Serial entrepreneur Ben Hertz of Penny’s Coffee talks about starting, growing businesses

July 14, 2018

Ben Hertz is at it again. Hertz already brought the world colored shoelaces from Benjos and U.S.-made sheets and pillowcases from Cama. He does real estate deals through his Westwood Hills Partners holding company and has been instrumental in restaurant projects including Martina in Minneapolis Linden Hills neighborhood. In his latest venture, Hertz, 33, is co-founder and CEO of Pennys Coffee with partners Dean Phillips and Adam Roozen. Pennys Coffee is more cafe than coffee shop, offering sweet and savory crandecirc;pes, bakery items and hard-to-find treats. Hertz said Pennys is set to expand from its downtown Washington Square and year-old Linden Hills locations to a handful of spots in the coming months.

Q: What drives you?

A: I thrive on chaos. This list-building thing is not new to me. This is iterative going back to eighth grade. Its totally disorganized chaos. Heady thinkers and people who read a lot of books will talk about purpose. My purpose is to kind of be busy all the time. My wife would tell you that Im a better person when Im busy. If that to-do list started to get all crossed off I wouldnt look nervous but I would feel empty in kind of an anxious way. Like people get when their bank account starts running low on money. How am I going to fill it up? I start making calls and creating chaos.

Q: How does Pennys stand out in a competitive coffee shop market?

A: I dont think of us as an independent coffee shop. Just north of 40 percent of our sales come from food. When people out of town in this space ask what Im working on I say that weve been building a cafe brand. What were selling is a great guest experience an escape from your kids, from your house, from your normal routine. We ask people to hang out with us. It could be a 20-minute escape. It could be an all-afternoon retreat.

Q: How did the menu come together?

A: It was Deans idea to add the crandecirc;pes. Danny del Prado as adviser, our internal team and I, we had the food program before we had a store built. Its this mix of sweet and savory. It was what menu items can you make using fridges, bowls, utensils and crandecirc;pe irons, which wont require a hood fan. Then we sourced this oven that fit on our counter and built a teeny tiny pastry program. People loved it and they want more. Im very transparent with our vendors when we start working with them. Were working with you right now because youre the best. But if somebody else comes along and has a better product, were going to probably migrate over to that camp.

Q: What is Pennys position in the coffee market?

A: We shifted from working almost exclusively with La Colombe to a company called Vittoria Coffee, a small 50-some-odd-year-old family-run company out of Australia whose coffee I love and our guests love. I think the market would agree that our coffee is not third-wave tasting. Its not bright and acidic. Our coffees, our espressos, our drip coffees are all dark roasts.

Q: What is the growth plan for Pennys?

A: Dean has this magic number of 200 [locations]. At one point we talked about 50 stores. We decided that we would roll out a handful of new stores but in a short period of time as a test. Before summer of 19, in the Twin Cities.

Q: Why did Pennys begin paying $15 an hour years before that becomes the citys minimum wage?

A: We were 60 days from opening and Dean calls and says we have to pay everybody $15 an hour. Wed have a seven-year advantage on everybody else in the market at figuring out how to make it work because it wouldnt be easy. Weve afforded ourselves the ability to be really picky with the quality and the expertise of the staff that we hire. A lot of them come from career-track jobs, from the fine-dining world. We get a lot of people who dont want the grueling, tiring lifestyle of being at a restaurant.

Q: Whats something you have learned from your earlier ventures?

A: One of the most valuable things Ive learned was this notion of sharing. Im fortunate to have a lot of friends who have rock star MBAs and great jobs and made a lot of money in business or in the investment world. One of those people told me in the beginning of Benjos you have to make a choice here. You can own all of something small. If youre really brilliant about it and really careful you could probably own all of something thats medium-sized. If you want to have something big youre going to have to share. Youre going to have to find somebody that you cant afford to pay. Youre going to have to give them ownership. Youre going to go find an investor or syndicate a group of investors and share with them. Thats something that I hadnt learned in real estate. This business [Pennys Coffee] is different. The idea with this was invest, invest, invest, build something thats great and share a lot of it. Share all the way along the way and youll have something great.

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