Thursday, July 25, 2013

Media contact/question

Are any of you aware of small businesses being put out of business by the Federal government. See story below. Do you have any thoughts?

Are any of you aware of situations where the state has taken away business from small businesses. I know some of the small businesses selling food products to the government have lost business because prisoners are selling to government agencies. It is my understanding they can’t even bid on this.
Are any of you impact by this.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA  94116


Hello Scott,

I hope you’re doing well. We’re working on a story and wanted to get your thoughts on it. The story concerns a small business owner who is one of many across the country who will soon be out of business due to the Federal Government’s decision to sell their product themselves instead of continuing to contract out to sell their product. In this case the product is coffee, and it’s the VA who is canceling contracts for some businesses that have coffee shops inside the VA. They’re now going to be selling Starbucks brand coffee in their cafeterias instead of having him there selling his product which he has been for the last fifteen years.

How do you feel about a business being taken over by the feds

How often do the feds do this kind of wholesale takeover when independent contractors seem to be doing a fine job on their own?

What could be next – would other concession businesses be in the governments away??  Have they already gone away? Newstands? Shoe shiners?

What’s next?

Below is an article on this incident and background info – let me know.


Coffee Shop Owner: Getting Shut Down by V.A., Starbucks
By Gabrielle Karol

Published May 22, 2013

There's a coffee war brewing inside America's V.A. Medical Centers that threatens to oust long-established mom-and-pop businesses in favor of a Starbucks-affiliated chain.

At stake is more than a cup-o'-Joe - for a lot of vendors, it's their livelihood.

Ken Gilmore, who owns and operates Epiphany Coffee and Tea, which for 15 years has been serving up coffee and snacks inside the V.A. Medical Center in Sacramento, California, says the government-run agency has not extended his contract, and instead will open a PatriotsBrew, a chain shop already operating in more than 115 V.A. Medical Centers.

Stacy Papachrisanthou, the director of marketing and communications for the Veterans Canteen Services (VCS), says the conversion of contractor-run coffee shops into PatriotBrews comes from the desire to offer veterans and their families "a more consistent assortment" of healthier snacks and beverages, including Starbucks brand coffees.

Over the past five years, the PatriotBrew initiative has converted 30 coffee shop contractors to PatriotBrews. Papachrisanthou says when the vendors' contracts are up, they're given notice that their shops will change over to VCS management. At that point, owners and their employees are offered the opportunity to become employees of PatriotBrew.

That's one offer Gilmore says he can refuse.

Gilmore says he currently makes $3,300 a month running Epiphany Coffee and Tea - and the salary at PatriotBrew would only be $15 an hour.

"I'm the sole supporter of my family - I can't pay my mortgage on $15 an hour," says Gilmore. Even though the position would come with the benefits given to federal employees, Gilmore says the switch still wouldn't be worth it.

He adds he's been trying to cut back on stress since having two heart attacks, but the idea of having to start over In 90 days has been weighing heavily on his mind.

Will Veterans Pay the Price?

Gilmore says he sees the decision to oust contractors as financially motivated, rather than stemming from the desire to provide vets with more healthy options.

He says he has a contact within the V.A. who told him, "If they run everything and have licensing with Starbucks, they end up potentially making more than just having a vendor run it. It's my understanding that prices will be higher."

While higher prices could be less affordable for veterans patronizing the V.A.'s coffee shops, more revenue for the V.A. could help provide better services to veterans.

Papachrisanthou says the difference in price from contractor to PatriotBrew depends on the prices set by individual vendors.

In the case of the Sacramento V.A., Gilmore's hunch may be correct. He currently charges $1 for an 8 ounce cup of coffee, while Anthony Goolsby, the manager of the Los Angeles V.A. Medical Center's PatriotBrew, says that the price for a cup of coffee starts at $2 and goes all the way up to $5 for something more elaborate, like a latte or a cappuccino.

"I've tried to keep prices lower for the veterans," says Gilmore. "It's an opportunity to give back to those who serve the country, and a lot of them are on fixed incomes and can't afford a lot.

"I see the same people over the years, and I love hearing their stories."

Michael Lundin
Fox News Channel
San Francisco, CA
415-951-8550 (office)
415-359-5849 (mobile)

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