Pocket Bakery won’t be opening in the Central District anytime soon. Josh Grunig, the baker behind the bakery said he would still love to open a retail location in the area, but financial realities have forced him to alter his plans from a year ago.
“Maybe I was a little naive, but I also try to be as optimistic as possible,” Grunig said.
He had been operating Pocket Bakery as a pop-up in Magpie, a toy and clothes shop on 20th and Union with plans to open his own retail location in a new building near 23rd and Union. He explored bank loans but ended up raising about $25,000 from crowdsourcing. He has about 100 participants in the loan program, about a third of whom were from the neighborhood, he said.
But $25,000 doesn’t even come close to funding the startup costs for a retail bakery. Building out the dining space alone can run into the six figures, and then there’s still the kitchen. After his fundraiser finished, he found his would-be landlord was not as optimistic as he about his plans to come up with the capital.
“Literally, a week after that was done, they offered the space to someone else who was fully funded,” Grunig said.
Grunig said he has had an exchange with one backer who was upset that the bakery won’t be coming to the neighborhood. Grunig said that with his relatively low amount of cash and no viable location, there was little he could do.
He’s still working to pay the money back. He ran his crowdfunding through Community Sourced Capital. That site, rather than offering perks like a Kickstarter campaign, is more of a no-interest loan. The funding recipients simply promises to pay back the loan within three years. Grunig says he is on track to be able to do that.
Grunig hasn’t let the setback deter him. He used the funds to buy a commercial freezer and some equipment to allow him to make croissants, among other things. He’s been operating a wholesale operation, called Standard Bakery, out of a facility in Tukwila.
He plans to continue his wholesale operation. He already sells through some area coffee shops — Freshy’s in West Seattle, Analog Coffee right here on Capitol Hill and Anchored Ship in Ballard – and he’s been selling some items through the Central Co-op. Grunig also has a regular stall at the Fremont Sunday Market, and said he’s looking at other farmer’s markets.
He is hoping to expand the wholesale operation to the point that it would allow him to open a retail location, as well. He said he likes the model of Columbia City Bakery, with a thriving market in both wholesale and retail, and he believes there is space for his niche – breakfast pastries featuring organic, locally-sourced ingredients.
Ideally, he said, he would still like to open that retail location nearby. Driving to Tukwila has not been the highlight of his day. And the facility he’s using will close at the end of 2016, so he’s got a pretty firm timeline for when he’d need to open someplace more permanent.
“The CD, in a perfect world, yes,” he said.
What happens? You learn the hard way why it’s maybe not such a great idea to part with your money for a business that can’t present a business plan to a bank (that likes to make money as much as anybody does) that gets it funded through normal means. That’s what happens.
Generally supportive of crowd-sourcing, but this gives me pause. The baker is given 25k by donors who are donating in order to see Pocket Bakery become a brick-and-mortar reality.
The 25k isn’t enough to do that, so the plan for Pocket Bakery is at least temporarily abandoned…and the 25k is used to fund a basically unrelated venture?
The donors didn’t pledge the 25k for a commercial freezer to be used in a Tukwila wholesale operation. They pledged 25k to see the pop-up they enjoyed turn in to a reality.
It might not technically break any rules, and those that donate to crowd-source ventures should understand that the risks of the project never coming to fruition are high…but it doesn’t make me completely comfortable with the alternate use of funds.
It’s certainly less of a big deal when the money is a sort of a loan instead of a permanent donation, though. That has to be noted.
Why the rancor? People freely gave a no-interest loan, and Grunig is planning to honor the paybacks. His coming up with alternative ways to stay in business will enable him to honor the terms of the loans.
I can understand why neighborhood funders would be upset, but short of fast-tracking their loan repayment, I’m not sure anything can be done for it if there is no space available for him to create his bakery. He’s still baking – it’s not like he’s taking the $25K and taking a trip around the world.
Don’t mean to make it sound like something immoral or criminal happened…just that I think I’d be a little irritated as one of the backers that thought they were helping to bring about Pocket Bakery.
And, like I noted, it’s way different to use the funds for a different venture when it’s a loan that you plan to pay back on time than if it were the traditional donation you see on Kickstarter or GoFundMe.
I hope these folks get to open their bakery eventually!
The crowd-sourcing phenomenon seems to be gaining in popularity, but this article shows that there are serious risks in contributing to such an effort. I’m sure Mr. Grunig is sincere in his attention to pay the loans back, but without a definite source of income how will he do that?