Natural Foods Merchandiser

Giving Food Power to the People in the Republic

Even in Boulder, Colo.—known, by turns, lovingly or sarcastically as The People's Republic of Boulder—merging business and principle to sustain a vegetarian cooperative market and café requires dedication and a lot of fancy footwork.

For three years, a core but fluid group worked to make the dream of the Boulder Co-op and Café Prasad a reality. Steve Phillips, the co-op's manager, says there were five primary challenges to overcome en route to long-term success: finding an affordable, convenient location; raising capital; building a critical-mass membership base; operating as a vegetarian store; and surviving in the face of stiff competition.

The initial idea was to find a 4,000- to 5,000-square-foot space that was centrally located and allowed for bicycle, foot and bus traffic, as well as for community building. But this was difficult in the expensive Boulder real estate market. The year-and-a-half search ended when a community-minded landlord offered a 12,000-square-foot building at a third of the going rate. "The low rent is still somewhat of a mystery to us," Phillips says. "But we didn't want to question it too much. Part of the reason was due to the extensive renovations needed."

Those renovations and the extra square footage forced co-op organizers to rework financial projections and capital-raising plans. Though they increased the $300,000 projected opening costs to $700,000, actual costs still proved to be $975,000.

In February 2002, the co-op took possession of its new location, but by April it was out of funds. Contractors ceased work for fear of never being paid. The group launched an intensive campaign to raise funds and netted $400,000—the majority of which came from memberships, member loans and a bank loan. After zero dollars were acquired through co-op banks and loan funds, a regional corporate bank came through with $180,000 based on equipment collateral and the recommendation of a bank client—the co-op's new landlord.

Building resumed, but further complications meant delays. "The heating and air conditioning contractor ordered the wrong units, and the electrical contractor received incorrect information regarding the electrical power to the building," Phillips says. "These issues added another seven weeks to the process." Finally, on Oct. 23, 2002, the market opened for business. The café opened Jan. 17.

The drive for members—the strength of any co-op—actually benefited from the protracted planning and building stages. The opening day 2,400-member tally obliterated the co-op board's 1,000-member goal. The co-op has since averaged 290 new members per month, bringing the total to nearly 4,700. "This is many more than I expected to have by this time," Phillips says. "I am happy with that number—about 5 percent of Boulder—but not really happy about the number who are shopping here regularly. We have work to do to build the store in a way that satisfies more of our members." He also knows that with approximately 40 percent of sales going to nonmembers, there is a daily chance to recruit new converts to the cause. "Our nonmember shoppers are our best opportunities for new members."

If membership numbers are any indication, being a vegetarian market and café hasn't harmed the co-op's bid for sustainability, although challenges do exist. Phillips says the café, which is not yet breaking even, counts for about 15 percent of total store sales. "We are in the process of making it more self-serve by adding a hot bar and salad bar and charging by the pound," he says. "The major challenge regarding the cafe is labor. We are committed to quality organic food and great service. We currently serve meals individually, requiring a lot of labor."

Breaking even is the co-op's Holy Grail. There are no shareholders banging down the door, looking for profits, but members do hope the co-op at least stays solvent, not easy to do in the face of stiff competition. Boulder is home to the corporate headquarters of Wild Oats Markets Inc., three Wild Oats stores, one of the most successful Whole Foods in the country (10 blocks down the street from the co-op) and a Vitamin Cottage Natural Food Markets location (also 10 blocks away).

The co-op projected sales of $2.5 million for the first year, or $7,000 per day. For the first two months the store averaged $5,500 per day, but since the café opened, the market has averaged $12,000 per day. However, expenses also have outstripped initial projections, which means a 10 percent per month shortfall. Despite cost-cutting measures to the tune of $20,000, an urgent fund-raising plea still went out to members.

How the story ends is still uncertain. Phillips believes the current situation may be just what the co-op is all about—community. "Hard times seem to bring people together on a deeper level," he says. "There is frustration due to not having the funds needed to accomplish many of the important projects we have planned, and we can't give raises to those who deserve it." Still, he says, employees and board members are willing to pitch in and help however they can. "We do have an excellent plan to turn this around and become profitable."

That plan includes reminding members that if each of them spent $5 more per week at the store, the financial problems would be solved. The co-op is also seeking new loans from members and asking yearly members to make a lifetime commitment. It also has joined with a local telephone-service provider that donates 10 percent of members' billings to the co-op. Employees and members are encouraged to be creative in the quest for funds, with a possible benefit concert by high-profile local and national bands as one example of self-starter ideas on the table.

Knowing that members have begun and brought so close to sustainability a co-op that many thought was a dream may be satisfaction enough, but perhaps the greatest reward for all of the hard work is in the name—cooperative. Following on the market's success, several new, local ventures have begun, including farm, childcare, arts and even health insurance co-ops. And Phillips knows this may be the greatest gift to the Boulder community. "We seemed to provide the confidence for others to form co-ops."

Boulder Co-op Market and Café Prasad
1904 Pearl St., Boulder, CO 80302-4428
Employees: 75 total, 30 in the café
Working Members: 150
Store Size: 12,000 square feet total; 9,000 retail
Sales: $12,000 per day
Best-Selling Department: Packaged Grocery
Top Seller: Bananas

Natural Foods Merchandiser volume XXIV/number 8/p. 58

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