FAILURE TO LAUNCH Like many small businesses, Allentown grocery couldn’t make it work
Joe Calloway didn’t have reason to doubt Torie Day’s business pitch.
As the owner of RE 360, a real estate brokerage and developer that owns nearly a dozen commercial properties in Allentown, Mr. Calloway loved Ms. Day’s concept for a combined grocery and cafe that would bring fresh food options to a prominent corner in that struggling city neighborhood.
Though she had never run a store or restaurant, Ms. Day had earned a reputation in local culinary circles as a talented caterer whose healthy take on traditional soul recipes won honors in competitions.
And she had credible backers.
Before Mr. Calloway agreed to lease her a 5,000-square-feet storefront he owns on East Warrington Avenue, Ms. Day had raised $16,000 in startup financing.
But in the end, her enthusiasm, cooking savvy and the upfront capital weren’t enough.
Months after she signed a lease, spent thousands of dollars on equipment and renovations, and widely promoted her menu of juices, smoothies, sandwiches and entrees, including shrimp and grits and sweet potato casserole, Day La Soul Cafe & Grocer vacated the space in June — before it opened for business.
According to Mr. Calloway, Ms. Day missed thousands of dollars in rent payments while she tried to get the business up and running. While he made concessions and eventually downsized the space to make it more affordable, she still couldn’t keep up.
“It became a situation that just didn’t work,” said Ms. Day, who blamed the failure on higher-than-expected costs for permits and other expenses. “I needed more capital.”
Among the major expenses was a master plumber needed to make water connections that would comply with regulations, she said.
For Ms. Day, who last November allowed the Post-Gazette to tour and photograph the space as she painted and set up equipment weeks before a planned December opening, the failure to launch was a lesson in not having adequate savings to cover unforeseen costs and delays.
“I basically went in on my own with some small levels of financial support and no business partner,” she said.
For her landlord, it came down to a tough business decision to cut his losses when he realized Ms. Day wasn’t able to bring the idea to fruition.
“Despite all of us wanting it, we concluded it wasn’t going to happen,” Mr. Calloway said.
Both described the situation as frustrating, tense and unpleasant, and said there were issues they couldn’t discuss publicly.
Against the odds
Though the grocery-cafe never quite made it out of the gate, it shares a lot of characteristics with many businesses that don’t survive for long because of financing or unforeseen challenges.
According to the U.S. Small Business Administration, 20 percent of firms started in 2014 failed within a year and only about half of all firms last five years or longer.
In Pittsburgh, the odds of success might be even lower.
In a May report on startup activity nationwide, the Ewing Marion Kauffman Foundation said Pittsburgh tied with Milwaukee for last place among 40
metro areas ranked by the rate of new business creation.
Those who backed Ms. Day were reluctant to talk about what went wrong.
They include Bridgeway Capital, a nonprofit fund that gave her a $6,000 grant. Blair Schoenborn, manager of the fund’s healthy foods access program, said Ms. Day used the money for equipment but declined further comment.
Joe Bute, a local investor who specializes in backing food enterprises, had mentored Ms. Day and invested in the online crowdfunding site Kiva Pittsburgh through which she raised a total of $10,000. In a message, he said he had lost touch with her before she moved out of the Allentown space.
Siena Kane, Allentown business district manager for the Hilltop Alliance, said the nonprofit community alliance was rooting for Ms. Day to succeed because the neighborhood lacks a grocery store that offers fresh produce and other items not available in nearby convenience outlets.
She declined to discuss why the venture didn’t work, but Mr. Calloway said the alliance supported Ms. Day through its rent abatement program, which paid about half of her original rent of $1,500 a month.
It also provided money for signage.
As problems mounted, the alliance continued to cover its share of the rent each month, but Ms. Day did not, Mr. Calloway said.
She delayed the original opening from December to Valentine’s Day and when it was still not close to happening in April, the landlord restructured the lease. At that point, Ms. Day agreed to occupy about half the space, pay a reduced amount, and focus on opening the grocery store.
“But time was literally money,” and while she was spending capital on renovations, “the rent would be due again,” she said.
After she missed more payments, “Hilltop Alliance and others were asking what’s going on and I became 100 percent skeptical,” Mr. Calloway said.
“I was the only one who could say, ‘I can’t take a loss anymore.’”
Not getting discouraged
The prime real estate Mr. Calloway is now trying to market for another grocery or food establishment sits across from the city’s Zone 3 police station.
While Day La Soul’s planned hours of operation are still etched on its glass doors, and interior walls are painted the bright gold and berry purple trim that Ms. Day selected last year, a large “build-to-suit” sign hangs in the window.
“I was nothing short of impressed by Torie and I don’t want her to be discouraged,” Mr. Calloway said. “I failed multiple times before I succeeded, too.”
Next time around, Ms. Daysaid she will buy a building that can house a restaurant or cafe. She is rebranding her catering business and wants to add mixed alcoholic drinks to her offerings.
“I’m just trying to move forward,” she said.
Mr. Calloway said he’s been able to shake some of his disappointment because just as the deal with Ms. Day was collapsing, he was closing on the sale of a property on West Warrington Avenue to another small business.
Commonwealth Press, formerly based on the South Side, leased a 19,000-squarefoot warehouse from RE 360 with an option to buy and was able to acquire it much sooner than expected.
The company brought 14 jobs to Allentown.
“Business is tough, period,” Mr. Calloway said. “Sometime it works; sometimes it doesn’t.”