When Ritual Coffee Company owner Eileen Rinaldi walked into the Napa location about a month ago, the staff expected it to be a run-of-the-mill meeting. Then, she announced any of them could become owners of Ritual.
“I don’t want to be cliche and say, ‘it’s too good to be true,’” said Andrew Caldwell, who had only worked at Ritual Coffee in Napa for two months and will not be eligible until he has worked there for a year. “But it’s hard to put into words how incredible it is.”
About a month ago, Rinaldi began alerting employees that she wanted to officially transition the business into an employee-owned company. Though the details still need ironing out, she hopes every Ritual Coffee employee with at least a year under their belt will own a share of the company by the end of 2022.
Ritual Coffee, she said, will have an Employee Stock Ownership Program (ESOP), in which interested employees can own Ritual’s stock. They do not need to buy shares to do so, but complete an opt-in training program that lays out the responsibilities of being an owner.
Rinaldi will retain the majority of the shares — it’s still being decided how shares will be distributed — but hopes her stake will diminish each year. She can imagine a time when she will no longer own any, she said.
A third party will determine employee shares, and the number will likely be based on the employee’s tenure and salary. “I love what I do, and I find it endlessly challenging and fulfilling and rewarding,” Rinaldi said, but she wants to plan for the future. “I would love for Ritual to operate for another 80 years. To me, ESOP is the answer.”
Ritual Coffee launched in the Mission in 2005, then expanded to multiple locations throughout the region, establishing itself quickly and building a reputation for doing its own roasting and inspiring other cafes. The company survived the pandemic and, at present, maintains five locations with approximately 50 employees.
Rinaldi said the company didn’t turn a profit during the pandemic, but in traditional years it has been profitable. Presumably, employee shareholders will see the value of their shares, which will change year-to-year, depending on the profitability of the enterprise.
Ritual Coffee has also survived a few scandals involving alleged racist attitudes, one in which Rinaldi’s husband, “Chicken John” Rinaldi, used a racial epithet. Shortly after, Rinaldi fired her husband and implemented a series of changes, including new hiring standards and creating pathways to bolster staff input and hold conversations on diversity and inclusion.
That work and re-evaluation of Ritual Coffee’s work environment, Rinaldi said, made her “really look at how we wanted to evolve our culture.”
But even before those incidents, Rinaldi dreamed about transitioning Ritual into an employee-owned company. Part of that derived from her desire to see Ritual and its legacy live on after she leaves. “I think about like, oh, in 2055, there could be a 50th-anniversary party, but I’m not going to be the one planning that party.”
She observed other independent coffee companies mainly go down one of two routes: selling a large stake to a conglomerate, like Blue Bottle did, or passing the reins to employees. Only the latter would perpetuate Ritual’s community feel and values, she decided.
“I’ve been on Valencia Street for 16 years. I’m one of the founding members of the local merchants association,” Rinaldi said. She wanted to keep it local. “How do I set that up?”
The Bay Area teems with examples for her to study, including Rainbow Grocery Cooperative or The Cheese Board Collective in Berkeley, which was a model for Arizmendi Bakery on Valencia Street and in the Inner Sunset. Nearby, in the Mission, Heath Ceramics also has an Employee Stock Ownership Program (ESOP). Rinaldi ultimately chose this model.
It appealed to her for multiple reasons. First, it empowers staff to own shares without forcing people to buy in, like in a co-op, though generally ESOP stocks can’t be cashed out until an employee leaves the business. Second, many ESOP programs allow stakeholders to make top decisions. At Ritual, Rinaldi imagines, the employee-owners would have equal say on big decisions.
Caldwell, the Napa barista, loves the idea of an employee-owned business. Feeling valued transforms a worker’s experience, he said. He worked at a coffee company in Sonoma for nearly seven years, and was let go without any call from the owner. “The saddest part was, it felt like none of that magic or effort mattered,” he said. On the flip side, this structure relies on ideas from people who work “directly off the floor.”
Additionally, by allowing employees to own shares of the company without investing can potentially help distribute wealth and narrow economic inequities, which was important to Rinaldi.
April Kavan, Ritual’s sales manager and a working mom, said she never imagined owning a business on her own.
“It’s so the opposite of everything we’re taught as American kids, in terms of capitalism and a corporate structure,” Kavan said. “This is showing a redistribution of ownership and wealth, and moving into group decision-making.”
Growing up, Rinaldi always knew she wanted to own her own business. In her adolescence, she felt compelled to learn the ins and outs of all her jobs, even at a bookstore. Once, a customer thought she owned the bookstore.
Passing on that education aspect is equally gratifying, and a big pull for employees like Alexander Fodich, a shift lead at Ritual Coffee for eight years. He always dreamed of owning his own cafe.
“Learning more of the things that are working, and what would it take to run a successful business, would be super valuable for me,” Fodich said.
However, with a lot of details still to be solved, he and his colleagues are cautious about celebrating quite yet. After all, Four Barrel Coffee did not transition to an employee-owned company, despite announcing its intention to do so in the aftermath of its founder’s (and Ritual co-founder’s) sexual harassment allegation and lawsuit.
Still, the potential alone left employees energized. “It’s the biggest thing that ever happened to us. I think we’re ready for it,” Kavan said.