Discuss Mr. Ahmadi’s attempt to open a grocery store in West Oakland
TRANSCRIPT
Speaker 1:Okay. Okay. Okay.
Speaker 2:Listen to KLX Berkeley 90.7 a fan and this is method to the madness, the show about the innovative spirit of the bay area. I'm your host Tallinn Huizar and today we have Brahma Matti with us, the founder of people's community market. Welcome. Brahm good to be here. What is the problem you're trying to solve? Sure. Well, I've been working in the community food movements, so to speak [00:00:30] for about the last 10 years. And the majority of my work has been in West Oakland right here in San Francisco Bay area, low income neighborhood, about 25,000 residents, predominantly African American and Latino. And that community has faced for a long time a real problem of having access to good quality, uh, groceries and food products, um, immediately in the neighborhood in a convenient and affordable way. Um, in fact, the neighborhood has not had a full service grocery store [00:01:00] for quite some time and has really suffered on and off over a number of decades, uh, having a consistent grocery, uh, available.
Speaker 2:And the real issue with this is not just that it's a complete hassle for residents because what it means is that, uh, they have to leave the neighborhood by and large to shop. And for a lot of residents, they don't own their own vehicle, so they're relying on public transportation or walking. Uh, so it's really hard to do that on a consistent basis. [00:01:30] Um, and so they tend to rely on what is locally available and, and, uh, that tends to be predominantly corner stores or liquor stores, uh, which of course are not really focused on fresh food or healthy food options per say, or even a, a a satisfactory range of products that residents can really rely on. Um, but nonetheless, people are somewhat depending on the options that are conveniently available, again, because there's someone bound to that neighborhood or at least a good portion of residents are.
Speaker 2:And [00:02:00] so this is having pretty substantial health impacts in, in West Oakland. Uh, of course our countries at this point, you know, sees with it with a public health crisis, particularly on obesity and diabetes and what have you. Communities, like West Oakland have disproportionately higher rates of all of these problems. So West Oakland, uh, is in the 67th percentile for diabetes, which is very, very high. Uh, and uh, almost half of the residents are overweight or, or considered obese. Um, and [00:02:30] diabetes is very prevalent through the neighborhood. And of course there are a lot of different factors that contribute to, uh, health or ill health. Uh, but certainly diet is one of the most important factors, uh, that, um, really matters. And so 10 years ago, uh, I, and a number of my colleagues I was doing community organizing work at the time, really began to look at this problem specifically in West Oakland.
Speaker 2:Uh, and the way that came about for was [00:03:00] that we were having meetings with community residents around environmental justice campaigns, which is looking at other sort of issues of social and economic equity and land use and policy and health. Um, and in those meetings where we're talking about campaigns and what do residents want in terms of, uh, what they're demanding from, for example, a polluter in the neighborhood or from, from a city. Um, the city government, uh, we were often getting this feedback that a big problem in the neighborhood [00:03:30] was just not being able to get access to good foods, um, affordable, particularly fresh and particularly in the perishable product categories. Uh, and, and we just kept hearing it again and again and again. Um, and residents, even at that time, 10 years ago now, we're already making the connections between their diets and their health.
Speaker 2:You know, it's all the rage now to be talking about the connections between, uh, you know, eating and prevention and health outcomes. Uh, and it's often assumed that low income people aren't making those connections, [00:04:00] but, but that's completely wrong. They very much are. And so they were really communicating that with us and I think felt that as organizers, you know, we should do something about it. Okay. So, and you know, historically there's always been low income communities. Is it always been the, they haven't been serviced or has there been a change over times or kind of as supermarkets came into vogue, they just couldn't service those communities and there used to be like a neighborhood grocery store everywhere, right? There did. Yeah. I think that the beginning of this problem, [00:04:30] uh, really began, uh, sort of post World War II, uh, moving into, uh, a development pattern really across the United States, um, where you've started to see fairly substantial shifts in population from urban cores to new suburbs.
Speaker 2:So, you know, a lot of Gis came back and they were able to get a home and what have you. Uh, so you saw essentially a flight of capital, uh, as people moved. Uh, and as [00:05:00] a result of that, one of the results of that was a concentration of lower income people in the remaining urban core. Um, and so the economies sort of lost their foundation. Um, so that was a key factor. The spending power just dropped to the point where for a lot of grocers, they just couldn't sustain themselves in, in that kind of a neighborhood anymore because of the demographic changes. Uh, the same time, the reality was that the supermarkets were following the shift, so [00:05:30] they wanted to move to the suburbs as well, partly because that's where the spending power was going. [inaudible] and secondly, because there was an important development in industry around that time around 1950s, uh, which is the dominant retail model today, which is towards larger footprint store formats, uh, you know, the economies of scale and efficiencies that can come from that.
Speaker 2:That sort of consolidation of the larger market range and what have you and, and the volume that could be derived all was more attractive and sort of the New Paradigm in [00:06:00] the supermarket and grocery business. The other important piece to that is the availability of large land for parking lots and of course in the 50s was the real rise of the home ownership for the single family in the United States. So I think we saw both, uh, interesting trends in, uh, urban development and policy and planning and sort of overall shifts in population. And we also saw some interesting changes in the industry itself towards consolidation towards larger footprint formats. And as a [00:06:30] result, the shutting down of both smaller stores, uh, and, and, and stores particularly in these urban cores, which had been somewhat decimated as a result of this, this trend. Okay. Yeah. Interesting. This is, this is where listening to problem id here on method to the madness on KALX Berkeley.
Speaker 2:And so tell us a little bit about how your background and how you kind of, you got it. You said you were community organizing. How did you get there? I got into community organizing really when I was a kid. So I grew up in [00:07:00] a far eastern La County and southern California. And, um, my early teens I kinda got turned on by some community issues, particularly around environmental justice. The neighbor I lived in was predominantly Latino and there were a number of environmental problems. They're polluting sites and factories that were, you know, emitting carcinogens into the air or, you know, that particular neighborhood had a higher rate of asthma or cancer or whatever. Um, and so I got pretty into that really early [00:07:30] on, um, you know, like 16, 17 years old. And, um, just started volunteering and getting involved in these different campaigns. And then I went to college, I went to Santa Cruz, um, and I started coming up to the bay area on the weekends and volunteering with environmental justice organizations here, like communities for a better environment and green action and literacy for environmental justice, um, helping out with different, uh, campaigns around the bay area.
Speaker 2:And then eventually, uh, got a job as an organizer for one of those organizations, uh, and did the mindful justice [00:08:00] work for several years. And it was also doing youth development work as well, primarily with urban youth, low income youth. Um, and then, you know, this, this food access problem emerged and kept coming up. And, and I and my colleagues who eventually went on to found people's Grocery, the nonprofit organization, um, really wanted to make a a shift personally in the work we were doing and creating change and, and social justice in the world. I think we were getting a little bit tired, uh, of [00:08:30] the organizing model that we were working in, um, long hours, not regretting buying. Um, and really hard frankly to feel a sense of accomplishment outside of the objective of shutting something down. That was Kinda the, the measure of success at the time and the Environment Justice Movement of course to its credit, its changed since, has very different kind of objectives these days.
Speaker 2:But back then your call was a shut somebody down and get rid of them altogether. Um, and while that was absolutely essential, uh, and PR, you know, very [00:09:00] likely is contributing to better health in the community or at a minimum preventing more sickness. It was really hard to feel a sense of a real impact in terms of advancing progress, especially in low income neighborhoods. And so we were at the same time beginning to get turned on around this whole idea of social entrepreneurship, which 10 years ago, you know, 2001, 2002 was really starting to emerge as this very popular thing here in the United States. And, uh, we attended the social enterprise alliance conference and then eventually a social [00:09:30] venture network conference and were like, this is really neat. We could create a business in the neighborhood that creates jobs and creates economic value while at the same time having an impact on some social health need.
Speaker 2:In our case, we were interested in this food issue. Um, and so we initially thought that the best way to go actually was to open a grocery store. I think we had the, the sense, even though we had no experience in that business, that a grocery store was going to provide the most convenience to the neighborhood. Um, in terms of a fixed location [00:10:00] and regular operating hours and abroad selection and what have you. Um, but we also knew that we didn't have the know how to do that. We had no business background whatsoever. None of us. Um, and so we decided to sort of keep that vision in that goal of opening a community grocery store that had, you know, be a goals beyond just retailing quality foods really w could provide a means of engaging the community and, and offering additional value where it was needed in the neighborhood.
Speaker 2:Um, [00:10:30] but in the short term we would develop smaller food projects that could on the one hand, begin to address the immediate local need in West Oakland. And on the other hand could begin to give us that first hand experience and sort of knowledge and track records, so to speak, of marketing fresh foods and healthy foods in the low income neighborhood, uh, and providing education and providing job training to that population. Uh, with this sort of sense that eventually we could come full circle [00:11:00] to pursuing the opening of a grocery store and that we would have a stronger foundation to do that with. So people's grocery was the, you're the main attempt to realize this vision, right? Exactly. Was sort of solution 1.0 so to speak. For us it was a, it was a nonprofit organization still exists and it's doing very well today. Um, and it's, it's um, it became a mix of these various projects.
Speaker 2:Um, we worked a lot in creating and experimenting with smaller scale food [00:11:30] projects that could distribute food to the neighborhood. So for example, uh, we are very first project was called the mobile market. We literally took an old postal truck and we tricked it out, uh, into a small grocery store on wheels. And this is back before food trucks were their age. Um, and we drove around the neighborhood on a fixed route and schedule three or four days a week stopping central locations and carried a mix of fresh and packaged goods, um, and learned a lot and engaged a lot of people in that process. This truck was [00:12:00] bright purple and orange. It had an 800 watt sound system. It smelled like French fries cause they ran on biodiesel until we caught a lot of attention. And that was really our goal as can be organizers.
Speaker 2:That's what we knew how to do, was interact with, with the neighborhood and, and start conversations and what have you. Um, and so we developed a number of different small projects over the years, a little like the mobile market. We also did a lot in urban agriculture developing a variety of food production projects, whether they were school gardens [00:12:30] or community gardens or, uh, greenhouse projects. Uh, and we even ran a four and a half Acre farm for a number of years. And we also, and I think increasingly, uh, continue to go deeper and deeper into education as well. Health Education, food education. Um, because we saw that as really a fundamental piece to the whole equation, uh, not only a, of solving the access problem in the sense that, uh, encouraging people to try out and purchase healthier [00:13:00] foods that are better for, you know, their health needs. Um, but they could also in the longterm create the kind of market conditions to succeed at a retail effort.
Speaker 2:Um, by having some sort of critical mass of residents that we were really wanting to support a local independent grocer and really having an understanding on what that was and why it was great for the neighborhood in terms of the economic multiplier and the job creation and what have you. So people's grocery really developed many, many different projects. [00:13:30] And part of our approach was just to experiment kind of wildly with ideas. We were the first to do a mobile market in the country, um, and learned a lot from that. And since many, many other groups around the u s uh, have developed and are even today running mobile markets, uh, and we've been able to share our learning and sort of what we documented and learn from it with those, those projects. Um, and then I think round about 2008 or so, we sort of assessed, [00:14:00] uh, that we, we had come to that place in the organizational life cycle, uh, where we were well positioned to return back to pursuing this original goal of opening a grocery store.
Speaker 2:We had built this huge base in the neighborhood. We had all of this firsthand experience in street creds, so to speak. The organization was locally and nationally recognized for its efforts. So people's grocery didn't, wasn't actually a storefront. It was never was a store. It was the mobile truck. It was a bunch of other, exactly. Yeah. [00:14:30] And the name is a little confusing. It came out of our original idea of opening your groceries. Gotcha. Um, and when we decided to put that on hold, we still liked the name, so we kept the name and call it the nonprofit people's grocery. And, um, so at that point in 2008, we said, okay, I think, I think we're ready for this. And the nonprofit can provide the strong foundation, uh, for going forward and bringing all of our insights and sort of knowledge from [00:15:00] all these different projects and experiments and all of the feedback that we had gathered from residents, um, to, to implement a business model.
Speaker 2:Um, and, and a really important piece behind all of this wasn't just that we felt ready organizationally, but we were seeing that these small scale projects ultimately were not effective at closing the gap and meeting the need at the scale at which that gap in need exists. So West Oakland, uh, is a, a really a larger [00:15:30] food market than people might automatically assume. It's about a $60 million annual market for groceries. And of that, about 70% of those expenditures are leaking out of the neighborhood every single year, uh, presently. Uh, and so that's substantially kitchen substantial losses to the local economy. But what it really represents, probably more important is just the total hassle and headache for these residents that have to leave West Oakland every time they want to shop at a full service grocery store. [00:16:00] So let me ask a question about the, the business of this because you know, it's really interesting how you talked about your evolution of coming from breaking down barriers or breaking down organizations that you thought were, you know, were were socially injustice or are going to building and being a socially entrepreneur, social entrepreneur, but you didn't know anything about groceries.
Speaker 2:You didn't know anything about this business. So you know, you think that the Safeways of the world, they've got a lot of numbers behind their [00:16:30] decisions to, to where they're going to open their markets. So if it's such a big market there, how are you able to come in and actually create an organization that is able to, you know, be sustainable from an economic perspective? Yeah. Well I think there are few few points to the answering that I think the, the most immediate one is that frankly, the majority of established operators have not been interested in low income neighborhoods for a long time. Almost irrespective of the market demand and spending power. It's there. That has [00:17:00] a lot to do with I think a related in secondary point, which is the, again, the dominant business model today in the grocery and supermarket business, uh, is a very large footprint format.
Speaker 2:And in a neighborhood like West Oakland where you have high density in development, uh, it's very cost prohibitive to be able to build a store of that size. So for example, there was a recent attempt by the city of Oakland to bring in a large operator. The plan was to build a 70,000 [00:17:30] square foot store in West Oakland, which the numbers, again the market numbers would support. The problem was to do this, they had to acquire an assemble four or five different properties together. Um, and all these other levels of complexity around contamination costs and clean up costs and what have you. And so at the end of the day, the project didn't pencil and yet these operators, I like Safeway only. No. At this point I would wager any anyway only know how to operate at the larger footprint. They [00:18:00] no longer really know how to go back to a smaller neighborhood scale format or are not really interested in doing that anymore.
Speaker 2:They've got a good thing going and as long as they can continue to penetrate new markets where that format can operate, there's not a lot of incentive for them to really change their business model or spin off different ones. So your advantage is the scale you're looking at. You're, you're okay with being a smaller operator. In fact, that's exactly, I think what is needed to appropriately serve this neighborhood. So I'm very, [00:18:30] very biased in favor of independent grocers, partly because a, I actually think that they face less barriers to entry in these type of markets situations. Uh, the cost of entry can be lower because they're tending to operate at a smaller footprint, but also because they conserve a specific local community in a much more customized, even intimate way that grocer knows exactly what that set of residents and families wants [00:19:00] and can very quickly cater to those preferences versus a centralized, you know, buying chain in a large corporation, the chain of command to make a small decision around a product shift on a particular shelf can take weeks or months if it ever happens.
Speaker 2:Uh, and the, the service isn't nearly as good. Um, not only in terms of, for example, the knowledge and the friendliness of the staff, uh, but the relationship, knowing [00:19:30] people's names, their families, uh, what's going on in their lives, there's really being able to have that rapport. Um, you know, I may be a little bit romantic in this area, but I really think that people still very much desire that quality. In fact, I think there's a resurgence in a lot of neighborhoods, not just low income neighborhoods or in many neighborhoods to have connection, uh, with their local community, their local economy, the businesses that are there then that serve them, uh, and go beyond just an informal transaction to actually having [00:20:00] some degree of a relationship. And I think all of that gives independent grocers a, a competitive advantage in these marketplaces where they can adapt and be much more nimble, they can serve much more effectively.
Speaker 2:Uh, and the data really proves that, that they tend to outperform larger format operations that operate in similar demographic market places. Uh, and they most certainly out innovate because again, they're not infringed by a large central decision making process. So if they want to partner with a church [00:20:30] or nonprofit or bring in a farmer and they can do all of that with a very little fanfare, whereas larger chains have to go through a lot to kind of bring those kinds of changes into the way they do business. Very interesting. Yeah, bureaucracy is bad. So I think in this case it the, um, nimbleness. It's necessary to succeed in what is already in you. A fairly challenging demographic area. Sure.
Speaker 3:Okay. Well, we are listening to method to the madness on KALX Berkeley 90.7 FM. My name is Ali Nasar [00:21:00] and today we have Brahma Mati on with us. He is the founder of peoples community markets. So let's talk about your latest manifestation of the vision. Yeah. People's community market. So you said about 2008 you realize that you had enough street cred to start actually building the vision of an actual market. So where are we with that now? So I left the nonprofit
Speaker 2:in 2010 we hired a great executive director, Nikki Henderson, who took my place. And then I went and actually finished getting my MBA and took some time off after 10 [00:21:30] plus years of nonprofit burnout and what have you. Ah, and then I, it sort of late 2010, fall of 2010 jumped into the process of planning and design, uh, around, you know, the premise that, uh, there needed to be, uh, some real, uh, customization, uh, and adaptation of the retail business model to the specific neighborhood, whether that was in format and footprint, uh, whether that was in product mix, uh, and sort of targeting the cultural desires [00:22:00] of the particular neighborhood, whether that was in the way that we partnered with nonprofit or healthcare organizations to be able to support our offerings with the education and the community engagement pieces. Uh, and so we spent about nine months going through pretty intensive planning process ranging from, you know, architectural design, uh, to really thinking about personnel structure and ownership structure and all these, you know, typical questions that are, that are business, uh, is going to go through [00:22:30] a, and then a roundabout, I suppose, Spring of 2011, uh, we came to a place where we felt ready to begin pursuing financing.
Speaker 2:Um, and where we began to get our, our momentum was through an interaction with a have fun that launched in July of 2011 called the California FreshWorks fund. This is a fund that was spearheaded by the California endowment, [00:23:00] uh, which brought in a number of other philanthropic and health partners. Uh, Kaiser for example, is a partner in this, uh, Calvert Foundation and eventually brought in a number of private banking institutions to contribute capital as well. It's a very large fund and it is solely dedicated to financing grocery stores and underserved communities in the state of California. And as a certain degree of commitment to independent grocers, I think with a similar analysis that independent groceries tend to serve these better, these communities [00:23:30] better or can at least customize more appropriately. And, um, also a certain commitment to grocers that are themselves committed to healthy food propositions, whether that's the core of their brand and their offering or they're willing to, uh, make changes, um, and, and make that a more central feature of their business model.
Speaker 2:Uh, so the California fresh works fund, um, expressed an interest in providing a loan to us. And of course we were a startup. And so they [00:24:00] said, you know, you guys are a perfect fit in terms of your business plan and value proposition and brand and positioning. Uh, and we would definitely consider a fairly substantial loan, potentially up to 70% of your overall financing needs. However you got to go raise your equity capital first. Um, that's just an underwriting requirement for them. And so we said, wow, okay. You know, that sounds like an opportunity that we can utilize as leverage when we talk to private capital sources that we have this potential loan opportunity, fairly significant one.
Speaker 3:What's the total [00:24:30] amount you need to tell him?
Speaker 2:It's a bit of a moving target, but it's basically at this point it's somewhere between 3.4 and three point $6 million.
Speaker 3:So you need, for the listeners, you need about a million bucks of cash, but an investor and the rest of that money will be made up via a loan from the fund. You're talking about, ideally, something like that.
Speaker 2:Trying to, uh, be optimistic that they will continue that commitment with this.
Speaker 3:Great. So, um, it's a, it's a beautiful vision. You're in the throws of the entrepreneurship right now, which this show is very much about innovation. [00:25:00] And I've talked to people in different parts of their innovative cycle right now. It's kind of a really important time for you guys cause you're doing the financing part, but let's say that that happens and let's say that I always like the end of the show to talk about the vision. Let's say five, 10 years from now poo people's community market. It exists to vision comes full. Yeah. What's it gonna look like? Well, in your wildest dreams, what kind of impact would it have on West Oakland?
Speaker 2:Well, there are three, minimally three there probably really four [00:25:30] needs that, that we're hoping to have some impact on. The first and foremost obviously is, is just improving the community's access to good foods, fresh perishable products in particular. That's the, the largest gap in the neighborhood. Um, and, and also prepared foods is one of the other big gaps in the community. West Oakland on in lacks grocery stores. It lacks any kind of quality sit down, family oriented eatery or restaurant and there's no cafes or anything like that at all. Um, so prepare for [00:26:00] these programs, a fairly substantial part of this and we would love to have a really interesting fun and somewhat targeted menu, uh, to the cultural, uh, neighborhood. Um, particularly the African American and Latino community. Um, the other, another really big need in the neighborhood is, is sort of a safe, positive places for social interaction.
Speaker 2:Again, no cafes, no real community venues where people can just sort of show up and hang out and socialize or attend an event or check [00:26:30] out a performance or anything like that. Again, residents pretty much have to leave the neighborhood to be able to participate in those kinds of things. Um, and you know, they're doing it and so we know that if there was a local option, they would likely participate in that. So interesting. Part of our plan vision for this is that in addition to the retail store, the retail format and footprint where we're selling product a, there is an additional space that we're calling the front porch. And the front porch is basically, uh, a semi-open [00:27:00] aired, uh, community venue and, and Patio in courtyard. So it has a, a stage and seating and or private plans actually have a children's play area, a little rip off from the McDonald's playbook and have a little children's space where so parents can bring their kids and hang out, um, and really be able to provide a positive venue.
Speaker 2:So the basic idea is that what can we do to enhance both the attributes of our store as a destination in the neighborhood beyond just quality food retailing. Uh, and what additional value can we provide to our customers [00:27:30] if they're coming to shop already. What else can we do in a cost effective way that serves them better and meet some additional need? And ideally for us, has a, uh, an upside in terms of our, our business. Um, so I think, you know, what I would love to see is obviously a thriving retail business that, uh, is linked into sort of regional economy of food economy in terms of we work with a lot of great vendors and producers and bringing great foods that are available [00:28:00] in this region to this neighborhood. Um, but there's also just a lot of, it's a hub. It's a lot of interaction and hanging out and conversation taking place.
Speaker 2:So it's not necessarily purely about sales and moving product out the door. It's really being able to provide a positive space where people feel like they can come to and hang out and socialize fairly often. I think another really important need, uh, is, is, uh, residents want a lot more knowledge and information around, uh, health [00:28:30] and prevention and, and, uh, eating healthier and how to do that. Uh, and so we'd like to be able to provide resources to the neighborhood and for people's community market to be a resource to the neighborhood, uh, for that type of information. The way we're thinking about doing that is mostly through partnerships with nonprofit and healthcare organizations because for one, they have the expertise already. Uh, so we don't need to build that expertise to provide those services. And secondly, to be honest, [00:29:00] we won't have the margins to be able to afford these sort of enhanced programs, nutritionists on staff or cooking classes that'd be beyond our budget, especially if a, we wanna make sure we're priced affordably to the neighborhood. And B, we want to pay good wages to our employees, but we have 10 years of history of working with nonprofit and healthcare organizations in this immediate area already. And so we're really excited to bring them all into the fold as partners and sort of figure out a working model where they're very much integrated into [00:29:30] it and we're coordinating and providing space and promotions for those sort of non product based offerings. Okay, great. Well, wonderful vision. You've listened to [inaudible] uh,
Speaker 3:who's the founder of people's community market and this is method to the madness on k Alex Berkeley at any 0.7 FM and to learn more about people's community market Brahm how should they, how should our listeners get involved? Our website,
Speaker 2:the people's community, market.com one word, people's community, market.com we have a blog and all [00:30:00] kinds of information about our project, its current status generally what the plan is and where we're heading. Of course we're on Facebook and we're on Twitter as well and you can find this there and please pay close attention. We will, I expect get approval fairly soon for this public offering and we are really going to want to be getting the word out for people who want to make a local investment and want to make a community investment or interested in doing something different than this sort of, you know, mutual fund on Wall Street.
Speaker 3:Well Great. Thanks for being here rob and thank you for listening. This is method man. It's on KLX Berkeley. [00:30:30] You can learn more about us in method to the madness.org have a great Friday. Everybody.
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