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In this episode of Up and to the Right I'm excited to have Kari & George Grossman owners of Happy Lucky's Teahouse.
We'll talk about getting started in 2009 and adapting to a wildly changing business environment in 2020.
About Happy Lucky's
With a commitment to quality, selection, and community, Happy Lucky’s creates a highly interactive, informative, and immersive tea experience. Whether you are already a tea lover or new to the brew, you’ll find the flavor, aroma, and feeling that speaks to you from over 200 loose-leaf options on our Great Wall of Tea.
Find Out More About Happy Lucky's Teahouse
https://happyluckys.com/
970-689-3417
Welcome to Up and to the Right, the no-nonsense podcast where we blend your passion with proven business principles and practical tips, empowering you to create the impact and success you envision.
Hosted by Stephen Krausse, the show covers what matters to small business owners, startups, and people interested in becoming entrepreneurs. No buzzwords and no hyped-up trends!
A graduate of Colorado State University's College of Business, Stephen has an academic background that compliments over 25 years of business operations and management experience. He started his first business as a freshman in college in 1987, recording and producing demo tapes for local bands. Since that time, he’s been involved with numerous successful small businesses, including the operation and management of a niche high-tech company with customers and suppliers worldwide.
As a business professional by education and trade, he works with select business owners to blend their passion with proven principles, giving them the edge they need to achieve their unique impact. Stephen is always researching new products, ideas, and innovations - consuming content through audiobooks, podcasts, and online resources, and connecting with other professionals locally and abroad.
Now he’s sharing practical tips and ideas to help you get real work done. This isn’t about fancy solutions requiring a considerable investment or changing how you do your best work. You’ll discover ideas that will allow you to integrate proven principles into the way you already get things done. You’ll get practical ideas to easily replicate, modify, and integrate into what you already do.
Up and to the Right covers topics like getting value out of a business model, outsourcing, hiring for small businesses, working across platforms, productivity and efficiency hacks, building revenue streams, communication and planning, and more! Some episodes will have related downloads available from the show notes page below or unique segments with guests who have industry-specific tips that would be helpful.
It’s time to roll up your sleeves and get to work. Listen to Up and to the Right with Stephen Krausse today.
Unknown Speaker 0:07
High entrepreneurs and small business owners is the fact that the last 12 to 14 months have been very tumultuous, tumultuous for small business owners, whether it's business to business or retail or food service. But what if your business is both retail and food service? Today, it's my pleasure to have Cari and George Grossman, owners of happy Lucky's tea house on the show, we've had a great, we'll have a great opportunity to see the challenges and talk about what they've faced throughout the economic environment changes that we've seen in the last 12 to 14 months. I'm really looking forward to talking to them about their story and finding out what's worked and maybe a little bit of what hasn't worked. We'll see. So it's time to get caffeinated. It's time to roll up our sleeves and get to work. I'm Stephen Krausse e and this is up into the right, the no nonsense podcast where we blend your passion with proven business principles to create practical, actionable, sustainable solutions for your small business. Alright, so there's a little housekeeping to do today, just the usual stuff, what's in it for you, as a as a viewer, as a listener. We do real, real world business tips, interviews, topics. And today we're gonna have real business owners who are getting things done. And that's something that I feel is is really valuable. There are a lot of podcasts and live streams and other media out there that isn't always about the nuts and bolts. And that's what's in it for you with up into the right I really want to make sure that this is solid value that we deliver every every episode. If you're watching live, I appreciate that if you're listening to the podcast after the live presentation, the show notes will be at HTTPS be 50 p dot info forward slash 061. same format, as always, and all of the links and information that we share today on the show will be on the show notes page later. So with a with no more ado, let's talk a little bit about it. I'll just introduce Korean George Korean George are as I said earlier, the owners of the happy Lucky's are not the happy of get this right. Happy, Lucky's tea house here in Northern Colorado. I'll let them tell a little bit about their story before I bring them on. My wife and I met them actually my wife met Cory through their work with sustainable schools International. And so hopefully I'll let Cory talk a little bit about that as well. Let's, let's bring on Korean George. Hey, Cory. Hey, George, how are ya? All right. Hi, everybody. Hi. Oh, right on your CV. Hey, so why don't you guys give us a little bit of a an overview of maybe your entrepreneurial journey Getting Started into happy Lucky's tea house? How far back do you want to go?
Unknown Speaker 3:30
Probably the, you know, we started in 2009, about a year after we moved to Fort Collins. And what's significant about that is 2009 was the last time the economy crashed. So when we started in September of 2009, we thought well, there's nowhere to go. But up from here. If we have any business at all, that's a win. And we started it because when we we were tea drinkers when we moved here from Wyoming, and there was no good tea to be had and Fort Collins. So we decided that Fort Collins needed one at the time I was the founder and and chief executive of sustainable schools International, which does human humanitarian education work in Cambodia. And I was selling silk from Cambodia that I was importing. So we originally started as the idea as a silk import store and retail store, to give exposure, raise money and give exposure to sustainable schools international but we decided that that would only bog draw people in on the days when they needed a special occasion gift and we wanted to give people a day to a reason to come in daily. So we thought well, there's no good tea here. So why don't we start a tea room. So it actually began with silk goods from Cambodia in the front and tea in the back. After our first Christmas season, we realized the tea was the draw. There was a lot of people in Fort Collins who liked tea and didn't have access to good tea. And so we switched it. And that's when it morphed into happy lucky see house you see today? I was. That was good. I was there. Perfect. You're there. And you were there. Yeah.
Unknown Speaker 5:23
I mean, that the the interesting thing is, we felt that, you know, starting after the financial crisis prices in, oh, 809 that if we could survive that we could survive anything. And that's not a pandemic, I don't think, yeah, we didn't really, pandemic never came into their purview.
Unknown Speaker 5:43
Yeah, I was thinking about that, as I actually, as I read the bio, on your website, is you started a business at what, at the time, I would have argued was the worst time in history to start. And, and then here we are transitioning into, into the the COVID crisis. The it's always interesting to me how how business shifts, though. So you started, actually, as a silicon Porter, which I actually did not know that. So I, I'm learning something today, too, which is awesome. But, and it, was that a comfortable shift? Or was that scary? Well, scary, you know, it was sorry, go ahead. Good.
Unknown Speaker 6:32
It's interesting, because like, when I think about the work we did in Cambodia, and you know, like, every day when my kids go to school, and they leave, I always say, use your brain ask lots of questions. And so part of that is, it's scary, because what we know, and what we don't know. And so the whole key to that is knowing how to ask the right questions, and find the people that can help you. And so we knew about silk import, we didn't know anything about tea, except that we love tea. And we saw that there was a need for it. And so we went out, I started learning about tea, I went to some tea classes. I started, like really studying tea, but like, I didn't even know how to price tea. And so, I have a friend in Denver, who knew a woman who had a tea shop, and I went down to see her, she spent about two hours with me and finally said, How do you price tea? And how much do I buy? And she said, and she gave me a little bit about pricing. And she goes, just buy two out two pounds of everything she was in a week, you'll know what sells. And she was right. And we sold out Earl Grey right away. And I ordered five pounds of Earl Grey. And now we were under 50 pounds. Earl Grey. So I mean, that's it's like knowing how to ask that right question and find the people when you're starting out who can help you and and being honest with yourself about what you know, and what you don't know. And how to find the right help to get it.
Unknown Speaker 7:59
I would add to that. My answer to your question, Steve. I'm the Marketing Department happy lucky. So that's how I think about it. Can you tell he's operations and financing. But to answer your question briefly, it was just a response to customer customer interest. There was way more people interested in tea than Cambodian silk. So it was real obvious after the first season of Christmas to put the tea in the front and the silk in the back. The shop still has information about sustainable schools international we no longer do the silk but we did for the first five years. The soap was always there.
Unknown Speaker 8:40
That's great. So um I am losing track of my system here I apologize. Well, what I wanted to do while I tried to sort this Okay, so a couple things first of all, I think there's there's something really impactful that you're saying there about asking questions and and paying attention to what customers really want and I want to touch on that a little more. I do want to invite people if you're watching live and you'd like to ask George or Korea question about their journey or about happy Lucky's please go ahead and throw it in the chat and I will and as we move through the interview will will definitely will ask Cory and George those questions. So getting back to this idea of a asking questions and be paying attention to customer demand and not so much a once you get to the point where you're selling tea. Understanding customer demand becomes you know, to a certain extent becomes a math problem right because more Earl Grey is sold than something else. But understanding seeing that interest on the front end when you're when You're not known to be a tea shop when you're when you're when your vision was initially to do this silk. Talk a little bit more if you if you can about how how that that interest developed and how you, you talked about how you how you got into it with the colleague in Denver. But how did you get to the point where you said, Oh, it's gonna be tea, it's not going to be silk.
Unknown Speaker 10:29
Oh, I'll take that. So we started in oh nine. So in January 1 week of January, we were going to close and do inventory. And as a funny story, so we closed for one day, I'm going to count all the tea and all the silk and everything. And Carrie says, Hey, why don't we put the silk in the back tea in the front. And we'll go through the hot through until like Mother's Day in the spring, and then we'll switch it all around. And, and that's when the T really took off. And, and that's when we really knew. And then the second trigger for how we knew was T and not so was we, we did a change in our pricing for customers. And so we had everything was either yet two by four ounces, eight ounces, or 16 ounces, we had discounts at the higher volumes. And when we listen to our customers, they were coming in, and they were always wanting two ounces. And so and then they said well, how much would that cost my staff was having to like, we'd have to figure out how much two ounces was instead of four ounces. And so we and then the second thing that happened was all of our labels on our Great Wall of tea, if you ever come in the tea house, we have this great wall of tea, and all the stickers were white. And we have these little signs which showed the difference between white tea and green tea and long the different types. And khari said she got all the great ideas, she said we should color code this. So we decided to color code it. So once we color coded it and at the same time because we had to redo the stickers on the on the presentation to the customer and the tea house. The other thing we did was we went to per ounce pricing. And what I found was instead of a customer buying one four ounce bag of tea, they would buy one ounce of five teas or 60s. So my average order started going up. And I realized that people wanted the breadth of teas, the breadth of selection was important to them. And what would happen is they might walk out with five different six different teas, they'll come back in a week or two. And then they'll say this is the one or the two I like then they would buy four ounces or eight ounces, and bigger quantities once they kind of hone in on their favorite. And I was really scared when we sweat. Like this is the biggest one of the biggest fears when we went from four ounce pricing to params pricing, like that was really kind of critical of our the customers gonna respond or are we going to kill our sales? And they went for the one ounce pricing, and it's been great.
Unknown Speaker 13:01
Yeah, and that's something that I would would I can definitely relate to in terms of of changing that model so that a smaller amount is available. You do have to ask that question as a business person, you know, what? How is that going to impact? My, my, the value of each sale? Am I is each customer getting enough when they get an ounce versus when they get four. But it's, but it sounds like that actually was a win for you. Because you ended up now they're sampling several different types of tea versus a single one. Let me ask this question real quick. How much? How many cups of tea is an ounce? And what does that mean to me as a customer?
Unknown Speaker 13:53
Good question. We get that all the time. So an ounce will make about seven eight ounce cups of tea, a week's worth four weeks.
Unknown Speaker 14:02
Okay, so that that actually that's a good amount of tea for and certainly a good a good sample size, if you're not sure that this type of tea is is for you. Versus and maybe there's a there's a value in the lower commitment level than buying four ounces, which would be a month's worth of tea and then find out that maybe you like something better that where you could invest your your money there so that I can see that makes a lot of sense.
Unknown Speaker 14:36
Yeah, and when pre COVID customers would come in and we would always have two samples, brewed samples for them to try. And so and they were always different one had caffeine and one was herbal and they'd be different every day. And our whole idea for sales was around sampling, sampling sampling. So even if a leaf stir our staff or sales So this is called leaf stirs. So even if a leaf stir is is, we're sampling teas for potentially a new supplier or we get some new teas in or we're making a new blend, we would take those samples, and we would then go and share them with anybody who was sitting in the tea house at the time. Because we felt if everybody got to try so many teas, they would not just have one favorite, they might have two favorites, or three favorites, or five favorites or favorites in the morning favorites in the afternoon. And so I mean, you can drink tea all day, you can't necessarily drink coffee, certainly can't drink alcohol all day. So you know, I like I got tea free in the morning got tea for you right before you go to bed,
Unknown Speaker 15:36
I would add to that, as well as that experience of sampling and sampling, you know, in the day, at the tea house, whether it was you know, bringing it to the tables for people there, people who would sit at the bar stools and would always get these like opportunities to taste the news T's that came in from some, you know, amazing remote location is that the the the sampling of the T's showed us a lot of our developing our strategy for sales and how we work with our employees and training. Because when people first come to tea, and it they're usually interested in, in what in herbal teas, and a lot of our teas are pure leaf teas from China, and Taiwan and Japan. And some of those teas are more expensive, but they require a more refined palate in the same way. People who are new to wine might like you know, less expensive wines that aren't really is interesting in a in a flavor profile kind of way. But as they get into it and learn and learn and learn that they get interested in more interesting and more expensive types of wine, the same thing happens with tea. And so people who are longtime customers might have been someone who never always came in and asked for herbal tea, or tea xanes is what they're known as. And then when one of these sampling situations, they might have tried their first pure leaf tea from China, or like what we're drinking today t Kuan Yin Iron Goddess of Mercy, which is an oolong from Taiwan. You know, they wouldn't necessarily pick that by name or by interest at all, but I'll try it. And then all of a sudden, these longtime customers, we call them working them up the ladder. So we have people who are now been customers for 5678 years, who have shifted totally to pure leaf tea and they buy them in larger quantities, because they've, we've created a value for them. And they experience that's beyond just the tea, but the whole story of the tea and what they themselves know about tea. And then they like to share that top story in conversation with their friends and colleagues and sometimes first dates and things like that.
Unknown Speaker 17:55
Awesome. So I did want to ask you about something because and this is something well, first of all, I will confess that we have Shall I actually texted Deanna this morning to ask how much happy lucky we have in the house. And it turns out, we have a whole shelf dedicated to it. So there you go. But I did want to ask, so my personal experience with with that kind of of thing was going into your store. And of course, the leapster said, What do you want? And I'm like, Well, I don't know t so I don't know what I want. And I said, I think at that on that day, I was having trouble with my sinuses. And so I said, I'm having trouble with my sinuses, and it didn't take her two seconds to know what to brew. And so what I was curious about is is is that a word? Is that something that that you have trained people? I mean, to me, that seems like a really odd request. But then, you know, are you training people? Or? Or are you finding people to work for you that that just know this stuff?
Unknown Speaker 19:09
So I'll answer your question two ways. First, is part of our training is, you know, a lot of sales, a lot of businesses, what is the customer's problem? What are you trying to solve? And, and I don't quite look at it that way, because I think people who drink tea don't have any problems. So, but they come in, and we've identified through time that there are three types of customers. The first customer is what we call kind of our social ritual customer, and is what we train our staff on. And so when that customer comes in, they don't necessarily care what they're going to drink, but it's more about who they're drinking with, and the ritual of round that tea and drinking that tea. The second would be your tea connoisseur. They want to know this tea Kuan Yin, where did it come from? What season was at what flesh? Am I drinking? What? What steeping Am I on? How's this changing flavor over time, again, really nitty gritty, they're kind of your real foodies of tea. The third is for health benefits. So which is what you came in for. So you came in for a health benefit, and you were having some sinus issues. So one, we train the staff to identify when the customer walks in, if they started talking to you about t Kuan Yin, or what's the difference between long and green tea gone right over your head, and you would have been out the door and we just lost the customer. So one is to identify why that customer came in. And we do it through questions. So we teach the leaf stirs to ask questions. And, and so and then the customer will tell us enough. And then we really have three wellness teas, they're in our wellness line of teas be well, cosmic cold, and koala bear nasal care, which is the one they probably gave you. And so they know that and we trained for that. And our training is pretty is pretty simple. The first 20 shifts that they're on, we have three teas that they drink through a series for their first 20 work sessions. And so it starts fairly simple. Like what's the difference between a white tea, a green tea and a black tea? By the end, you're tasting three Chinese green teas and trying to figure out why they're different. And then when we do our tastings with our leaf stirs, it's we don't taste one if you just taste one, or you sample one, or even if you're home, or you're drinking a wine or, or something that you're drinking, if you drink wine, your answer is either do you like it or you don't like it? So tasting in threes is a great way because now you're like, Well, what does this one tastes like? What does this one taste like? What is this one tastes like? So when we're training, it's never about do you like it or not like it? It's how does how do these compare? Is it more vegetables and more floral is a little spare ski more like asparagus or broccoli or, or gingers forward or gingers lingering on the back of your throat. And we start Tanya. So our training, it's hard for us to find leaves doors that have a lot of experience. So a lot of it is around teaching them the vocabulary and teaching them to trust their palate. And that's really what we're trying to do what the customer is teaching them to trust their palate, through our guidance.
Unknown Speaker 22:28
And I would add to that, that your experience of coming in for not knowing anything being a new customer, which is obviously how we built the business because most people don't know a lot about tea. Because we're American, and we don't have that embedded in our culture. They come in for a health benefit. Usually it's either immunity, you know, some kind of a cold situation, sleep, or weight loss. And they begin with those issues in the different teas. And then they learn how powerful not only how good it tastes, but also how powerful tea is. And that's what begins that, that that step up the ladder that we talked about taking them through the whole t wall over multiple visits over multiple years.
Unknown Speaker 23:09
And that's product knowledge. And anybody who's in sales or any business out there that has that is in the sales business is product knowledge.
Unknown Speaker 23:17
Yeah, absolutely. So let's, let's shift gears a little bit and and talk about as, as, as we know, and as I alluded to in the introduction, that the economy has changed in the last 12 to 14 months. And what I'd like to get from you guys is what was the first sign that let you guys know that the economy was changing for your business? Having to close the door for two months, three months wasn't the
Unknown Speaker 23:46
three months? Well, it was a you know, in March, I think Linda February, beginning of March, you know, I think the entire country was starting to get signs that that there's going to be some shutdowns and, and I think they're really for us as well when the sports shut down. It was like this is coming to us. And so it was March 23 was a Monday was we have two locations. And so we closed we open that second location in 2016. So we closed that second location. And because we just couldn't keep it open, nobody was coming out. And I mean our food service, which which is coming in having brewed tea and sitting in the sitting and getting snacks and or taking something to go I mean we were getting five customers a day by the end of March and early and through April, walking in the door, and which is nothing but as a as a restaurant and licensed as a restaurant with food service. We were allowed to stay open and we pivoted the business and started offering Store pickup and local delivery. And and online in an online and shipping. And that really is what what saved.
Unknown Speaker 25:09
It's kind of a unique situation than that, you know, our main store is like the food service brewed service was on par with our retail sales or, or kind of the funnel for retail sales. And we immediately had to pivot to the strength of the retail side of the business through online ordering. We were lucky in that we had already designed and launched a new upgraded, better e commerce website in November of 2019. So it wasn't like fully each page dialed in marketing wise, but the functionality of ordering was there, George was very quickly able to add the curbside pickup and the local delivery our son was the delivery driver, our high school son ran around down delivering tea. In our marketing, we notify their customers right away have, you know, we've the big challenges we faced and this was our solution. And we needed their support. And people. I mean, people spent their first stimulus checks with us to support us and keep us open. So it was a quick pivot at the beginning, using tools we had in place, cutting our costs of labor, immediately supporting our leave stores in that, who, you know, our immediate interview of leave stores was like how many shifts Do you absolutely have to have to pay your rent and buy food and survive, pay your car payment. And so we kind of took that information and we spread it out. And the people who said you know, I live with my parents or I have a roommate whatever was the case or could go on unemployment they did we work together as a team to figure out how to do that. And then the other I would say is we never from the beginning, we're like, oh, this will just be for a few weeks or a few months. And then we'll open back up and do the same thing. We knew right from the beginning, it was going to be a long haul and probably a year. So the entire time from that time forward. We started really working on both the functionality of our website, the marketing of our website, and then our back end for order fulfillment.
Unknown Speaker 27:14
That's great. So one of the things you said there, and I just, it struck me You said you were lucky that you had already developed the online shopping and and that, you know, I appreciate the sentiment. But I wonder right, you know, I obviously, I'm not suggesting you knew that the the pandemic was coming. But But I think that to identify that I identify that as for thought not so much in terms of Oh, some horrible catastrophe is going to happen to my walk in traffic. But always what I'm what I hear from you guys, every time we talked, you know, that today and actually, you know, anytime we've talked before is there's always an exploration of the environment, the the economy, the the, the economic environment that we work in and live in. And so I just I think it was unlocked. To me that was just part of a solid approach to, to business. And I just wanted to point that out. I love what you guys were talking about, about how you worked with your staff, because it's very hard as a business owner, and sometimes people don't really understand. You know, in the news when people get laid off, it's like, it's corporate people who are the impression is that it's corporate people who don't care about their employees or whatever. As a small business owner, sometimes you have to make the same decision. But it's gut wrenching. And I totally appreciate I love how you how you did that. I also, I also really liked that sports was your trigger that sports was going to have a problem we were gonna we're all going to be in trouble. Nobody knew Dr. Fauci was that well, and now Yeah, now now he's pretty much a household name, right? You already touched on the implementation a little bit and and what the pivot looked like so for you guys, the pivot really was at least at first. Okay, we've got to shut this store because it's not driving enough traffic and we need to move online. And it sounds like that was very well executed. After that, what what kind of pivots did you have to or or tweaks did you have to do in your pivot as as you move past, maybe a April, June, you know, in July, stuff like that, what was there additional shifts and and additional things you needed to change?
Unknown Speaker 30:10
Well, there were a couple other things going on in the in the in the bit in the background. And so, you know, I'll give a shout out to Shopify, because you know, we started our first website in 2013. And we've been on a couple different platforms. And so there was this whole back end thing that we were trying to do to become more more efficient. And Shopify had the tools there. And so additional shifts is is that you know, recognizing, though people were were doing subscriptions. And so we know it took a little while, but but we were able to add a subscription element to what we were doing, we pretty much pooled all the advertising dollars that were going to go to anything that was promoting the brick and mortar tea house, and all that went into plus more went into Google ads, Facebook ads, Instagram ads, and then expanding our shopping channels to be on Facebook, Instagram, Google Shopping, I mean, all these tools are there. And I think that this was in our business plan, there was probably going to take a year or two to do and all of a sudden was like, we got to do this in six months. And that became the 100% focus. And our bacterium. I mean, I know, Stephen, you've been in the tea house, you know, this back Tea Room. You know, we used to have for four tops, and some nice comfy chairs to sit in. That's our shipping station. And so when it was when we pare down the staff, I mean, my general manager, Master blender, he was the chief guy in charge of shipping. And our wholesale went as it were, didn't go down and went to zero. So we had no wholesale orders, go into coffee shops, and fine dining restaurants and all the places that we wholesale to went to zero. And so he came back and started working on the floor. So everybody's I mean, I started making deliveries, and we all started doing other things. And they were well outside of our normal, what's a predict predefined responsibilities. And so that flexibility in the nimbleness of the business and in the team that we have was able to follow and just do what we needed to do. And we reduced hours. And the SEC last thing, I'll say is that we also work with our landlords around rent. And, and and that's about
Unknown Speaker 32:44
all say about that. We can't go into details about how that worked out. I want to add from the marketing department that, you know, yeah, I mean, I have an annual marketing calendar that on March 23, I threw out the window. We're doing March Madness, we were in the middle of March Madness, which is a mad we call it moto madness, we in every day, for the month of March, there are two teas to taste. And the customers can vote with a ticket on their favorite. We go through a bracket situation and we have a T champion at the end and whoever guesses that get some free, you know, swag and prizes and stuff like that. So we're in the middle of that when the shutdown happened. It's like one of our biggest marketing campaigns of the year, and the entire calendar went out the window. And all of a sudden it was like, Okay, first thing we got to do is pivot marketing message to, here's our struggles. Here's why I support us. Here's how to support us. Here's how we're supporting you. Then we started asking for reviews. Here's another way you can support us you can earn loyalty points by referrals and reviews. And then of course, our T house business is often based just like we talked about the beginning of this interview and in store experience. How can we bring the in store experience of tea education and the knowledge of our leave stores? online, I started online tasting videos, we have over 200 teas that I had to video people tasting and giving the health benefits, the flavor profiles, all the things we talked about. But from the beginning, we knew that no matter what all of this had to prep for holiday season, we that entire time we paid our employees and didn't pay ourselves. Holiday season was make or break. So that's when we brought in things like the T subscription and making sure all those videos were done and making sure we had all those on marketing dollars spent correctly with the right ROI in the online environment, so that you know as we ramped up in October, November and December 40% of our business is in November in December and I think we got there by what we consider a miraculous win is we were Only down 15%.
Unknown Speaker 35:02
Well, the year we were down 14 15%. But December was only down like four or 5%, which was, which is amazing. And it was huge when, and, you know, January was, was down again about 12 13%. But, you know, January of 2020 was up over 2019. So we were on this upward trajectory. But we've also become more efficient. So our costs are down. So even though sales are still down from last from pre COVID, by having better control of costs, you know, puts us in a better cash flow position and profitability position.
Unknown Speaker 35:43
Yeah, absolutely. And I think I think it says a lot about the, your willingness to look at your business model early and quickly and adapt. But it also says a lot about your relationship with your employees in our, well, them too. But I, I met customers, in terms of being able to communicate with them, and, you know, find new ways to, to, to communicate with them to speak to them, but also and say, Hey, we're a small business, we're trying to, to get through this. And please don't forget about us, I mean, if your ritual is to come in and drink a cup of a cup of tea, and that ritual gets broken, because you're staying home, you know, your ability to, to maintain that relationship through the pandemic. Is, is, you know, to me, that's, that speaks volumes about about the shop in general your business model, but also your communication with with your customer base. I love that.
Unknown Speaker 36:53
So So Carrie mentioned the customer who came in and spent their their stimulus check. I mean, they came in and bought a $500 gift card. And, and they've been longtime customers. And I called them up and I think, and, and I said, Why did you Why did you do this. And she said, we picked three businesses, that we really want to make sure that they succeed. And you are one of those businesses for us. And a $500 gift card. And I went back and you know, Shopify is a little big brother ish, and go back and see how much they spent. And I mean, it took them over a year to spend $500. And I was like, you just gave us 500, I was awesome. And it gives me goosebumps still talking about it right now. And others like that, but it was like, that's why I mean, your customers are like gold. And you do take care of them. They take care of you. And you know, I've got I can spend another hour just talking about stories of customers and the things that they've done for us, and we've done for them. And and, you know, in the end, when we, you know, when we think about why we started the tea house, it was about community and connection about bringing people together. And that's kind of what tea is. I mean, tea is the beverage of the world. And it's always about who you taking tea with. And part of the reason we started happy Lucky's was bringing attention to our nonprofit. And, you know, we knew that there were other nonprofits out there and like how can we get busy, you know, nonprofits and have a place for meetings and have a place for coming together. And sharing tea, and sharing ideas and sharing thoughts and having discussions and listening to people.
Unknown Speaker 38:35
I would add to that literally, it was quite intentional from the beginning to be the antithesis of our multitasking, coffee fueled hyperactive world to be the place to come sit down. Be whether it's quiet time by yourself or a meaningful conversation with a friend or with a colleague over a pot of tea. Tea has been the community knitting beverage for cultures all over the world for 100 years. And we felt like our community and really in many ways our culture kind of was missing that.
Unknown Speaker 39:12
Yeah, and it the the the so I am curious, I didn't have this on my list of topics but am curious. Was there was there some kind of communication that you guys used? or some kind of I don't even know the right word. Well, how did you if you did, how did you help people during this time, transition, that experience that they would have had as a communal tea drinking experience in your shop? How did you translate that or help them translate that to having an experience in their home?
Unknown Speaker 39:54
So So part of that was that we have this great wall of tea where where people People come in and they experience that's where the leaves there's talk about the tea. And that was the real impetus for our YouTube channel and videoing all the teas. And so we have 200, loose leaf teas, I think 120 of them have been videoed with with a personal tasting, were just like I'm brewing this tea kleinian. Now, Ricardo was talking, it's like, I take you through that, or one of the leaf stirs takes you through that. And then part of the other connection, I think, at the beginning, you know, I did a lot of delivery. So I got to talk to a lot of customers. And it wasn't just ring the doorbell put the bag on the ground and run away, you know, I would thank them for for supporting us. And then I'm the owner, and I'm out here trying to make those connections with people. And, and I think that just translated.
Unknown Speaker 40:48
And I would add to that, that in the marketing department, of course, we not only promoted these videos, but we also use social media a lot like what tea Are you drinking and creating community conversation around tea, or, or the pandemic issues or whatever, on our Facebook and Instagram and cross connecting cross posting cross promoting with other like minded businesses doing the same?
Unknown Speaker 41:18
That's great. So we've talked a lot about what you guys have did that we have done that was successful. Was there anything you you tried to do? Or you looked at that that didn't work that that wasn't wasn't successful? The DJ actually had to kind of drop and move on?
Unknown Speaker 41:39
Well, that's a hard question. I don't know, we both looked at each other like, Huh, what didn't work?
Unknown Speaker 41:45
Well, we I know what didn't work, we did actually tried to close our second store. And after we were working with the landlord, and we reduce the costs, and we knew this was going to be a long term thing. And we already knew that the way we would survive is by online sales, and just keeping our one retail location and Old Town open that in terms of our finances, and our energy and our staffing, the easiest, the best move for us would have been to actually close that store. But we had a year and a half left on the lease. And we tried to buy out the lease. And it was a long negotiation, our lease down there is held by a corporation and Michigan or something. And of course, they were dealing with this situation all over the country. So it was difficult back and forth with the various parties we were communicating with. And we ended up not being able to buy out the lease, because more important to them, was having someone in there because so that would have that would, that would have made this whole thing easier, we did have to reopen that store, at the beginning of August, we had to do a lot of changes down there, you don't get the same experience anymore, because we couldn't do it the same. We have all prepackaged teas on the wall, and we have to staff it with just one person per day. So we had to reduce hours, things like that. So our bread, our preference would have been to close it, but we had to work out but I am going to give because I know this is for business owners. And there is this little one nugget. And that is that in that negotiation, which George was mostly doing, and I was you know, talking his ear on the sideline, there was of course, their mo was to get as much out of it as we can, especially with the PPP stimulus funds and all of that. And eventually, we're like trying to get it because, you know, we like I said, we had 18 months left on our lease and over $100,000. So we're like, we, you know, the way it finally worked was we just came back to them and said, Look, we get it that you need you. It's better for you if somebody's in here, but we have to make this work. So it doesn't take our company all down. And the reality is that we signed a lease together based on market value for this space that no longer exists. And we don't it's not I said it's not fair to either of us that we don't know what the new market value is, for a retail space walk in traffic. And we won't know until this is over. And so the only fair thing is for us to split that hit. And so we offer to either pay half rent or to pay buyout the lease at the half of what we owed for the duration of it. And then argument one.
Unknown Speaker 44:41
That is a great story, I think for a lot of business owners. And we could do a whole show on negotiation. But they one of the things that I think is really important is understanding what the real value of something is because what you touch Don isn't? Well, what's the problem? The problem for me is, is I don't want to shell out this money. The problem for the, for the vendor or the landowner is I need I have people I have to pay probably most of them do. And but you approached it from what's the real issue in terms of value. And so I, I don't want to dig into that too much, because I could go on all day, but I really liked that you approached it from that perspective. And were able to, to look at it look past, you know, maybe your own specific perspective of, you know, it's all about cash flow to look at, well, what's the real value of this of this whole contract or, or service or whatever they're providing? So one thing I want to ask is, is there anything, you know, now, we're 12, or 14 months into this, we still have a ways to go before everybody's vaccinated, and we have, and we and we see a turnaround? Is there anything you're continuing to change? Or is there anything you would do differently? If you knew everything, you know, now, you know, 14 months ago?
Unknown Speaker 46:16
Well, you know, current talked about, you know, paying attention with, with the governments working with small business. And so, you know, we've been really grateful for that, because it's really allowed us one for our business just to survive and cash throw through cash flow through last April, May, June, July, when it was really, really difficult. And so we are working to expand our business. And so we're not sitting here saying, this is as good as it gets, because it's not as good as it gets. And so we're actually looking and for warehouse space. And we're continuing to pivot our business by starting to work on retail packaging, to go launch a line of chocolate teas in grocery stores. And this is what we're working on today. And, you know, I'm not worried about how am I going to open seating in the store as much in the tea house as much as I'd love to open seating in the tea house, that's not still not safe for us, and still not safe for our leaf stirs. And so we're continuing to evolve the business, because this isn't as good as it gets.
Unknown Speaker 47:37
And I would say that the reality is that back Tea Room, we can't open until we have moved what is now the warehouse and shipping department to a new space. Because we don't want to lose that online business. We've now built up a huge, like 50% of our business used to be like under 10 is now online, we don't want to lose that to welcome that people back in. We want to keep that and welcome people back in. And so in order to get there, we've got to make these the pivot to a warehouse. And then, you know, we talked we touched on how do you bring that tea house experience home to people who even shipping so much tea, that we had to create new packaging that would reflect our business values, our brand proposition, everything that you would experience in the store now has to be on the packaging, because we just have these like green bolt bags, that are very sort of nondescript, the story that goes with it is the least or who packed it for you. Well, that's not existing anymore. So you could put it on the packaging, well, then all of a sudden, you're going down the road of buying, you know, 40,000 bags, that you've got to now fill with tea, and then we got to move those 40,000 bags. And we don't want to be just doing it through the the to us experience for our walk in traffic or even even our online and shipping and subscription, we need to really expand our retail wholesale. So we have no idea how to do that. And we have just signed up for like a course called retail ready, online that's teaching me marketing department and our wholesale person how to approach that and it's wholly new territory.
Unknown Speaker 49:19
Again, it's learning how to ask the right questions with the right people that have the knowledge that can give it to you.
Unknown Speaker 49:24
That that's awesome. What I I I love hearing, the theme that I'm hearing throughout this whole discussion is always both of you are always looking forward. I love what you said about this is not as good as it gets. Because I think a lot of people, a lot of business owners are kind of holding still holding their breath. You know, and and everything we've talked about as you guys are you, you may have held your breath briefly or had some concerns but you've always taken the in automation that you had, and said, Okay, how do I move this forward? What do we do next? I want to talk really quick about the chocolate tea because SDN is favorite. And I just want to, you know, thumbs up. The, the, the last thing, you know, George, you said, we could talk all day on this. And I believe that's true. But the last thing I want to touch on is I always like to have something that that business owners can walk away, that's practical that they can say, Okay, this is something I can I can take this from this podcast or livestream, and I can try it in my business today. Now, we've already done a bunch, but you guys have something specific that that you'd like to leave people with today?
Unknown Speaker 50:47
one drink more tea? Was the brain and fills the heart. Beautiful. Business wise, I would say, and I kind of touched on this a little bit is that no, your your your customers are gold, and your team is gold? Because we can't do it all all of this alone. And around that it's building that right culture, and whether that culture is the culture with your team, the culture that you create, and add value to, for your customers? Like that's the thing, how can you do it, where you differentiate yourself, and you're adding that extra value for your customers, when you can go buy really crap tea in the grocery store right now? For a lot less, so you can buy nice tea in the grocery store. Well, not that nice of tea. But, but but how do you add value? And that's like, how do you figure out in whatever business you're in? How do you do it? And for us, it's around the education and the experience. And whatever your business is, there is that value proposition that allows you to differentiate yourself in whatever your market is, because there's always competition. And so how are you going to do that.
Unknown Speaker 52:11
And I would add on a totally different note is obviously, you know, we couldn't have done this without our local community support not only our customers, but also our, our city government, our county government, even our federal government has an even just, there's been so much in the narrative of the pandemic about supporting small business. And we needed that before the pandemic, we needed people caring enough about their local community businesses to choose to buy with them instead of Amazon. The big box stores are not our competition, Amazon is our competition. And being able to have our son deliver your tea that day, or the next day instead of three weeks from the Amazon Prime truck is is is of value. And we were able to make all of these pivots because we are both of us. But George especially, is very involved in a lot of community organizations, and then the community government stuff. And, you know, the people who are working in those jobs are trying to help but they can't they don't know what help you need if you don't communicate to them. So it is worth the time to go to the meetings. You know, answer the emails, tune into the, you know, podcasts or whatever offering they have staying in touch with the health department. All these there's a lot of entities that are really trying to help the small businesses but it's not, you know, super coordinated, so you have to be proactive.
Unknown Speaker 53:44
That's, that's fabulous. I want to thank you guys for joining me this morning. And I guess before we go, you guys want to shout out the shop.
Unknown Speaker 53:59
Yeah, well, it's happy. Lucky's calm, happy Lucky's tea house. And you can order online and we'll ship it all over the country, wherever you are. And watch the videos I mean, when you get to a tee on the tee page, just click on a video and just know that when you order you know, the Leafs are gonna hand pack your order, they're going to package this right they're going to send it off to you. And they'll be a little swag in there as always, and if you really love tes t subscriptions are great. You get never run out of tea and try some new things. We have some subscription boxes that are that are on different themes. So if you want to try some teas,
Unknown Speaker 54:40
you want to gift it to somebody who doesn't live here. There we have some gift boxes that every team every month has a different set of teas to like introduce you like if you're interested in purely but you don't know anything about it. We have a whole story to take you through by sending you 40s every month so Send it, you know, help us spread the word by sending tea as gifts to people who don't live here. I mean, our mission is to nourish your happy. And we just do that through tea, because that's what life's all about.
Unknown Speaker 55:12
That is great. I have to ask one question, because we're a socially distant and you can't throw something at me. Can I make tea in a coffee pot?
Unknown Speaker 55:20
If you want your tea to taste like coffee, absolutely go for it.
Unknown Speaker 55:24
We sell plenty of low price, medium price and expensive tea where to keep your tea pure.
Unknown Speaker 55:33
So the answer is no, I can't make tea in a coffee pot. Is that right? I would not do that. Unless you wanted to. It's like coffee. Awesome. Thank you so much, guys. All right. Thank you, Steven. Our pleasure.
Unknown Speaker 55:49
Okay, what a great conversation. I really appreciate khari and George joining me this morning. As I said before, there will be show node episodes at HTTPS be 50 p dot info forward slash 061. in the show notes for that episode, I will have a link to happy Lucky's I will also have a link to their YouTube channel so you can check that out. Learn more about how to make tea the right way without a coffee pot. And if you have a tea experience or you have an experience around the pandemic or around how you pivoted please leave a comment in the in the description but are in the comment section of the video. If you found this video helpful, helps my channel if you like it, subscribe, all of that stuff. And if you're watching the replay, subscribe to the channel by clicking the logo that you're seeing in the center right now. And there's a full playlist further to left to watch the rest of the episodes. For up into the right it's time for me to get back to work.
Transcribed by https://otter.ai