Have you ever wondered how we plan to fund the opening of our full service grocery store? Board Treasurer, Tom Lamberty, has all the financial details for you here!
Prairie Food Co-op follows a well-established process to open our store. The foundation of everything is growing the number of Owners. At 800 Owners, we have the proven support to sign a lease, announce the site of our store, and begin the search for the store’s General Manager. At 1,000 Owners, we will launch our owner loan campaign that will give Owners a unique opportunity to invest in their community. On opening day, we project to have 1,500 Owners.
After completing a market study, business plan, and financial pro-forma it is clear that opening a 10,000 square foot grocery store is a major financial undertaking, but one that we can achieve. This newsletter explains each upcoming expense category and all expected sources of revenue needed to open our store. The delicate fiscal balance between Sources and Uses motives the Board to move cautiously, but steadily, forward.
Expenses (Uses of Funds)
Opening a new grocery store requires numerous upfront expenses. We have broken down our anticipated costs into four main categories and one catch-all for the rest.
In January 2015, the Prairie Food Co-op Board hired Debbie Suassuna of G2G Research to conduct a comprehensive Market Study to evaluate several potential store locations in Lombard, create a sales forecast for each site, and make general recommendations based on our communities’ demographics. After many months of research and meeting with community developers and city officials, the Board selected 3 sites for evaluation in 3 distinct areas of Lombard. Ms. Suassuna spent two days in Lombard in February to research the trade area. In her report, Ms. Suassuna noted that the natural food segment of the retail food industry has been increasing at a rate considerably faster than the conventional segment of the food industry. While no exact statistics are available, it has generally been reported in various trade journals that the size of the natural and local food market has been growing at a rate of between 5% and 10% per year.
Key Findings Noted in the Market Study:
In light of these [quickly growing natural foods industry] developments, the Lombard area seems to represent a market with sufficient demand to warrant serious consideration for a natural foods co-op store.
The competitive environment to be faced by the proposed co-op is moderate
Based on the population size, good demographic composition, and competitive environment of the Lombard market area, combined with the experiences of other natural foods co-ops in similar market situations, it appears that there is sufficient sales potential to support a natural foods co-op.
Given the available sales potential within the market, it is recommended that the co-op planning group seek a facility that would be large enough to accommodate an acceptable variety of food store departments, including meat, bakery, produce, dry grocery, frozen food and dairy, as well as a few specialty departments that might include a deli with some prepared foods, a specialty drink bar, and/or a small café/seating area.
While we would love to share more specific findings from our Market Study, industry best practice dictates that proposed sites, trade area, sales forecasts and much of the other specific information included in the report is extremely sensitive. However, we CAN answer the most frequently asked question about our future store location: What about Mr. Zs? Our response: The Mr. Zs building is at least three times too big. That doesn't mean that a developer cannot purchase the building and sub-divide the space, but at this time, that appears highly unlikely. There are a variety of other spaces in Lombard that provide better sales potential and we are excited to start exploring the options with our real estate agent!
Cooperatives around the world generally operate according to the same core principles and values, known collectively as the "7 Cooperative Principles". We'd like to focus on Principal 6 for a moment - Cooperation among Cooperatives - because this principle is so integral in making Prairie Food Co-op a success.Read more