WeFunder campaign shows community support for transforming the restaurant industry
by Karen Kahn
The Main Street Phoenix Project (MSPP) — an effort to transform the food service industry through cooperative ownership — has made its first acquisition, Griffin Coffee, located in Edgewater, CO, just outside Denver. Griffin Coffee is more than a coffee shop; it is a community center, showcasing local artists and performers. MSPP, which is a cooperative holding company, acquired the business at the end of November. Its four employees will become members of the MSPP cooperative, owning a share of all the businesses under the MSPP umbrella.
The Right Fit
“In making our first acquisition, we were very conscious of choosing a business that was the right fit,” says Marisol Lazo-Flores, managing director of MSPP. “We wanted the owner and/or general manager to be invested in our mission and to be willing to stay during the transition and support the employees.”
In making our first acquisition, we were very conscious of choosing a business that was the right fit.”–Marisol Lazo-Flores, managing director of the Main Street Phoenix Project
That was particularly important in the present moment because of the severe staffing shortage that is affecting restaurants as they try to reopen. Lazo-Flores noted that restaurant owners and workers are traumatized from the pandemic. “It’s not surprising,” says Lazo-Flores, “that restaurant workers are not returning. The industry has not treated them well—wages have always been low, hours erratic, and sexual harassment common. As a result, turnover has always been high.”
In its first acquisition, MSPP wanted to make sure the workers would not fear the worst and leave, but instead would understand that the change in ownership would benefit them. It was important to have the current owner communicate to the workers that they would be crucial partners in envisioning what would come next for Griffin Coffee.
Proof of Concept
Lazo-Flores is excited now that MSPP has made this first acquisition. It hasn’t been easy, with the pandemic still taking a toll on the industry. The group has submitted a dozen Letters of Intent, and this is the first deal that made it to completion. The group went from signed LOI to closing in under 30 days, which is less than 1/3 of industry standard of 6-18 months.
It’s tough for an owner to realize that after putting their blood, sweat, and tears into the business for years or even decades, the business may not have much monetary value today, explains Lazo-Flores. What MSPP tries to communicate is that, if the cooperative buys the business, it will retain the owner’s legacy, remain invested in the local community, and save the jobs of employees. That can mean more to an owner than a quick sale to a competitor, who might shut the business down or move it to a different location.
What MSPP tries to communicate is that, if the cooperative buys the business, it will retain the owner’s legacy, remain invested in the local community, and save the jobs of employees.
After nearly two years of developing their model, MSPP finally has with Griffin Coffee a chance to demonstrate proof of concept. Lazo-Flores says that Griffin will showcase the MSPP brand—how it supports workers with better jobs as it also creates value for customers and the community. With Griffin in the portfolio, MSPP will be able to test its vision against the practicalities of implementing open-book management policies, educating workers on cooperative principles and mechanics such as patronage and voting rights, and codifying HR policies in an employee handbook. Working out the kinks in a small venue will make the next acquisitions that much easier.
The new acquisition also lends momentum to MSPP’s WeFunder campaign. Launched this fall, the campaign has already met its first goal of $100,000. Eventually, the team hopes to raise $500,000 through the crowd-funding platform.
Crowd-funding sites like WeFunder, says Lazo-Flores, give everyday people who want to use their money to make change opportunities to invest small dollar amounts in businesses that represent their values. She notes, “I can talk to family and friends and tell them about MSPP and its exciting vision to change the restaurant industry; it’s easy for them to go online and make a small investment to show their support.”
On crowd-funding platforms, investors do not need to be accredited. Anyone—community members, restaurant customers, coop supporters—can invest. In the case of MSPP, investors will earn returns based on a revenue-sharing formula. The investor earns annual dividends capped at 2 times the original investment.
The MSPP Vision
MSPP is ambitious in its vision. By creating a cooperatively owned restaurant group, it hopes to build economies of scale that will benefit workers through better wages and benefits, stable hours, and the opportunity to grow their careers. As Lazo-Flores explains, with multiple restaurants in the portfolio, workers will be able to try different venues or join the back office staff, giving them a variety of career paths.
Says Lazo-Flores, “We know the way the restaurant industry operated before the pandemic is not sustainable. It is up to us—people who have been in the industry—to envision a new path. For so long, the workers have been overlooked and ignored. It’s time to support local restaurants and impact the lives of the workers by acknowledging their value and showing them the respect they deserve.”
Karen Kahn is a communications consultant and the editor of Employee Ownership News.