Branching, Blooming, and Branding

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From #104, January-February 2003

Branching, Blooming, and Branding

B Y   E L L E N   M I C H E L

After ten years of operating two stores, Bloomingfoods Market and Deli recently has blossomed into a cooperative with five different sites in its southern Indiana town. Bloomingfoods was initially incorporated under the umbrella our founders named Bloomington Cooperative Services, Inc., an organizational structure with the potential to branch into other kinds of cooperative ventures. Now some of that potential is coming to fruition.


Bloomingfoods Statistics

Bloomington Cooperative Services, Inc.
Members: 3,200
Year established: 1976
Locations: Two full-service grocery stores; one restaurant; one café
Total annual sales: $8.5 million

Bloomingfoods East Co-op

Bloomingfoods Market & Deli

Eastside store

Retail Sq Feet: 6,000
Total Sq Feet: 9,000
Annual Sales: $6.8 million
Daily customer count: 800
Average customer sale: $21.21
Percent of sales to members: 58.4%
Years in current location: 10

 

Bloomingfoods downtown store

Bloomingfoods Market & Deli

Original, downtown store

Retail Sq Feet: 1,600
Total Sq Feet: 2,000
Annual Sales: $850,000
Daily customer count: 285
Average customer sale: $7.13
Percent of sales to members: 43.5%
Years in current location: 26

 

Encore Café bar

Encore Café

Cafeteria-style restaurant with bar,
acquired in May 2002.

Annual Sales: $700,000
Retail Sq. Feet: 4,500
Total Sq Feet: 7,000
Average Sale: $9.15
Daily customer count: 220
Years in current location: 10; operated by Bloomingfoods since May 2002

 

Theater Café

Theater Café

Café/coffee shop/theater concessions,
open since Sept. 2002.

Annual Sales (projected): $150,000
Retail Square Feet: 400
Total Sq Feet: 550
Daily customer count: 50

 

Bloomingfoods has long had a strong community presence in Bloomington. Our first location, opened in 1976, was a two-story space in a renovated limestone carriage house just off our town's main street, Kirkwood Avenue. This original location, near the campus of Indiana University, still serves as our downtown store.

Two-store evolution

In 1991, when annual sales crested $1.5 million, the board decided to create a second, much larger store on the east side of town. Building Bloomingfoods East involved renovating a free-standing restaurant in a shopping center to provide 6000 square feet of retail space, plenty of parking, and an outside patio.

The first three years of operating at two locations were financially rocky, requiring a recovery plan. Secondary financing and member loans were secured and eventually repaid. A salary recompense program was initiated for staff who had taken voluntary pay cuts, and a huge accounts payable debt was retired. Having experienced the risks of expanding without sufficient member capital or strategic planning, the board charged management with focusing on operational efficiencies and achievable improvements to both stores. In 1999, with sales approaching $6 million, the board formally recognized the need to begin another expansion effort. A location analysis prepared by Stephen Dorn and a market analysis conducted by Pete Davis (both of Cooperative Development Services) confirmed that the East store location is ideal for our market. At the same time, the decision was made to continue to operate the downtown store, which has seen increased sales volume in the past several years. Two board planning retreats, facilitated by Bill Gessner, focused on best practices and steps towards expansion.

The initial desire to simply renovate and expand Bloomingfoods East transformed into the dream of replacing it with an entirely new structure constructed on the opposite side of the parking lot: an attractive retail environment unencumbered by the structural inefficiencies of our current space. Green design elements could contribute additional energy-saving features while sending a message about our values and distinguishing us from other grocery stores.

Opportunity knocks

Either expansion option for Bloomingfoods East would require interaction and communication with a big box retailer currently in bankruptcy proceedings as well as with a property management company from New York. Not wanting to let the molasses-slow process of securing our site stall our opportunities to grow, we began to consider other options. Our overarching goal was to foster a culture of preparedness, in which we would continue to steadily build our assets, including a large and loyal membership base.

Part of the Bloomingfoods marketing strategy in our university town has been to maintain visibility by providing concessions at quality community events. We are the city-selected concessionaire at the Saturday Farmers' Market, where we have a weekly presence during the six months from May through October. For several years we have also provided food for the Lotus World Music and Arts Festival, held each September in the heart of Bloomington. One of the major venues of the festival is the Buskirk-Chumley Theater, a historic vaudeville stage and movie house built in 1922. A national landmark building recently restored to its previous grandeur (with widespread community support), the 600-seat theater is now managed by a private non-profit organization, BCT Management, Inc. In 2000, the BCT board approached Bloomingfoods about opening a small coffeehouse café in the 550 square foot space adjacent to its lobby. To test the viability of this concept, we began selling concessions made by the Bloomingfoods East deli at theater events. While the idea of a theater café was attractive, particularly because it represents a golden opportunity to support the local arts community, we had concerns about the internal production capacity of our deli. Expanded meal service at the East store, increased demand for special events catering, plus service to the Downtown store and Farmers' Market were all stretching our deli to beyond capacity.

Our overarching goal was to foster a culture of preparedness, in which we would continue to steadily build our assets, including a large and loyal membership base.

Then a second, related opportunity presented itself. An article in the local newspaper in October 2001 publicized the fact that the owner of the Encore Café (described as "one of downtown Bloomington's most popular restaurant destinations for nearly a decade") was looking for a buyer with long-time roots in the community. Familiar with the Encore, a 7,000-square foot facility serving gourmet food cafeteria-style in a traditional urban setting, we immediately recognized a good fit. Board and key management began exploring the possibility of purchasing the Encore, motivated in part by longstanding member feedback suggesting two things: that we open a restaurant, and that we develop a presence on Bloomington's near west side.

After determining that we could purchase the Encore without a negative impact on our balance sheet, we took possession in May 2002. Our purchase included the business and its inventory but not the building itself, which we lease from the previous owner. Initial interviews revealed a capable staff eager to join the Bloomingfoods fold, expanding their responsibilities to include food production for the Buskirk-Chumley Theater, the Farmers' Market, and our downtown store.

The Encore Café seats 175, and its kitchen serves other Bloomingfoods sites as well

Realities and challenges

The initial public response to the Bloomingfoods acquisition of the Encore (first announced on the front page of the local paper) was overwhelmingly positive. While a few members questioned the fact that the purchasing decision had not been put to a member vote, the vast majority of member-owners appreciated the fact that to do so would have compromised our timetable and perhaps our ability to buy.

The acquisition of the Encore enabled us to relieve the production pressure at the Eastside store and to move ahead in our partnership with the Buskirk-Chumley Theater. We opened our coffee house café in late August 2002. Because the Theater Café includes no kitchen space, all of the food is prepared at the Encore.

While the typical customer at the Theater Café is either attending a theater event or looking for breakfast, lunch, or afternoon refreshments (as well as cappuccino and espresso), the Encore Café caters to people seeking lunch, evening and late night dining, or Sunday brunch. The Encore features a much larger space, with a seating capacity of over 175 and a variety of levels and seating options: a self-standing bar with local and specialty beers on tap, booths for families or students, and tables that can be arranged for meetings and parties.

Branding

At a time when many co-ops are realizing the importance of consciously shaping their brand identities (and when, in fact, we are thinking about the implications of a national co-op brand), Bloomingfoods faces some specific branding challenges. How important is it for us to communicate the cooperative difference at our two cafés? To what extent do we encourage the cafés to cultivate or capitalize on their own distinctive identities? How can the benefits of co-op membership be made tangible to restaurant patrons, including our members? What messages do our food, décor, and music send? One of the first decisions we made was to selectively emphasize the connection to Bloomingfoods. We worked with Pat Thompson of Triangle Park Creative to create a logo for the Theater Café and update our Bloomingfoods and Encore logos. Our trademark wheatshaft logo is now used in the signage for all of the businesses: blue for Bloomingfoods, plum for the Theater Café, dark green for the Encore, and pumpkin for the Farmers' Market. Our newsletter is distributed at each location. Spots on public television and radio often link the grocery store with the Encore or the Theater Café, and countless other cross-marketing opportunities arise.

Integrating employee cultures involves coordinating financial and payroll data, educating the Encore staff about the co-op, and idea-sharing across our retail boundaries. Member feedback weighs heavily in favor of bringing the food options at the Encore more into alignment with Bloomingfoods. Local quality meats are now featured at the Encore, and we expect to integrate a stronger natural foods influence in our ingredient purchasing. The success of the salad bar and hot bar at our grocery store suggest that these might be popular self-serve options at the Encore as well.

Both cafés exclusively serve Equal Exchange Fair Trade coffee, and in September they hosted a visit from representatives of the Nicaraguan co-op Miraflor. Our annual meeting was held this year at the Encore, and it was also the scene of occasional benefits for community organizations. The board is currently planning quarterly member breakfasts at the Encore, enjoying this venue as a place for visioning conversations about our values and our future.

Branching out into the restaurant business does not mean that our original expansion plans have been abandoned. Indeed, the increased visibility, patronage, and membership that Bloomingfoods now enjoys underscore the need for an expanded full-service grocery store. At the same time, we have been able to bloom and grow in new directions, laying the groundwork for an even more prosperous and community-connected future.

Ellen Michel is marketing and outreach manager at Bloomingfoods: [email protected].

 

See other articles from this issue: #104 January - February - 2003