How to Start a Food Co‐op

Conceptualizing Your Food Co-Op

Study the ins and outs of a food co-op. If you’re serious about starting a food co-op, you need to become an expert on the topic. A food co-op is a member-owned business that buys food for its members. It’s owned and operated by the very people who use it. It seeks to find and sell food for the lowest possible prices, while rejecting misleading marketing or shady sales practices. Membership is open to anyone and everyone.

Determine your mission with your food co-op. Are you creating it to save money? Perhaps you want to be more involved in the community, or maybe you want to do your part to reduce harmful greenhouse gases by purchasing locally. Do you want to start a food co-op so that the people of your community have access to fresh, healthy produce? Whatever your reason, it’s important to identify your purpose. This will be your driving force throughout a process that experts say takes a minimum of two years to do properly.

Organize a small group of community members to help with the initial planning stage. There is a lot that goes into creating a food co-op, so you’ll need a group of people to help get everything in order. This core group of people needs to be as dedicated and passionate as you are to create this food co-op. It’s a great idea to have people from different types of industries, if possible. For example, lawyers can help with the legal documents while business or finance-minded people can help with the financial aspects.

Gather information specific to your community that will affect your food co-op. When it comes to creating a food co-op, what works in one community may not necessarily work in yours. You’ll need to figure out how much it costs to rent the space you’ll need, the other grocery stores in the area that you’ll be competing with, the population you’ll be marketing and selling to, the health codes of the area, and so on. By gathering these facts and figures early, you will be able to create a plan moving forward. Additionally, you will garner confidence from the community if you’ve shown that you’ve done your research.

Recruiting From Your Community

Spread the word about the co-op you’re creating. Getting the information about your co-op out to the public is vitally important. You won’t be able to build a successful food co-op unless everyone in the community is aware of it, and you’re able to market effectively and recruit members. Utilize any and all outlets you can, such as newspaper ads, radio, flyers, signage, and word of mouth. You want the community to be talking about it.

Hold an informational meeting. Unlike grocery stores, not everyone has used a food co-op. Many, or even most, people are unaware of the special benefits of co-ops, and may not fully realize what the co-op can do for the community. Hold a meeting so that people can learn more, ask questions, and understand why they should support your co-op. Advertise the meeting everywhere! Then, come prepared with more information than you think you’ll need. Be ready to explain what exactly a co-op is, the advantages of co-ops, common misunderstandings about them, and their financial and environmental benefits. Have informational pamphlets or flyers at the door for everyone to grab when they enter. People can follow along with these, and refer to them after the meeting is over. Welcome questions from your audience. Do your research before the meeting to ensure you can answer all of their questions, especially the questions that are specific to your town. If you aren’t sure about a question, tell them to leave their email address so you can find an answer and let them know.

Take down contact information of anyone interested. This includes their email addresses, mailing addresses, and phone numbers. This is a very important aspect of your initial meeting. By getting a preliminary list of people who are in support of the co-op, you can start sending out newsletters, emails, and invitations. You can create an ongoing dialogue with these community members, updating them with the progress of the co-op and potentially getting your founding members. You can also begin reaching out to these interested community members for fundraising efforts. These people, who understand the long-term community benefits of a food co-op, may be willing to donate in order to get the co-op up and running.

Set up your website. Many people will turn to the Internet to learn more about their community food co-op, so it’s important to put the information online for them. You can buy a custom URL for relatively cheap. Put your mission statement, membership information, and even general food co-op facts on your website. Allow people to sign up for email updates on your website.

Financing Your Co-Op

Decide how much members will invest. When you’re deciding how a member must contribute to the co-op financially, remember that the cost of setting up a food co-op is high. If you allow your members to use payment plans to pay off their investment requirement, you won’t raise a large sum of money in the beginning. This can make the start-up costs difficult or impossible to meet. For example, if you make your membership cost $150 and gather 100 members who pay outright, you will have earned $15,000 towards start-up costs. If you allow them to pay in increments of $50, you will only start out with $5,000. It can be helpful to give incentives to charter members who become members first and agree to pay their full membership fees outright.

Apply for grants and loans. Do a little research about food co-op grant options in your area. These grants can help assist you with early start-up fees by giving you a sum of money right off the bat. These grants will have criteria for your co-op, from having a clear vision for your food co-op to being willing to match the grant amount through member investments. A Google search can help you find grants that will apply to your food co-op. There is help out there if you look around.

Determine the costs for buying equipment and staffing your co-op. The big initial costs that most people consider are the costs of renting a space and buying inventory, but there is a lot more that you will need. For example, how many employees will your co-op have? How much will it cost for your cash registers, freezers, refrigerators, and air conditioning? Will you have ovens or coffee machines? There is much more to a co-op than what initially meets the eye, and it’s important to visualize your co-op in its entirety when planning your budget. Start with a modest staff, and you can hire more as your co-op takes off. Their pay will initially come from your start-up fees, and can increase as revenue increases. The key is to hire people who are passionate and engaged in the co-op’s mission, and who understand how it works. You can also call for volunteers to work the food co-op, which will obviously save money.

Setting Up Your Co-Op

Pick your official site. Do your research! Make sure that you pick a location for your co-op that puts it in a convenient location for the population you are marketing to. Consider all of your options, such as building vs. remodeling and leasing vs. owning. Understand how many members you’ll need to take on to cover the costs of setting up your official site. Picking the right location and site can make or break a food co-op. Consult professional analysts to help you making smart business decisions.

Create a membership system. For this step, it’s wise to hire someone with experience drafting legal documents. This document will officially spell out how someone becomes a member, and what financial investment it requires from them. The membership system is the foundation of the co-op because without members, you have nothing. After you’ve laid out the requirements, responsibilities, and benefits of membership, compile it into an easily-understood brochure or pamphlet to distribute. When you’re deciding how a member must contribute to the co-op financially, remember that the cost of setting up a food co-op is high. If you allow your members to use payment plans to pay off their investment requirement, you won’t raise a large sum of money in the beginning. This can make the start-up costs difficult or impossible to meet. Officially recruit your members. Send out membership applications to interested parties, and collect investments from your members. These early investments are vital to covering your start-up costs.

Purchase inventory. At this stage, it is so important to form relationships with the local farmers and food producers of the area. Because you will be buying food in bulk for members and for inventory, you will want to work with them to get the best quality for the best prices. Additionally, you need to be constantly talking with members to ensure you are purchasing the products they want and need. The inventory you buy and sell will most likely evolve as your food co-op gets up and running. As you learn what sorts of things sell and do not sell in your area, you can tailor your inventory. The most important thing, however, is that you are listening to the members to ensure that you are meeting their needs, and that you are making sure to bring them the best quality product for the lowest possible price.