Elgin food co-op 'extremely promising,' expert says
Plans to open a co-op grocery store in downtown Elgin have a great chance of success, but it's time to ramp up the effort, an expert said.
Based on its business plan, Shared Harvest is an "extremely promising" venture with a great location in a vacant area of the Ziegler's Ace hardware store building at 215 Spring St., said Jaqueline Hannah, development specialist for Food Co-op Initiative based in Minneapolis.
Shared Harvest has solid leadership, a reliable market study and a site with adequate parking, all crucial components for success, Hannah told the Elgin City Council last week. Food Co-op Initiative is a nonprofit that offers assistance to nascent co-ops.
The overall project is estimated at $1.6 million, with $800,000 coming from "owner loans," or loans from individuals who want to invest in and become an active part of the venture, Hannah said.
The group has raised about $200,000 in owner loans and must raise the remaining $600,000 by the end of the year, when its zero-rent lease and loan offering expires, she said. It also has sold $100 shares to 615 households and aims to reach 1,000 households.
"Raising the money in seven months is totally doable," she said, pointing to Green Top Grocery co-op in downstate Normal, which raised $1.3 million in seven months. "But they have to do a really good job of getting to the community and getting the word out. And they know that."
The group hopes the city will contribute $250,0000 to $300,000, with the rest coming from a primary lender, she said, adding successful co-ops typically rely on investments from their municipalities.
Mayor David Kaptain pointed out the co-op would compete against existing grocery stores that didn't get cash incentives from the city. Stores like Butera Market and Sam's Club get sales tax rebates, which Shared Harvest is not planning to ask for.
"What makes you different that you desire ... a cash gift from the city of Elgin?" Kaptain said.
Thirty to 50 percent of each dollar spent at the co-op would stay in the community, compared to 20 percent for conventional grocery stores, Hannah said. Also, with its estimated $2.7 million in sales in the first year, the co-op wouldn't be a great threat to others, she said.
Councilwoman Tish Powell complimented the group's grass-roots efforts.
"It's really exciting to see something like this going on in our community," she said.
While co-ops are for-profit businesses, they typically have low profit margins and are aimed at benefiting the community as a whole, she said. Shared Harvest wants to support local farms, be economically accessible and provide food education.
Food co-ops bring "measurable local economic impact" by creating employment - Elgin's will provide an estimated at 20 to 25 jobs at opening - and selling an average 20 percent of food from within 50 miles, Hannah said.
"Food co-ops create an opportunity, and we see young farmers going to farms or starting new farms (because of it)," she said.
The Elgin initiative kicked off with a steering committee in summer 2012; it takes on average five years and as many as 10 to open a co-op store, Hannah said.
For more information, visit www.sharedharvest.coop.