Henry’s House of Coffee: How the 55-year-old small business keeps going
Welcome to Money Talks, a series in which we interview people about their relationship with money, their relationship with each other, and how those relationships inform one another.
Henry Kalebjian, 79, is the owner of Henry’s House of Coffee. His son Hrag, 43, joined as co-owner in 2013 — and although the father-son collaboration required a little more understanding and empathy than either Henry or Hrag had been expecting, business has more than tripled since Hrag came on board.
Today, the 55-year-old coffeehouse makes between $1.5 and $2 million in annual revenue, provides jobs to one full-time manager and 12 part-time employees, and sells both traditional and Armenian coffee to customers in San Francisco and online coffee-lovers around the world.
Henry is Armenian, but his family was one of the many families displaced in the early 1900s during the Armenian Genocide. His grandparents went to Lebanon and Syria, where they lived as refugees. Henry was born and grew up in Lebanon before immigrating to the United States.
His experience as an immigrant building a small business was very different from Hrag’s experience as a financial expert taking co-ownership of a thriving coffeehouse — which is just one of the factors that father and son discuss in the following conversation.
Henry: As I was young, I was helping my father back home. He used to roast coffee — small volume, not a big one. It was a hobby. When I came to the United States, I went to school and became a mechanical designer. We got laid off after 10 years working, and I had to do something. I saw this store, a small Middle Eastern store, and the owner wanted to sell because he wanted to retire. When I went in, I saw a small roaster in the corner and thought “This is interesting.” I bought the business, and little by little I increased the volume and became a good solid roasting company.
At that time, coffee roasting was a very simple thing. The quality was different, everything was different. Now it’s very fancy. I started attending lectures and conventions, I noticed the change, and I followed the change.
Hrag: I hated the business when I was a kid. For me, it was like doing a chore. I didn’t look forward to helping my dad, especially on the weekends when I wanted to watch cartoons instead of working in the shop. I wanted to be upfront with the customers, but my dad wouldn’t let me — which makes sense, you don’t want a 10-year-old taking your coffee order, it’s weird. So my dad always had me in the back, scooping coffee beans into five-pound bags. There’s no music, it’s cold, I’ve got a scoop, and it was super-boring. That was what I was tasked to do, and I reluctantly did it.
When I went to college, the last thing on my mind was taking over the business. I was involved in finance, and I did corporate finance for roughly 10 years. The corporate grind is great, but sometimes there’s lack of recognition. I felt like I was giving a lot and not getting as much back, and I started looking into other avenues. One of those avenues was my father’s business.
Being in finance, you’re crunching numbers all the time — and as I dug into my father’s business I thought, “Wow, this is a really strong and healthy business. I wonder if this is something that I can take to the next level?”
[When you’re an entrepreneur], whatever you put in is what you get out. If you put in 5 percent, your business is going to suffer. You put your heart and soul in it, and every tiny little sale is a result of your work. That’s much more satisfying than sitting in front of your boss, having your quarterly review, and hearing “Good job, here’s a 3 percent increase in pay.” It’s like, two worlds apart.
Right now, I’m digitally in front of the customers. My focus is our online channel, and so all of the business development, marketing, all of that is me. I spend a lot of my time in front of the computer, thinking of ways to tell our story and get new customers.
Henry: When Hrag took over, he changed everything! I was so mad at him, but I couldn’t express that I was getting angry. One day he comes, and he tells me that we’re going to do advertisements — I think it was Google or Facebook or something — and we’re going to spend $7,000. I said, “What? Seven thousand dollars? I used to spend one thousand! Don’t do it! Stop it!” He said, “No, Dad, we have to do it.”
Finally, I talked to myself a little bit. I said, “Listen, Henry. This is your son. This is not a stranger. Let him do it. If he fails, imagine that he’s going to learn, and it’s going to cost $7,000. By losing $7,000, you’re not going to go bankrupt. This is your son. This is how he’s going to learn.”
So I let him do it. Man, am I glad he did! We tripled our income. That $7,000 became so many more.
Hrag: When I started working at the coffee shop, for the first six months I didn’t do anything — I was observing how the business functioned and the nuances of how the business worked. I noticed that every once in a while, my dad would run off to Safeway to get some milk, because we were running out of milk.
I thought, “We’re a coffee shop, we make lattes and cappuccinos, they’re 75 percent of our sales, why the hell are we running out of milk?” When I dug into it I realized, typical mom and pop shop, there are no procedures. Nothing written down. If the person who does the milk ordering is sick, someone else takes a stab at it and doesn’t know how to do it, so we would be short of milk.
I thought to myself “Here’s a good opportunity. I can create a milk order form for the staff.” Tell them, “Here’s how much milk we should have, we need 100 bottles of 2 percent milk, count what we have in the refrigerator, subtract the two, and that’s how much you need to order.” Super simple.
This was six months in, and I sat down with my mom and dad and I was explaining this thing, and being a mama’s boy, my mom was all “This is so smart, I love it, it’s great,” and I’m talking to them about how we’re going to implement it — because that’s the other aspect of running a business, not only having the strategy but also implementing it — and my dad wasn’t saying much. I turned to him and said, “Dad, what do you think?” He looks at me, and he says, in Armenian, “I feel like everything is being taken from me.”
That wasn’t what I was expecting. I was expecting a lot of kudos and congratulations, and here’s this guy telling me that a simple milk order form is as if everything is being taken from him. If changing the way we order milk makes him feel like the whole world is crumbling in on him, how’s he going to react when I tell him that we have to get rid of a lot of the coffee he’s selling? Or that we have to do a $300,000 remodel? Or that we have to spend $50,000 on a website? How is he going to react to that?
Henry: I saw that my son is very smart, just like his mother. He is good with numbers, so when he did the calculations, I saw that he was completely correct. So I let it go. Whatever he wants to do, he can do it, and I have no objections. Sometimes I put a brake on it, but other than that I let it go. I say “He knows what he’s doing, so let him do it.”
That’s what he does now. He’s free, he does the changes, he does everything, and I am very, very pleased. He has taken my store over, and he has increased the volume three or four times what I used to do.
Hrag: I love what I’m doing right now, and I want my children to do what they love when they’re older. I don’t want them to feel like [the coffeehouse] was forced upon them. The challenge for me is that I also want them to know what Dad does, and I want them to be proud of that. If it’s not something they’re interested in, that’s absolutely fine. But I want it to come from them as opposed to me.
So I wanted to take aspects of the business that I thought my children would like, and not have it feel forced. One of my sons really loves culture, he loves language, he’s interested in history, and so my conversation with him when it comes to the business is more around where our coffees are from, why that’s important, different styles of coffee that are grown in Ethiopia as opposed to South America.
He was so excited when I told him that Ethiopia has a lot of regions, and they have cities and states that are very different from what the United States has. I asked him if he could teach me a little bit more about that, and his eyes opened up. He went and researched Ethiopia, and so it really came from him. I just planted the seed. Never at any point was I talking about him working in the business or taking over. It was just conversational.
I think that’s a lot healthier, especially with kids nowadays, where they know what they like. If you’re forcing them into a situation, it has drawbacks — when they grow up, they’re like “no, I had bad experiences, I never want to have anything to do with it,” instead of having fond memories when they’re older.
The other big thing is, when my father immigrated to the United States in the 1970s, he had nothing. For him to be able to provide for his family, he worked his ass off — and I didn’t see my dad. He worked Saturdays. If I wanted to spend time with my dad, I had to go to work.
I’m a little more spoiled. My dad has given me all of this, and because of his hard work, I don’t go in to work on the weekends.
Henry: The father has to give in, in the sense of “Let it go. The son is taking over. He might take a step, and he might not succeed. That’s okay. That’s how he’s going to learn. Next time, he’s not going to do that mistake.” The father has to give the son the opportunity to try on his own, whatever he thinks he’s doing, and he will succeed eventually. That’s how I did.
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