One of the oldest coffee shops on State Street is closing, but the Steep & Brew name and brand isn’t going away.
Mark Ballering, who founded the coffee company in 1979, said he has accepted an offer to sell the building at 544 State St. to a developer. However, his company’s business model is intact and will continue to grow.
Ballering said the State Street coffee shop accounts for about 5 percent of his company’s revenue. The bulk of sales is generated by assisting nearly 20 independent coffee shops with products, marketing and training, and sales of Steep & Brew coffee and other products at convenience stores in multiple states and at 550 grocery stores throughout the country.
“I had an opportunity to sell the building, and it was a good opportunity that I couldn’t pass up,” Ballering said. “There’s been good decades and more challenging decades. We’ve definitely seen the ebb and flow over the years.”
Employees were notified last week of the coffee shop’s closing. A manager at the State Street store will be retained but the other 10 employees at the shop will receive a two-week severance after the shop closes on Sept. 28, Ballering said.
The company employs about 65 people, most of whom work at the company’s roasting facility and corporate headquarters at 855 E. Broadway in Monona.
Ballering declined to identify the buyer and did not know the plans for the property, which includes the 2,000 square-foot coffee shop on the first floor and four student apartments.
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The shop is located next to Qdoba Mexican Grill to the west and to a building on the east that had been home to Gino’s Restaurant, another State Street institution. The Italian eatery opened across the street in 1963, moved to 540 State St. in 1967 and closed in 2013.
The announcement by Steep & Brew comes at a time when city officials are trying to attract more retailers to the venerable street and just weeks after the opening of a large Colectivo Coffee a half block away. The Colectivo cafe, at 583 State St., is on the ground floor of the 313-unit Hub Madison apartment building at the corner of Frances Street, across from State Street Brats.
The shop is Milwaukee-based Colectivo’s third in the Madison market, joining others on Capitol Square and on Monroe Street.
Steep & Brew was founded in a 144-square-foot space at 1148 Williamson St. where Ballering sold ground coffee but not cups of coffee. In 1982 he moved the operation to a 250-square-foot space in the 100 block of State Street before opening a full-fledged coffeehouse a year later in the 500 block of State Street. Ballering, now 64, began roasting his own beans after purchasing a 1890s-era Italian coffee roaster. That led to trips to coffee farms in Central America where he met with coffee growers and learned the coffee business.
Throughout the 1990s, Ballering opened other coffee shops, including four in the Twin Cities that ultimately closed by 1999, and a shop on University Avenue that has since closed. In 1995 he opened a Steep & Brew in Market Square on the West Side but sold the business, which retains the Steep & Brew name, about three years ago.
But the 1990s also provided a breakthrough for Ballering’s company as it began selling to grocery stores in 1992.
A few years later he began assisting independent coffee shop owners and in 1997 started offering his coffee to convenience stores. The PDQ chain is one of his biggest customers, Ballering said, and Steep & Brew recently signed a convenience store deal with a Minnesota company and is eyeing the Texas convenience store market.
“Our model over the last five to 10 years has been to work with owner-operators who are in the cafes,” Ballering said. “For us, the direct operations of cafés is probably not the direction we think we want to go when we’re competing against the large chains like Starbucks and Colectivo.”
Other southern Wisconsin cafes licensed to sell Steep & Brew products include Brewster’s Coffee House in Gays Mills; Jeff’s Coffee Bar in Janesville; Le Croissant in Portage and Sharrow’s Downtown in Columbus. Steep & Brew also works with cafes on college campuses, including three at Madison Area Technical College and nine at UW-Madison, including the Crossroads Cafe in the first floor of the Education Building, 1000 Bascom Mall.