I was in Grand Central station recently and stopped in for a latte at Joe. I love indy coffee houses in New York. I will go out of my way to avoid Starbucks. Joe was espresso done old-style. Nothing automatic. Baristas who know their beans. When I got home I looked up Joe on the web and found a pretty interesting company. Founder Jonathan Rubenstein was gracious enough to give the rest of us entrepreneurs some perspective on what it’s like to run four superb coffee houses in the world’s toughest market.
Tell us about your business. I would love to know how many coffees you serve a day, how many baristas you employ, what kind of growth you are seeing, the basic stuff like that.
We have four locations. On average, the shops serve about 600 customers a day and overall we serve about 3,200 cups of coffee per day. We currently employ 60 people, of which two-thirds are full-time. Fifty are baristas and 10 are support staff.
In the bible of entrepreneur books, The E-Myth, the author says that just because you love baking doesn’t mean you should open a bakery. Yet it appears you started Joe because of your love of coffee. Is that right, or was there something else that drove you?
I read The E-Myth and loved it. I loved coffee, but that didn’t mean I was a “mechanic” or even an expert. I was more of a consumer who looked at it from a business perspective. While I worked many counter hours at the beginning, I never defined the business by making the coffee drinks myself. I instantly tried to train others to do it, so I could focus on other aspects of our business.
So you opened your first store. When a retail entrepreneur opens a first store or restaurant, maybe it’s still a hobby. But not when you open the fourth. That’s a real business. Did you have a vision of having a lot of stores when you started or did getting the first one under your belt change your thinking about what the business was going to be?
I always said I wanted to have five stores. In small retail business, that is often the point where the whole is greater than the sum of its parts. Where we could build the infrastructure, share costs, use purchasing power. Five shops is just shy of what people will perceive as a chain, and still lets us be viewed as a small business, which we really are.
New York City has to be the toughest market in the country for retail. Did you fund your expansion internally, with family, other partners? And how are the banks treating you?
That has changed as the business has grown. The first two locations were funded using money that I and my family raised. The shops were also built out for as little money as we were able to raise. Starting with the third location, banks were much more willing to help us with loans, and we are now at the point–or were, until a few weeks ago [with the financial crisis] where we can more easily raise money privately, or go to the banks for loans.
Who does what in terms of management of the company?
Gabrielle is my sister and partner. We are constantly restructuring the organization as we grow. At this moment, each of the four shops has a general manager and a barista trainer, and most have an assistant manager. Gabrielle works as director of operations, and Amanda Byron is director of coffee, overseeing the trainers and quality of beverages. Consistency and quality of training is perhaps the most challenging area of our growth.
What prepared you to be an entrepreneur? Anything in your genes? Family business? Role models? From your press clippings it looks like you were a complete neophyte in business. Are you the accidental entrepreneur? And how glad are you that you didn’t buy that Long Island summer camp?
Good research! I guess I have always had that entrepreneurial spirit. I used to form clubs in high school and college. I started a day camp in 1988 that is in its 20th year. While I never took a business course, that is just where my skills lie. There have been plenty of other jobs where I didn’t succeed or have what it took.
Seth Godin in his book “Purple Cow” talks about the importance of having a business that is truly remarkable. Starbucks, not remarkable. What your baristas do with latte art — remarkable. What else is remarkable about Joe?
Thanks! As empty a mission statement as it seems, we just try and home in on three things–great coffee great environment and great customer service skills. I’d say the way we treat coffee as a culinary art is remarkable. Otherwise I’d say we are more solid–we do try very hard to be a community place and offer things like classes for home enthusiasts, artwork by local artists, a running club, and free public cuppings.
What’s the most painful lesson you’ve learned in your business?
That is yet to come.
How has the change in the economy affected your business and what are you doing differently now?
So far it hasn’t. I keep waiting and worrying. Some people tell me that a cup of coffee will remain an affordable luxury and it will be one of the last things anyone gives up. I’d guess that some may switch from $4 drinks to $2 drinks.
What will the business look like in five years?
There may be one more location and we may get more into roasting, catering and consulting. But that is probably the extent. Hopefully we’ll do what we are doing now, but do it better and better.
Here’s where you get to give advice to would-be entrepreneurs. What’s the one thing you think everyone who is thinking about leaving their personal Dilbert cartoon and starting a business should know?
It sounds cliche, but just have passion and so as much learning and research as you can.
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If you’re in New York, you owe yourself a coffee at Joe. I don’t care what the stock market is doing–stop in, order a latte and drink it right there. In addition to Grand Central, Joe has stores at 141 Waverly Place,
9 East 13th Street and 405 West 23rd Street.
I was introduced to Keith Simmons from B2Bcfo.com by my CPA. I don’t often get together for a cup of coffee with a stranger, but because my accountant is someone I really trust, I decided to do it. We had no particular agenda except to see if there might be some common interests, and indeed there were. Keith is a partner in a fascinating business that helps small firms have access to expert chief financial officers on a temporary basis. His focus is Long Island and the New York metro area, but his company has partners nationwide. He answers some of my entrepreneur-focused questions here.
