The first thing that you notice in the atrium of 100 Washington Square in downtown Minneapolis, is that the Penny’s isn’t shoehorned into the space. Thanks to the design work of Jonathan Gomez Whitney, the coffee bar and surrounding seating fit seamlessly into the dark marble walls of the 1980 building designed by Minoru Yamasaki – designer of the original World Trade Center twin towers in New York.
Creating this particular coffee shop was not the original plan for Hertz and partner (and fellow MOT) Dean Phillips (of Phillips Distilling and Talenti Gelato fame). The original Penny’s will open in a building that Hertz owns in Linden Hills at 3509 W. 44th St. The space is a current co-op office space which will have a Penny’s in the front; it’s scheduled to open in late January.
The Penny’s downtown came to be when the landlord of the building called Hertz and said they were looking for a high-end coffee bar in the building. Hertz had done some work with Spyhouse Coffee and while the Spyhouse crew weren’t looking to expand, he saw an opportunity.
“It dawned on me: If we were going to a coffee shop in Linden Hills, we could do a coffee shop downtown,” Hertz said.
The second coffee shop is what led to the Hertz-Phillips partnership (tech entrepreneur Adam Roozen is a third partner and the company’s CFO).
“Dean and I were meeting and he said that he heard I was getting into the coffee business,” Hertz said. “He wanted to be a partner and be involved, not just pay the bills. How many opportunities do you have to work with Dean Phillips?”
Starting from scratch, Hertz and Phillips built a brand around well-designed spaces – approachable luxury, Hertz calls it; finding the gap of where the market is at and where the ceiling is.
“In our market there is Spyhouse and Dogwood, and they kind of run the top-end market,” Hertz said of the Twin Cities coffee scene. “But the consumers will pay a lot more. They were the consumers coming into my office everyday asking for better coffee.”
The coffee principally comes from La Colombe Coffee Roasters, a Philadelphia based roaster and café chain that also sells coffee beans. “It’s a very elevated brand,” Hertz said. “Todd (Carmichael) sent his sales people, his training people. The built a training bar at the Linden Hills location. They handle every single one of my daily phone calls.” Spyhouse supplies Penny’s with their special, single-origin coffees.
The Linden Hills location has competition around, but Hertz said the plan is to offer an “elevated” coffee option. The shop will be in the front portion of the building he owns, which was built in 1917. There will be a glass-and-steel wall built that fits into the architecture of the space and also gives soundproofing for the office workspace behind it.
Hertz isn’t a coffee guy. He’s a real estate guy who has built an interesting portfolio of businesses. Along with coffee and his real estate work, he owns Benjo’s shoelaces and CAMA sheets.
“The only thing I’ve done that was really intentional, the real opportunity that I didn’t wander into was bed sheets. Again, it was another way to elevate the experience,” he said. “The shoelace thing was happenstance: I needed red shoelaces, I found red shoelaces, they broke, I needed them again, and I found a manufacturer for them. I could only buy 10,000 so I would up with 10,000 pairs in my parent’s basement so I built a brand around them.”
The name Penny’s is a tip to Hertz’s family history, as they owned the Penny’s Supermarket chain that sold to Supervalu in 1983.
“I know the brand from my family and nostalgia and no one ever said a bad thing about it,” he said. “I love branding and nostalgia, Dean loves history. It was a great opportunity to reuse the name.”
The biggest challenge as Penny’s takes off is Hertz’s 4 a.m. wake-ups.
“I thought I had a busy schedule before,” he said. “I still have my real estate stuff. I still oversee the shoelace and sheet business. They kind of run themselves, but I do need to keep my hands in.”
As Penny’s has generated buzz for the coffee and the design of the space, Hertz defers credit to the staff and general manager Mike Lacy, who joined Penny’s after stints at Burch Steak and Bar La Grassa – both owned by James Beard Award-winner Isaac Becker. Hertz also said that he and Phillips made the decision to offer a base wage of $15 per hour.
“Dean is passionate about livability and healthy community, and we worked our economics to support those wages,” he said. “The team is the backbone of this operation. They are doing a phenomenal job to make sure this thing runs not only like a coffee shop, but like a fine dining restaurant.”