Imagine you’re sitting around with a few buddies back in 2012, trying to come up with the next great business idea. A safe bet no one reading this would have been thinking: “What Silicon Valley really needs is a new coffee shop.” But that’s exactly what the four Fanourgiakis brothers (George, John, Mike, and Nick) came up with. The result was Penelope’s Coffee & Tea in Foster City, a colorful spot for a meal or beverage that includes a spacious outdoor patio. It doesn’t take long for a visitor to realize this is more than just another coffee shop—but more about that shortly.
Penelope’s is just the tip of the brothers’ entrepreneurial iceberg. Right around the corner is Sandwich Monkey, another store owned by their company, Grand Venture Group. While both do a healthy retail business, the big revenue comes from deals with several big Silicon Valley firms, such as Gilead, Visa, and the Hornblower cruise line. Between Penelope’s retail location and outside deals, the company sells over a million cups of coffee a year in the Bay Area.
But the story is much bigger than four brothers in the coffee and food business. In total, the brothers hold nine U.S and 15 international patents with several other patents pending—and the fruits of those innovative ideas are just starting to be realized.
A FAMILY AFFAIR
Working together was something the brothers did at an early age, helping their grandfather who ran concessions at the San Francisco Bay ferries. “Over the years we did a lot of different things and dealt with a lot of different business and management issues,” John recalls. “We were always used to working with each other and we knew we wanted to do something as a group.”
Their first joint venture was a janitorial service. They got customers the old-fashioned way, cold-calling and pitching their services directly to different offices in the Bay Area. Then Nick’s background working in grocery stores led to their next idea—cleaning shopping carts. John points to a University of Arizona study that showed 70% of shopping carts were dirtier than public restrooms.
Their initial plan to use a pressure washer hit a roadblock when they learned it would produce gray water that can’t be left collecting on the ground. But the brothers brainstormed, helped by Mike and John’s engineering background, to develop a giant cart cleaning machine they describe as a cross between a dishwasher and a car wash. “Basically, we bought a trailer and converted it into a cart cleaning system,” relates Nick. It also resulted in the first of their many patents.
COFFEE, COFFEE, COFFEE, AND TEA
Speaking of spoiled, coffee lovers won’t lack for choice at Penelope’s; the store has over 13 different blends, and also offers a choice as to how you’d like your coffee made. Playing off their Greek heritage, the brothers were sure to offer Greek-style boiled coffee, but there are also pour-over blends and regular brewed coffee with beans from all over the world, as well as a full espresso bar and a variety of tea options.
“We named it Penelope’s after our grandmother who loved to serve
coffee in the village and bring people together.”
And all are served in colorful, fully recyclable BPI-compliant (biodegradable) Penelope’s Coffee & Tea cups, which have proved to be a viral sensation. Unprompted, customers started sending pictures holding the cup from countries all over the world, including South Africa, Australia, Greece, event the Great Pyramids in Egypt.
“It all happened very organically. We’ve received hundreds of photos,” notes John. Gilead and other companies require recyclable cups and John said Penelope’s was happy to do the right thing for the environment, while making sure it could offer a full-strength cup without plastic.
THE POWER OF THE WAFFLE IRON
Penelope’s also features a breakfast/lunch menu that has an innovative backstory. Basically, they were trying to come up with a way to avoid the space and expense of having to install and maintain a full oven and grill. The answer? Waffle irons!
“We created one of the first omelet waffles where we actually make all of our meals using waffle makers,” said George. A brief video at Penelope’s website shows an example of potatoes, ham, bacon, cheese, and egg batter poured into a waffle iron, the cover closed until after a short heating period and—voila, a full omelet that looks like an egg-based waffle. Nick adds there are plans to officially call it a Womlet.
In case you’re thinking you’d like to try that yourself, be warned. “If you have a waffle iron at home and you throw some egg in there, it’s not going to work,” says John. “There’s actually some IP (Intellectual Property) in how we’ve reengineered the waffle iron to make it work quickly and not have the eggs stick. Georgie and Mike went through at least 30 waffle irons to get it right.”
The creation of Sandwich Monkey, which makes 700-800 sandwiches for outside clients before its doors even open for retail each day, also involved some innovative thinking. As with Penelope’s, store sales at Sandwich Monkey don’t tell the whole story. The brothers designed the store in a modular way so serving tables and chairs can easily be moved aside in favor of work surfaces.
While efficiency at both Sandwich Monkey and Penelope’s is an ongoing consideration, tradition also plays a role. “What we really wanted to do was bring out something from our roots in Greece, where there is a much slower pace,” notes John. “Everything moves so fast here, we wanted to create more of a Public House feeling you see in Greece, where people can talk and meet and get away from their computers and mobile devices—though of course they are free to use them here.” Penelope’s has both standard and larger-sized community tables.
Tradition even influenced the name: “We named it Penelope’s after our grandmother who loved to serve coffee in the village and bring people together,” notes John, adding with a chuckle, “My dad kept trying to have a daughter he was going to name Penelope, but it never worked out.”
There are also plans to add new locations and eventually franchise both stores, but the brothers are proceeding with caution. “We’re working on franchising, but we want to be sure we can maintain our unique qualities without becoming just another chain,” notes George.
REINVENTING THE GROCERY STORE
Even as they look to grow the coffee and restaurant business, one of their creations is still under wraps. The Ellipse Smart Shelf Platform (patent pending) is no less than an attempt to reinvent the grocery store. “The grocery store hasn’t really changed in over a hundred years,” explains George. “We look at our smart shelf as a kind of Trojan horse to show these stores how they can change.” The smart shelf is a modular design that can easily expand, contract, and even bend into different shapes to help retailers make better use of their space. He adds, “The retailer will be able to change the full layout of their store in days or weeks, instead of months or years, without buying new equipment.”
John notes that retailers get all kinds of analytics and advice about what products to sell, but often it’s too hard to change inventory because the infrastructure—the shelving—is inflexible. The Ellipse system will work with software programs that track inventory so a retailer would be alerted and able to easily check stock remotely.
Changing a store’s layout is also expensive. “When you start talking about construction permits and changing all the shelving, a store could be looking at half a million dollars in costs,” says John. “We’ve been hiding this. But it’s going to be a very big deal when we bring it out.” Part of the launch will be a joint marketing effort of the Ellipse and the existing Cart Cleaning System, already in limited use at a few grocery stores.
WHY IT ALL WORKS
Sitting around a large table at Penelope’s, the brothers happily share stories about their early days and future plans. When asked if being brothers with a long history of working together means they don’t have any arguments, all four laugh as one.
“Oh, we argue. The business has its challenges,” relates Nick. “But the thing is we listen to each other. Any disagreements we have are because we care about what we’re doing and for each other.”
“You usually get over it the next day,” adds John. “With a regular business partner who isn’t family, I’m not so sure it’s as easy to get past it. That’s been a big plus for us.”