June 2020: C&S was preparing to scale a new mixed-format business model when COVID hit. Now, they're working to ensure they can come back and come back better than ever. We spoke with Dani Cone, owner of both Cone & Steiner and Fuel Coffee.
You own two very customer and community centered businesses, where connection with key. How are you feeling right now about what’s next?
I think, in my optimistic moments, I absolutely see an enormous opportunity to take a hard and honest look at what pieces work in our business and how we double down on those, amplify those, improve those and leave everything behind. Because on the other side of this, when we reopen or when we reintroduce ourselves, we can be whatever that company is. We have to be better and this is our chance.
Let’s start with Cone and Steiner: where were you at with those stores in January? You were preparing for a lot of growth, right?
We have three stores: Capitol Hill, Pioneer Square and Downtown. And, that most recent store in Downtown is where we have learned so much, where we have really evolved our model.
It’s downtown and there are tons of people, but they can’t always see us, because we’re around the corner or down the street. So, we decided that we needed to go to them. We launched online delivery and eventually added meals and catering, really designed to reach those office communities. That was a new direction for us, but it led to a lot of growth throughout 2019.
It also led to some new opportunities. As we were doing more catering and events - delivering a happy hour, a spread of beer, wine and snacks - we became connected with the co-working spaces around town. I began to take notice of their honesty markets. I kept looking at what they offered and I knew we could do better. That led to us developing a concept for a micro Cone & Steiner model where we would do a self-serve kiosk, within offices, offering a unique mix good food that promoted local vendors.
I saw it as a way to pull our brand together, to really meet people where they’re at and introduce them to rest of our offerings.
We launched several of those micro-markets and they did great. We started lining up installs in February. I had nine up and running and at least 10 scheduled for install in March and April. On top of that, I started raising capital again and we were anticipating a round in June to scale this.
I loved it. It was an efficient and scalable way to grow our customer base, while reinforcing our model and our mission to offer a good place for people to come together with good food and drink.
The single brick and mortar retail unit is not enough today. It is just not what the modern landscape and consumer demands. Even if Starbucks was starting today, versus 45 years ago, they couldn't start as just brick and mortar.
By combining retail with on-line, we were creating a little ecosystem, very in-line with not just economic trends, but also with what we see, know and hear directly from our customers about how and where they shop and eat. That was what we were working to scale.
And that is now off the table.
On March 23rd, we closed the downtown store. We’ve reduced the hours significantly at the Pioneer Square store. And, our Capitol Hill store is maintaining.
We’re at about a third of our previous revenue.
And, at this same time, what’s happening with Fuel Coffee – have you kept those stores open?
No, we closed the coffee shops on March 28th. It was a double gut punch because it was two days before our fifteenth anniversary.
That is so much to take in. What was that process of closing all of these locations like?
We chose to close for a number of reasons. To start, the three Fuel shops certainly took an enormous hit, as March went on. I mean, there were just minimal, minimal sales.
But, we tried. We tried reduced hours and reduced staffing, because we wanted to be there for the neighbors…in these times, we wanted to offer that touchstone place to go, even if it was just grab and go.
But three days before we closed, my managers called me and they said, listen, we just don't feel safe or comfortable being behind the bar anymore…there's too much exposure. As soon as I got that phone call, we decided to shut down.
How have you gotten through this? Have you gotten the PPP loans? What is keeping you afloat?
Too much coffee and too many cigarettes. And my all-sugar, all-carb diet!
But, yes, we’re not currently paying rent. We’re accruing rent. That’s going to be a hefty amount of debt and we have to figure out how we’re going to deal with that.
There are even tougher questions, specifically with whether we’ll be able to re-open all of our locations.
We did get the PPP loans for both companies but I do not know if I can use them because of their timeline and parameters. They’re not workable.
For Fuel, I got the PPP loan after I closed the locations and I won’t be able to re-open until late June, after the PPP timeline. For Cone and Steiner, even with one and half stores open, I still can’t keep the stores fully operational and I can’t use the loans in the way that they were designed.
I just can’t take the risk in taking on more debt, at a time when I’m accruing MONTHS of rent debt, especially if we don’t know what the other side of this looks like or whether we’ll emerge.
You’re thinking about re-opening at some capacity in June. Have you spoken with your staff? How do they feel about that?
I just had a staff meeting with Fuel folks last week. They want to come back to work, they miss their community and their friends. But, there is significant concern about whether they’ll feel comfortable coming back. They have their own networks and families and they don’t want to infect them. But, then they are concerned: are they still going to have a job?
Each person needs to do what’s best for them. There will be a job for them if and when they want to come back.
And of course, outside of staff, there is so much uncertainty about the spaces themselves, which is core to both of your businesses.
Right. We have to reconsider our spaces and experiences. How do move tables, move the condiment bar here or there, move seating. But, beyond the design, how does that impact the potential projections? How does that change product mix?
Before, we were thinking about our business six, twelve, eighteen months in advance. But now, that’s just bananas, because we have no idea what the next one to three months looks like.
In the midst of all of this chaos, has there been anything that surprised you, something that you've gleaned about what is ahead?
If we do come out on the other side, we are going to be better. We are going to do something better for our customers and that is exciting.
And, this doesn’t necessarily surprise me, but I have been constantly reminded about how amazing people are and our community is.
Any time I run into a customer or a neighbor, they aren’t trying to pump me up but they do: they are so kind, or they donated to the grocery fund, or they ask about the employees, or, in some other way, they express that they’re looking forward to coming back in.
And, I don’t think they realize how it feels for me to hear that.
We have these spaces that people feel connected – what a gift, that I get to be a part of these spaces, where people want to be.
As an example, at Cone and Steiner, there’s a woman who lives in the neighborhood. She’s come in at least once a week. She buys a can of soda, maybe a box of crackers – just a thing or two. And, she leaves $100 a tip. Doesn’t say anything. Just shows her support, in her way.
Even in the weeks and days before we closed Fuel, the tips from and the conversations with our customers were incredible. One of the managers was saying how he needed to get a tablet, for homeschooling his daughter. A customer came by later in the day, with a tablet for him.
This is how our community responds.
And, just think about how important your work will be on the other side of this. Think of the value that a ‘third place’ has, when we come out of months of just having that one place.
People miss these places that are part of the daily landscape, that are part of their ritual. That’s what got me into the business in the first place: I got hooked on going to coffee shops because that's a place where everybody was welcome. You can connect with people and you can just be whatever you are.
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