“Why can’t we just open a small store, and grow from there? Let’s get the doors open, even if it’s a small store!”
“PCC opened with just a small little store and look at them now. Why can’t we do that, too? What is the board waiting for?”
Start small, grow! We hear it a lot, and for some co-ops that’s totally appropriate. Certainly the co-op wave of the 1960s-70s saw cooperatives grow out of the back of trucks, out of garages, and small shared spaces. For many of our owners, this is how they experienced how co-ops happen, and grow in the most healthy way. This is how you get food to the people, which is the mission, right?
In this wave of new co-ops, we aren’t seeing big success with cooperatives starting smaller and growing. With the banking climate being what it is, they are being extra cautious about where they put their money. A cooperatively owned grocery store is not something widely understood. According to Stuart Reid, Executive Director of Food Co-op Initiative, some cooperatives have walked into banks with 50%, and even 75% of their funding in place, and been turned down for the loans they needed to open their doors. I am just going to say, between me and you, that made me nervous!
With the large responsibility the co-op has to raise capital in order to get our doors open (whatever size they are), it’s critical that the board has all our ducks in a row. The chance is fair that we could be turned down, even with a killer business plan, jazzy proforma and all of our feasibility due diligence in place.
Let’s also consider what happens in order to open a co-op of any size.
- Marketing the concept
- Getting enough member-owner equity to be able to afford it
- Locating and vetting an appropriate site
- Getting additional financing in place that equity doesn’t cover
- Building new or retrofitting a leased building in order to get doors open.
- Hiring staff, inventory, installing equipment, opening doors.
If we open a grocery store, we go through this very simplified list. We have to get our idea out there, convince people to buy in, convince the banks it’s a solid concept and then actually execute on opening those doors. That takes time, and I can tell you, a lot of money.
If we start small, we do this now, and we get a small store open. Within two or three years, generally, the store grows to such a point that now, guess what- we need to go through all of that again. So now we’re back out there asking member-owners to buy into a move to a larger store, to support the site the board chooses, to be willing to invest more money, asking the community to again join the co-op, and finding yet more financing…. it basically doubles our work, doubles our time, and doubles (or more) the cost to the store, and to the owners, to go this route.
Therein lies one teeny tiny rub of being cooperatively owned, and not three investors with a wad of cash they can just throw at the problem, right?
The board is committed to opening this store once, and opening it right. This means that more than anything what we need from the community is to invest quickly, but to be patient as we are growing to the point we can open. Want it open faster? Get one member of the community to join the co-op!
What the Board is Doing Now
What is the board doing about site right now?
We’re looking at several sites from a financial perspective first before we send teams out to look at them inside. Our old estimates of $3M to get the door open are not what we’re seeing in the marketplace right now. What will it cost to get a building? It completely depends on the building, and how much we’re going to have to do to get it ready to open. We aren’t necessarily looking for a cheap building, as much as one that has the qualities we know we need in order to be successful.
- Looking primarily in Central Kitsap.
- Dense number of ‘rooftops’ in the local area around the store. – Market research has taught us that the general public (who are not shopping for values-based reasons, but for convenience/just to get food in the house), will generally shop within a 3-mile radius of their house/work. Keeping in mind that the membership alone can not sustain the grocery store, it is critical that we are well positioned to those shoppers who might come in because they’re just hungry, or are on their way to a potluck, or who are just curious about what we’re doing.
- 6000-10,000 square feet, ideally. The sales projections of a store this size means we can be profitable. 2/3 of any building we’d choose would be retail space, the rest would be administrative/storage. If we want a classroom, or commercial kitchen (etc), add even more space!
- On a main arterial – it is important that our store is on the main thoroughfares to get the most stop-in traffic. Too far off the beaten path and only the people who know about it will shop there. Deadly for a grocery store!
- Adequate parking – We need 6 spaces per 1000 of store. Parking also should be laid out in in a certain way (think Safeway’s parking lot, vs. the new Trader Joe’s. One layout is desirable, one is not, for the co-op.)
- Easy access to city transportation
- Loading dock in place – Otherwise we have to build one in, which adds to the expense. Doable, but something that would help keep costs down if we don’t have to.
- Feasibility and financing vetting must be done and be positive for the site
Some of these things you can research on your own, very easily. Size of building, cost, is it a lease or purchase, how many parking spaces, etc.? Get out there and start looking around for buildings that meet our criteria. The board, once we have those ideas, will take that research to the next level, looking at the financial picture and getting on site when appropriate. You can email your ideas to email@example.com. Keep talking to me about your site ideas! It’s helpful to us if you’ve looked at this criteria before sending your ideas on to us- that’s time we don’t have to take do do that research ourselves and saves us time to work on other things (there’s a giant pile on my desk right now!)
So get out there, fellow member-owners – start looking around, be our eyes! If you can safely and legally get in to take photos, do it! Look at the store from the perspective of what the public will feel when they walk in, not from a “let’s hurry up and get the doors open.” Remember- we’re moving toward success, profitability!
I hope that answers some of the questions we hear most often – I look forward to continuing the dialogue with you!