As Brahm noted, community involvement builds trust, “so that residents trust you and your vision and your intent. From a practical business perspective, you want to get it right, and there’s no better way to do that then to listen to residents and have them help you create it.” His approach is backed up by recent research from University of California at Davis professor Catherine Brinkley, who recently assessed why local grocery stores fail, especially grocery stores in low income neighborhoods. As she concludes, “The success of a supermarket intervention is predicated on use, which may not happen without community buy-in.” A successful grocery store is about meeting demand with supply, but it’s also about building trust, which can give way to a sense of local ownership. Trust takes connections, which is perhaps why Brinkley saw stronger likelihood of success among grocery stores that were started by community groups or non-profits (see table below).
“We are purposeful and intentional about pretty much every decision we make about our business,” says Brahm. He stressed the need for the store to feel welcoming and accessible, not upscale or off-putting -- there are too many examples of well intentioned grocery stores in low income neighborhoods that didn’t make it because they were perceived as natural foods stores or some other grocery subspecies that didn’t meet local needs. That means being responsive to requests and carrying foods that reflect West Oakland’s culture and neighborhood preferences. The chefs and cooks at CFM and its attached Front Porch Cafe come from the neighborhood, and it is perhaps no surprise that hot foods are the best selling items at CFM right now. Organic and vegan products are available at CFM, but as Brahm described, “We carry the junk, too, because our goal is to create traffic so that we engage the community. If they’re not coming in because we don’t carry what they want, we’re never going to get to the point where we can have a conversation, or offer a class, incentive, or sample. That whole journey will never happen if someone never comes in in the first place.” What is important to Brahm is relevance and offering a spectrum of choices, and it’s paying off in the store’s first 100 days. CFM customers include a broad cross section of West Oakland residents. “We serve low income seniors, low income families, the homeless, sex workers, drug dealers, newly relocated IT people from San Francisco, artists, the whole gamut.
We’re focused on sustaining and leveraging that to create opportunities for cross-interaction and cross-pollination,” notes Brahm. A store and a community anchor What makes CFM such a great story for land recyclers is its creative approach to funding. The cost of CFM was estimated to be $15 million -- too big for crowdfunding. Plus, Brahm and David felt that CFM wouldn’t sufficiently stand out in the crowded field of projects vying for the public’s dollars. That led them to take CFM to the people via a Direct Public Offering (DPO). A DPO offers shares in the project directly to the public, with investment minimums based on income. DPOs have been used by Costco, Ben and Jerry’s, Annie’s, and others. CFM generated about $2.4 million from around 650 shareholders, 80% of whom were Oakland residents. 30% were West Oakland residents within a half mile of the store. The average investment was $3,200, and the minimum was $1,000. Half of all investors invested at the $1,000 minimum level, including churches, small businesses, and non-profits, all of whom bought in alongside foundations and high net-worth investors. The project raised a total of approximately $15 million through CDFI’s such as San Francisco-based Community Vision, federal grants, DPO, New Market Tax Credits, and other sources. From a financing perspective, it is the grocery store equivalent to a tax credit-financed affordable housing project. As Brahm noted to Next City, the results of the DPO gave the project credit with institutional investors, and led the way for helping CFM access other types of funding. CFM took root on a lot at the corner of San Pablo Avenue and Myrtle Street (3105 San Pablo). The site hosted a tile and granite showroom (that building was later demolished), and back to the 1940s, it had been a Harley Davidson shop. David conducted a Phase 1 Environmental Site Assessment. It came back with no Recognized Environmental Conditions (a technical term for “red flags”), relieving David and Brahm of the need to conduct a Phase 2. They did find one environmental surprise, however: during construction, they encountered an abandoned underground storage tank in the public right of way. It wasn’t on any databases, but CFM was responsible for managing the tank per City of Oakland code. Other environmental issues the project faced were more related to traffic, parking, and CO2 reduction than to contamination. Abandoned UST removed during construction of Community Foods Market.
At 14,000 square feet, the building is similar to the size of a Trader Joe’s store, and less than half the size of a traditional grocery store. CFM’s goal is to be a full service grocery store that offers healthy food alternatives, and that also serves as a focal point for community health initiatives, like diabetes and high blood pressure screening. Its Front Porch Cafe is intended to serve as a community gathering/programming space, where meetings might take place, non-profits might offer services, or customers might receive meal planning help. From its name to its branding, color scheme and signage plan, CFM was designed to be welcoming and accessible to West Oakland residents, and is geared to serve the underserved, underrepresented West Oakland community. CFM’s ownership and financing are aligned with its mission in a way that reduces pressures to service higher cost loans or maximize returns to owners.
All this translates into the ability to charge lower prices for groceries. For example, organic kale goes for $1.49, and conventional for $0.99 -- 50% less than comparable grocery stores. CFM currently employs 55 people, with 65% or more coming from the local neighborhood.