by Andrew Alonzo | aalonzo@claremont-courier.com

Over the last few weeks, Sanctuary Coffee has made patrons aware of its uncertain future. Adjacent to the cash register is a sign explaining the nonprofit will soon be hit with a $2,000 monthly rent increase and absorb additional labor costs of about $1,000 per month associated with California’s new $16.90 per hour minimum wage.

“We survived COVID and we survived the downturn in the economy,” said Sanctuary Coffee Executive Director Steve Gerali. “Now we’re faced with a twofold hit, and it is pretty deadly to a lot of businesses.”

Sanctuary manager Gibson Gutierrez pictured at work Monday. Courier photo/Andrew Alonzo

Gerali has until mid-March to find a way to cover the increases at the seven-year-old nonprofit. His landlord, a private family trust, told him that Sanctuary Coffee can either sign a new long-term lease or liquidate.

Word of the rent increase came around last Christmas. “Originally the landlord said we have until the end of May to go month by month, but then he just recently moved it up,” Gerali said. “Our lease ended at the end of January, so, we were given a few weeks into the year and either we paid it or we had to be out. And so, we negotiated to the month by month till the end of May, and the landlord graciously allowed us to do that. So, now we have to either generate the funding or we have to liquidate.”

In all, monthly expenses have risen some 35% to about $6,000 per month, Gerali said. His previous five-year lease was signed in 2021.

Nick Quackenbos, a local commercial real estate broker with Quackenbos-Bell, speculated that the drastic rent hike could be seen as a way to remove the tenant from the property.

“Yeah, a 35% increase is just off the charts,” Quackenbos said. “You don’t do that unless you’re trying to get somebody out. Now, I don’t know what his original rent was. I generally calculate rent on dollars per square foot, but to give somebody a 35% increase is nuts. It’s, to me, not right. You’ve got another objective, and that is to raise the rent so you can get a better price when you try to sell the property.”

Gerali made one thing clear in his fight to keep Sanctuary open: “We can’t and refuse to raise our prices more than they are.”

Gerali recently began a membership drive at sanctuarycoffee.cafe/donate where supporters can make reoccurring monthly donations in exchange for gifts such as free drinks, bags of coffee, mugs, and use of the space’s conference room. On Thursday, February’s pledges were at $1,680.

“If we can raise $3,000, we’re in business,” Gerali said.

Sanctuary faces plenty of coffee competition nearby, but Gerali said its mission sets it apart.

“We give 100% of our profits to charities,” Gerali said. Among them are Inland Valley Hope Partners, Ability First and The Joseph Project. “And then with our coffee broker, we donate 10 pounds of food for every pound of coffee that we serve or sell. And to date we’ve donated over a half a million pounds of food to families just in the east Los Angeles and San Bernardino county areas.

“We operate on a fiscal year. So at the end of June, we assess where we are with our operations and then everything over and above that is charitable, that’s how profit is determined. So, we pay our bills, we pay our staff, we do all of that, and then whatever’s left we donate.”

Should the nonprofit fail to meet its financial goals, Gerali said Sanctuary’s exit would be widely felt. “Number one, the charities that we’ve partnered with lose our contributions. Number two, we do some job skills and opportunities for people with developmental disabilities, and that goes away. And then the third thing that we do is we provide a free gallery space to artists that are starting up, and that all goes away as well.”

And should that come to pass, Gerali said he’s not planning on opening elsewhere.

“The answer is no, absolutely. I will not,” he said. “I’ve been looking for an exit strategy to retire. My forward moving strategy over the next few years is to bring somebody in to run it while I phase out. But if it goes away, I’m done.”