Café Verde Expands Ann Arbor Co-op

In downtown Ann Arbor, Mich., People’s Food Co-op (PFC) is thriving, thanks especially to its expansion into an adjacent space and opening Café Verde. The co-op launched the combined café and foodservice area in 2001 and renovated again in late 2004. It provides Fair Trade coffee and fresh juice, fresh-baked goods and a soup, salad, and hot bar. The café space connects with the grocery section (the original store) and has boosted the co-op’s sales every day of the week.

The café is an extremely popular spot for very diverse members of the community. PFC is located within a block of city hall and the county building. Its location is also a half a block from the Children’s Hands On Museum, so we are a destination for parents with kids. Most of the co-op’s weekend sales still come from the grocery store, but the café is busy all the time! Three of our six registers are for foodservice, although all of them can accommodate small numbers of other grocery store items and can handle all the member services (selling gift certificates, enrolling new members). Our busiest times on any day are now very predictable—it’s whenever the hot bar is up—so we can plan better for staffing and use our managers-on-duty as floaters during those peak times.

Backdrop

For many years, PFC had two small stores within two miles, one closer to campus (Packard) and the other near downtown (Fourth Avenue). When Whole Foods came to town in 1993, we intensified a search for one location that would accommodate the projected sales volume of combining the two stores and help us become a more effective agent for meeting our members’ needs. We couldn’t find the perfect place to consolidate both stores, but in 1994 we moved the Fourth Avenue store to a bigger space (3,000 square feet) just two doors down. We knew that the space constraints of the new facility wouldn’t carry us as far as we wanted to go, but it was the best choice at the time. We developed plans to strengthen the Packard store but ultimately had to close it in 1997. While that was a difficult decision, it was the result of a long and thoughtful process that kept our members informed of the decision points along the way. We found ourselves with one store at 3,000 square feet but without the resources to expand again any time soon.

Call for Dr. Equity

PFC undertook a plan to grow our equity by switching to a patronage rebate system, a process that took us a couple of years. We knew we needed more space, and through surveys, continued to consult with our members about what they wanted from the co-op. Consequently, we were able to jump on an opportunity for expansion in early 2000. Picture this: I was sitting at my desk in the basement of the co-op when our neighbor from the coffee bar next door came by to use the copier. He was grumbling about his bills and said, “If someone offered to buy me out of my lease, I’d be outta here.” I very calmly got up, stuck my head out the door, and told him that if he were serious about that, I would love to talk with him more. That was the start of an expansion process that unfolded quickly. We met with the landlord, neighbor, accountants, and attorneys, and developed a vision of a fair trade coffee bar in the front with a new kitchen and foodservice department in the back. The co-op took over the space next door within a matter of months.

Envisioning a gathering place

We knew we couldn’t duplicate Zingerman’s, the well-known Ann Arbor deli, and we also didn’t want to open up just another coffee bar. We had the only salad bar in the area, and developing that concept would be a niche we could fill in the immediate vicinity, where there was already a high concentration of foot traffic. Opening a fair trade coffee bar with an organic focus was a way to differentiate the co-op based on our values and product selection.

We went through a process of deciding what we could afford and then scaled our vision to that budget. The switch to a rebate system gave us some cash to work with, so we didn’t have to implement a member loan program. (See the sidebar on patronage rebates in the May–June issue of Cooperative Grocer.) Our operations had recovered from the consolidation, and our balance sheet was strong. We wanted to open the coffee bar as soon as possible while we worked on the demolition and renovation of the foodservice kitchen, to start building a customer base and adding sales to offset the construction costs.

Several factors made it easier to come to quick alignment on our vision. The board of directors had begun working on ends policies for the co-op and had a planning retreat to which we had invited key members for the first night. We found that having a space for people to gather was a high priority for our members, so the risk of giving up precious store space for a new café was mitigated by thinking it would meet some of the social needs of our members. Based on the strength of our operations, we also had a clear sense that we could be successful in foodservice. Our members had asked for more prepared foods, and we knew it was a growing trend in our industry.

When I look back, I am amazed by how much I didn’t know about what we were getting into. I did know that other co-ops that had delis were always concerned about margin and labor, and I was almost scared off. But I made the right choice after I realized we could invest money up front in good training and setting up systems, rather than investing in adding training and systems after opening just a deli. We added 2,300 square feet with the expansion, and the café is currently one of the most appreciated and profitable parts of the co-op. When we opened the coffee bar, we implemented some cosmetic changes (painting, cleaning) and invested most of our money in the back, where the kitchen could generate profit more quickly. We committed to renovating the café once we had the money to do so, and the windfall from the sale of Blooming Prairie was the impetus to carrying that out. In addition to the above, an essential component of our success in the café has been the continuity and excellent leadership from our PFC Foodservice Manager, Liz Glynn.

More coffee! More foodservice!

In August through November 2004, we renovated the café, and this too has been a big hit with our members. We increased our seating by 20 percent, improved traffic flow in the coffee bar, and added a second register near the food bar. With the renovation, we also added a successful panini program. Additionally, since the opening of the café, a local juice bar near the co-op closed, and we have added a juice program as well. Coffee bar sales following the renovation are up an average of 30 percent. Presently, the fabulous hot bar sales are almost equivalent to our entire refrigerated grocery department.

The food bar is the 11 x 5 foot centerpiece of the deli, with a 10-linear-foot salad bar, five-linear-foot soup bar, and five-linear-foot hot bar. The food bar focuses on healthy, tasty, organic, and relatively affordable, vegetarian-based foods, with chicken and fish alternatives. It is also conveniently located near our 12-foot grab-n-go case and the three-foot goodie case; this supplements the PFC-baked goods served in the pastry case of the coffee bar.

The co-op’s Café Verde received a nice review in the March 2005 Ann Arbor Observer: “There is no better place in town for an impromptu rendezvous. Cozy and unpretentious, healthy and price friendly. My fellow diners might be bus drivers or meter maids, Central Casting bubbies, lone students devouring Camus with their tofu, middle-aged moms with toddlers, even the odd Observer editor. A handsome makeover last fall preserved the dining room’s spirit while improving traffic flow and adding seating along the blond wood banquette.”

*** Carol Collins formerly was general manager at People's Food Co-op in Ann Arbor, Michigan for over ten years, and presently is central corridor assistant development director for the National Cooperative Grocers Association (carol@ncga.coop).