1,000
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1804

Firebrand Presentation - 7.22.2020

At our July 22, 2020 Board meeting we heard directly from our operational feasibility pros at Firebrand. If you missed it, the full video (minus a minute we missed of the intro) and a brief synopsis are below.

Firebrand prefaced their presentation by reminding us that it's still early in their study, so there are still unanswered questions. This was a chance to give the Board a sense of the direction they're going and what they've learned thus far.

Regarding programming (which is the departments and sections of the store):

    They think there are ways we can meet our goals via different delivery mechanisms that cost less, such as an exciting local meat program without a costly onsite butcher. (We've learned onsite butchering is not a profitable department, but we know we want to champion our local ranchers.)

    They are currently comparing two models that both feature local and hyperlocal foods, a robust deli/prepared foods section and price accessible options.

    They visited a lot of our competitors and were surprised to find no one in our area doing a good job of providing local foods - this can be our place to shine.

They dove into our market study and also spoke with the market analyst who originally worked on ours to learn:

    It has very strong projected sales; like no other co-op site in the country.

    The Gerber Building's projected sales are better than any other location in our trade area - no site would perform better for sales and serving the community.
Even by Chicago standards, we are in a very high density location.

    75% of sales will be walk/bike/transit customers.

    But it's also great that we have parking, and our parking-to-sales ratio is on par with our competitors.

Firebrand knew going into this that the triangular shape of our space would present design and labor efficiency struggles. They think they will be able to offer solution(s) to the shape, including a plan to use only a single check-out station. That leaves us more floor space for product sales.

Most co-ops around the country are in suburban areas and college towns, so they are not good comparisons. In order to do financial and sales modeling for us that reflects our unique dense urban location, Firebrand is talking to a few co-ops that are in similar environments and comparing different aspects of their operations to ours. In addition, one of their former GMs is on our Firebrand team. Here are some key findings:

    Labor costs in urban co-ops are higher, but so are margins.

    It's important to maintain a reputation for affordability and high quality food, and having a mix of affordable options.

    Cultural fit in product mix is the key.

They also spoke to how critical it will be for Chicago Market to hire the right General Manager:

    Chicago will not be forgiving of a poorly designed/run store.

    We will open at 2-3x the volume of most co-ops.

    We'll need TOP talent at GM level with experience in urban environment; working with/developing relationships with local vendors; and marketing savvy.

    We'll need to pay well to attract that person.

Sharing a few (slightly paraphrased) words from Jacqueline Hannah, one of the members of the consulting team that presented to us:

"When I heard the board was looking at reassessment, I thought it was a good idea. Now that I've gotten to see the feasibility information, the site and the plan for this co-op in detail, I think this was an excellent leadership decision. (Note that I'm a pro-bono member of this team.)"

"There are co-ops all around the country in communities of 25,000 people that have raised quadruple what Chicago Market has raised in Owner loans so far. Can Chicago raise the money it needs to raise? Without a doubt, but you're going to have to make the decision to make that happen as the owners of this co-op, as a community. It's going to take your time, money, and talent. This is yours. You're going to have to grasp it and decide to do it. We may come back with a great plan, one that is fully feasible to accomplish, but this is on your shoulders to take from there.

"The lack of local food access in Chicago is interesting. Compared to other cities your size, the availability of local is minimal. There are farmers, producers, creative food innovators who can have their work transformed by Chicago Market. You have an opportunity to take Chicago's entire food scene to a new level and to a new level of equity."

And one of our Owners, Michelle Schutz, emailed us after sitting in on the meeting to say:

"Firebrand work is looking really stellar. It’s clear that they are exquisitely thoughtful about this and have assembled the right group of experts to advise from multiple angles. I have a lot more confidence having heard their preliminary assessment and reasoning. I know there’s chatter about spending money on this work; sharing my opinion that these dollars are well spent."

We'll close with a word of caution - if Firebrand comes through with a feasible plan for us, that will be exciting for sure. But it is only the next step. Co-ops are not funded by deep-pocketed investors; they are, as Jacqueline noted, funded primarily by its Owners. It's our business and we need to fund it to make it happen. Think of it as a three-legged stool - one leg is an operational plan that works; one leg is a strong organization that has the volunteer power and board strength to do the work (three cheers for our upcoming Board candidates!); and the third leg is funding. We'll need a lot of loans and donations large and small from Owners to keep the stool sitting upright and to open this Co-op. A positive report from Firebrand needs to be seen as a rallying cry for us all!

 

 

 


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