Photo and Article by Jack Armstrong
A “communication breakdown” was the cause of confusion surrounding Pekoe Sip House’s exit from the CU Boulder campus, according to university officials. The business owners called it “gross incompetence.”
The university has since changed how it communicates with its commercial vendors, but the coffee shop may be forced to close its second location in North Boulder due to the financial fallout.
Pekoe’s owners first posted publicly about their dilemma Aug. 23. In a letter taped to the door of their North Boulder location and posted on GoFundMe and Reddit, owners Jeff Rommel and Alisha Mason detailed how their shop at CU Boulder’s ATLAS Institute came to close, a story that was later reported by the Daily Camera and other local media.
“Without notice, consideration, kindness, or ethics,” they wrote, “we lost everything within one day.”
‘A no-brainer’
The couple have been running Pekoe since 2020, when they purchased the business from Paul Cattin, but the cafe has been operating at CU Boulder since August 2009.
Rommel and Mason’s lease started in 2020 as a one-year contract with options to renew for three years. Although the cafe was closed for 2020 and 2021, the lease was renewed each of the past three years.
In January, Mason and Rommel were approached by CU’s real estate services team about an opportunity to expand their business to other campus locations. According to the couple, they expressed their interest in renewing Pekoe’s ATLAS lease at that time.
Rommel took that January conversation as a sign that CU Boulder wanted to keep Pekoe there, and decided to “focus on the ATLAS space.”
“I thought it was a no-brainer that they wanted to continue working with us,” he said.
On July 15, Pekoe received an email from Nick Feathers of CU’s real estate services division, letting them know ATLAS “would like to pursue other café options” — the first correspondence Rommel and Mason said they had received since the January conversation.
“Would you still like to be considered for renewal?” Feathers wrote. “Should the building want to move in another direction your lease will be terminated on 7/31/24.”
‘Pekoe will not be closing’
Unstated by Feathers, or in any subsequent communication from CU to Pekoe, was that the university was already in conversation with other vendors about the space. Nancy Kao, who operates the shop that replaced Pekoe, Fen’s Cafe, said she was notified in early July about the potential to rent the storefront.
“ATLAS was in the process of searching for new potential vendors to fill the space when the University asked Pekoe if it wished to be considered among other cafe options,” university spokesperson Nicole Mueksch confirmed via email.
The same day they received Feathers email, Rommel visited Mark Gross, Director of CU Boulder’s ATLAS institute, and Sara Preston, the ATLAS Institute’s finance and accounting manager, to ask them to consider letting Pekoe stay. According to Rommel, Gross told him, “[I] can’t make any promises.”
Rommel said he went to see Preston again on July 16 to re-emphasize the importance of Pekoe’s lease renewal. According to Mason’s open letter to CU, during the visit, Preston said to Rommel that, “she didn’t think [Gross] was talking to anyone else about replacing us on the lease.”
The next day, Rommel and Mason received their first encouraging sign: An email from Preston confirming that Pekoe’s ATLAS location would not be shut down.
“Mark [Gross] and I talked and agree that terminating the lease as of 7/31 is not what any of us want,” Preston wrote in the email. “Pekoe will not be closing at the end of the month.”
But Preston also reminded the couple that Pekoe was only one option being considered.
“We are working as quickly as possible to do our due diligence before making any final decisions,” she wrote. “Prospective vendors are being asked for a brief description of food and beverages they plan on offering for the coming year.”
Reassured by Preston’s email, the couple hired 10 new students to add to the summer staff of four in preparation for the upcoming school year. Rommel and his attorney sent two additional emails to CU in the following days seeking to confirm details; neither received a response.
So they were surprised when, two weeks later, an employee told them a woman had come into the shop and offered her a job at the new cafe that would be taking over Pekoe’s location. That same day, they received their first communication from CU’s real estate services division since Preston’s July 17 message: An email giving them two weeks to vacate the property.
“The lease expires today, 7/31/24,” the email read, “and after today, Pekoe is no longer permitted to operate the ATLAS café. Pekoe will have until 8/15/24 to vacate the café space in ATLAS.”
Unlike previous email correspondence from the university, there was no identifiable author or employee’s name included with the message.
“We were shocked,” Rommel said. “Our shop performed the best financially last year out of the history of that location.”
‘A misunderstanding’
The university gave Pekoe two additional weeks to move out after an email from Rommel’s attorney, which threatened legal action. Rommel believes he was entitled to two months notice that his lease would expire, something his attorney communicated to CU on July 23.
CU disagrees. The specific lease provision applies only to early termination, Mueksch said in an interview. Moreover, Pekoe was never eligible for a renewal, despite Feathers’ use of that term in his July 15 email.
“There wasn’t an opportunity for a renewal of the lease,” Mueksch said. “There would have been an entirely new lease granted.”
Pekoe’s lease expiration date, July 31, “was very clearly stated in the lease,” she said. “We do expect all of our vendors to understand the terms and conditions of their contracts.”
When asked about Preston’s July 17 email stating that Pekoe would not be closing when their lease expired, along with other communications between ATLAS staff and the business owners, Mueksch characterized it as a “communication breakdown.”
“There was a misunderstanding,” she said. “I can’t speculate the details on why that communication happened.”
Mueksch declined to make Feathers, Preston or Gross available for comment.
Following Pekoe’s exit, the university updated its rules for communicating with vendors. The “RES (Real Estate Services) Satellite Café Lease Management Procedures” now include a requirement to notify vendors six months before their lease is set to expire.
This “critical date monitoring” will “ensure all parties understand timelines and required actions prior to deadlines,” the policies state.
“Certainly through this process, CU Boulder has taken steps to improve its processes, particularly around vendor processes and communication,” Mueksch said. “The university, with real estate services, has really taken what transpired seriously.”
Domino effects
Rommel is not mollified by the university’s reaction.
“Changes to their policies… to me that’s an admission of guilt,” he said. “They are admitting to devastating a small company.”
Rommel and Mason were forced to lay off their entire staff. “We went from 23 employees, 16 of those being students, to just the two of us now, six days a week,” Rommel said. “And it’s like, how long can I do that?”
With the revenue from the ATLAS location cut off, the owners were forced to close their commercial kitchen on 63rd and Arapahoe, which supplied the store with Pekoe’s own brand of food. The two still owe a monthly rent on the facility, a cost Rommel says is getting difficult to afford.
The one remaining North Boulder shop “does not generate even close to the revenue cost to sustain those debts,” he said. “I don’t know right now where we sit, if I’m going to be open by Christmas at this store.”
By far the most difficult part of the experience, Rommel said, was the attitude of some ATLAS officials — particularly Gross.
“He never came to the cafe,” Rommel said. “He doesn’t realize the domino effect of his decision, even though I told him the lives he was affecting.”
‘Life isn’t fair’
It’s not the first time a vendor has expressed dismay and confusion over losing their space at CU Boulder. In November 2014, Folsom Street Coffee, which operated in the Porter Biosciences Building, was abruptly notified that they had 30 days to vacate the space.
“It just pains me that they wouldn’t come to us if they were looking for a different concept and tried to work with us,” then-manager Ian Short told the Daily Camera at the time.
Mueksch said Folsom and Pekoe were “isolated incidents.” CU Boulder manages leases with five vendors across eight campus locations, with decades of positive experiences despite these two publicized events.
“We’re really committed to having vendors that can have success on our campus. We want them to have a good experience,” she said. “That’s part of the reason for more transparency in our process moving forward.”
Fen’s Kao, said communication was lacking during her move into the ATLAS space, which overlapped with Pekoe’s move out.
“I thought [The ATLAS directors] didn’t want my business anymore because I didn’t hear from them after July,” Kao said.
Still, Kao isn’t worried about Pekoe’s fate becoming her own.
“Life isn’t fair,” she said. “I had [Formosa Bakery] taken away from me back in 2019. I’m a single mom, and that was devastating for my family, but I found a way to move on.”
As of Sept. 20, Pekoe Sip House has not taken legal action against CU Boulder.
Shay Castle and Tyler Hickman contributed reporting.