The 24th Street building that houses the original Philz Coffee — which the company told its employees is permanently closing because it chose not to renew its lease — turns out to be owned by an LLC managed by Philz’s co-founder, Jacob Jaber.
The young Jaber is also the son of the founder, Phil Jaber.
In a deed dated Oct. 12, 2011, the building located at 3101 24th St. was granted to Humble Lion, LLC, an investment company founded by former Philz CEO Jacob Jaber, according to public records from the San Francisco Assessor-Recorder’s office. Humble Lion also lists Philz Coffee as one of its portfolio companies.
Philz Coffee, which now operates dozens of cafes across the country, is named after Jaber’s father, Phil Jaber, who in 2003 founded the first Philz Coffee shop at the 24th Street spot. The son, Jacob, served as CEO of the coffee chain until September 2021, when he stepped down.
Neither Jaber nor the company responded to multiple requests for comment asking why the coffee chain did not renew a lease in a building controlled by its own cofounder.
Philz workers skeptical of lease claim
Philz Coffee first notified its Mission store employees that it would be closing for good during a virtual staff meeting Tuesday night, according to multiple Philz employees. The lease was not being renewed, the store’s management told its employees and reporters.
For their part, Philz employees do not find the lease non-renewal a plausible reason for the store’s closure.
Mission Local interviewed six current and former Philz employees at the Mission store and other San Francisco stores, most of whom chose to remain anonymous for fear of retaliation.
The workers offered a snapshot of a store that has gradually been abandoned due to declining profitability: They highlighted outdated equipment, high maintenance costs, a training ground for new managers, and growing tension between employees and management.
“It was probably the best excuse they could come up with,” said Xanny Tasej, a team lead at the Mission store until April, when his hours were cut and he had to pick up a second job.
Tasej and others said they knew Jaber’s LLC owned the building. In fact, workers used to see tenants who lived upstairs in the building bring their monthly rent checks down to Philz and hand them over to the manager on duty because Jacob was their landlord.
The closure, Tasej theorized, was likely a combination of “the fact that the building is old, and the fact that the employees are bringing up stuff that they need for the store, and the company doesn’t want to do it.”
Maintenance “was one of the big things that was always brought up by corporate,” said Tasej, who named a lengthy list of issues in need of upkeep: A broken fridge, peeling floors and walls, faulty power. “The power would go out a lot of the time, out of nowhere,” Tasej said, and the lack of air conditioning would result in staff being forced to drink water to cool off in the summer, when working with hot liquids.
In addition, the store had to spend time dealing with a constant influx of “pretty big rats,” according to workers. At its worst, employees would turn on the lights in the morning to find five or more rats waiting.
Meanwhile, flagship store employees witnessed their colleagues at the Embarcadero store, flush with tourists, using equipment they could only dream of. “They have taps that run automatically for different sizes. They have their own ice buckets, their own creamers,” said Tasej.
“If I were to put the store into the perspective of years, the [Mission] store is still stuck in 2000,” said one current employee, of the flagship store. “Meanwhile, Embarcadero and the stores that make money off tourists are basically in 2023. They get all the new up-to-date technology, because they get to make that money.”
“We just don’t make enough money to deserve their upgrades.”
The situation deteriorated over the past few years, according to workers, after Phil Jaber became more hands-off due to illness, and his son, Jacob Jaber, stepped away from day-to-day operations in 2021. “I think, since then, a lot of the older sales values, like the community values, like ‘this is your grandma’s coffee shop’ sort of values, were replaced by, like, a big business, ‘we’re here to make money for our investors’ sort of thing,” said a former six-year Philz employee.
“Philz is, increasingly, getting more and more corporate based,” added another Philz worker. “They’re testing out new ways of setting their hours, based on the cups of coffee sold per hour.”
The Mission cafe became a training ground for managers, with six coming and going over the past two years; one month the store went without a manager altogether, workers said. “The Mission store notoriously is a revolving door for managers. Most of them are not well-trained to deal with the issues,” one worker said.
Upper management’s decision baffled employees and customers alike, as the Mission Philz is frequently busy. The store suffered from the pandemic, like others, but as a neighborhood favorite, the lively morning hours ensured the space “always broke even,” said employees.
Workers worry they’ll lose jobs, despite company promises
Still, what worries employees most now is their own fates.
A former worker, knowledgeable about the situation, said several workers were given notices stating they would be ineligible to transfer to other stores in the days prior to the closure.
“The promise of location transfer comes with a stipulation of ‘good standing,’ with the company having yet to expand on what that actually means,” a Philz worker said.
In the statement to the press, Philz Coffee promised that “all eligible team members at our Mission location will be offered positions at nearby Philz locations.”
The company did not respond to multiple requests to clarify what eligibility criteria would be required for workers to remain with the coffee chain.
“This is a way to lay off most of the Mission staff,” the worker said.
A former Mission store worker added, “They were told only a few people [could be transferred] because they don’t have space at other stores.”
The Mission store workforce, mostly workers in their early 20s, many of whom are paying for college tuition, were generally blindsided by the news of the closure at Tuesday’s staff meeting. For the past several weeks, the company had been sending out the cleaning team to replace “fridges and whatnot.”
In the absence of further clarification from the company, workers see the closure of the store as a form of retaliation.
“I feel like, to a certain extent, maybe they’re trying to get rid of some people, because that’s just a way of easing the way out,” said Tasej. Of all the Philz locations, the Mission location is considered “the rebellious store.” In 2020, there was a backlash against the store’s management for allegedly firing employees who feared Covid-19, and for firing an employee who posted a meme on the store’s official Instagram account opposing police brutality.
“During that time, that’s when we were trying to unionize,” said Tasej, “because everybody was scared to lose their job, and everybody was scared to speak out and not be able to speak out freely. And that’s just how it is right now; they’re not letting people talk about how they feel about the conditions.”
Nonetheless, most of the Mission workers are hoping to keep their jobs at Philz — and possibly encourage the company to reconsider closing the store.
Rachel Maldonado, a former Mission store worker who resigned earlier this year to pursue her master’s degree, wrote in an email, “I know the Mission neighborhood will stand by the baristas there and support them, but I hope Philz patrons statewide understand the greater issues in play.”
I can see Jaber’s desire to keep the Philz as original as possible, just like so many O.G. Cafes/coffee shops, but they also need to do some basic updating. People LOVE that cafe, and am disappointed they aren’t going to renew the lease there.
Per the article, the same family owns both the building and the coffee chain, albeit likely through different intermediary LLCs. So not renewing the lease is just a very transparent sleight of hand for simply shutting down that location of the chain.
Though the Jaber family is likely sole owner of the building, and is definitely not sole owner of Philz Coffee. If they didn’t separate out the flagship shop when they brought in investors (I think Trieste did that), then it’s easy to see how an agreement would be tricky as Jaber would face a conflict of interests.
Great coverage Ms. Zhou. Living a block away from Philz I have come to really enjoy a “cup of love”. Especially in the company of a friend. I hope, somehow, Philz will still be serving Tessora a year from now. It seems when Philz emerged from a liquor store/sandwich shop there was a wonderful eclectic spirit. Truly the spirit of Phil himself. He was there all the time telling stories that amazed and amused. As partners were brought in and expansion blossomed the sweet smell of Phil seemed to drift away. Thank you for providing wonderful background to this saga. I can’t wait for “the rest of the story”.
Ah, I spent many a good time there in my 20’s… (long ago).
You can’t expect an owner to keep the shop open, for whatever reason. When it’s a headache to manage/not it’s up to the owners to decide if they want the hassle or not. I think workers often just see it all one sided. Maybe the Union talk tipped them over the edge.
No owner is required to keep a business going, profitable or not.
Sad for the hood though, always a good mix of folks there, and always sucks to find a new job. ‘One cup at a time’ is maybe not profitable.
I lived across from Philz in the 90’s when it was a corner store. I knew Phil back then and recall the space being very old and somewhat decrepit. I Imagine that the commercial space which currently houses the original Philz coffee reached its functional obsolescence a long time ago and that the current utility connections and infrastructure likely do not have the capacity to support modern day equipment.
Total BS and sketchy. They could easily give a more upfront answer than just ” not renewing a lease”…. to Themselves. Sure, in sure there may be legal intricacies involved, but they could be a little bit transparent.
Not too long ago an astute commentator wrote: Every SF property owner, regardless of it being commercial, industrial, or residential, is a real estate speculator.