Freeman Spogli will take ownership of Philz Coffee in a $145 million deal set to close by August 8, the Los Angeles private equity firm announced on August 5. The agreement cancels all employee-held common stock while issuing payouts to board members and the founding Jaber family, sparking sharp employee sentiments across the 77-store chain. Current CEO Mahesh Sadarangani will remain in his role despite the ownership change, ensuring continuity in leadership.
Philz Coffee began as a single corner store in San Francisco in 2003. Third-wave coffee pioneer Phil Jaber and his son Jacob transformed that original location into today’s powerhouse chain. Today it runs 77 company-owned cafés, mostly in California and Chicago, plus an Oakland roasting plant. Sales reached $88 million in 2024, up 11.4 percent, yet the brand had lost value prior to the sale.
Rooted in one corner store, Philz scaled to 77 cafés and $88M in sales—yet value slipped before the sale.
Freeman Spogli’s investment strategies focus on scaling consumer chains such as El Pollo Loco, initial Watch, and Popeyes. The firm will keep CEO Mahesh Sadarangani and the current management team in place. They pledge to protect Philz’s handcrafted coffee process and community culture and to keep cafés company-owned.
The deal wipes out earlier private funding rounds totaling $30 million that included Summit Partners and several celebrities. Employees who held common stock will get nothing, prompting posts on Philz’s internal Q&A platform expressing frustration and worry.
Plans call for adding stores beyond the current California and Chicago base, expanding online sales, and increasing wholesale channels. Freeman Spogli believes it can grow the chain while maintaining the custom-drink experience that Philz is known for.
Legal advisors included Morgan Lewis & Bockius LLP for Freeman Spogli and Piper Sandler & Co. and Kirkland & Ellis LLP for Philz.
No layoffs have been announced, but workers wonder how the new ownership and loss of stock value will shape day-to-day life behind the counter.
