Philz Coffee in the Castro has become the front lines in a company culture war. Reporters and confused customers have flooded the cafe, asking about the company’s decision to remove Pride flags — among other wall decor — from all its locations.
At the Castro location Thursday, a Pride flag still hung from the slanted ceiling. An artist was selling work featuring men in jockstraps. A chalkboard made the point clear: “Welcome to the queerest coffee shop in town. Period.”
Philz CEO Mahesh Sadarangani said the decision to remove the flags is part of an effort to create a “more consistent, inclusive experience across all our stores.” Not everyone agrees, including the thousands of signatories to a petition decrying the change and LGBTQ+ nonprofits reconsidering their affiliation with the SF-based company, which has more than 80 stores in California and Chicago.
The move has been frustrating and confusing to baristas, who are fielding questions from regulars. Some baristas interviewed by The Standard said the company’s queer-friendly appearance is why they chose to work there. One employee estimated that 90% of the staffers at the Castro location identify as queer.
“This store being in the Castro, there’s so much gay history in it. People come to this area to be seen and recognized and honored,” said a barista. “I’ll wear a Pride flag dress if I have to.”
There is a version of the Pride flag on display in a majority of Philz stores in San Francisco. A downtown location features a California flag with a rainbow trim. The Salesforce location has a banner of Pride flags. Most baristas said Wednesday that they had not heard of the policy change and were shocked that it was even a possibility.
“I doubt that this will be applied,” said an employee at the Castro location. “I don’t think that’s going to be even a possibility. I’ll reach out to Mahesh myself.”
By Thursday morning, they were getting dozens of questions about the change from customers. The baristas said they had not received direct instructions from the corporate office.
Philz hasn’t been a scrappy local chain for a while. The move to remove Pride flags comes less than a year after Philz, which was founded in the Mission in 2003, was acquired by private equity firm Freeman Spogli & Co. for $145 million. At the time, employees said the culture of the company, which previously prioritized employees’ well-being, had become more corporate as it took on large investments and opened more stores.
As a result of the private equity acquisition, some former employees who had invested in the company lost tens of thousands of dollars. (opens in new tab)
A Change.org (opens in new tab) petition (opens in new tab) protesting the removal of the flags has more than 2,400 signatures. Signers accused Philz of catering to MAGA; some customers threatened to boycott.
Despite shuttering its original Mission location in 2023, the company retains its “Mission-made” slogan. The original location, with its chalkboard wall and slouchy furniture, is a departure from the clean lines and minimalist aesthetic of its coffee-shop competitors — the direction Philz appears to be heading.
“Autonomy amongst stores is gone,” said Mary Morrison, who worked at Philz in Corte Madera for more than a decade but quit this year, citing a change in work culture. In a precursor to the policy change on flags, employees at the Corte Madera location, acting on the orders of management, removed first-responder paraphernalia that had been displayed. That was followed by the removal of a Pride flag in December.
“This is a change in how our stores look, not in who we are,” Sadarangani said. “Our allyship runs deeper than what is on our walls.”
But, for some, the change is more than decoration. The Billy DeFrank LGBTQ+ Community Center in San Jose was one of five LGBTQ+ nonprofits that received funds from Philz’s annual Unity fundraiser (opens in new tab) last year, which takes place during Pride month.
CEO Gabrielle Antolovich said the center would cut fundraising ties with Philz given the new policy, which she described as part of a pattern of companies removing symbols meaningful to minority communities.
“I’m sad that the new people didn’t want to keep up the values of the old company,” Antolovich said. “You lose customers if you don’t take over the values.”
Philz’s Unity campaigns, which give nonprofits a cut of specialty drink sales, have run since at least 2022.
But Antolovich said the campaign was not as lucrative as she had anticipated. Philz capped donations at $25,000, allocating $5,000 to each of the centers it supported that year.
Sadarangani said the Unity fundraiser would return in June. “Unity is fundamental to how we operate.”