Trader Joe’s pulled it off. Starbucks does it all the time. Now, after a year of navigating city rules, a hip apparel brand that started in San Francisco but found success overseas has convinced the city to grant it permission to open a local store, despite being slapped with the “chain store” label.
On Thursday, the Planning Commission voted unanimously to grant HUF permission to open a store on Valencia Street. The decision was something of a reversal — in March 2019, the commission denied HUF a permit because it was deemed a chain store. HUF only has three stores in the United States, but it triggered the city’s “formula retail” rules because of its dozen stores in Japan.
HUF San Francisco was originally scheduled to open in April 2019. The delay has cost HUF hundreds of thousands of dollars, according to company officials.
Planning Commission president Joel Koppel said Thursday evening he was in full support of HUF, which was founded in San Francisco nearly two decades ago by skateboarding legend Keith Hufnagel. Koppel praised skateboarding as a healthy youth activity and an “underrated part of our city.”
HUF fuses skateboarding and streetwear culture to sell items like leopard print coach’s jackets and its famous weed socks. Until last year, HUF also made skate shoes.
The ruling comes amid citywide angst over local retail. Neighborhoods are suffering from empty storefronts, while local owners bemoan the cost of doing business in the city.
Opponents of the chain store rules say the empty spaces could be filled if the rules weren’t so tight, while some supporters push to tax landlords with vacant retail properties. Others who support the restrictions, like Office of Small Business commissioner Kathleen Dooley, say big-bankrolled chains will steamroll local merchants, whose existence is already precarious. Dooley, who co-founded the North Beach Merchants Association, said that formula retail laws are not to blame for vacancies and noted the high rate of vacancies in the Union Square shopping district, which allows chain stores.
Technically, HUF fits the city’s chain store definition, with 15 stores around the globe. But its backstory has less in common with Starbucks and Whole Foods than it does with Philz Coffee or Ike’s Place Sandwiches, other locally launched brands that have taken off beyond city limits.
Hufnagel drops out
Keith Hufnagel moved from New York City to San Francisco in 1992 to attend San Francisco State University. He was also sponsored by Fun Skateboards, and school soon took a back seat to skating. When Fun promoted him to the professional ranks later that year, he dropped out of school, all of 18 years old.
“He came out here to follow his dream and pursue skateboarding,” said Jim Thiebaud, vice president of Deluxe Distribution — Fun’s distributor — and a San Francisco skate legend in his own right.
Hufnagel left Fun two years later. Former teammates wanted him to come to Los Angeles and join another company. Thiebaud knew he had to act fast.
“I drove around San Francisco in my little white Honda Civic looking for him,” Thiebaud recalled. “It was a foggy day. I think I found him in the avenues and told him, ‘You have to ride for REAL Skateboards.’”
“He just pulled over and started talking to me,” Hufnagel remembered. “I was tripping out. It was a huge deal for me at that moment. Like, which path are you gonna go down?”
Hufnagel decided that San Francisco felt more like home and agreed to ride for REAL, another Deluxe brand. (He’s on the team to this day.)
Hufnagel wasn’t just interested in skating. In 2002, he opened a HUF store on Sutter Street to sell sneakers, as well as his favorite streetwear and skate brands. The store soon started printing its own T-shirts and the HUF brand caught on, eventually replacing all outside brands in the store.
Three more San Francisco stores followed, plus one in LA. Then the great recession hit, and HUF closed all four SF stores in 2011, according to global retail director Keith Murray, who began as the first store’s manager in 2005.
With LA as its only physical presence, the company regrouped. There’s now a store in Brooklyn and a pop-up in Dallas. But it’s the company’s success overseas that had it entangled in San Francisco’s bureaucracy.
Barely formula retail
The only reason HUF ran afoul of San Francisco’s chain store rules: it runs a dozen shops in Japan, most of which have opened since 2017, when HUF was bought by its longtime Japanese distributor TSI Holdings.
The San Francisco Planning Department defines formula retail (or chain) stores as businesses with more than 11 locations worldwide and consistent branding across locations. In 2004, the Board of Supervisors passed the original formula retail legislation, banning formula retail from North Beach and Hayes Valley (and more). In 2007, San Francisco voters passed an amendment requiring chain stores to obtain a conditional use permit before opening in any neighborhood commercial district.
‘I now have the honor of helping them come back to San Francisco.’ —designer Benny Gold, announcing in early 2019 he was handing over the lease of his Valencia Street store to HUF
Supporters of the law say it protects local independent merchants from corporate giants. But when a San Francisco-based business opens its twelfth location, it becomes subject to the same restrictions and delays as Starbucks and KFC.
Ike Shehadeh of Ike’s Place Sandwiches experienced this firsthand. After a two-year process to open a store on Polk Street, Shehadeh told the Chronicle in 2018 that he would no longer try for new San Francisco locations. Unlike Starbucks, Shehadeh said, smaller chains cannot afford to pay rent for months while getting permits approved.
Judi Basolo, director of office and retail leasing for Keller Williams Realty in San Francisco, agreed. “Small independent retailers don’t have the deep pockets that these big operators do,” Basolo told The Frisc. “The independent retailers get so hurt.”
Basolo, who has helped clients find retail space on Valencia, argued the formula retail law contributes to the epidemic of empty storefronts. Rather than putting independents out of business, chains occupy spaces that smaller stores can’t afford and bring foot traffic to their neighborhoods, she said.
Unfortunately, reliable data are hard to come by. A North Beach neighborhood group’s survey found a 10.25% vacancy rate in 2018, and unverified reports have since put that figure twice as high. Basolo said she has seen an increase in vacancies on Polk Street in her Nob Hill neighborhood as well.
‘We’re going to have to rebuild everything’
In January 2019, Benny Gold shut down his eponymous streetwear shop at 968 Valencia and said he would hand over the lease to HUF, which gave Gold his first job in the business as a designer.
“I now have the honor of helping them come back to San Francisco,” he wrote. “I can’t think of a better brand to inhabit the space.”
HUF took over the lease on February 1 last year. Murray estimates that the brand has spent about $300,000 on the store since then, including a year’s rent.
‘San Francisco is where the brand started, and we really just wanted to have a home base.’ —Keith Hufnagel
Part of the expense is that HUF got ahead of itself, from the city’s perspective. It had already started renovating when the city first denied its permit in March 2019. The city then told HUF to demolish the walls it had built.“We’re going to have to rebuild everything,” Murray said. “It’s been a costly procedure.”
The company had also already hired two employees, who were on payroll for three months, as well as an expediter and a lobbyist to help navigate the permitting process.
It was time to play by San Francisco rules. HUF needed local buy-in. In August, Murray began reaching out to neighborhood groups, merchant associations, and other businesses. HUF held a public meeting at the Valencia Street site in September and more than 100 people came. (Murray said the support was overwhelming.)
At its December board meeting, the Mission Merchants Association voted unanimously in favor of HUF. The Valencia Corridor Merchants Association soon did the same.
Murray said he received a few emails opposing the store from residents and anti-gentrification activists, including Roberto Hernandez, who runs SF Carnaval and Our Mission No Eviction. Murray responded, explaining his and Hufnagel’s role in opening the SOMA West Skatepark, HUF’s donations to youth skate programs like SF Skate Club, and their commitment to hiring locals. According to Murray, Hernandez ultimately voted in favor of HUF at the Mission Merchants Association meeting. (Hernandez did not respond to requests for comment.)
Mission Merchants president Ryen Motzek was sympathetic to HUF’s situation, having had his own permit for a food-truck park on Valencia denied in 2018. He appealed to the Board of Supervisors and had the ruling overturned. (Motzek also owns a skate shop in San Mateo and a valet service in San Francisco.)
“The whole system is just kind of broken,” Motzek said, noting that HUF is different from the huge chains that the law was designed to keep out. “We have a business that’s trying to open up in San Francisco and provide jobs. We have the great story of Keith Hufnagel. They’re coming back to San Francisco. They’re opening in Benny Gold’s space … things come full circle.”
Motzek said no neighbors have complained — an assertion borne out by The Frisc’s admittedly unscientific merchant survey on the block of Valencia where HUF plans to open. Next door to the empty space, Chrome Industries sells bike messenger-inspired gear. Like HUF, it was born in San Francisco before spreading across the globe as a hot brand. Earlier this week, Chrome employee Judy Ly was sitting at a sewing machine near the front door, as passersby enjoyed an unseasonably warm winter day. “It would be really good to have someone as well-known as HUF’’ next door, she said.
Ly will have her wish sooner than later. HUF San Francisco will open its doors in May, Murray estimated after the commission’s thumbs-up. Even with the victory, there are no immediate plans for more HUF stores in America, according to Hufnagel: “San Francisco is where the brand started, and we really just wanted to have a home base.”
Max Harrison-Caldwell covers San Francisco news (and skateboarding). He previously wrote for The Frisc about troubles on Treasure Island.