255: Operationalizing Kindness and Absolute Excellence while Building Birch Coffee with Paul Schlader

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Building a business doing these things, it takes time. There's no button you can press to accelerate your ability to be better at managing people through circumstances that you've never experienced. You can't do it until you go through it. And so I think just giving yourself grace, going through those experiences is the greatest teacher you can possibly have.

This is your time. How can we earn twice as much in half the time with joy and ease while while serving the highest good? That is our guiding question here at the Freetime Cafe, your home for heart based business. I'm your host Jenny Blake. Join me for conversations with authors, friends and fellow business owners as we explore ways to free your mind, time and team to do your best work. Now onto today's show.

Happy New Year Free Timers. I am so excited to kick off this month, this year with a very special guest today, Paul Schlader, who was introduced from a mutual friend, John O'. Connor. John is on episode 353 of the Pivot podcast talking about pain, purpose and portals. And at the end of that conversation John said, you know, I'd love to connect you with my friend Paul. He's the co founder of Birch Coffee. And I had one of those moments, as I usually do, where I about fell out of my chair because I cannot tell you listeners, first of all how much I love coffee. That goes without saying. But secondly, how many times Birch Coffee has come in clutch as I'm walking through the streets of New York, as I'm meeting a friend I haven't seen in a while, as the rain comes pouring down and I duck into a birch coffee. Doesn't matter which neighborhood, I always look for those yummy coconut macaroons. And now I get to say thank you live on the POD to Paul Schlater. Paul, welcome.

Jenny, that was so sweet. Thank you so much. For me, there's, there's a little bit of a surreal moment when people have a connection to Birch and hearing that, it's very warming to. To my heart and just awesome. So thank you so much.

Now I'm just gonna have to resist all the coffee puns for the next.

30 minutes of recording. I'm probably on my fourth or fifth cup today, so I'm a little, you know, over excited. It's true, though. I mean, I remember going to the Birch location. I want to say it's on 29th. Where was one of the early ones in New York city.

It was 27th. 27th between 5th and Madison. Yep.

Yes. And it was just this magical little place. All the signage was so personal. There was a bookshelf, if I'm remembering correctly. It was even attached to this cool kind of expansive hotel situation. There was like dimly lit couches inside.

Our first location, it was inside what was then the Gershwin Hotel. And if you remember, it had like those flames. People kind of always misunderstood like what it was. It was either flames or horns or something protruding outside of the facade of the building of the Gershwin Hotel. That was our very first location. We opened in 2009. And I appreciate the shout out on the books, the library that we had set up, because that was very much quite intentional for how we wanted to get that going.

I mean, it's really saying something that of all the coffee shops in New York City that I've been in, almost 13 years of living here, I still remember that location. That Birch, the friend I met, the coffee I ordered, the bookshelf. It really is a testament. I don't mean to just fangirl out as I want to do here on this show, but it's really a testament to what you've built. And listeners. I should give you Paul's proper official bio in case the one I gave doesn't suffice. That they started at that location. I didn't realize it was next to such an iconic spot. And since then They've grown to 14 locations and counting. Maybe it's even more by now they're doing 10x the revenue by the end of their third year in business. And they have a really inspiring mission behind it to serve our customers. Every need, every time. Knowing every moment counts. I'm curious, Paul, because mission statements are not easy as anyone listening to the test. They really. They get corny quickly or wordy or overly corporate. How did you and your co founder come up with this mission statement?

In particular, Jeremy and I try to be quite intentional on anything that we're saying. We don't like to seem hyperbolic. We don't want to misinterpret what is reality or ourselves in that and just be honest. And that part of that is the foundation of our work, which comes from our sobriety. And I'm happy to talk about that more as well, if you'd like. In that honest honesty, the need to serve our customers, every need, every time, knowing every moment counts, speaks to that. We're in New York City. Time is precious. It's the one thing we never get back. And I remember Jeremy's father said that to me when we were first starting our business, is that time is the most precious resource we have because we never get it back. I really took that to heart in our work, knowing that any movement we have behind the counter and from how long it takes to place your order to get your drink to move out of the line, all of those things matter. And if we're intentional and meaningful behind those things, it's so seamless that you're able to do it in such an efficient way that the individual that's placing their order is able to just be at peace with how things move. Right. Because there is that element of waiting. Fortunately, we have relatively busy stores, and with relatively busy stores, you have lines. And so how we navigate those lines is the most important part of our business.

You mentioned just the facts of the business. Opening a coffee shop in New York City, New York City is just notoriously difficult for restaurants. And that's why the food is so good here, because there's so much competition. Did part of you feel, I don't know, I don't want to put words in your mouth. Crazy, insecure. What were you thinking saying, yes, we can start a coffee shop and it's going to be better than all the other coffee shops, or it's going to be unique somehow and we can figure out how to thrive even up against the big chains.

For us, it wasn't necessarily about being better than others. It was being ourselves and true to our ideals in our work. And we knew that if we were able to do that consistently and maintain our integrity in how we were making our beverages, when it came to sourcing coffee and how we're roasting all those things, I don't accept anything less than absolute excellence in that part. But with the people part, that's something that we knew we could separate ourselves in our industry by how kind we were, how we work behind the counter with others. Jeremy and I are both extraordinarily hands on in our business to this day, 14 years later, that we're still quite hands on. In our business. And with that, we believe we're adding a personal touch, sometimes literally, to what's going on in our stores and always coming from a place of empathy, gratitude, and trying to do the best for our teams.

When you say separate based on how kind you are, that's music to my ears. That's so in line with the values of heart based business that we talk about here on the pod at Freetime headquarters. How do you search for team members who are kind by nature? And then how do you operationalize that in terms of the training?

The individuals that we have running our employee success, our hr, they've worked with us for a long time because our team understands our core, our foundation, our values. And that the first thing that we're looking for in our team members is their kindness. Like, what is their kindness? That's the first thing that we're looking for before any hard skills. It's that number one soft skill, right? Like, is this individual going to be a kind person behind the counter when they're talking to 300 to 500 people a day? That is the number one thing we're looking for first. Everything else is secondary.

Like, how would you even assess that it's questioning right?

We don't get it right 100% of the time, but I believe we definitely get it right more often than not. If you look at our reviews, if you look at comments that people make about us, a lot of it has to do first with how kind our team is and how kind the individuals are at our stores. And I believe it's multifaceted, but one being how we're screening people coming in, the questions that we're asking. I won't get into like the specifics of the questions, but also we have the team members that we have doing those screenings have a good barometer of what we're looking for. And again, they're getting that right far more often than not.

Can you share one favorite question? You don't have to give away the whole secret sauce.

That's fair. Actually, I'll read one. What do you like most about working in the coffee industry and what has drawn you to this industry With a specific question like that the individual has to talk about something positive. I'm leading them into speaking about something positive and through their tone, what they're sharing with us, we have to then make an assessment of is this person being truthful, honest and open or are they like just blowing smoke? And you interview enough people, like, we have thousands upon thousands of people that we've interviewed over 14 years. And you build enough skill to understand that when people are genuine and when people are not.

The reason I'm asking, thank you for sharing that question is that I feel like kindness is the benchmark. It is the must have, do not pass go for so many things. And I remember coming to this insight must have been in my early 30s after sporadic dating misadventures in my 20s. And I declared to myself first and foremost, the next person I date must be kind. And it became this like driving value. And even my husband, I met him walking down the street. He had these brown sparkling eyes. But more than that, he was kind. I just knew he had a kind heart. And I joke that when we had a mouse problem when we first moved into our new place, he's Lebanese, so we would catch them in humane traps because he didn't want to kill them. And then he would serve them an almond with some peanut butter on it or some cheese before he would let them back out in the park.

And like to this day, oh my goodness.

Yeah.

One of my favorite stories about just this is a kind person. Like this is a person who is as kind to the mice that we don't want running around our house as he is to people. And nobody's perfect and no one's kind every single day, even when they're in a bad mood. But those examples that just show you.

Somebody'S heart, we're not monoliths. Right. And I think that's the point and that we have both of those things exist. But if we're leaning more towards the kindness far more often than not, I mean it's obviously that makes all the difference.

Yeah, I can imagine it's like kind and passionate about coffee and can work in a fast paced environment like a coffee shop. But I do remember, I do remember all the Birch team members being really friendly and talkative. I always left feeling buoyant, like, oh, I just had a fun New York City experience. I love those.

We'll be right back just after this.

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Where you have a random conversation before we hit record, you mentioned that you have about 40 full time employees and that you still identify more with a small business owner than like you just said, the big conglomerates. Was there a point where you and your co founder were at a fork in the road debating do we stay this size? Just a handful of locations. Now you're up to 14. How do you think about growth through the lens of being, you know, the Goldilocks number, like not so big that it's obnoxious and bureaucratic, but then meeting the demand that you've so clearly generated and the systems you've already solved to create this great experience in more than one neighborhood?

That is the question. Because for us, we have no intention of being the behemoth. So currently we're fundraising right now. We're doing our first fundraise which we've in 14 years, we've bootstrapped the entire time. We're now entering a place where we don't want to, we want to grow a little bit more. But our growth number is not what I believe is an insane number as far as locations. We know that we're never going to be a 200, 300, maybe even 100 stores. It's like that just is never going to be us because we don't need that. It's not something that we're necessarily looking to do because we want to be, and I specifically want to be involved in this for as long as I possibly can. As long as I'm loving this something that's too large, I believe we lose our joy. But to get back to your question, we didn't choose to grow our first store. We lost our lease and so we got bought out of that hotel lease after two years of being open and we had to build another store because it was either that or we were going to go out of business. Once we took the buyout and were able to, we actually were able to open two more stores because of that buyout. So it was these things that were seemingly beyond us, beyond our control that we at first saw as massive hurdles that we had to clear, really ended up becoming gifts because they allowed us the opportunity to flex and grow. Personally doing something we just didn't anticipate that we were going to be doing specifically at that time, we believed that we were going to eventually grow, but certainly not in the first two years. There was still so much that we were learning. Neither Jeremy or myself had ever owned a small business before. We were completely blind in what we were doing and learning very much on the fly, Both having worked in restaurants for the majority of our careers, but still not being the sole person responsible. There was a lot to that. And the decision was, I guess, kind of made for us that we had to evolve and expand. And then since then, it's been a kind of more gradual decision to open other stores in specific locations where we believe we will be successful.

It's so interesting how sometimes those decisions are made for you, like you said, and at first it seems like horrible news. What a twist. The hotel's closing, we're getting bought out. But then it's so amazing that you're able to take the buyout and parlay. One store now becomes two. It's like the atom splits, and it shows you for the first time what it's like to run two concurrently. Was there at any point in the opening these last 14 stores where you had growing pains, like the complexity exceeded the current level of systems or training? As I've seen with other small businesses, sometimes the demand is so high they grow quickly, and then things start going haywire unless they uplevel to a different way of thinking. So I'm curious if that happened to you at any point in these last 14 years.

Yeah, still happening. Kind of a daily thing as it were. Moving from one store to two stores was far more challenging than moving from two stores to four stores because we had already started to put systems in place from two stores to four stores. It was that initial leap of having two different spaces going, oh, my goodness, what is going to happen on any given day? That part became our greatest hurdle at the beginning. And then passing maybe year 10 for us, it was making sure that all of our systems were written and tracked. So having everything on digital paper, as it were. And Jeremy talks about having everything memorialized so we have everything memorialized for all of our sops and expectations of our business.

Yes, I'm a big fan of that too. What was the paradigm shift that you had to make from going from one store to two? How did you have to grow as an owner?

The trust. There was a lot of trust involved in that because with one store, you can just be there, and with two stores, you certainly can't. And with 10 plus stores, it's impossible. Right. Again, it's building the trust with the individuals that they are going to be as responsible as they're able with the business that they're being entrusted with. And I think that part of our leadership training is reflective of that. There's a lot of focus on owning. Like, one of our core values is ownership. It's ownership up and down the chain of command, as it were, without really no one being above anyone else. We all do dishes, we all do the cleaning, we all do whatever is called upon us at any time in the business. And training that from the time you're a cashier to if you become a store manager is how we impart kind of that ownership with our team members.

You mentioned that you and your co founder had experience in the restaurant industry previous to this. What were you doing? What were both of you doing? I'm just curious what your background was.

Jeremy was. I mean, he did a lot of bartending. He'd been bartending for a long time that he had a break and did mortgages in the real world, 9 to 5. And he did that briefly. He was like, nope, not for me. Not nine to five, not interested. I've worked as a server, bartender, restaurant manager. I've kind of run the London game all front of house, never back of house, just because of a lack of experience with it.

So now as you work on your. I call it the manager manual. But sops, there's always a part of the training that's like we were talking about earlier, the soft skills.

Yeah.

I'm a big fan of Will Gujara. Haven't had him on the show yet. But the idea of unreasonable hospitality. Do you have other principles that you train your team members with to say this is how we show up in a really unique and special way? You've shared some of it. I'm just wondering what has evolved over these last decade.

Plus enthusiasm. In our work, we take words that we believe that we can apply across all aspects of our jobs. Right. So ownership, enthusiasm, excellence, like these are things that sound overly lofty or unreasonable, but we believe everything is in the moment. And again, because of our foundations and our personal lives, how we've built things, everything is to the best of our ability. So excellence to the best of our ability, that may change from day to day, but that we're always striving to be the best of that, of whatever we are in that moment. Right. And we don't have anything less than that expectation of anyone that's working with us now.

I can't let this conversation go without a mention of the before time and the you know what striking in March of 2020. I wish I didn't even have to say pandemic. Yep, we're all still working through the fallout from that. Although I hope Birch Coffee is now thriving again. Can you take us back to say, April or earlier, your crucible moment of 2020, where I would imagine you were mid expansion and all of a sudden the apocalypse hits, New York City shuts down and you're running a retail business, a food related retail business. I can't tell you how many coffee shops closed in my neighborhood over these last few years. I was devastated each time. Our favorite morning spot. And now another one bites the dust. And another, and another. The fact that you're still here, still standing, to even be on this episode is itself a miracle. So I'm just wondering, like, take us to the moment. And then I'm so curious to talk through just how you made it through that time emotionally, for functionally, organizationally.

When it got very real for me, I believe, is when we were given the shutdown order and I had to have my entire salary team on a phone call and let them know that they're all being furloughed. It was the worst conversation I've ever had to have that I never want to do again because I won't forget it. I will not forget what the individuals look like on the call, on the zoom call telling them that they were going to have to stop working, I could no longer pay them to work, and that we were going to be closing our stores and we don't know when we're going to be opening. And it was extremely painful and very scary. And I remember hanging up with them and just sobbing. Feeling like I was letting so many people down because I was taking away their livelihood. It was definitely a feeling of failure, though. Completely out of my control. Right. But still, nonetheless, that was that the sense from that very quickly, because we're small business owners and we're doers, we're immediately looking for opportunities to get things going again. So once they gave us a shutdown order, the conversation was, well, what can we do? We kept our head roaster on salary and he and I were working in sending out coffee to individuals online. Online became our business and we were shipping hundreds of orders a day, which we had never experienced before. And it was just the two of us. So that was a unique challenge for the two of us. But again, it kept our minds clear in doing that in the Meantime, Jeremy took our. We have a mobile coffee cart that we do events with. He took our mobile coffee cart and our van and he would load it up and go and serve coffee to frontline workers. And so he would go and give away coffee to frontline workers a couple times a week at hospitals and other areas around the city. Then we developed a program where we would let people buy coffee for frontline workers that became another kind of revenue generator for the business that paid for individuals to get coffee given to them that they didn't have to pay for. It was a really beautiful time of, like, coming together and seeing the city coming together. And as far as, like, how I kept things straight in my head. I have three children. My eldest, Emma, was with my parents at that time. They went and picked her up in Chicago and brought her back to Minnesota. And so she was staying with them for a little bit. And my other two, my youngest, younger two, Ava and Wes, 9 and 12 respectively, were here with us in the apartment. And so as a parent, our experience was we were forced to keep things as grounded as we could with our kids and continue to move things day to day, try to find joy where we could find joy and peace where we could find peace. And maybe this was something that happened with you, Jenny, but we looked forward to seven o' clock scream every day. That was a big thing for us, just that venting and that ability to just like get all of that energy out that you wanted to get out outside. There was a release that came from that. That was our experience and that finally we got the order that we could reopen. And so we slowly did and began to stagger our way, our way back. We were very fortunate in that we were able to survive. As to your point, a lot didn't. And it was devastating to see so many companies go out. It was really sad to see that the other side is seeing what's come since and how things have evolved in this city specifically has been, I believe, kind of joyous. I'm looking forward to what more is coming in the next few years.

Thank you so much for sharing. Just your journey through these last few years. And yeah, that 7pm when everyone would open the windows, stick their head outside, and then bang on the pots and pans. I know if you don't live in New York City, you probably read about it or saw it on the news. I even included a snippet in one of my podcast episodes. But it really was this just collective gratitude every evening and for all the workers coming home. And it Makes me want to cry. Just remembering.

No, I know.

Me too.

I'm like, don't do it now.

This is our Oprah moment.

Oh, my goodness.

Oh, my gosh. And then what about the fact that you were paying leases? Were you able to renegotiate? Because that must have been sort of crushing. Not sort of. Yeah, very crushing to the business.

The majority of our landlords were extremely gracious and did right by us and did right by their businesses. I have a lot of good to say for the majority of our landlords. There was one that didn't and that ended poorly and I'm disappointed with how that ended, but those things happened. In total, we lost four stores through the pandemic. Obviously devastating. Again, the majority of the landlords were extremely gracious and worked with us to get things back on track.

We'll be right back just after this.

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I've always wondered about the margins on coffee shops because again, being the aficionado that I am, I love a good coffee shop. I just love them. All of them. Not the chains. Preferably. There's even a new one that opened in our neighborhood. And don't get me wrong, I am paying $7 for my oat lattes at most coffee shops in the city. So when people say online, buy me a latte, I'm like, how about a New York City latte? That's seven plus dollars. Eight once you add the tip. Are you able to pay the New York City rents through food and beverage? Or does it require the online part of your business as well? And then getting into the coffee grounds, manufacturing and shipping and maybe you like doing all that as well. I'm just so curious. Like the margins on a business like this because it seems kind of tricky.

It's food and beverage. Right. So we have. Our margins aren't fantastic. Also because of the level of quality of coffee that we're buying, we're not buying commodity coffee. You know, we're buying specialty grade coffee that is exceedingly more expensive than commodity coffee. With the exception of one store, all of our stores are profitable. They're all doing well. And specifically this last year, they've done much better. And so we believe it's because of the efficiencies that we have again behind the bar, how we're running our operations, that we're able to maintain the margins that we can.

And the store that's not profitable, is that because it's in an expensive neighborhood or. Or because it's in a less trafficked neighborhood or neither. Multiple choice.

I choose none. Yeah, it's more because of it's just currently less traffic. We were ambitious. The way that we look at how we decide what zones to put our stores in, we're always looking for like mixed use. Right. So like a mix of residential and commercial. This one leans just slightly more commercial. And because of so much working from home happening now, there's far less foot traffic in that area than we had anticipated. So that one is struggling solely because of that.

That makes sense. Thank you for filling in my multiple choice.

Yes, you are very welcome.

Because that's true that that is still an issue facing the city today. It's just people aren't really returning to offices. At the time of this recording, we were just declared bankruptcy. And honestly, I was kind of watching the rise and fall of WeWork with a little bit of schadenfreude because I felt like, oh, they just got so far over their skis and they're getting billions of dollars. And I was like really kind of annoyed at some of the business practices that I was watching. And then now that they're declaring bankruptcy, I actually feel sad. Like, don't go away. Just restructure. Please figure it out. It actually is a solid resource for.

A lot of people.

Yeah. I genuinely do hope that companies like that figure it out, but it's hard right now.

Yeah. And with investors that are so wary of putting anything into tech companies and things of that nature that don't have that multiplier, things that have like significant overhead, like wework just are such high risk right now. Again, over years of work, what has transpired?

I've heard people say, oh, what do you wish you knew when you were starting your business? And in fact There was some viral clip on YouTube where somebody asked the Nvidia founder, I'm pretty sure they're one of the first trillion dollar companies or something. Anyway, he essentially said, I would have said don't get into this business. Like don't get into the world of entrepreneurship. And I think he was half joking. But just like you have no idea what you're in for. What do you either wish you knew when you were starting Birch Coffee or what would you tell someone now? Just starting out? Another multiple choice. Choose your own adventure.

I'll start with the what I wish I knew. So if I'm perfectly honest, Jenny, if I knew what the next 10 years were going to look like and that there was going to be a pandemic, all that, I don't know what I would have done. I really don't know. I think for me, not knowing has been the best part of this adventure because that's how I learn along the way and I'm responsive to things along the way best. And so that's been my greatest teacher. So I don't know that I would want to necessarily have anything given to me. Not that I wasn't constantly reading books, looking at things like, how can I be better at this? Not that I did wasn't fully doing that all the time. But building a business, doing these things, it takes time. There's no button you can press to accelerate your ability to be better at managing people through circumstances that you've never experienced. You can't do it until you go through it. And so I think just giving yourself grace, going through those experiences is the greatest teacher you can possibly have. I would change nothing if I'm being fully honest with what I would want to know. As far as what I would recommend, I would lean into the giving grace to yourself. Because building a business is hard and it takes time. There is no quick way, even with all the resources and money to do it. It doesn't change the fact that you're a individual or individuals who are trying to do your very best with your team, with your company, whatever it is, and it's going to be very hard no matter what. If it's what brings you joy and brings light to you, then you should just do it. And whatever will transpire will transpire and you'll make the decisions that you'll need to along the way.

I love all these give yourself grace permission slips. And also this is a bumper sticker. You can't do it until you go through it. It's so true. Like sometimes no matter how many books you read, as you said, there's no button you can press to accelerate your ability to be better in certain areas. You can try to learn, you can read, and yet you can't do it until you go through it. It's so good.

Yep. I think I just have a T shirt now, Jenny.

I know. Seriously.

Birch stickers.

Birch stickers. What? Let's put them at all.

Stickers.

Doors.

New swag. Unlocked. I never know how to say that silly word.

No, that's it. You nailed it.

Okay, Paul, the last question. And you kind of already gave us a permission slip around giving ourselves grace. If you could give fellow business owners permission to do something differently or drop something altogether, what would it be?

I would say drop being hard on yourself. I'm very much saying that for myself in this. But it's something that I've seen repeatedly. I'll give a really quick example. So I was doing this coffee convention in Louisville and I met this woman. Her husband was a coal miner and now they're doing this mobile truck. He's been able to leave his coal mining job and they've been able to support themselves. And I remember just talking to her and hearing her talk and just being so hard on herself for not doing a good enough job with her brand new business. And I had to just pause for a moment and say, your husband quit his coal mining job to do this with you and you're doing this together and you're making money. I said, that is the most massive success in and of itself. And I think as entrepreneurs we are constantly just berating ourselves for just never doing enough, never being good enough, whatever it is. And I would say that'd be the number one thing that I would give people permission to drop and just really just give themselves a hug knowing that they are doing their very best in that given moment.

That's beautiful. Thank you so much, Paul. I'm going to put the link to Birch Coffee in the show notes. Is there one or two locations that you hang out in most often so we can stalk you, obviously.

Exactly. So just geo tracking everybody. I live by our store on 88th between 3rd and Lex and so I'm there quite often. And then on our store on Columbus Avenue between 95th and 96th Street. So they're pretty often as well.

Well, maybe we'll have to do a free time flash mob. Don't worry, we don't have too many listeners here. You know, one day we'll just show up.

That sounds awesome.

Sounds really fun. I know Wait a second. Got an idea. Thank you so much, Paul. Is there anything else you want to share or anywhere else you want to point people to learn more or keep in touch?

Birchcoffee.com, and you did it. That's it. And I really appreciate the time and giving space for the conversation today.

If people want to order a bag, is there a certain blend that you love the most? I know it's asking to pick among your children.

It's funny that you say that. So I actually named our espresso after my first daughter, Emma. So it's a really good coffee and it's called Emma's Espresso. So go for that. My other two are. So when do we get a coffee? It's like, yeah, sorry you guys were late to the game. I don't know that you're gonna get one. Yeah, that's a really exceptional coffee. So it's a three bean blend. It's a really fantastic coffee.

I'll put that in the show notes too. This is not Spawn Con, I swear, but I would love to try the grounds. I know that it's your favorite and that it's Emma's blend. That's so sweet. Okay, I'm gonna add that to the show notes. Paul, this was such a blast. So thank you so much and thank you for keeping me caffeinated all these years in all these neighborhoods.

Yeah. Thank you, Jenny.

Thanks, everybody for listening.

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