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An iconic gay bar changes its business model to survive gentrification

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The Stud, a gay bar and performance space in San Francisco’s South of Market neighborhood, turned 50 in 2016. But, it was also in the news that year for another reason: The owner was calling it quits after a new landlord upped the rent by nearly $6000 — from $3800 a month to $9500. 

To keep the doors open, The Stud’s loyal patrons banded together to buy the business and formed a worker co-op. That, as it turns out, was the easy part. We catch up with the  co-owners a few years later to hear how they did it and how it’s going.

Click the audio player above to listen to the story.

The Stud will be hosting a full slate of performances and parties throughout Pride Weekend 2019, June 29–30. 


HONEY: For over 50 years The Stud has been our place of solidarity and empowerment. A place for creativity ... a gathering spot for queers in the gayest city in america, and a beacon for tourists and transplants.

On November 26, 2016, Honey Mahogany stood before a meeting of San Francisco’s Small Business Commission. She was speaking on behalf of a group of friends and patrons of The Stud who called themselves The Stud Collective. They were fighting to keep the bar open, and the goal that day was inclusion in San Francisco’s Legacy Business Registry. So, Honey described its legacy.

HONEY: The Stud opened its doors on May 27, 1966. At the time many of SoMa’s bars catered to men in the gay leather scene. But The Stud stood out as a place for patrons of all stripes.

If The Stud got legacy status, the bar would qualify for a rent subsidy from the city. That would help offset the nearly $6000 rent hike. So there was a lot riding on this speech.

HONEY: It’s a place where everyone can dance, anyone can get on stage to perform, and we all get a chance at finding love. Thank you.
CHAIR: Awesome. Great speech. Well done.

Honey’s plea clearly moved the committee. [The vote] was unanimous. Now, you might think that becoming a legacy business would protect The Stud from becoming a former business, and in an ideal world, that’d be the case. But this isn’t an ideal world, it’s San Francisco in a time of rampant gentrification.

HONEY: We formed The Stud collective and we are currently 16 members—
MICA: 15.
HONEY: 15 members strong.

Just days later, Honey Mahogany was giving another speech, this time from the stage of The Stud.

[CONTINUED] And we have a shared vision ... to keep The Stud alive, but even greater than that, to keep San Francisco queer.

Honey was joined onstage, in front of the iconic gold mylar curtain, by fellow drag queen VivvyAnne ForeverMORE a.k.a. artist Mica Sigourney. Mica explained how they got to this point. Six months earlier, the owner of The Stud had announced that, barring a miracle, the bar would close.

MICA: Some of us who were at that meeting got together and we were like, what the fuck are we gonna do now, this is our home, ... this is where we get to live out our dreams. And we looked around at the resources we had, and we were broke, but we realized we were really wealthy in friends.
HONEY: And that’s when Vivvy turned to me and she goes, “so, Honey, do you want to buy a bar?”

The goal: to keep alive the bar and performance space they love. In order to do that, Mica says, they had to move quickly.

MICA: We were tapping everyone we knew who had an emotional stake in The Stud, who might also have the time, passion, energy, and like, capital.

That pesky capital. None of the Save-The-Stud crew had enough of it to buy a bar. At least, not by themselves. So the group turned to a less traditional model.

MICA: The best way was actually through a cooperative.

For one thing, a cooperative would allow them to pool their financial resources and buy the business together. But there were also philosophical reasons.

MICA: … A cooperative is a business model that has multiple bottom lines. And one of those things is prioritizing the people, as opposed to just the profits. And that was really in line with what The Stud was to us.

So what exactly is a worker co-op? And how does it differ from a quote-unquote “normal” business? Melissa Hoover is Executive Director of the Democracy at Work Institute. They advocate for worker co-ops and help guide people who want to form them. She says that the two business types are not all that different from each other.

MELISSA: A co-op shares about 80% of its DNA with a conventional small business and operate in the market. But the real difference is that the cooperative is owned by its members and it’s intended to benefit those members.

But small variations can have big consequences ... for instance, two other things that share 80% of their DNA? People and cows. And what makes co-ops really distinct is that members are simultaneously worker and owner, which is a different animal than being just one or the other.

MELISSA: And as a member you have a couple rights, the first is to share in the profits. And the second right is to have a voice in how the business is run.

Instead of existing to enrich a boss or a group of shareholders, worker co-ops can be successful just by providing good jobs and living wages to their members. In some cases, breaking even can be enough. And if co-op members can choose to prioritize goals that aren’t about maximizing profits—like taking creative risks, or sticking to ethical standards. And if there is a profit? they get to vote on how to spend it.

What may seem like a utopian idea has been hugely successful for some of the bay area’s most enduring businesses, including Arizmendi Bakery, the Cheeseboard, and Rainbow Grocery. These food retailers have been in business as coops for decades. But would this work for a service business like a bar?

MICA: It was more like, how can’t we. It was like, we do this until we can’t do it anymore. So if we hit a point in two weeks where this is impossible, then we don’t do it. And then we did it ‘til we bought the bar.

Rachel Ryan, a community organizer, and sometimes go-go dancer, was one of the first to join.

RACHEL: I was amazed at how many people right off the bat said, “Yes, I am in.”

People like Paul Dillinger, a Vice President at Levi’s, who says every community needs places like The Stud.

PAUL: The center for public convening in straight culture has always been there. It has been the church, or the city square. Cultural and public convening for gay culture has always been hidden in a shadowy corner ... and that’s not fair. This is one of our public squares. For lack of a better analogy, this is our church.

John Cartwright, who works at the Yerba Buena Center for the Arts, got involved because the bar made San Francisco feel like home.

JOHN: When I first came here to SF, and the first time I came to this bar, I was like, ‘Oh, ok, this is where the people are that I want to hang out with.’

And Bernadette Fons, a Stud bartender who customers know as Bernie, was the only former employee of The Stud to become an owner.

BERNIE: I was approached by coop members if I indeed wanted to be a part of it, and I said definitely. No hesitation... And I feel that it definitely can survive the challenges of SF business. I don’t feel that there’s a hurdle that we can’t overcome, and I know that sounds pollyannaish, but i do believe that’s true.

And there were plenty of hurdles to come. First of all, they owned the business, but they didn’t actually own the building. And their lease was about to expire. But with the help of District Supervisor Jane Kim, they negotiated a new, two-year lease at a more reasonable rate. Then, they had to learn how to run a bar while also starting a co-op. And that’s when things got a lot. Less. Exciting. They began having regular meetings, which Mica says were run according to strict rules.

MICA: One of our first meetings was intro to roberts rules of order … it was a really intense meeting, because we all had to get our minds around parliamentary practice. You can’t often reply directly, you have to wait your turn.

It’s a way of running meetings so you don't murder each other.

They used this process to get clear on their priorities.

MICA: Is it about making a million dollars a year? Or is it about taking a risk with events from new producers who need the experience? Like, if we’re able to stay open then we’re able to meet these other bottom lines.

That led to this mission statement:

RACHEL: Nightlife must remain at the heart of San Francisco queer culture. We celebrate and preserve the legacy of The Stud bar while cultivating creativity and operating ethically and according to our established co-op values: Self-help, self-responsibility, democracy, equality, solidarity and equity. We are committed to a sustainable, radically reimagined business model that leverages the collective energy of a highly engaged ownership community. We have a commitment to diversity in our membership and programming, through which we create an inclusive space.
MICA: It still gives me chills.
RACHEL: I know it, it makes me so happy.

But here’s the thing: The collective was made up of people with both a deep commitment to keeping The Stud open and enough money for the buy-in. Which created a group that was very invested in running a bar, but without much experience actually doing so. Although art director Terra Haywood had worked in bars, she had never done what she was needed to do at The Stud.

TERRA: I became head of the finance department when we first started with absolutely zero finance experience.
RACHEL: It’s been hilarious the things that we’ve really had to just step up and figure out. I mean, I’m the ATM technician now.
TERRA: Rachel's basically a plumber now too so if you need, she’s fixed toilets—
MICA: If there’s some anal beads in your sink that you can’t get out, just call Rachel.
RACHEL: I came in strapped on a headlamp, and improvised a tool to try to go plunge the sink in the bathroom, and found anal beads in the sink. A little bit of wig hair and some anal beads. There are definitely moments where we bring an issue to the general assembly, and our membership meetings, and say, hey, this is outside of my wheelhouse. So, if a YouTube tutorial can’t do it, the first place i’m gonna take that issue is to our membership, and say hey, we’ve got a hole in the floor, who can help me patch this?

There were also basic tasks like serving good drinks quickly.

PAUL: We had great marketing skills and we had someone who was going to be really good with city hall, and we really didn’t have a lot of great barkeep capabilities.

So, Paul Dillinger says, the group decided to hire bartenders. In doing so, they created a second category of worker - employees who were not co-owners.

PAUL: The goal would have been that every hour worked here would be worked by someone who owns this place, for that we would have needed to be recruiting into membership people who clean, or people who work security, and it just wasn't possible, with the spirit of this community and the urgency of protecting the co-op, to go out and find people who also had the money for the buy in, and had the skills to fully staff a whole work-week of work. So, we came to a middle ground, and so people do what they can, and I do what I can, but what I can’t do is be an engaged security guard on an evening when I have to get up in the morning at 8 AM.

Because, remember, Paul’s a VP at Levi’s. And most of the members have other jobs.

Now, while the idea of having employees that aren’t co-op members goes against the textbook definition of a worker co-op, Melissa Hoover says it’s actually not unusual.

MELISSA: Most worker cooperatives have some percentage of employees who are not owners. That maybe because they’re on the track to becoming owners … it may be because they don’t want to be owners The key differentiator for a worker co-op is that you have to make membership available to all employees. What we want to avoid in cooperatives is creating a two-tiered system in which the member-owners have all of the rights and protections and privileges of membership and then there’s a second class of employees who don’t have access to that.

Paul says they’re working on creating a path to membership for all employees once the business is on solid financial ground. But they’re not there yet.

Another original intention that the group decided to amend in the interest of keeping the bar running was having a workplace without hierarchy. Instead, managers oversee different departments. Mica says that it just made more sense that way.

MICA: It turned out to be a more troubling way to work, to have much more horizontal structure than we have now. Troubling in that it was inefficient, it wasn’t as profitable, which we need in order to provide a space.

Several members, including bar manager and member Terra Haywood, pointed out to me that running a bar collectively doesn’t mean you have a meeting and a vote about how to cut limes -- reaching consensus on all of the tiny decisions would be crazy.

TERRA: That just didn’t work out financially for us, organizationally. It took too much time to bring things back to the group for decisions, and it’s worked a lot better to have managers.

So The Stud has managers, non-member employees, hierarchy. Though its website proclaims it’s “the first worker-owned co-operative nightclub in the U.S.”, they aren’t legally registered as a worker co-op in California. But, as Melissa Hoover points out:

MELISSA: There isn't like a ministry of coops that’s enforcing these things … there’s a pretty wide variation of practice in how worker cooperatives work.

Terra says, because of the way the business is structured, it’s fundamentally different than other bars.

TERRA: Having worked at other bars and restaurants, when the owner comes in it’s usually kind of a scary thing. And I don’t think we agree with having that type of environment.
MELISSA: One thing we hear from worker owners a lot is that they feel they can bring their full selves to work. One of the people who responded to a recent survey we did said, I don’t feel like I have to go home and undo all of the damage I did during the day, that I can actually live my full self at work.

Hollywood Texas, who tends bar at The Stud as a non-member employee, agrees.

HOLLYWOOD: Working at The Stud is definitely more aligned with working with people as opposed to working for people. Being in a queer community it’s really important to some of us to be able to work next to each other instead of for each other.

And co-op members like Mica Sigourney feel that difference every day.

MICA: There’s something to be said for washing a glass and being like we’re building this for you, for the patrons. It sounds so corny and so cheesy, but each thing that I do when I’m there isn’t just to make my wage or get a tip … it's not so that one person, who maybe lives in palm springs is making a ton of profit. It’s so that this space continues.

Continuing: That has been the goal from the get-go. And two years after The Stud collective bought the business, according to Paul Dillinger, it’s experienced a renaissance.

PAUL: We went from a sleepy little club that was maybe busy twice a week and open three times a week to a place that’s got diverse, exciting programming six nights a week. We’ve seen extraordinary attendance.

In the time since they bought the bar, The Stud collective has added new shows, new drinks, fancy new curtains on the photo booth, and a palpable renewal of purpose born of having nearly lost the space. But as they’ve known from the beginning, the bar still needs to find what they call a ‘forever home.’ Because for all of the changes they’ve made, the obstacles they face are still the same. This is no surprise to Melissa Hoover:

MELISSA: The Stud is a perfect example of so many of the pressures facing legacy businesses. Employee ownership does not solve that rent pressure. If the rent tripled, the rent tripled.

That pressure nearly closed the bar two years ago. So far, The Stud has avoided that outcome, but there’s a difference between resisting a threat and becoming immune to it. The Stud’s Achilles heel is that they can’t really control their own destiny while somebody else owns the land on which they dance. But changing that in the current real estate environment is not easy.

MELISSA: What we’re seeing in SoMa is what we’re seeing in cities around the country, which is that land becomes very valuable, developers can affect and control policy, and can afford to buy huge swaths of land and sit on them ’til they’re valuable enough to develop, generally into housing. Industrial areas that have had this sort of funky mixed use character where it was cheap enough to start a bar that was outside the mainstream, are suddenly incredibly valuable, and those funky little institutions are being bulldozed for high end housing that often has absentee owners, so we’re seeing hollowing out of neighborhoods that used to be vibrant spaces of commerce and culture.

Although she advocates for businesses to transition to a co-op model, she’s also quick to point out that becoming one won’t magically save a business that’s overburdened with existing financial pressures. Stud manager Terra Haywood can testify to that.

TERRA: It’s not enough that we’re a legacy business … that we’re members of the community who participate in all different areas that benefit the neighborhood directly, and the greater city. None of that has still been enough to find us a place that will work for us yet. And that is ... can be disheartening.

Rachel Ryan, also a manager, feels that pressure too:

RACHEL: One of the reasons The Stud was at risk of closing was that the owner was like, jeez, I don’t have it in me to keep fighting this fight. For me that’s been one of the hardest things, that as lofty as our ideals are, and as exciting as it is to be part of this radical model, there’s still that financial bottom line that we need to meet, and we have to hustle every day to do it.

And so that’s what they’re doing.

MICA: What you can do is keep showing up so that we can keep showing up. It takes money to run a business, and it’s your money that keeps this place open so you can come here and party.

On a Friday night, a week before pride 2019, The Stud is packed. And for everyone here, just being together—in this space—is reason to celebrate.