22, 2012, 9:57am, On the Range
It's as easy as falling off a log, right?
Ah, maybe like falling off a log while balancing a budget and dealing with a ruined shipment of beans and arguing with neighbors about possible noise violations and trying to keep even pissy customers satisfied and stopping employees from staging a mutiny and – you get the idea.
Running a coffeehouse is, sometimes, a total fucking headache.
But it's also, at other times, among the most satisfying things a person can do.
You probably already figured that. Even if you've never owned a coffeehouse; even if you've never even worked in one; even if you don't hang out in one and sip at the dark tasty java for hours on end, week after week after week.
That's what I figured, too. But I didn't want to rely on my assumptions and make an ass out of somebody, especially somebody named Brenner.
So I made a few phone calls and finessed a few schedules and – here, coffee lover: Four people who run coffeehouses for a living. (Well, three who do that now, and one semi-grizzled veteran who got out of the game after sixteen years.) I gathered these people together – at a national chain coffeehouse, just for irony's sake – and I asked them a bunch of questions about The Biz As They Know It, so we can better see what it's like.
Mark Kamburis currently runs Satellite Bistro & Bar with his brother Marty – but the Kamburises also started and ran Flipnotics Coffeespace for sixteen years before selling the place in 2009. This is the man whose coffee-based business survived, among other things, the construction-nightmare upgrading of Barton Springs Road back in the day. This is a man who knows.
Thomas Gohring has also run a successful business for sixteen years: Master Gohring's Tai Chi and Kung Fu. But now Gohring's also in charge of the coffeehouse he founded in 2008: Kick Butt Coffee. Another welcoming and well-run cafe, with excellent drinks and service, Kick Butt is fighting the good fight these days, over there on the north end of Airport Boulevard – while plans to turn the nearby, mostly abandoned Highland Mall into Austin Community College slog through the next phase of the city's revitalization process.
Steve and Stephanie Williams are the husband-and-wife team who brought us the, well, yeah, you could say spectacularly successful coffeehouse called Bennu, open 24-hours-a-day, over on MLK. They started that in 2009, and now the Williamses continue to expand the business with their nationally distributed Chameleon Cold Brew brand of coffee. (Tangential note: The heir to the Bennu throne, the Williamses' infant son Colin, was also with us there at the [redacted] cafe that day.)
So. Here's the transcript. It's a long one, so you might want to
grab some coffee yourself while learning the answers to the question ~
COFFEEHOUSES IN THE ATX: HOW DO YOU MAKE 'EM WORK?
Thomas: That's a very good question. I'm still exploring that question.
Mark: Who wants to take that one?
Stephanie: That's a big question.
Steve: That is a big question. It's a complicated question.
Brenner: Okay, how about, when did you get into the business?
Mark: November 1993 is when we opened up Flipnotics. Started working on it in 1992, and with our lack of capital and shoestring budget, it took us about a year and a half to open with all the Austin city regulations and planning. We thought, back in '92, that opening up a coffee shop wouldn't take as much as, well, it's like opening up a restaurant. So it took us a while to get through all the city hoops. We'd moved here from Houston with the idea of opening up a live music venue, but we kind of shifted gears once we saw the building on Barton Springs. We ran the Axiom in Houston, and we used to do Coffee House Night on Wednesday – this was back in '89 and '90 – so that kind of spawned the idea of a coffee shop and a clothing store on the first floor.
Brenner: At the risk of sounding, uh, racist? Was there something in the whole Greek-coffeeshop-owner DNA that maybe …?
Mark: Racist? [laughs] Yeah, after a few trips to Greece, and we kinda caught wind of some coffeeshops there, with people playing chess and backgammon and stuff like that. But, contrary to why maybe a lot of people open coffee shops, the coffee was a secondary thing. Our reason was the social aspects of a shop.
Brenner: And Thomas, what brought you into the coffee business?
Thomas: For me, it was 2007 – and it was really on a whim. That was before the recession happened, and I was making a good living with my kung fu school and I was dating someone who was working at a coffeeshop. And I was in line at Bank of America, and the teller was like, "You know, there's no coffee shops around here." And I was like, "Yeah, you're right – I'm gonna open up a coffee shop!" And that night I named it. A month later, I signed the lease. And nine months later, through lots of city hoops, I opened it. That was February 2008, and because it's a business area and not residential, I decided to have a liquor license and to have entertainment. So we have a real strong entertainment scene every night – mostly the music, but comedy and dancing, too. The dancing night is the Blues Dance Night, and we have that every week now. I went to our Jazz Jam on Tuesday night, and that's also big, a lot of national jazz musicians coming in to jam – just on their whim.
Brenner: And, Steve and Stephanie?
Stephanie: I guess our story's sort of different. Steve had years of background in coffee before we opened, he'd been in coffee for ten years.
Steve: Yeah, I started at Mojo's, on the graveyard, back in the day. And opened Epoch. Then opened Bennu after that.
Stephanie: We saw a gap that we wanted to bridge, where we wanted to focus on high-quality coffee, but at the same time make it a comfortable social space as well. Some of the places I've found that are rocking really amazing espresso aren't very community-focused and comfortable.
Steve: And I have a serious coffee addiction, so this way I can make my own coffee and get it at a wholesale price.
Brenner: Mark, you got out of the business?
Mark: Yeah, I did.
Thomas: How long ago?
Mark: Sold Flipnotics on Barton Springs in April of 2009. For many reasons. One, we'd ventured off into restaurants – the Satellite, and did some multiple locations. And then, with the recession and spreading ourselves a little thin, we decided we were gonna move into the restaurant business instead of coffee shops. I was 47, getting a little bit older, and I wasn't as edgy or whatever, didn't feel like I was bringing in any new stuff. And the music, too, was kinda, I don't know. It seemed like it was getting a little stale. And if I couldn't keep it creative, like I felt we'd had it in the '90s, I didn't want to continue.
Brenner: And, Thomas, Kick Butt sends out an email at least once a week, with coupons and contests and all sorts of news. And you sent out one a while ago, that said you guys had to give up your Triangle location, and that, even at the Airport Boulevard store, you're kind of struggling? Like, you were wondering if you could even hang on until Highland Mall turns into ACC?
Thomas: At this point, I'd say "Yes, we can."
Brenner: Oh, excellent!
Thomas: What I didn't expect, in closing the Triangle location, was how many of our customers would come over. The day after we closed the Triangle location, our sales went up 25% at the Airport store – and they've stayed up. And because I have such a tight and strong team, the combination of the talent I have in there and the growth that Airport's about to experience, we're just now breaking even. So I didn't know, but now I know: In the restaurant business, break-even is a real important point. Because, if the product that goes into a cup of coffee costs fifty cents and you sell it for three dollars, there's still no profit there until after you pay your expenses – like paying your employees, and rent, the accountants, the bookkeepers, and so on and so forth.
Mark: I can add to that, when Tom talks about break-even sales and things like that. Over the years of being in it, it's funny how many people came to me, who either worked there or were customers, and were like, "Hey, I'm gonna open up a coffee shop, too!" And I said, "Hold on." And I went and got the P & L, the Profit & Loss Statement, and I'd show them, "Do you realize that there's this cost and this cost and this cost?" Because everybody thinks it's a piece of cake, basically, like when you open up a coffee shop it's gonna be an easy thing. And, somewhat, it is. But as Tom's saying, there are so many other costs than the typical customer or even staff person realizes. It's just like any other business.
Brenner: Steve and Stephanie, you guys opened up Bennu and it took a while, too.
Steve: The build-out part? Yeah, it took four or five months.
Stephanie: We signed our lease on January first, and we opened in April of 2009. So it took just a little over four months.
Steve: I'd spent some time beforehand looking the place over, you know, with the city people. I had them check out the location first with a permitter's eye, like "What are the problems you see here?" So we knew what we were getting into.
Brenner: And after the first two or three months of getting established, the place seems a runaway success.
Steve: Well, we look really busy, but we're kind of on the edge.
Stephanie: Well, maybe not the edge.
Steve: Well, no – but it's not like we're living in a mansion.
Stephanie: We're comfortable.
Brenner: Every time I drive past, all the parking spaces seem full, like that Yogi Berra thing, "Nobody goes there because it's too crowded."
Steve: Well, yeah, but like they're talking about with all the hidden fees – the credit card company wants their pound of flesh, the county tax assessor wants their pound of flesh, the state wants theirs, federal wants theirs –
Thomas: And they don't talk to each other. The State doesn't talk to the TWC, and they don't talk to the IRS. They don't know that they're taxing us in all these different ways.
Mark: Yeah, I don't want to sound jaded, but the system's set up for big business. It really is. And the economies of scale blow away what the small independents ever think about. We had one audit by the Texas Workforce Commission about ten years ago. And we're paying x amount percent, and we've never had any kind of charge-backs, a 100% clean record, everything's going great. And I got into a discussion with the guy, and he mentioned Dell and I said, "So, what does Dell pay?" And he said, "Oh, like .2%." And I'm paying like 1.8% – how many times more is that, right? It does sound small or whatever, but it adds up, it adds up. That was one of the reasons we intended to grow, to get a couple of units and try to get the economies of scale going, to try to stay strong and stay afloat – and compete as well.
Brenner: Were you in charge of Flipnotics when it opened in the Triangle?
Mark: Yes.
Brenner: And then it closed, and then you moved in, Tom – into the same space. And now you're, ah – is the place cursed?
[laughter]
Mark: It's cursed with students who don't know any better.
[laughter]
Mark: When we tried the Triangle location, we'd been courted by the developer, and figured we'd give it a shot. And the students coming in, they were young and I don't know if they knew what Flipnotics was at all – where we were from, what we're about. And our music and the things we were trying to do there just didn't jive with their interests. And if I take myself back to when I was 18 or 19, I can see myself skipping out on the coffee shop downstairs and going downtown, and I think that's what they were doing. And, another thing for us, we were just in the Triangle way too early, too. We were the second shop in there – it was only Mandola's and us. And all the buildings weren't built … So were were just kind of sitting there in the dust, waiting for things to happen, while we were kind of digging ourselves a hole.
Thomas: There are three things for me, but I'll only talk about one that doesn't speak ill of anyone. You have Mandola's, which is hugely successful there, and I know it's hugely successful not just from the amount of people that go there, but it's known that they're doing really well, it doesn't just look that way. So if you're gonna spend $30 or $40 on lunch, you'll go look around and find that paring garage and park – because you're going to spend an hour or longer there, to meet with friends and spend a lot of money. If you're going to pop into a coffee shop and spend like $5, at the most $10 if you get a couple of items, there has to be a parking space where you see the front door of that shop. You can't see the front door of the shop, well – convenience is huge. And we'd open at seven in the morning, so it was no problem then. But around ten o'clock, everybody's coming in for lunch, and it's [shakes his head]. So I' would speak to the perception of lack of parking – and what the reward is for finding the parking space.
Mark: And the residents in the Triangle, the students are living up on three or four different levels – so when they drive in, they drive their car up to the level where they live. And I think they just found it too laborious to walk back down from the second or third floor to get back to the coffee shop. And likewise, when they're leaving, going to school or whatever, they'll go into their cars first before they'll walk down two floors. So they get in, roll on out, and there's no parking, no instant access, like Tom said. So they just go by and pick up something on their way downtown.
Brenner: Steve, when I go into Bennu, if I'm there for a couple hours, it doesn't seem like there's a lot of turnover. There's a lot of students there with their laptops and stuff, and I guess that's a boon – they come to do their work and they buy coffee, right? But is it also a problem sometimes? Like when someone's … just camping?
Steve: As long as someone's buying something, it's not a problem. We have to have the staff pay attention to, you know, "Did you bring your own drinks?" Because if you brought your own drinks, that's not cool. Or "Are you just gonna sit there for hours and not buy something?" Because if they're not gonna buy something, we have customers who could be using that table. Or if somebody buys a small coffee and they're taking up a big table, we'll ask them to let other people sit there too. We try to pack them in as much as we can, and the staff has been really good about that. They understand that their tips are directly tied to people who come in and try to cheat the system.
Stephanie: There are definitely some people who do it deliberately. They get a plastic cup that we only serve water in, and put a straw in it and just sit there with it, you know?
Mark: At Flipnotics, we used to tell them it wasn't Zilker Park. We'd be like, "Zilker Park is down the street You have a few hundred yards to go."
Steve: Nice.
Stephanie: And, you know, if you buy a soda for a dollar, we're happy.
Steve: Exactly. Just get involved. A lot of times I've made the speech of "Look, this is a business, we're trying to make money, this isn't a public library, we're not funded by the government." And now I'm carrying this guy around [gestures toward his son], I'm like, "In fact, you're taking money out of my child's mouth."
[laughter]
Mark: That's one reason we toyed with not getting wi-fi. It was the late '90s, people were putting in wi-fi, and we talked it over and over and over. Should we do this? Won't people just flip up their laptop and sit for hours and hours? Because, Flipnotics, we only had 22 parking spaces, we had to make it work off that. And we made jokes about it, and sometimes it was a problem and sometimes it wasn't, and then we finally decided to get wireless. And it didn't hurt us – in fact, it increased sales. It's funny because, at the time, Newsweek did an article about how wi-fi friendly Austin was, and they put Flipnotics as one of the places – and we were one of the last places to do it. Which, touché, because there were many times when we thought we were the pioneers of something and didn't get credit for it.
Brenner: Okay, here's two final things. And we're gonna do the bad one first. In all your years, whether it was with a customer, with the city, or something about the building itself – what was your worst experience, your worst nightmare?
Mark: Well, I've got two.
Brenner: And this is gonna be on the record, okay, because this is the juicy shit. I mean, I'll leave out names, if necessary, but …
Mark: Okay. It was either the music or the mutiny-on-the-ship with the employees. We'll go with the mutiny.
[laughter]
Mark: It was, what year? Maybe 1995. I thought we had a great staff and that things were going well, but, obviously, the staff – or a couple of the kingpins – thought otherwise.They were taking their studies, their courses at UT or whatever, and they wanted to start a coffee-shop union. And I'm all for it, but we took some heat. And I accidentally picked up the phone while one of my employees was talking to another employee who was at home, about how they were gonna cause all this mutiny. And Marty and I were just floored. We took it personally – we thought we had friends working for us, we're all in this together. But, eventually – well, it turned out things weren't as bad as we thought they were. And years later, the guys came up to me like, "Hey, we're sorry, we realize what we did. We were just in college and young and thinking we needed to change the world, and we feel bad." And the second thing was the music issue. In 1999, a new neighbor moved in and caused us so much headache over our bands playing outside. We'd been there for seven years at that time, playing music outside, no problem. And then the neighbor moved in. And he even told us, after he saw Alejandro Escovedo one night, "That's the best musical experience I've ever had in my life." And we thought, "Cool, we've got him, this is gonna work." But it didn't work. And just every city agency and department he could throw at us, he did – for a long time. We did about ten or fifteen music shows outside after that, where we'd been doing like 70 or 80, and, ah, that was a tough time.
Thomas: Well, I'm gonna pick up on that one, because I've had a lot of very expensive lessons in business – especially in coffee shops, especially with the coffee shop in the Triangle. I'll focus in on one thing: About two months before we finally decided to leave, were getting a couple of additional music shows going. For instance, Ted Hall's Blues Jam – it's 20 years running, it's a huge thing. And I had someone who'd just moved in upstairs and didn't realize it was Kick Butt Coffee Music & Booze. And they didn't understand why there's music playing in a coffee shop, and we'd get a phone call every Sunday. And we weren't technically violating any ordinance, so it put us in a rough spot. And, at first, the Triangle management at the time didn't respond reasonably – they were threatening to evict us. And I'm like, "You guys know what we are, you get our books every month, you see what we're doing. We're losing six or ten grand a month trying to stay open, and now you're going to evict us?" Anyways, we learned that there were special issues with that tenant, and we did resolve it. And the management redid the leases, so that people understood that, if someone's moving in, you know, there's a – they really accommodated – a special leasing agent stepped up and helped us out. But by that time, it was done. I had to leave, or I wouldn't be able to pay people, it wouldn't make any sense.
Brenner: Steve? Stephanie?
Steve: What are our nightmares … ?
Brenner: That you want to talk about.
Steve: Uh …
Mark: You two aren't jaded yet!
[laughter]
Stephanie: There were surprises during build-out, like anybody has. Having to have an extra stall in the ladies' room came as a big surprise.
Steve: Yeah, it's crazy. You walk into some huge restaurant, and we have more bathroom space than they do. And we had to revamp the whole layout we'd already had drawn up.
Stephanie: And this is on a personal, small level, but I think my own bad thing that happened was when I was way too sensitive about the review sites?
Brenner: Like, ah – Yelp, for instance?
Stephanie: Well, you can check our Yelp, it's highly positive. But there was that one review, and I used to have a business account that would come to my cellphone directly, and I'd wake up in the middle of the night to use the bathroom, and I'd read the site. Which was always a mistake, because I wouldn't be able to go back to sleep – you take it so personally. Because we really try to do right by our community and our customers and our employees and our vendors. And we're real people, you know, so when someone goes off about something that's so … unfounded, I guess? You know, people complain that it's so busy in there, they can never get a seat – that's one thing I heard early.
Steve: And we had another coffee shop flaming us on Yelp.
Stephanie: I think we did.
Steve: Pretty sure they sent us nine one-star reviews over a short period of time. One of which was like "It's too Steel Magnolias in here." I don't even know what the hell that means!
[laughter]
Mark: Yeah, I always wondered if there's sabotage going on. We just got another bad Yelp at the Satellite, and we do take it personally. We've really got to do something about Yelp. And they call us, too, wanting us to advertise, and I'm like, "Are you crazy?"
[laughter]
[discussion of various Yelp practices]
Thomas: Well, they're not professional reviewers.
Brenner: No, they're just any idiot off the streets, right?
Thomas: Unfortunately, I have a lot of experience with that, with my kung fu school and Yelp. The worst reviews, I've learned – the worst scathing reviews – are usually from former employees. So that's a tough one. And if someone's telling their story, I mean, that's their experience, and I'm sorry, and I'll email them back to be genuine and apologize, see what we can do to fix whatever it is. But sometimes it's a rant, it's not telling what happened. It's just like a character attack – it falls into defamation. And Yelp's more responsive to that now. Because I'm like, "Hey, this person never even went to my business and they're writing a review about my business – I don't even know what they're referring to here, and I thought that was against your terms of service."
Steve: Yeah, there's some ridiculous reviews. Like, "I love the coffee, I love the place, the staff is amazing. TWO stars."
Stephanie: To bring it back to what Tom was saying, a lot of our negative ones would be from the people we busted with their own food or trying to sit there and not buy anything. And we're always polite about it, but those were the ones who'd go on Yelp and accuse us of, like, targeting them. As if we personally picked on them.
Mark: If they have an issue, those Yelpers out there, just stop a manager, stop an owner, and talk about it there. You're gonna get more out of it right then, than by going online. I mean, people like us, we're trying to do the right thing, we're gonna give you another coffee, were gonna give you another meal.
Thomas: Yeah, we'll try to make it right.
Mark: Exactly.
Brenner: But what makes it right for you? Which is, I'm trying to segue into the final thing here, which is to say: In all the time that you've been working in the business, what's the one time you remember that something happened and you thought "Ah! This is why I'm in this business."
Mark: You know, Brenner, there were a lot of those. And that's why we did it for sixteen years. It certainly wasn't the money – we never intended it to be about the money. My creative outlet at Flipnotics was booking the music. And, man, the names that walked in there and asked to play … the one that did it for me was Alejandro Escovedo. He walked in the coffee shop, and I'm in the office downstairs, and they call me and tell me "Alejandro Escovedo was just in here and he wants to play here." And that just floored me. And that kind of thing happened over and over. Jon Dee Graham coming back from California, called me up and said, "Hey, this is Jon Dee Graham, I used to –" and I go, "I know who you are, you don't need to go into your bio or anything, just getcher guitar and come down and let's do it." So, for me, it was those times with the bands.
Thomas: It'd have to be things that've happened recently. I've been running running my kung fu school for sixteen years., and I think it was the end of year five – which is where we are with Kick Butt Coffee right now, just coming up on the end of year five – where I'd learned a lot of the major lessons of what I'm supposed to know to have a successful school. And I can feel that right now with the coffee shop. I had no idea that, in closing the one location, there'd be such loyalty from customers. I still see them every day: "Oh, I used to go to the Triangle, I'm so sad you had to close it." And it's like wow. I don't work shifts, but I'm at Kick Butt a lot, and it's a great feeling when I have three or four customers in a row compliment the shop, like "This is a lot better than the rant-rant-rant place." And I'm like, "Thank you, thank you." I love Kick Butt Coffee, so it's hard to think I'd have to make a decision on a lease renewal – as I shared in my weekly email a while back. The only thing I haven't liked about it is the financial distress part of it. If we can just break even or make some money, that'd be great. I'll give you one more example: I just promoted someone from inside, from assistant manager to manager. And I had seven other employees talk to me before, during, and after, recommending him for the position. And the team feeling, the feeling of working together instead of working
Brenner: What about you guys at Bennu?
Steve: This kind of goes back to your question when you were asking why we were so successful from the start. We've really focused on our community, on building community relationships. Like, we work with a local garden and give them coffee grounds. So, suddenly, you've got all these people that are gardening there coming into the shop, because they know we're giving back to the community. And as soon as we could, we tried to get our employees health insurance. So now they're telling all their friends, "Look, our bosses are doing this," and that comes directly out of our pockets, and they know that.
Stephanie: And they come back to us. We've had a lot of employees who've left to pursue, you know, landscaping or this-that-and-the-other, and they leave. And we've had more come back to us that left voluntarily than we've had that just stayed away. Which makes us feel like we must be doing the right thing. When we opened, we weren't like, "How can we make the most money ever?" We were like, "How can we have something that's good for the community, good for our vendors, our customers, the growers, and good for our employees too?" So when we see evidence that we're achieving that, that's why we're running a small business, even though it's difficult at times.
Steve: And people have written books there. And you're there. And the guy who came up with Loku, he wrote it there. So you get all these different people there, doing things.
Stephanie: And you're creating a space for that.
Steve: Yeah, and that's really nice. It's really gratifying.
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