“I’m a vegan restaurant owner, an organic farmer—a true environmentalist that cares about the soil, the water, and the air. I employ 350 people. I feel like I should be exactly what California wants … But I literally can’t make payroll,” says Mollie Engelhart.
Watch the video:
A chef, entrepreneur, and regenerative farmer, Ms. Engelhart built an incredible farm-to-table business in California that had eleven years of year-over-year growth before the pandemic. But California’s policies ultimately strangled her business, she says. Now, she’s giving it all up to start from scratch in Texas.
FULL TRANSCRIPT
Jan Jekielek: Mollie Engelhart, such a pleasure to have you on American Thought Leaders.
Mollie Engelhart: Thank you so much for having me.
Mr. Jekielek: Please tell me about your farm.
Ms. Engelhart: This is Sow A Heart Farm. This is in a dream taking shape, and an experience in the world. I owned restaurants. I was a chef and I was creating food waste. I realized that food waste was not the best thing, so I wanted to manage my own food waste. I got a farm so that I could keep the food in the loop. It evolved into this beautiful place where we grow food for our restaurants and for our community, and it became this community hub. People come and get their food here. We also use all the compost from the restaurants and turn it back into new food to send back to the restaurants.
Mr. Jekielek: Where are we right now?
Ms. Engelhart: We’re inside the greenhouse in a windstorm. If you’re hearing wind in the background, you’re not imagining it.
Mr. Jekielek: Why the greenhouse?
Ms. Engelhart: It’s a beautiful place on the farm and it’s a metaphor for anywhere that you can create shelter and grow something beautiful. This is a place where you create shelter and grow something beautiful.
Mr. Jekielek: You’re growing some things in here that you couldn’t grow out there.
Ms. Engelhart: Yes, you’re growing food inside. We have bananas, papayas, coffee, strawberries, spinach, broccoli, basil, things that you could grow here and also in New Zealand.
Mr. Jekielek: Are you roasting your own coffee here?
Ms. Engelhart: No, not yet. We won’t because we’re leaving, but we have a lot of really healthy coffee plants and somebody in the future could roast their own coffee here.
Mr. Jekielek: Let’s talk about your journey. We know that you’re heading to Texas to rebuild. Please chart for us the path of how you got here.
Ms. Engelhart: I grew up on a small farm in upstate New York. My parents were vegetarians. I came to Los Angeles to go to film school. I worked in the music industry, was a professional poet, and did a lot of different things. Finally, I settled into my love of food and my love of serving people.
I love to feed people and I love to serve people. That led me to wanting to get back to the farm and wanting to know where the food that I was serving came from. It was all working really wonderfully for a little while. But now the restaurants are really struggling and the farm needs the restaurants. This kind of farm needs the restaurants to survive. Now, we’re pivoting and shifting and doing things differently. That’s why we’re moving to Texas.
Mr. Jekielek: You were riding high before March of 2020 when the pandemic arrived.
Ms. Engelhart: We had 11 years of year-after-year growth. We were in a deal with a big firm to sell the business for $31 million and we were doing great. We had four locations and a brewery. We had the farm with this farm-to-table concept. It very much resonated with people to know where the food was coming from, to know that when they were done eating that the scraps were going back to the farm, and to know if they had a beer that the grain from that beer went to feed cows.
People liked that. Even the first quarter of 2020 was our best quarter ever in the 11 years leading up to that point. We were on a trajectory to expand to other states and do this on a larger scale, and really bring this kind of service to more communities.
Mr. Jekielek: You would think this is exactly what Californians want.
Ms. Engelhart: Let’s look it up in Wikipedia and find out what a Californian is. I am a vegan restaurant owner, an organic farmer, and a true environmentalist that cares about the soil, the water, and the air. I employ 350 people. I feel like I should be exactly what California wants. I have a medium-sized business that is doing good in the world, caring about their employees, caring about the environment, and caring about their community.
But now it’s impossible, and the pieces no longer fit together here. It used to be that people who worked in my restaurants could live in the same neighborhood, could eat at other restaurants in that neighborhood, and could afford to go on vacation. All of that fit together.
Those pieces no longer fit together. The people that work for me can’t afford to live in the neighborhood. The people that live in the neighborhood can barely afford to live in the neighborhood, so they can’t afford to pay much more for food. Over the pandemic period, the costs for food have gone up so much.
There’s a top price that people are willing to pay for a burrito or a stack of pancakes, and I'd say it’s $19 or $20. Going above that is having us lose money with each takeout that goes out the door. Those pieces that used to fit so nicely together no longer exist.
Mr. Jekielek: You mentioned that prior to the pandemic, there was a huge regulatory burden to make it all work, but you did somehow. Please tell us what happened through the pandemic that changed things.
Ms. Engelhart: In some states, they were closed for three weeks up to three months. But we were closed to some degree for two-and-a-half years, but the regulations didn’t stay the same. It wasn’t they said, “Now you can get your bearings. You are just doing takeout,” and for two years you would just do takeout and you get your bearings. It would change every couple of weeks.
First, it would be, “We’re only doing takeout.” Then it would be, “We’re going to let people go back to dine-in, but the tables have to be six feet apart. If you put in booze, they could be back-to-back with high backs. Never mind about the booze, we’re going to eight feet apart. Midnight on Friday, there’s going to be no more indoor dining.” It was always that phrase, “Midnight on Friday.”
Then you get your whole outdoors done and you do umbrellas and you put up heaters and you do everything and you expand your outdoors and you get a permit from the city to change parking into seating. Then you get the rails and you get plants and you decorate it and try to make it feel like people are not eating in a parking place outside on the street. Then they say, “Midnight on Friday, no more outdoor dining.”
We would spend a lot of money trying to pivot and go with what they were asking of us, and I never closed. I kept my employees that wanted to work employed the entire time during the pandemic, but we couldn’t recover from that. It was just endless money, spending on outdoor awnings or trying to fix this or that. We said, “We’re going to do a little store. There’s no groceries. We‘ll bring in produce from the restaurant. We’ll sell toilet paper. We have toilet paper. ” We just kept endlessly trying to give the public what they needed through this time, but the regulations kept changing.
Then minimum wage kept going up and all of these other things were very volatile. Takeout boxes went from $30 for 400 up to $150 for $400 within a span of months. Cauliflower was vacillating between $9 a case to $130 a case. It was hard to price anything, and sometimes ingredients would just be gone. Then you couldn’t have these things on the menu and you would have to reprint the menus.
We kept thinking it would recover and it would get better. Really, we have retrained the public to eat at home, to go out less, and to order from third parties that take 30 percent. Now, we have a strike in the film industry, and even the best paid people in LA are not having any income, and all the ancillary and support staff don’t have any income.
Mr. Jekielek: It’s almost like a perfect storm with the prices going up. People don’t have the money to spend on things, and there are these strikes. Is this specific to California?
Ms. Engelhart: I don’t know. I have not been to other places, but I know it’s highly exacerbated here. The workforce is different. The people that are coming into food service graduated high school during the no-school-for-two-years period. They kind of got pushed through. There were practically no expectations of teenagers for two full years, and then they went out into the workforce.
That’s a different workforce than we started the pandemic with. People that have been two or three years into the workforce now once spent two or three years at home on benefits. I don’t want this to be misinterpreted. Everybody deserves the best, but we also need hard work to be a fundamental core principle in raising our children.
Mr. Jekielek: It should be viewed as a virtue.
Ms. Engelhart: Yes, it should be viewed as a virtue. Yes, that changed, so the amount of employees you need to do the same job has shifted. Everybody went through this thing together and it was some kind of trauma. Whether you were afraid of it or you felt it was being foisted upon you, it was a thing that happened.
That is in everybody’s psyche in how they’re responding, so customers can also be less forgiving. This has been a perfect storm and we’ve had to close two of our restaurants. People said, “Can you sell your restaurants?” I replied, “There’s nothing there to sell. How can you sell a business that can’t make payroll? There’s nothing there.”
I’m not alone, because I was just looking at the liquor license transfers. There are 40 liquor license transfers lined up in front of me before I can sell mine to somebody else. I have never seen that. I’ve bought multiple liquor licenses in my life, and I have never seen 40 liquor licenses lined up like that.
Mr. Jekielek: Please remind us of the names of your restaurants.
Ms. Engelhart: I own Sage Plant Based Bistro & Brewery. There used to be four of them, but we’re now down to two, plus a cloud kitchen that services the Culver City area where we used to have a brick-and-mortar restaurant. We still have Pasadena and Echo Park and the breweries in the Echo Park location.
Mr. Jekielek: Do you think anyone is taking over the type of service you offered?
Ms. Engelhart: Not exactly the type of service that I offered. I have gone to some of these webinars for restaurant owners and listened. What is considered sit-down casual is being hit the hardest, because people from the sit-down casual place are going down to the Chipotle’s and the fast casuals. The fast casuals are going down to fast food. The fast food people are not eating out at all as the money is shifting.
But the people that eat at fine dining are not coming down to the fast casual places. They’re still eating at fine dining, so there’s nobody to come down into the casual sit-down restaurant. That is the market that is being desecrated the most, and you see it all over Los Angeles. Restaurants all over LA that had been open for 10 years with a line waiting outside are now closing with no notice.
Mr. Jekielek: There is also this whole reality of increased homelessness and drug use.
Ms. Engelhart: It’s all intertwined. At my Echo Park location, there are whole encampments of homeless people. I believe that we have to find places for people to live. I don’t know if it works to say, “They’re unhoused, so we can’t move them.” I could be delivering to my restaurant and park right behind this encampment on the street outside. I could forget my meter while I’m unloading pizza boxes and whatever else that I’m taking in.
Then someone says, “Hey, a customer wants to talk to you,” and I get distracted. I get a $52 ticket, but they are ignoring an entire encampment that’s taking up three parking spaces right in front of my restaurant. Someone just set off the fire sprinklers in my restaurant. Someone else got naked on Mother’s Day inside of the restaurant, screaming at the top of their lungs, and spitting in the face of my manager.
We don’t have as much of a late night clientele because people are not as inclined to want to go out late. Obviously, we have to do something. California spends more on homeless resources than any other state and has the most homelessness of any state. But yet, it just gets more intense year after year after year.
In my Culver City location that we shut down, the walking through the neighborhood was all blocked off, because all of the underpasses had become permanent encampments that were sanctioned by the city. It’s a shelter that is cool from the heat because of the overpass, and I understand all of that logic. But then I see guests and say, “Oh, my God, I haven’t seen you in so long.”
They say, “We would always come get a cocktail and an appetizer when we walked our dog at 8:00 pm, but we no longer walk our dog this side of the freeway.” How many other guests that I didn’t talk to now no longer walk in that area? Of course, the condition of the city impacts the ability to do business. It has been getting progressively harder, and clearly, I haven’t been great at navigating it.
Mr. Jekielek: It really does feel like the perfect storm. You were telling me about all the regulations around this farmland here, never mind all the restaurant regulations. Let’s talk about that.
Ms. Engelhart: Yes, there are regulations about everything in California, like who can live on your land with you. I can’t have any accessory dwellings or tiny homes. Nobody could live in an RV here, and I can’t build any guest houses. But that’s only one type of regulation.
Then there is how tall your compost pile can be. There are rules about almost every single thing. If an avocado falls on the ground, you can no longer sell it. If I’m selling parsley at the farmers market, they can come here and measure it to make sure it’s the same parsley I grow, and that I’m not buying the parsley from somewhere else. Yesterday I got fined $150 because one piece of produce that’s on my list of 300 products that we grow somehow got missed by the inspector.