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The Ice Cream Shop View On Government Aid

How assistance for hospitality business creates positive community-wide ripple effects, not to mention a phone call from Joe Biden.

Zachary Davis is cofounder and CEO of The Glass Jar, a Santa Cruz hospitality group that owns and operates five businesses, including three ice cream shops. One of those shops, the original Penny Ice Creamery, became famous in 2010 when then-Vice President Joe Biden called to thank Davis and his partner Kendra Baker for their support of economic stimulus legislation at the time.

I have a friend who tells me he doesn’t vote in elections because he doesn’t think they matter. But I don’t buy it. I’ve seen time and time again over the last decade how good government policy can impact me, my ice cream shop, my employees, and my city.

President Joe Biden recently signed a $1.9 trillion COVID relief bill. This government aid has been, in my opinion, a long time coming. It’s going to help a lot of individuals, and also provide much-needed assistance to businesses across the country.

I feel confident about that because my business partner Kendra and I once had our own dream that wouldn’t have been possible without a little help from government. More than 10 years later, our five businesses—and the thousand-plus employees that have worked with us—are living proof of what targeted government assistance can do for our economy and real-life Americans.

Our dream began when Kendra and I met in a dive bar in downtown Santa Cruz in 2000, a decade before we’d go into business together. It didn’t take long for us to become friends.

Kendra was attending UC Santa Cruz at the time. I had just moved to the area after graduating from the University of Washington. But when Kendra graduated, we went our separate ways. She went east to culinary school, then spent time in Europe cooking and traveling. I went to San Francisco to work for a startup and eventually enrolled in business school.

But life is unpredictable, and in 2008 we both found ourselves back in Santa Cruz.

Zachary Davis and Kendra Baker. Photo: Courtesy The Penny Ice Creamery.

We were each doing pretty well, but things were crazy. I was splitting my time between Santa Cruz and San Francisco, driving all over the Bay and exhausted. Kendra was executive pastry chef at Manresa, which is an amazing three-Michelin-star restaurant in Los Gatos.

She told me she’d get home from work at 4 a.m., sleep a little bit, and then go back over the hill to start the day again. I wasn’t sleeping much more.

One day, we were sitting on a little picnic bench in Kendra’s Santa Cruz backyard, talking about our lives like good friends do. And as we were chatting, we both came to the same conclusion—the paths we’ve chosen aren’t making us happy. What if we try something different? So we floated the idea of going into business together.

That’s not something either of us had ever done, but I was getting my MBA, and Kendra already had a great reputation in the food scene. What if we opened a restaurant?

We started working on an idea for a cafe in the fall of 2008, and that continued into 2009. We didn’t have definitive plans, but I was using it as a capstone project for my MBA program, so we moved the general idea along without knowing exactly what we would do.

After that summer, I went up to Seattle to visit some friends and family. My sister-in-law happened to be working at an ice cream shop, and I wanted to check it out. I just thought it was so cool—they were laser-focused on using local, organic ingredients. I remember thinking this could really work back home.

Photo: Courtesy The Penny Ice Creamery.

Well, while I was dreaming of ice cream up in Seattle, luck would have it that Kendra was doing the same here in Santa Cruz. She was going through her old notes, looking for inspiration, and found an old business plan she had created for an ice cream truck.

When I got back to California, we met up and both almost immediately asked each other, “Hey! What about ice cream?!” It was perfect for us. Not only did it fit her area of expertise as a dessert, but also it was a nice and narrow focus—relatively speaking—for two people with no entrepreneurial experience.

We found potential places to set up the shop, and we put together our business plan and financial model. We talked for hours upon hours about our ideas, and we drove from county to county, meeting with farmers and dairy people to understand the feasibility of creating the socially responsible, environmentally conscious, made-from-scratch ice cream shop we dreamed of.

I remember one time we literally pulled over on the side of a country lane to pick some wild fennel we saw. We took it back to Kendra’s house and tried to make fennel ice cream with a hand-crank ice cream maker.

We were having fun! Life was exciting! All we needed was a bank to finance us. That, it turned out, was a major obstacle.

Photo: Courtesy The Penny Ice Creamery.

The year 2009 was during a little thing called the Great Recession. By the middle of the year, the American Recovery and Reinvestment Act, or ARRA—passed by newly elected President Obama and Congressional Democrats—was starting to take hold, but banks were still understandably nervous to lend money.

Kendra and I talked to a lot of banks, and the initial response was not especially encouraging. On one particularly difficult day, I remember walking around town pitching our business to six credit unions. No one was interested.

Then we found Lighthouse Bank. They told us they wanted to help us out, and that a small portion of the ARRA could be used to back loans helping small businesses. “This is not something we could have done in the current financial environment,” they said, “without the government stepping in to make it possible like they have.”

At that point in my life, I was only theoretically aware of how governments help people and business. I hadn’t really seen it in action before.

But there we were. That government-backed loan allowed us to start building our shop in February 2010. It took a little longer than we were thinking—in part because Kendra and I both had kids that year—but, finally, on August 24, 2010, we were ready to open The Penny Ice Creamery.

Photo: Courtesy The Penny Ice Creamery.

That August 24 happened to be the hottest day of the year—bad news for most, but great news for an ice cream shop. We served a ton of customers and made the front page of the local newspaper.

It was also exhausting. Kendra and I were working more than a hundred hours per week, so we decided to hire more staff. And by the end of our second month, we had a dozen employees.

To be able to start the business of our dreams in a harsh economic environment was awesome. But to be able to create jobs for people during that time? That was special.

Like our funders said, however, if it wasn’t for ARRA, none of this would have been possible. In our one situation alone, the government’s actions helped so many people. We wanted to say thank you.

We made a short video showing how the legislation Congress and the Obama administration passed allowed us to hire an architect, a contractor, and the many, many subcontractors who built our shop. It allowed us to buy industrial equipment from American manufacturers. It freed us up to do business with the local farmers who provided all of the fresh ingredients we needed to make the completely from-scratch flavors we dreamed up. And it let us pay full-time employees, and to provide them benefits like healthcare.

It was a pretty good video, but I was extremely surprised when it made it all the way to the Vice President of the United States. Part of the reason is because Joe Biden famously loves ice cream. When he saw our video, he called us to tell us he wanted to come to our shop one day. He also said, “I don’t drink, I don’t smoke, but I eat a lot of ice cream!”

I didn’t know that about him then, but what I’ve always known is people who love ice cream really love it. One of our former Santa Cruz mayors, for example, has an ice cream tattoo. Some of our employees got them, too. I don’t think Biden has an ice cream tattoo though.

Zachary Davis and Kendra Baker on the phone with then-Vice President Joe Biden in 2010. Photo: Courtesy The Penny Ice Creamery.

We hope Biden comes and visits us, but there was something else he said on that call that I remember. He told us how much he enjoys seeing local businesses like ours take advantage of good policy to make their dreams come true and help others. That’s exactly what we did, and it continues to pay dividends for us and the people around us.

Today, we don’t have just one ice cream shop—we have three of them. And they’re the only ice cream shops in Santa Cruz where the ice cream is made completely from scratch. We’re the only shop with a licensed pasteurizer, which is healthier, and we support our local economy by buying the ingredients that go into our unique flavors from other nearby businesses. Mascarpone Pear, for example, wouldn’t be possible without our friends at Sea to Sky Farm. And our Stout flavor uses beer from Santa Cruz Mountain Brewing.

In 2011, we opened The Picnic Basket, a cafe selling food from the farms, fields, and artisans of Santa Cruz County near the famous Santa Cruz Beach Boardwalk. Most recently we converted a fine dining restaurant we owned into a taco shop called Snap Taco. We know Santa Cruz inside and out, so we’re literally hiring our friends’ and neighbors’ kids for their first jobs.

We have some positions that are careers, but we have others that are a young person’s first, foundational work experience. Kendra and I take that seriously. We want them to learn and grow, and to set them on a positive trajectory in life. It’s been 10 years since we opened The Penny Ice Creamery, and many of our earliest employees are out doing incredible things in Santa Cruz and beyond. And we understand it couldn’t have happened the way it did without government action.

Today, small businesses find themselves in a similar situation. This time it’s because of a global pandemic, but the challenges aren’t new. As customers disappear during challenging economic times, we need the government to step in and allow banks to lend money that will save local business.

Thanks to huge voter turnout in the November election, Congress and the Biden administration were finally able to pass additional reliefk. Hopefully that will help stop future businesses from closing, but the fact that it took a changing-of-the-guard election to get needed relief to Americans is disheartening.

We have to ask ourselves what is important to us as a country? We talk about community, but our communities are knit together by local pubs, cafes, restaurants, coffee shops, and ice cream shops. If communities are important to us, then we need to support community businesses during challenging times. I’m not talking about throwing money at a failing business model, or about giving money away.

This is the perfect time to support local businesses, because it’s when we’re going to be our most innovative. The Penny Ice Creamery used our PPP loan in part, for example, to create an online ordering system because the pandemic has made it clear how important that’s become. We improved as entrepreneurs because of that PPP funding, and once the new COVID-relief money makes its way to businesses, I think you’ll see a new wave of innovation.

That innovation also makes it easier to pay back those government-backed loans. The Penny Ice Creamery just recently finished paying off ours from the ARRA—with interest—without ever being so much as late with a payment.

Government can work for us when we demand it, but we shouldn’t wait for crises to become engaged citizens. Since Kendra and I opened our first ice cream shop more than a decade ago, I’ve seen the important role good government policy can play in my life, in my business, and in my community. So when I hear someone talk about how they don’t think being an active citizen matters, I can point to a decade of evidence and respectfully disagree.