Peace Coffee, G&B Environmental pruned, then grew to survive through pandemic

Big-box retailers, IT firms that helped office workers connect from home, supermarkets and Amazon were among the winners as the U.S. endured the coronavirus pandemic for much of last year.

Hotels, restaurants and retailers were forced to cut millions of workers. Government support, charities and regulations saved many people from outright disaster.

A couple of small Twin Cities businesses from very different industries — G&B Environmental and Peace Coffee — survived with wit and speed, providing lessons for others.

"Approximately 35% of my business went away in March," said Glen Bergman, who in 1992 started G&B Environmental, a provider of HVAC filters, screens and other air- and water-filtration equipment and related services to businesses, including restaurants.

"Sales dropped from $150,000 in January to $50,000 in April," he said. "I was notified that we were an essential service. But I couldn't find personal protective equipment for our workers. I had restaurant and office customers closing. I felt helpless. I was scrambling."

Much of the restaurant and office trade disappeared last spring.

Bergman decided that existing clients, such as grocery stores, were going to need help sterilizing surfaces and would be going through filters on HVAC systems.

He invested in surface-cleaning equipment, including his first electrostatic-disinfecting machine, which he found in Europe through eBay for $7,000.

That was about four times the normal cost, amid an initial rush from governments and other customers.

"There were just none available," Bergman said.

"I eventually, over time, bought more than 50 electrostatic-disinfecting machines at about $1,700 apiece. Last year at this time, surface disinfectant wasn't part of my revenue. Now it is the No. 1 business I have. We're disinfecting about 1 million square a feet a week, from barber schools to grocery stores to manufacturers."

One of his customers is Metro Transit, for which it provides disinfection service and air filters for light-rail trains. Other customers include Lunds & Byerlys, General Mills, auto dealerships and manufacturers.

Bergman also invested in G&B people. Only one of 15 decided not to stay on the job last spring.

Bergman paid up to $50,000 in bonus money to compete with state and federal unemployment benefits that, for several months last year, included a federal payment of up to $600 a week.

That made it more lucrative for some workers to stay home, including parents with at-home kids.

"Hell, yeah, it was worth it to keep people employed and customers safe," he said.

In the end, annual sales topped $2 million, more than in 2019. But the heavy investment in people and products erased profits, Bergman said.

"I've navigated this so far. About $300,000 of the business we lost early has come back," he said. "We're cleaning more offices. We're in pretty good shape for 2021."

Peace Coffee shuttered its three downtown coffee shops in March and decided not to reopen them later in the year.

But its larger wholesale and e-commerce businesses, which constituted about 85% of revenue, grew by double digits. They should again in 2021.

Peace Coffee, a $10 million revenue business, benefited from the eat-at-home trend and the same boom that benefited the likes of grocery stores and Target, which sells Peace Coffee.

"There's a little bit of guilt," Lee Wallace, the company's chief executive, said about the success. "We're fortunate. But did anybody ever imagine I need to make my business pandemic proof?"

Wholesale sales increased 17% in 2020, despite a huge decline in sales to restaurants, hotels and others in the hospitality industry.

"Peace Coffee tripled capacity to produce roasted coffee with a new Diedrich roaster we acquired in February for about $120,000," Wallace added.

"And [we] added 14,000 square feet to space at the Southside Greenway Building, to 22,000 square feet."

Peace Coffee expanded sales to Chicago, Denver and Milwaukee and Madison, Wis. It added a larger, 20-ounce bag of whole beans. The "public benefit" company also increased profit-sharing to small-grower farmers.

Peace Coffee cut 26 retail employees with the closing of the downtown shops. Its Minnehaha Avenue store was taken over by Wildflyer Coffee, a nonprofit that works with and employs homeless teenagers.

Several Peace Coffee retail workers were hired for expanded wholesale operations at an outfit that pays a minimum of $15 an hour and employs about 50.