#44: Creating Sustainable Careers in Specialty Coffee | Charles Jack | SCA 2018 Lectures

As a barista or production roaster, it’s hard to make a living in the specialty coffee industry. Some of our industry’s brightest, most passionate, and creative individuals ultimately leave coffee for other higher paying industries even though their true passion lies in coffee. This is a shame as these people are the representatives of our industry – they are the direct connection to the consumer and are the keeper of our quality standards.

In order to progress our industry and grow a truly sustainable specialty coffee presence, these people need to be provided for, given a career path, and paid in a manner that’s competitive with other professional industries. The key to being able to provide these opportunities lies with the company owners. The age-old question Charles Jack asks in today’s episode is this: Can you run a profitable business and still have enough money in the tank to provide a living wage for your employees?

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Table of Contents

0:00 Introduction
2:15 Introduction to Cat & Cloud and the issue around sustainable careers
8:15 Why it’s difficult for the coffee industry to offer more sustainable careers.
11:15 What is a sustainable career? Affording a house, offering a sustainable income, offering challenge and growth opportunities and employee ownership.
16:15 How does an owner create a business that can offer sustainable careers?
23:00 An explanation of the financial metrics on which Cat & Cloud bases its business model
37:30 How to build out a growth plan – profit-sharing, employee benefits, giving employees ownership of the company
53:50 Audience questions
1:15:45 Outro

Episode Transcript

0:00 Introduction

Heather Ward: Hello everyone, I’m Heather Ward, Senior Manager of Content Strategy at SCA and you’re listening to the SCA Podcast.

Today’s episode is a part of our SCA Lectures series, dedicated to showcasing a curated selection of the extensive live lectures offered at SCA’s Specialty Coffee Expo and World of Coffee events. Check out the show notes for relevant links and a full transcript of today’s lecture.

This episode was recorded live at the 2018 Specialty Coffee Expo in Seattle. Visit coffeeexpo.org to learn more about this year’s schedule of lectures – and get your tickets!

As a barista or production roaster, it’s hard to make a living in the specialty coffee industry. Some of our industry’s brightest, most passionate, and creative individuals ultimately leave coffee for other higher paying industries, even though their true passion lies in coffee. This is unfortunate because they are representatives of our industry – they are the direct connection to the consumer and are the keeper of quality standards.

In order to progress our industry and grow a truly sustainable specialty coffee presence, these people need to be provided for, given a career path, and paid in a manner that’s competitive with other professional industries. The key to being able to provide these opportunities lies with the company owners. The age-old question Charles Jack asks in today’s episode is this: Can you run a profitable business and still have enough money in the tank to provide a living wage for your employees?

Charles Jack is Co-owner of Cat & Cloud Coffee in Santa Cruz, CA. Prior to starting Cat & Cloud Coffee, Charles spent 3 years in a Deputy-CFO role, running business operations for Verve Coffee Roasters. Charles holds a degree in Finance from Tulane University, and spent 6 years as a Wall Street investment analyst for multiple private financial companies. After leaving Wall Street, Charles discovered coffee while spending a year working in Ethiopia, Kenya, and South Sudan as part of TechnoServe’s East Africa Coffee Program, a program that championed smallholder coffee quality and access to markets for more than 100,000 farmers in East Africa.

Okay Charles let’s get started!

 

2:15 Introduction to Cat & Cloud and the issue around sustainable careers

Chris Baca: So, good morning everybody. Thank you so much for coming. Thank you for taking the time to be here. My name is Chris. I’m a co-owner of Cat & Cloud in Santa Cruz, California with Jared over there and Charles who you will you be hearing from today and when we set out to build Cat & Cloud, we really wanted to build a company that put its people first, that fostered real growth, real development opportunity for people to creatively express themselves and come away from their work experience at Cat & Cloud learning so much more than how to just make and serve a great cup of coffee. As it turns out, to be able to do all those things you first need to run a really sustainable and a really efficient business to have some gas in the tank to get where you’re going and that’s where Charles really shines.

He has been an awesome member of the team and Chuck always wanted to downplay his accomplishments and he’s really humble, so we have to toot his horn for him. So, a little bit about Chuck. Chuck has a background, he worked on Wall Street for years analyzing investment options for VC funds, managing the portfolio of over a hundred million dollars. He’s worked in the green coffee sector for NGOs in Ethiopia, in South Sudan doing financials for them and he’s crunched some numbers for some really big names in specialty coffee. But aside from all that big kid stuff he’s just a really nice guy and he always finds time to do the little human things.

So, every time we have a new hire on staff Chuck takes them out to lunch for a one-on-one just to kind of learn about them and see what makes them tick. So, Chuck has been just amazing and it’s an understatement to say that without Charles, Cat & Cloud really doesn’t exist and the things that we do just wouldn’t be possible.

So, if you’re here that’s step one and if you believe the same things that we believe or if you just want to run a really awesome sustainable business we think you should listen to what he has to say because he’s got some good stuff and he’s got game. Chuck Jack!

Chris Baca Any questions?

Charles Jack: No. I’m going to go through a lot of information today and if you guys have any questions of things that I don’t touch on or you want me to touch on deeper or other questions related to what I’m talking about just email us @podcastingcatandcloud. These guys are always trying to get me on the podcast more.

So, if you guys have questions and things like that, that go deeper than what we talk about now feel free to email us there. So, let’s talk. What are we’re going to talk about today? What is a sustainable career in coffee? Why is it so difficult to create a sustainable career in coffee? The three things that really as business owners that we need to do to put everybody in a position to succeed. The heart of this talk is that employee ownership is the way and that’s a really a key piece of what we believe in and what I’m going to talk about today. Is that being able to create a sustainable career in this industry, which is so hard that employee ownership has to be a part of it. We’re going to wrap up after that and then we’re going to do Q&A. Hopefully, we’ll have some good time for that.

So, who is this talk for? It’s mainly when I put this presentation together it’s for two groups of people. One is the like Kristen, she’s our Portola Cafe team lead. It’s for the coffee professional and for everything that I talk about today I want you to view it through the lens of, is your company providing this for you? Is your company helping you progress in the way that you want to progress, and do you see the opportunities that I’m going to talk about today? Just sort of show of hands, how many of you guys are non-business owning coffee professionals?

Awesome, and then, so the other group is like my bud Jer Bear right there, business owners like all of us. Just again for you as business owners to view what I’m talking about is, can we implement some of these things to really think more about the employees who are moving our business forwards and to view kind of everything I’m talking about kind of through that lens? But, why is a career in coffee so hard to achieve? As we begin to pose this question, some people say coffee is the second most traded commodity in the world after oil and there’s so much money that flows through our industry. Maybe most of it goes to Starbucks, but the independent sector is really growing, and we have an opportunity with all this entrepreneurial spirit and with all these businesses to kind of change the way that coffee has been perceived in the past as a low-income non-sustainable career situation.

8:15 Why it’s difficult for the coffee industry to offer more sustainable careers.

Charles Jack: Yeah. So, why is this so difficult? I’m going to talk about four things. The first one is there’s a productivity issue surrounding how different businesses and different industries operate. Owning a cafe versus a technology company to go to extremes. In the metric, I talk about this. I talked about this on a podcast about a month ago is, I like to look at the metric that’s gross margin or gross profit per labor dollar and it’s a really technical metric. But, essentially it’s saying for every dollar of labor that you have in the café how much gross profit are you producing? For us at Cat & Cloud, it’s around two. For Google it’s like 10,000 or something but there are issues around like how much labor it takes us to produce the revenue and income and contribution that we receive in the cafe.

So, again even within coffee our Cafe runs at about a two, our wholesale roastery business. is about three and a half. You get a little bit more income contribution for the labor that’s required in the roastery and then our web business is like a 5. So, you can see how at the cafe level that is really kind of the most labor-intensive part of your business, which we all know. The second thing is just operational issues. I really believe that we can be better at running our businesses and at this money really with our desire. It’s like this money can go to help employees and provide more for employees. We’ll talk a little bit about benefits later, different and structural issues, different businesses. I think one of the really awesome things about our industry is how entrepreneurial it is and you’ll often see successful baristas, successful roasters starting companies, but they may not be starting the companies with maybe a financial mentor in mind and getting up that financial learning curve very steeply.

So, there’s some structural issues in how you set up your business that would in my mind, address how flexible your business will be if you want to give employees ownership in the future and finally, growth. I think in some parts of our industry growth is a four-letter word, but we think about it at Cat & Cloud as how do we need to grow? How much do we need to grow to be able to create the income and the profit to provide for our employees the way we want to? So, everybody’s going to have different ideas on growth. But, if any of you have ever worked for a coffee business that has one café. I would never go to work for that business because it’d be very difficult for that business to provide you a sustainable income. If they’re just going to have one café, they’re never going to grow.  I’m not going to go work there.

11:15 What is a sustainable career? Affording a house, offering a sustainable income, offering challenge and growth opportunities and employee ownership.

Charles Jack: So, what is a sustainable career? I’m going to argue it’s four things with the main thing being that it provides you the ability to buy an income that provides you the ability to buy a house. So, not necessarily this house. This is Jack O’Neill’s house in Santa Cruz. He invented the wetsuit and the O’Neill surf fame. It’s the only house in Santa Cruz that’s allowed to be on the cliff. But, a house for the majority of Americans in any business or any industry, your house is the largest asset you’ll ever own. It’s a big part of your retirement and really anything that’s going to be able to provide a sustainable career in my mind has to include and help you buy your own house. How many coffee professionals, non-business owners own their own house? Exactly. I would say how many business owners own their own house?  It’s better. We’re not there yet, but getting there.  Yeah, but it’s a real thing and that’s how we think about it. How can we get our employees to a place where they’re with us 5, 10, 20 years and we need to get them into a house.

So, along with that I think is an income that allows you to be in a position to buy a house and third I’d argue that really a sustainable career is one that provides challenge and growth opportunities throughout your time with the company. One of the things that really pisses me off is working for a company where they hire in above you. That sucks and at Cat & Cloud we hire everybody from within so everyone who moves up within our company starts either in a cafe or the roastery. Yeah, I understand there’s an idea at some level of hiring people in with a skill set but honestly we believe just from a company point of view that we’re going to take the extra time and effort and train people.

We’re for HR, we’re going to be hiring our first HR professional soon and we’re going to send them to a program, it’s a certificate program. It’s five, seven thousand dollars for them to do but that’s really building people up from the inside versus going out and hiring people in from above and that it just demoralizes people, and that’s not building a sustainable culture or career and that really piss me off, you can tell.

So, for us at Cat & Cloud finally, the fourth thing and then I’m going to kind of harp on this throughout and talk about it more in the final section here. A sustainable career involves employee ownership in the business. I’m going to talk about different ways that this is possible but it’s something that I think is really crucial, just due to the economics of coffee and cafes and things like that and again, in an industry where so many entrepreneurial, I talk about roasters, baristas starting companies. We’ve all been there making US$10 an hour. So, it should be an industry where we’re looking out for those younger people within our companies and wanting to bring them up and help them build that type of career.

Alright. So, what is a sustainable income?  I’m going to argue it’s not cash floating from the ceiling to sit on your espresso machines but, yes. So, the majority of people that work in coffee live in probably the US$20 to US$40,000 income range annually. That’s $10 to $20 an hour and it’s not sustainable. Where the minimum wage is going in California, going to $15 an hour plus tips, take home is around $40,000. You’re getting closer, but I mean US$20 to US$40,000 a year is not a sustainable income. So, I kind of looked, there’s a few studies, peer research, US Census Bureau defined middle class in the US as US$55 to US$65,000.

So, I’m going to throw out US$60,000 as a place where you’re trying to get people in a position, especially they have a partner or something like that to be in a position you can buy a home, have some money where you’re not living paycheck to paycheck and again equity is going to be a part of that. Just some other US$60,000 jobs, its corporate recruiters, entry-level software engineers, corporate accounting, marketing sales, registered nurses. I want to see more coffee professional jobs in that list.

16:30 How does an owner create a business that can offer sustainable careers?

Charles Jack: Alright, so how do you get there? I’m going to argue at this point that the owners are the problem and part of the solution and really the three things that you have to get right as the owner is the structure and funding of your company, the operations of your company and the growth of your company and that success in these three areas is going to give you the flexibility to have the money and structure to take care of your employees in a better way. So, as a coffee professional, view this as the company that I’m working for.

Do I know what the growth plan is? Are people being transparent with me? What does the structure look like? Just view it through that lens as well. This is kind of my mantra; these guys hear me say it all the time. If you don’t structure and run a good business, there won’t be money to take care of people. This is my mantra throughout the whole thing. So, let’s transition and talk about running a best-in-class business and a business that will provide careers for our employees. Again, if you’re coffee professional and you’re not noticing these things happening, it may be an issue long-term and, you’ll be there for a few years before you find out that there isn’t the money to take care of you in the way you thought.

Alright, so I’m going to segue into this with the idea and for the people who do run businesses out there that running a business is hard. It’s really hard. There’s an exercise when I went to college where they’re like, look to your left, look to your right one of those people won’t be there next year when I was a freshman. So, it’s kind of similar. So, if you look at yourself and four people next to you, one out of every five businesses fails within its first year. So, you and the four people next to, one of you won’t be there next year if you all started your business at the same time. The SBA also says 40% of businesses fail within the first three years.

So, Cat & Cloud, we’re like a year-and-a-half, we’re halfway there, still going and finally only 4% of all small businesses reach a million dollars in sales. So, running a business is hard. I’ll point to Starbucks a few times throughout this. They closed 600 stores in 2009. Obviously, the economy wasn’t doing well, but the main reason they cited for those stores was location and not getting the traffic that they needed, 600 businesses with employees that closed down. So, this slide I put in here in particular, this is Jack Harris from Blue Lagoon Coffee in San Diego, and he’s a wholesale partner of ours. One of our goals in our wholesale program is to help the people we work with run better businesses.

If we can make them better that’s going to help us as well and so, we do an annual wholesale business forum where we get a bunch of our wholesale accounts together and talk through the challenges of owning a business, running a business, share information. How can we all succeed together? It was a really powerful event that we did, and I think it’s just really important in that way that we support each other and be resources for each other because it’s hard.

Alright, so, the first part I’m going to talk about, I’ll cruise through this because it will take too long in this section. I’m going to preface this by saying that company structure is important. Throughout my career, I’ve just as an investment analyst and with different coffee companies that I’ve worked with or consulted with, I’ve been in a position to have access to how companies were funded and structured. A good company structure at best it’ll help you, give you kind of the flexibility to be able to take care of employees and a bad one will kind of limit it. So, we believe in transparency at Cat & Cloud. So, we have shown all of our employees what our company structure and ownership looks like.

So, how many people out there work for a company where the owners have shown you what the structure and funding and ownership of the company look like? Alright, a few. Yeah, I would like that to be everybody. I think transparency goes a long way in connecting the owners’ vision with what people on the front lines are doing day-to-day. It’s transparency, its alignment, it’s getting the right people on the bus and them understanding what your vision is. Things I recommend as an owner retain as much control as you can. Start slow prove your concept, go to the bank. The bank is a scary place, but it will be your best friend when you show them that you’re running a profitable business.

The three of us, we’re equal partners, we’ve shown a third and the bank has funded, we’ve got our two stores. We’ve got two more that we’re going to open by the end of the year. The bank has funded all of our stores and that’s because they believe in the business that were running, so start that relationship early with the bank because partnering with the bank instead of giving up equity right. We want to preserve equity, carve it out for employees and you can’t do that if every time you open a new café, it’s a different entity and there’s giving up 50% of ownership or 75:25. There’s different structures that you can use to open up different cafes, but I prefer just like a simple, single entity company structure and it doesn’t have to be an LLC, but this is kind of what ours looks like.

It’s simple for taxes, simple legally and it allows you then to carve out. This is kind of important. It allows you to carve out for employees ownership of one entity. If you have a business where every cafe you open is a different entity, it becomes hard beyond just like aggregating all the data and information from all those cafes together. It becomes hard to really carve out for your employees ownership from one entity. So yeah, I just like to throw this in throughout. Structure and run a good business, there will be money to take care of people. Alright. So, this piece number two, going to talk about best-in-class operations.

 

 

23:00 An explanation of the financial metrics Cat & Cloud bases its business model on

Charles Jack: And so, what I’m going to talk about is a specific business model. It’s not a restaurant. It’s a café/coffee shop. We’re going to look at some numbers and it works. It’s the way we run our business. I’ve been involved with a number of other businesses that are successful who run their cafes this way and yeah, it works. If you’re running a restaurant., it’s not this business model. This is more of a café/coffee shop business model and it’s kind of helped us methodically move from one café to two cafes to three, four. Alright. So, there’s a few assumptions in this business model. One is that your cafe is paying full wholesale price for the coffee and the pastries if you make them. If you’re a roaster/retailer that you’ve set your company up where your roastery is its own department and basically like our cafes order through our online ordering site the same way that our wholesale customers do, and they’re charged the same way that our wholesale customers are.

So, that way you’re really being able to see what the true economics of your roastery. and your cafe are. You’re not subsidizing your cafe as, “I’m making like a 40% profit at my café, they’re awesome.” No, you’re not because you’re not comparable to other cafes and when you look at banks or investors, you’re going to have to explain this whole thing of I’m subsidizing my cafes with my roastery. No, they should be separate departments and if you have a bakery the same thing. It should be separate departments where the bakery is selling baked goods to your cafes and it’s kind of like it cancels out, it’s a sale for the roastery, it’s your cost of goods for the cafe’s. They cancel each other out, it’s just a transfer but you’re looking at the roastery as its own business and the cafes as their own business.

So, the first metric. If your cafe does not make US$2,000 a day. I do not want to go to work for you.  It just creates a really high hurdle to success and to scale. If you are trying to build a company that will be able to take care of employees. If all your cafes are making US$1500 a day there’s not going to be the money to be able to, your company’s not really going to be worth much and there’s not going to be that income to supplement whatever salary you’re paying them through ownership. The ownership isn’t really going to be worth anything. So, yeah, we kind of look at this with every store that we open, and our average ticket is between US$7 and US$8 and so, if we can’t get 300 people, if we’re not pretty much 100% sure that we can get 300 people through the door every day we’re going to pass on that opportunity, and it’s just part of scale and how our cafes run and what our vision is for what our company is going to be and again, on the flip side, if you’re coffee professional and you’re working for a cafe that does like US$12/1500 a day. I’m going to argue it’s going to be really difficult for them to provide you a career a longer-term doing that.

So, after your daily average, we’re getting technical here with a gross margin. Your gross margin is essentially your sales minus your cost of goods. Your sales minus the cost of the things you sell gives you your gross margin and gross profit. So, this sales mix and these margins they work. It’s part of this business model that works. You sell 60% coffee, 20% food, whole bean, tea, merch and these are the margins you need to make on those products, and this is with us charging our cafes full wholesale price. You should still be making a 60% margin on your coffee drinks and this margin includes coffee, milk and cafe supplies. That’s what’s involved in the cost of goods for the coffee line item. Food, if you’re selling food and you’re getting a 30% margin, no, you got to find a new provider because you need this as a cushion to set up the rest of the P&L success and it doesn’t have to be exactly this, it’s not going to be this exactly every month but on average you should be in this area.  It’s all right.

So, I’ve got a question on this one too. So, why might a restaurant have a lower gross margin than a coffee shop? That’s like your food percentage is higher and it’s at a lower margin. So, it’s bringing your overall gross margin down. Most restaurants operate in a 5 to 10% net income. They’re just riskier, you all hear about restaurants that come and go and fail. It’s a riskier business than a coffee shop and we want give as much cushion as we can for the expenses that have to flow through the business.  Everyone’s biggest expense, labor. So, what kind of labor percentages should you be shooting for? 25 to 30% is a pretty standard rule. Anything under 25% and you’re probably not paying your employees very well, burning them out. You don’t have enough staff, you’re not providing the best service that you can. Anything above 30% and you’re not being as efficient as you can and it’s going to be detrimental and have a negative impact on the business.

So, at Cat & Cloud we’re closer to the 30 just because of the benefits and things that we offer but we’re really hyper-focused on making sure that we’re within this range. And when you look at this number, it’s inclusive of health insurance, PTO, payroll taxes. It’s an all-in number for your payroll.  Looking at this picture. What is your most important fixed expense in your business? Rent. Yes. I heard somebody say it. So, the real title of this slide will be “Bad Leases will Kill You. ” Your rent structure is super important. We were lucky with this spot, not lucky, Chris and Jared building a community in this neighborhood over 10 years allowed us the opportunity to get a lease where we are here and our rent here in last year was 3% of sales. 5 to 7% is not bad. I’ve seen 10%, that’s not good. I’ve seen 15%, that’s even worse. The whole kind of expense section of your P&L should be 10 to 15%.

So, if you’re paying 10 to 15% in rent. it’s going to be really hard to maximize the operations in the financials of that café and it is. The biggest thing that I’ve seen slow down or really hurt businesses are companies that feel like they have to sign a lease and they sign a bad lease and equally as bad is to get in bed with a bad landlord. They will hinder what you’re trying to do at best and at worst they will cripple what you’re doing. A story from a friend of mine is they’re getting a loan from the bank, they’re moving along. But, when you get an SBA loan, your landlord has to sign something that says that they’re willing to give up the title to a lot of the equipment and stuff in your Cafe and their landlord didn’t want to do it. So, they’re like six months into their build out. They’ve put all this money into it and it literally almost cost them their business. They were able to finally mediate their way through it, but understand these things and understand who your landlord is and really get to know what kind of person they are because that could suck a lot. So, really from this rent is the ultimate fixed cost including triple nets.

Net income, the bottom of the P&L,15%. 15% is great, 15% best-in-class, you’re maximizing the financial abilities of a cafe or coffee shop while still, what I believe providing the service that’s going to help you grow the business and bring people back. We kind of talked through the numbers at 60% percent gross, 30%. Let’s start with 60% gross profit minus your 30% for labor minus your 15% for expenses. You’re at a 15% net income and this is a number that banks, investors, people like this number. Starbucks, I’ve had conversations with people that work there. They target a US$400,000 build out in their normal cafes and a 35% return on investment. That’s essentially we’ll look at in a minute, but that’s essentially what this number gets you to through their cafes run at a little bit higher net income just because they’re Starbucks. But, really this is where you want to get to and if you can do this it’s really going to help you in everything else you want to do. So, this is our goal and Cat & Cloud in our first year, we’re between 10 and 15% But this is our goal in this is where I want to get to. If our store managers hit 15% for a year. They get a $10,000 bonus because this is where we want to get to.

So, let’s go real life. This is a Cat & Cloud P&L from December 2017 and let’s roll through it. So, from right to left, it would all be up and down, but it’s cut up from right to left. So, first daily average. We did about US$2700 a day.  Moving down cost of goods margins. Coffee good, food good, whole bean, merch, tea and RTD stuff good. 59.6, we were close. Actually, and it’s interesting because for us in December. Actually first, so let’s hop back up and look at the mix. Lower coffee or as I say 60% coffee. And this is kind of a seasonal thing. In December we get a lot of people buying more food, buying more merch, buying more coffee as gifts and things like that.

So, for December our numbers kind of tweak a little bit but for most of them we’re closer to what I showed you before but even with this kind of tweak and even with little bit more food than I talked about, if you’re getting that margin, you’re still going to hit the right number and the gross profit and the gross margin. So, on the right side then kind of looking down rent or payroll around 30%, rent 3% and, point out your attention to, we talked about gross profit per labor dollar. Our gross profit was US$48,000, our payroll is 24. It’s around two to one and I think most cafes, a lot of cafes are kind of in that range. And then all that kind of leads down, we talked about 60%, 30% labor, 15% other expenses, bank fees, depreciation, insurance, interest on our loan, rent. We must have got a credit in that repairs and maintenance side. And then selling, marketing are we put like discounts and things like that on that line item and then utilities.

So, they’re about 14.4 all in, 15% bottom line and so, this is like what we’re shooting for every month and we think this is possible for everybody. This is kind of what you want it to look like and as well, we talk about a lot of people starting businesses as successful baristas, roasters other types of coffee professionals. You probably have an outside bookkeeper. Your bookkeeper should be giving you this by the 15th day of the following month every month. It’s so important that you have good numbers to look at so you can see the trends that are happening, and you can make adjustments. Even example from us when we first opened is we kind of understood the seasonality because I was over it before and but really in Santa Cruz, July is our busiest month all the tourism that comes in and then August all those people go back to school, there’s like smaller groups.

So, we didn’t adjust our labor fast enough and when we saw July, July was awesome, but August our labor was way too high, and we just hadn’t made the switch kind of knowing that our seasonality was slowing down in our daily average was 10 or 15% lower just understanding your seasonality as well is super important and adjusting your labor. And you can’t do that if you’re not getting current financials. If your bookkeeper can’t give you this, for March by April 15th, find a bookkeeper that can because it’s standard practice.

37:30 How to build out a growth plan – profit-sharing, employee benefits, giving employees ownership of the company

Charles Jack: The third topic in this section, growth. Again, I’m going to harp on if you own one store and you never want to grow, I don’t want to go work for you. I don’t think there’s a career there and I don’t mean, the other extreme is we’re now going to open 50 to 100 stores and sell our company for a billion dollars to Nestle. That’s not that’s not what we’re trying to do, but I’m talking about understanding, just throwing shade, sorry. But I’m talking about understanding what it’s going to take to provide for your employees what you want to provide for employees and what it’s going to take financially to get there and then to build, to plan and build out your growth plan accordingly. So, for us we kind of think, we’ve got two stores going that’ll be four. We’re going to chill out and 2019, but over the next five to ten years maybe it’s getting us to 10 stores where we have the income. and the profit and things like that to be able to get the ownership that we give out to people to be worth something.

So, it’s just growth in terms of thinking almost like backward engineering your growth. If we’re going to take care of our people and we need this much money to do it, how much growth do we need to get there and again, involve your employees in this, it’s not just me, Chris, and Jared that are deciding this. We have a leadership team including us of 10. So, it’s the three of us, it’s our four cafe managers, our wholesale team lead, our education team lead, our roastery team lead, yep, seven. It’s those seven employees who are our leadership team that we’ve trained and brought up and us and we get together every quarter. We do a quarterly off-site. I can’t say enough about planning and making the time to get together to work on the business instead of in the business. I hear that stupid thing all the time, but take time to plan and it’s hard to find that time but we, every quarter the ten of us get together and talk through these big things. How do we want to grow? What do we want to do for employees?

I think it’s super important that there’s that kind of communication and buy-in and just teamwork really from like the owners and the people that are working with you. That’s super important.  The bottom line is already of growth is growing at a pace that provides increased opportunities while maintaining our mission, vision and values and those are all developed kind of with that leadership team. So, this is what I believe the path to sustainable careers is, its employee ownership. If any of you guys were here Expo last year we bring different people, we actually pull names out of a hat for people that come with us. But Grace and Alex are here. Grace is our Roastery Manager team lead and Alex is our Wholesale Manager and we’re kind of in a transition. In the next section would talk about what we can do for employees in the business cycle from, we’re all at one store at some point too. For us 10 stores or whatever your growth plan might be.

So, benefits are the first step and I think at Cat & Cloud we’ve put together an industry-leading benefits package. We do 10% retail profit sharing. So, 10% of the profits of our cafes go into a pool that are divided up to all employees, full-time and part-time pro rata based on hours worked. We have four weeks of paid time off for full-time employees two weeks for part-time employees. and this is something we’re really passionate about. Everybody that’s worked in retail, you’re afraid to take time off because you’re not going to get paid and you’re just locked into this cycle of working and working and working and it sucks. So, that was one of the first things that we committed to doing is that all of our full-time employees get four weeks of paid vacation. And again, we can do this by running the kind of business that we run and this is what we communicate. It’s up to us to communicate this to our employees. We go over our cafe financials with our employees, with all of our employees every three months at a staff meeting and talk about how the numbers and the profitability are tied to things like this so that everybody understands why we’re doing the things we’re doing.

I think often times there’s a disconnect there and so we want to bridge that gap. We pay half of people’s health insurance. A lot of our staff, if you’re younger than 26, you can be on your parents’ plan. So, we give them $100 a month wellness stipend if they want to go to yoga or CrossFit, Jared likes to say, things like that. Another thing that I really believe in because I’ve been lucky enough to travel a lot and work in other parts of the world are Origin trips. We’ve sent a third of our staff to Origin in the first year and a half. That’s $22,000, it’s a lot of money, but that’s what we’ve prioritized as a really valuable experience for our employees and for ourselves and it’s really cool.

We have each of them kind of give a presentation about their trip and talk through kind of the things they learned and how its applicable to our values and our vision. Another super important thing, you hear leadership development thrown around a lot in our industry. But we send people to the Disney Institute. It’s a world-class leadership development course and I want to say 90% of the people on our leadership team have been to that class and it’s a lot of communication. It’s how we work with people as well. I’m in an organization called EEO, Entrepreneurs ” Organization that I recommend for any business owner out there and we have a lot of awesome leadership speakers. You get a lot of different kinds of supporting materials there as well that we’ve been able to implement at Cat & Cloud, but it’s something we really believe in. just hands-on experience.

We’re building our own leadership course to kind of take these best practices and have our own course that we can run people through. Again, I talked about we promote exclusively from within. This is our culture. We’re not going to hire in people above our employees, and then we don’t pay employees tips Those tips are something that they earn but, we’ve kind of created this service model and training where our average tips are $5 to $7 an hour. That’s something that’s awesome for them. I think it’s toward the higher end of the industry and that’s something that helps them as well. 46 minutes, going long. I know Baca, I know.

So, why ownership? So, giving employees ownership. A lot of owners in other industries have worked really hard. I’ve put all my money in blah, blah, blah. It’s I can cuss here right it’s all bullshit. You want to align your employees with the company, you want them to think about the bigger picture versus just their department. It builds a stronger connection between you and the company. Anything that I’ve been an owner of in the past, you feel connected to it. You feel a part of it and it’s something that you just don’t have if you don’t have that ownership piece. Also, I believe it’s the ultimate way to reward hard work. Chris, Jared and I only do so much.

Really it’s our employees who are doing the bulk of the work, pushing our company forward, creating value, having new ideas and we really want to reward this hard work not just do a pat on the back. Good job, back to work. No, it’s got to be a partnership and I really think that everybody wins here. I’m happy to give up part of my ownership in the company so that we can bring people along with us and all create careers together. We all want our employees to stay 5, 10, 20 years which is something that doesn’t really happen a lot in this industry. So, I really think we can get into this everybody wins mindset.

So, real life who does this besides Google, Facebook, Oracle, Tech blah, blah, blah? Whole Foods, Kind, We Work, as a co-working space. Farfetch is a retailer, REI is rad, all these places have equity incentive programs. They’re all larger companies sure, but we’re going to talk about this in a minute. What we can do as smaller companies. So, if the first thing you can do are benefits as you grow and I think you see it in tech. You start out everybody’s got equity and blah, blah, blah. But, I think three to five years is probably a reasonable timeframe to try to implement something as long as you believe you have the value and growth and buy-in from everyone in your company about going this way.

So, talk about this from the easiest to implement to the most complex profit sharing. Anybody could do this right away. This is just awarding percentages of the income of the company to people. You can do this over time, you can stagger it, you can give it all at once. It’s really easy legally, tax-wise it’s just additional compensation and still, I think there is a bit of ownership that comes with this. Just the better the company does, the better everybody does.

Phantom equity plans. So, this is what actually what a lot of small businesses do and a lot of people I’ve talked to when I was preparing for this lecture. Their companies have phantom equity plans, which are essentially like equity option plans just without the legal and tax complications and I’ll do a deeper dive on a podcast some time and talk about these things. But, we’re looking, and we’ve got an off-site in May where we’re going to talk to our leadership team and say, “Hey, here’s phantom equity plans and here’s equity option plans and which direction do we want to go?” Equity option plans are the full typical ownership plans that you think of, you’re actually transferring ownership. There’s a lot of legal and tax implications for you as a business.

Usually these are a little bit larger companies, but you can do it and it’s like I hear excuses of, “Oh it’s so expensive to set this up and operate. It costs $10 to 15,000 to set up and if this is really a priority for you, think about how much we all spend on roastery equipment, $10 to 15,000 to put this in place for employees is not that much, and then finally equity grants are usually more put in place when companies are bringing in executive talent or things like that or just really anybody have hired talent where they’re going to give them straight up, new CEO comes in, he gets 6% of equity. Here again there’s tax implications with giving someone equity. It is considered compensation it gets taxed on. So, equity grants is not really one that’s applicable. I just wanted to talk about it in the frame of these other things but really probably something that we going to be focused on.

Really just with the work I’ve done is like a phantom equity plan. where you can build ownership for people over time and it’s easy for small businesses to do. They have all the rights of ownership without… Anyone who owns a business knows if you own part of business, you get a K1 which is like a tax document that you take and file and have your lawyers prepare. So, without having to give out like a hundred K1s to all your employees and things like that. If you had a true equity option plan, a phantom equity plan and you can have change of control clause, all the same benefits of true ownership just without the legal and tax complications.

So, this is really what we’re looking at and I just bring this up because I’d love just to have more conversation about this in our industry. I don’t think there’s enough conversation around this going on and I’ll say it again, it was were so entrepreneurial. This should be a part of everybody’s plan for their company even if you can’t do it now, this has got to be part of your plan and again, from a coffee professional point of view you should be looking for companies who think like this because this is the piece that’s really going to help you. You spend time with the company, you grow with the company, this is the piece that’s going to provide the sustainable career.

So, takeaways, again I mentioned Chris, Jared and I, we can’t do everything. Our employees are the ones that are going to push us forward. We want them to stay 5, 10, 20 years, really help us build this company. Do it together reward the long-term value creation and thinking by employees. Get employees to think holistically about the whole organization and how we could run things better, we could provide better service, we can do things simpler. Just really bring everybody together in a way where they are thinking more about the company than about themselves and just keep pushing the mantra of running a good business because if you’re spending money on things that don’t make sense, if you’re taking on projects that don’t make sense, you have to run a good business to be able to have money to take care of people and I would just like say that over and over and over again.

Again, part of that is just having that understanding and putting that intentionality into that part of that business because that’s how we’re going to take care of people, is by running our business this way. So, from the coffee professional point of view, if you love coffee you want to make a career in coffee, do some research. Don’t just go work for the coffee company that’s in your town like, “Oh, there’s a third wave coffee in town, I’ll go work for them.” Do some research, find out what the opportunities, the growth opportunities, any benefit opportunities that there are at different companies.

I think there’s a super important and I actually think it’s really hard in this industry and that’s kind of my final thought is my call to action and something that I’m really passionate about is I’m going to be working over the next year to put together an annual survey where roaster/retailers will kind of voluntarily provide pay benefits, what they provide for pay benefits, growth opportunities, equity opportunities. I’d love to publish an annual survey that helps coffee professionals find places that are in line with the culture and the vision that they want for themselves. Because we don’t have that right now and I think this would go a long way to help. So, you can visit here, sign up for a newsletter and that’s one of the things that I’m going to be working on for the next year, is really pushing other business owners to be more transparent and to be intentional about how we can provide better careers for everybody in the industry.

Thank you very much.

53:50 Audience questions

Chris Baca Any questions?

Charles Jack: Oh, yeah, sorry.

Audience 1: Thank you for the great presentation. My name is Jeff. I’m from New Jersey, own and a coffee shop. We just made the first year so we’re very excited about that.  Serving great product great vibe and stuff like that. But, we’re one of those that we’re still under 1000 a day. We get okay with two out of three of your metrics. Our costs are good, our administrative costs are good, but our employee costs are still 50% because we have room to scale growth.

So, when you’re working with employees that are $10 an hour range, we don’t have the financial place yet to start the employee options and in the things coming. What are suggestions? What do you start where this is a great thing to grow into? If we can get to a 2000 a day shop we can start to implement some of these things. But where do we start now to build that sense of ownership in equity where we’re still tight on the purse strings?

Charles Jack:  No, you’re like in the beginning and give yourself time to build as you’re financially able to build past to that $2,000 and past. And things you can really do in the beginning is give your employees more responsibility. Let them be parts of decisions, let them take on more additional roles within the café. The more you can do to have them be part of the decision-making even at a really small level, it’s really invigorating and motivating. So, I think just transparency, more responsibility, the few people that you see that are really excelling, bring them in and let them be more of a part of the business. I think that’s a good starting spot.

Audience 1: Thank you.

Audience 2:    Hi, I’m Sean from Iconik Coffee in Santa Fe, New Mexico. Thank you by the way for also showing all the metrics and the P&L. That was really helpful and substantive. I have a question about when you have a growing company and you are basically trying to take in the universe everything that’s happening within your business and people that are excited and want to find a place in future growth, but everything that they’re trying to do or implement sort of doesn’t make sense to do right now, or it makes sense to do at this point in the future without deflating them or trying to. It’s difficult to give that context I find without them feeling shot down for their ideas.

Charles Jack: Just that you have employees who have all these ideas, but maybe it’s not quite the right. We actually have a process that we talked about at orientation. It’s five-step idea implementation process where they have to think about these ideas, try to kill their ideas, really sell it to their direct boss. And everybody comes in knowing that’s the process and it’s about intentionality and explaining to our employees the why around everything we do. So, somebody may have a great idea about something, but we’ve thought about that and we’re doing it this way for this specific reason and have that conversation to set it up and then, we’ve got amazing ideas from people but we kind of empower them to really take this idea from a to z and come present it to us and how it’s better than what we’ve thought about, and I think if you give them kind of like a process to go through and everybody understands that, that it puts the expectation in the right place as people have ideas and want to bring them to you guys.

Audience 2: And they can see the merit of it or not? Okay. Thank you.

Audience 3: I had two quick questions one was when you guys do your profit sharing how often do you pay out the employees? Is it every six months, every year, every?

Charles Jack: Monthly

Audience 3: Okay, and then my other question was for you, Chris, and Jared. How do you guys, do you pay yourself a salary?

Charles Jack: Totally

Audience 3: What’s that look like?

Chris Baca Yep, so we’re organized as an LLC that’s taxed as an S-Corp. We pay ourselves a salary just as one of our goals is buying a house and we want to show that W2 income. We’re happy to pay, we pay a little bit higher in payroll taxes versus as your owner of your LLC you can just take draws, but we’re paying into Social Security, we’re paying into these taxes. I want to have social security when I’m old and realize W2 is going to help you buy a house easier than trying to dig up all the documentation of the draws that you’re taking so, that’s what we do. If someday we all own houses, we might change that up, but that’s what we do for now.

Audience 3: Then how did you all decide what you are going to pay yourselves?

Charles Jack: Yeah, I think that’s super. As little as possible where we can still live. What’s that? Yeah, in Santa Cruz. Yeah, because we do have to divide up the money between everybody especially the leaders. It’s really important for us to set up leaders in the different departments and empower them and that’s going to take paying them some money. So, part of that and having three owners is that it requires a little bit of scale. So, we’ve put in the time and that’s why we pushed. We will have been open maybe a little over two years and potentially have four stores and that’s going to help us pay ourselves a more sustainable salary and then be able to take that down the line to everybody that we work with. Yeah. When we started, we paid ourselves what 50 grand. Yep.

Audience 4:  Hi. I just had a question pertaining to your roastery.

Charles Jack: Yep.

Audience 4: How is that structured versus your cafes? I work for a company that’s growing and what was manageable for one person to manage and roast and do pretty much all shipping, it’s become a lot more. So, I’m wondering how much production goes into justifying another person or how do you split/divvy up the work for that?

Charles Jack: Yeah, that’s interesting. Yeah, it’s almost, a separate department, similar in terms of creating a schedule. We run a little lean probably in our roastery, but with almost all full-time people and everybody who packages knows how to roast and everybody in the roastery. We don’t want people to take a pay cut going from the cafe to the roastery, including tips. So, we try to kind of equalize pay that way as well. But yeah, you get to a point where as you’re roasting and selling more coffee. You kind of need to bring somebody in and we kind of fill in with retail people who want to help and like learn a bit about the roastery until we feel like we can justify a new full-time person. So, there’s definitely a little like retail/wholesale or roastery crossover.

Audience 4: Do you mind me asking like volume how many people it takes to…?

Charles Jack:  Yeah, I mean, what do we do. We roast every day and what we send out wholesale orders Monday, Thursday. We send out web orders Tuesday, Friday and we roast every day, pretty much a full shift. So, we are at a point where we have probably three people on almost all the days working. So, one person resting all the time, two people packing and shipping. Yeah.

Audience 5: Hey Charles. Just want to say thanks. Also, my bosses are great, and they treat us really well, but they’re also here so don’t worry Todd. As a full-time employee. how can we come alongside and be supportive to our bosses without overstepping? Because I think a lot of times it’s like when you oversee your own department, you’re like, well, I think we should do this or that but it’s easy to like be hesitant because oh, I don’t want to overstep because my boss has the final say.

Charles Jack: Yeah. There’s a cool term for that called leading up the chain and me and Baca just finished this book called extreme ownership. It was actually really interesting in some of the leadership topics they discussed but one is leading up the chain. How do you empower people, department managers talking to owners?  I think one is just really building that trust and if they can see that they really trust in what you’re doing and that you’ve made an effort to bring them in and they understand everything you’re doing. I think maybe oftentimes there’s a situation where maybe the owner doesn’t really understand how your department works or everything that you do on the daily. Just bringing them in and asking them to spend time with you, talking them a lot about what you’re doing and what your challenges are, and, “Hey, I think we could make it better with this, what do you think?” Understanding where the owner is coming from as well, putting yourself in their shoes. That’s really going to help you because it’s maybe what you value, what you’re thinking about and you may not be on the same page. So, really trying to think about it from their point of view as well and then kind of try to bridge the gap from there.

Chris Baca: I have something to add and in answer to one of the earlier questions. I think a lot of the problems of things are things that can be really challenging can be.

Audience 6: Hi, my name is Melissa and I own Brewpoint Coffee in the Chicagoland area.  My husband I aren’t super rich or anything but when we bought our coffee shop on Craigslist, and I asked, he was my boyfriend at the time and I asked him to pay for it for us and he did and we just opened our third location late last year and, for the first time spent money on a build-out and fancy machines and all those different things. And even though we were able to get an SBA loan it freaked us out to get a really big loan and so, I’m curious to know what your philosophy is on debt. Obviously the better rates and things of that sort. But, is there a certain ratio or what you think about it that’s helpful?

Charles Jack: Yeah, totally. You definitely don’t want to get to over leveraged. How I think about it is, it’s in regard to options? For the first or second cafe bringing on debt versus bringing on a partner and the complications there. But, it is really scary and the thing that gives me comfort is just knowing that not only I, but like everybody on my team understands this and that this is what we believe in growing through taking on these loans and everybody understands this and buys into this and this is what we have to do to be able to continue to operate and pay down these loans. It’s the give-and-take with choosing that path and yeah, I think it’s scary.

But then the more you do it, the less scary it becomes as you get busier and see your model working, but I think our leverage, yeah, you can look at it different ways. There’s debt to equity or debt service coverage ratios based on income. I think you want to monitor it both ways. You want to make sure you’re producing the income to far exceed any of your debt payments and what you have to do. But then, yeah also that you’re not 10 to 1 debt to equity, or just that you’ve so over-leveraged your business that you’re going all in and sacrificing. If downturns, recessions will come, a lot of people in coffee, the last recession was 2008. It’s how are we all going to weather next recession together? I think you have to. I think just having everybody on the same page and understanding the business and knowing what you have to do.

Audience 6: So, I think part of what I’m thinking about is just prioritizing paying off debt in comparison to investing in staff. And so, a lot of times it’s just okay we can all get on the same page that we’re all going to get paid a little bit less for the next couple of years because we just built three cafes in the past three years. But at what point is it okay, it’s your five? We really should be starting to get to a place where we can all own houses. And I think we’re building that but at the same time there’s this part of me that’s just I want to pay off all my debt right away because ultimately, then it means in 10 years then we can all get houses instead of five years or something of that sort.

Charles Jack: Yeah, man, I think the big thing again is just communicating that and everybody being on the same page and everybody buying into that idea that, hey this is what we’re going to do, and this is what we’re going to prioritize. And yeah, if you can do like a little of both, maybe that is a good middle path but … You got some thoughts as well?

Audience 7: I have a question for you. What’s the payback period are you aiming for after a build out?

Charles Jack: Yeah. That’s another thing like sizing cafes and build outs and looking at a three to four year payback period for your cafes and if you can do that. Dunkin Donuts has an 18-month payback period for their cafes. We don’t want to be Dunkin Donuts, but they pay back their cafes in 18 months. So, yeah, two to four years payback period for the cafe is going to help you pay that down sooner I think by just being able to judge your build-out costs versus your income that you’re going to bring in every year. If you’re building out a million dollar store and you’re only making 100 grand a year, that’s a problem. You want to size your build-outs appropriately with how much income you think you’re going to want to make. A $300 or $400,000 build-out and you can make 100 to 150 a hundred fifty a year cool. You’ve paid back that store in three to four years and kind of thinking about it that way.

Audience 6: Great. Thank you so much.

Charles Jack: Yeah. I love the point. Howdy.

Audience 8: Hello, I’m from Costa Rica. So, I’m very short.

Charles Jack: Welcome.

Audience 8: I am a coffee producer and I’m here because I want to learn your challenges and I want to see how maybe we’re always advocating for the producer, for the farmers, for the pickers. But I also see here, and I want to know more about, the fact that you have baristas. I see baristas in the front line like I see pickers at the farm. And, when we’re small farmers, and actually I’m the founder of Farmers Project. So, we’re a team of five farmers and we do direct trade. When we’re small farmers we see a lot of those things you guys see in the competitiveness of the bigger farms and the bigger mills and we see the vans full of Koreans touring the big mills and we’re wishing and hoping that we could get some roasters to come, or baristas to come and see our operations.

So, I wanted to ask you, how did you choose where to go and what is your model to compensate or make Origin trips part of your compensation? Because small producers like us would like to partner with people that are just starting like us. So, you guys can come down and we can partner up from the bottom up, not just when you’re really at the top.

Charles Jack: Yeah,

Audience 8: Thank you.

Charles Jack: Yeah, that’s a great question.  I think it’s hard as a small producer.  I started my career in coffee working with an NGO called TechnoServe, working with Ethiopian farmers and helping form them into cooperatives and connecting them with buyers. It’s really finding those resources that can connect you with buyers that is really hard and really important because a lot of people, I think I speak for us and a lot of people in the US. We have trouble finding like the smaller people like yourselves and a lot of roasters, the more you could learn maybe about importing. Really just meeting as many importing partners as possible and then focusing on quality because if you guys are producing amazing coffee.  I believe somebody will find you.

So, I know, and it may not be all of your farm but some part of your farm, producing amazing quality, somebody will find you and beyond that it’s really understanding your supply chain out and up in the different markets and how can you really get to get an ear with those people. The café imports, the red foxes, all the people that do great importing work, really spending some time there as well. TechnoServe as an NGO, we helped connect producers to buyers. So, even within Costa Rica, are there organizations doing some research about, are there organizations that are kind of connecting smaller producers to buyers and getting you some visibility on the international stage as people hear about certain farmer projects that are happening in Costa Rica? If you can be a part of that then you’re going to get access in through that and that’s what happened for the Ethiopian Farmers that I was working with.

Audience 8: Thank you.

Charles Jack: Yep.

Audience 9: Hello. My name is Myra. I’m from Mexico. So, I’m also short. I’m here from Back of the Yards Coffee in the south side of Chicago and I feel like we share a lot of the same values. Our coffee house is going to be open for a year this May and so, within these last 11 months, we’ve been able to create jobs for 10 people which is super important for us. In our neighborhood, there’s over 4,500 youth between the ages of 16 and 24 that are out of school and unemployed. So, creating jobs is something that’s very important for us. But one of the questions that I have is, we’re actually working on expanding our roasting facility and getting a separate building. Something, I’m not sure what to do is if we should create a separate legal entity or keep it under same name? Because I’m thinking about our financial credit if that will follow us if we create a separate entity…

Charles Jack: Yeah.

Audience 9: …and it’s just kind of like for.

Charles Jack: So, I would prefer to keep it within the same entity and then you can use that buying power from the roastery as you guys look to further expand and keeping it all under one entity is just simpler. I think it’s just simpler all the way around. It’s less complicated, less legal stuff, less tax stuff and yeah, I would just challenge somebody to find a better reason for why it should be separate. I don’t think it needs to be separate.

Audience 9:  Yeah, I’ve just been told for like liability reasons.

Charles Jack:  Yeah, totally, and that’s

Audience 9: Trying to like wait out…

Charles Jack: Respect that is like one thing that people will cite. Yeah, liability, but I just think I had, yeah liability like being sued and that affecting the whole company, but I don’t think there’s much that we do in this industry, besides coffee obviously causing cancer in California,

Audience 9: Just in California.

Charles Jack: But, I don’t think there’s anything that we all do that puts us in that position necessarily.

Audience 9: Thank you.

Charles Jack: Yeah.

Audience 10: Hey man, thanks so much for all this. Justin Carabello, Carabello Coffee, Cincinnati, Ohio, roaster/wholesaler/retailer. Net profitability of 15%. Ownership salaries, is that coming before you hit the 15% or after the 15%?

Charles Jack: So, the 15% is just kind of looking at the cafe business model and then we have the roastery wholesale department and an admin department and I like to look at the wholesale business and profitability and that that’s helping cover some of the admin. So, actually part of JT’s salary, actually all of JT’s salary is spread across our retail. So, they get allocated since he’s the head of retail they get allocated part of his salary which again will decline as you open more stores. So, me and Baca and other parts, but his allocated across retail because he’s in charge.

Audience 10: Give a percentage you’re shooting for in terms of percentage of gross sales ownership salaries.

Charles Jack: Gross sales ownership salaries. I would say no, but I think even as a whole company like 25 to 30% payroll applies there as well.

Audience 10: Including ownership?

Charles Jack: Yeah.

Audience 10: Okay, cool. Thanks.

Charles Jack: Yeah, totally. Awesome. Thank you everybody for coming. If you guys have more questions or want to dig any deeper. definitely email us. We love talking about this stuff. I love talking about this stuff. So, thanks to everyone.

 

1:15:45 Outro

Heather Ward: That was Charles Jack at Expo in 2018. Remember to check our show notes for a full transcript of this lecture and visit coffeeexpo.org for tickets to this year’s event.

This has been an episode of the SCA Podcast. Thank you for joining us!

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