We're Moving! No we're not... We're Moving! No we're not... Here's Why
Over the past four years, we've grown as a company, as a team, and as individuals. The goal was always slow, steady, and sustainable growth as we prioritize building relationships with our customers over just moving volume. Going deep locally has always sounded better to us than hitting the market by getting into as many states as possible. And that slow growth model has worked really well for us!
However, with all that sales growth, we have yet to grow the size of our production space. And, as many of you know, it has not been for lack of trying.
We started our search for a larger facility back in the summer of 2017. We had grown over 100% from 2015 to 2016, and we were on track to double again in 2017. We assumed if we started the search then, by the time we really needed it in early 2018 we'd be ready to fill up the new spot with tanks, equipment, finished product, and additional team members. Unfortunately, as we enter July of 2019, we are still without a new location. We thought it would be helpful to provide a bit of a narrative on what that search for more space has looked like over the past couple years and why it seems to still be just beyond our reach. So let's take a trip down memory lane, or more appropriately - the avenues and boulevards of South San Francisco, San Mateo, and even Sunnyvale.
Aug 2017 - Littlefield Ave - South San Francisco.
This was our first onsite visit with a potential architect, building owner, and some bright-eyed, slightly naive business owners (aka: us). This 4000 square-foot location was about 1/3 offices and 2/3 warehouse. The ceilings were a decent height (18ft), but there were no sprinklers, minimal parking, not enough power, and most of the space from insulation to lighting would need a significant overhaul. Our architect pointed out that if we expanded to the adjacent warehouse, we would also need to install sprinklers in the entire 20,000 square foot building, not just our spot due to new municipal fire regulations. So with hesitation but a confident stride, we walked away in pursuit of a better setup.
After navigating through another half-dozen potential locations online, we stumbled upon a spot outside South City. It had potential, so we decided to pursue it.
December 2017 - Howard Ave - San Mateo
The current landlord was renting the space from a family that owned several buildings in a trust. He was looking to sub-lease this location and had already made some improvements like a new industrial AC unit and rewired the power. The building had no parking, but after Jenn did some digging with the zoning department of San Mateo, they found that it had been a retail establishment several decades ago. This allowed the building to be grandfathered in for the parking requirement that would support a taproom (1 parking space per 100sq/ft of public retail). LET'S DO THIS THING! We put together an in-depth proposal with the landlord so he could share our plans with the building owners and we were off to the races. We met with the architect, construction manager, and engineers onsite for a walk-through. Unfortunately, that's when it started getting scary. San Mateo has a rule that any building that goes through construction or change of use requires the addition of sprinklers. It certainly saves lives, but the cost had us on edge and extremely concerned about the budget. Pair the need for sprinklers with the updated electrical panel we would need and it started to get messy. We wouldn't just need a new panel, this building would also need an additional transformer, which would most likely need to go underground. Tack on another $70,000 for that to the $75,000 for sprinklers and a new main water line and it was almost time to call it quits. We were frustrated and scared but still wanted to make it work. We started working on drawings, running the lease through the lawyers, and working with the bank to secure our loan. WE CAN MAKE IT WORK!
Four months into planning and design, it all completely fell apart. Apparently, one of the members of the family trust that owned the building is a recovering alcoholic. Due to recently discovered religious beliefs, they weren't comfortable with alcohol production in their building or any sale of alcohol on the premises. WHAT?! Where was that information 4 months ago? Is this some kind of really bad joke? Are we getting PUNK'D?? Looks like the other family members had tried to reason with this one outlier but it was not to be. Luckily, the landlord was nice enough to give us our rent back but we lost several thousand dollars on mechanical, electrical, and plumbing engineering, not to mention a huge hit to our hopes for a new spot.
So the search continued…
April 2018 - Airport Blvd - South San Francisco
A spot just opened on Airport Blvd only blocks from Grand Ave and downtown SSF. WE CAN FINALLY BE IN SOUTH CITY! We explored this 8000 square-foot location with the building owner, our architect, and members of city planning and economic development. It looked like it had potential despite a few requirements that would mean some changes to our business model. Because of its location, the zoning for this location would allow the building to be used as storage or a restaurant. However, because our primary use was for manufacturing, we would be required to utilize 51% of the location for food service. We had no desire to run a restaurant, but the location would do well for a taproom so we rolled up our sleeves and looked at alternatives. We found a potential partner who would take on the food production, kitchen, etc... This time we started the conversation with the owners sooner rather than later. LET’S DO THIS THING! The building owners were willing to sign a 10-year lease but were requiring a 5-year "fair market value" price increase. FMV, as it's often called, can be a challenging item to agree on in a lease negotiation. This meant that in 5-years if that area was doing well, possibly because of our impact on the area, our rent could increase to whatever rate the third-party assessor deemed as "fair". WHAT?! As you might have seen with restaurants, bars, and even breweries in the Bay Area this can be a company killer with rent increases beyond an achievable amount. The second deal killer was they were likely tearing the place down to redevelop the whole block at the end of that 10 years. Given the money we would need to put into the building and the increase in rent, we had to walk away.
So the search continued…
June 2018 - San Lazaro Ave - Sunnyvale
With frustration mounting, time ticking away, and our current facility looking more like a game of Tetris each morning and evening, it seemed imperative that we find a new spot SOON. And at this point, we came to the realization that despite "location, location, location", we could no longer be picky about where we ended up. With that new mindset, a spot came up that could have been awesome, even if it was down in Sunnyvale. This 6,000 square-foot location had one section with a two-story office area of which we'd turn the downstairs into a taproom, plenty of parking, a budget for tenant improvements, and a killer corner location just a few blocks from the new "Apple Campus 3". It would need a power upgrade, a fire-rated wall between the offices/taproom and the production, and a removal of part of the second floor to make the taproom ceiling higher. There weren’t any zoning restrictions on use, we didn’t have to add a kitchen, and the landlord seemed really interested in having us onboard. After some creative thinking with our architect and several iterations of a taproom floor plan, we think this one might work. LET’S DO THIS THING! Call in the lawyers. We worked through the basic commercial lease they sent us, which unfortunately consisted of a basic download from the internet. Our lawyer cleaned it up and made it specific to this location, etc... We got through some changes and then the owners shut it down for no apparent reason. WHAT?! Unfortunately, we were never able to have a conversation with the actual building owner. They refused to talk with our lawyer or us. With a 10-year lease and $500K of improvements to their building, we couldn't get to an agreement and had to call it quits.
And so the search still continues…
All in all, this has been a really frustrating, heartbreaking, and stressful process. We have some leads on new spaces but as of now, we are still in a holding pattern, and still playing Tetris at 1236 Montgomery everyday. Luckily for us, our current landlord and management company have been really supportive and have given us a home for longer than we had originally planned. One other point that we want to make sure we hit home is how amazing the cities have been that we have worked with when these opportunities have come up. The staff members have a ton on their plates and have to work within very strict and sometimes very archaic building codes, but they have been on our side every time. So we raise a glass to them! The landlords - not so much.