BriarPatch’s Next Steps: A Development Process A · possibly for as long as 20 years. Our...

BRIARPATCH’S NEXT STEPS DEVELOPMENT REPORT

more business

with local businesses

more cooperativepartnerships

more support

for local farms

more organic

food choices

more living

wage co-op

jobs

more community giving

After a year of dialogue and research on BriarPatch Co-op’s next steps,

the Board has compiled this Development Report to share the information gathered with Co-op owners, shoppers, and staff.

As was presented to Co-op own-ers at the annual Owner Meeting held in October, this investigation into develop-ment is prompted by the store’s growth and popularity, which are straining the ca-pacity of the warehouse, deli kitchen, and especially the parking lot.

The report outlines three strategies for expanding BriarPatch’s capacity: expand-ing the current store as much as possible, opening a second store, and relocating to a larger building elsewhere.

The exploration of these options in-cludes financial implications, pros and cons, and how each would jibe with BriarPatch’s Ends Policies.

The Board encourages everyone who shops or works here to read it!

BriarPatch’s Next Steps: A Development Process

The Development Team has worked hard to bring us the information on the following pages: left to right: Chris Maher, General Manager; Jeff Gold; Robert Upton, real estate expert; Alan Weisberg, Board President; Andrea Echegaray, Finance Manager; front, Janet Cohen, communications consultant

Alan Weisberg, Andrea Echegaray, Janet Cohen

INSIDE:Introduction by Richard Drace,

Chair of the Owner and Community Engagement Committee PAGE 2

Welcome from Chris Maher, General Manager PAGE 3

EXECUTIVE SUMMARY PAGE 4

Strategy A: Improve current store and open a second location PAGE 4

Strategy B: Relocate to a larger building PAGE 5

Strategy C: Maximize current store PAGE 6

Pros, Cons, and Overview of each strategy PAGE 7

Conclusion, your feedback PAGE 8

Appendices A, B, C PAGE 9-11

BRIARPATCH’S NEXT STEPS DEVELOPMENT REPORT 2

You’re invited to join the conversation

by Richard Drace, Chair, Owner and Community Engagement Committee

What is our shared vision for our BriarPatch Co-op for the next five,

ten, and even fifteen years? How do we pro-ceed in order to realize this vision?

These two questions have inspired the Board’s efforts over this past year to build on our absolutely astounding success, and to continue to offer the best shopping experi-

ence we possibly can.The first question sent us directly to our Ends Policies for guid-

ance. I’m very proud of the way our Management team, Directors, staff, and consultants have kept these policies in mind throughout this process, as well as the Co-operative Principles that go with them. Every aspect of this Development Report reflects both the spirit and letter of these policies and principles.

The second question – how we should proceed - has not yielded easy answers. I wish I could report that we have a straight path to follow and clear marching orders. The fact is, though, that we have each evolved in our thinking from the easy assumptions we held at the beginning of the process. We’ve had to relax our sometimes stubbornly held points of view and strongly felt loyalties, and open up our thinking to solutions we might have resisted at first. I’d like to share with you my own experience of this process. In doing so, I invite you to allow your own assumptions, loyalties, and opinions to evolve as you, too, absorb a lot of new information.

First as a shopper (going back to the Washington Street days), then as an owner, then a Director, and now a member of the Development Team and Chair of the Owner and Community Engagement Committee, I’ve seen and been part of the Patch’s phenomenal growth. Like all of you, I now feel its growing pains, both in obvious places like the parking lot and the deli, and in places that are not so obvious to shoppers, such as the challenges our staff face in trying to handle an ever-greater volume in an in-creasingly constricted space.

At first I was skeptical that we should welcome growth just

to meet the increasing popularity of our Sierra College Drive store. After all, why not just stay as we are? Small is beautiful, no? I slowly realized, though, that if we just carry on with business as usual, custom-ers will become dissatisfied with the crowded shopping experience and will shop elsewhere. Stay as we are and limit growth by making people unhappy? Not a great solution.

I was therefore able to warm up to the idea that a larger opera-tion would enable us to bring more great food to more people… help more local farmers thrive… sponsor worthwhile commu-nity endeavors… and advocate for worthy food-related causes. I assumed, then, that we could simply expand our Sierra College Drive store to accommodate our needs and keep the store grow-ing in this way. The very thought that this might not be possible seemed pretty scary, because I feel a lot of loyalty to our present store. When I studied the numbers, though, I realized just how expensive substantial expansion would be, not to mention the fact that we could well find ourselves facing the same crowded condi-tions after just a few more years of growth. As a result, I had to persuade myself to open my mind to other scenarios as well.

Opening a second store seemed like a no-brainer, in terms of accommodating more shoppers. It’s still a very exciting and feasi-ble scenario. It’s been frustrating, though, that we’ve been unable to identify any suitable sites – either with or without an existing building. We’ve been quite thorough in our search and will con-tinue to explore options, but at this point, the second store sce-nario remains entirely conceptual.

BriarPatchBoard of Directors

To contact the Board, send an email message to [email protected] with “Board” in the subject; staff will forward it to the Board Secretary or another Director as indicated. Or you may leave letters at the customer service window.

President: Alan Weisberg Vice President: Rick ShellerTreasurer: Mark Fenton Secretary: Louise Jones

Each of us has evolved in our thinking… We’ve had to loosen up occasionally stubborn points of view and strongly felt loyalties, and open our thinking up to possible solutions we might have resisted at first.

continued on next page

Richard Drace, Alana Lucia, Debbie Plass, Lew Sitzer


Relocation? Well – this idea really put my loyalties to the test. Leave Sierra College Drive?

It’s been hard for me to be that open-minded. And yet… little by little I’ve allowed myself to entertain the vision of what a brand-new larger store in the right location might be like: a more ener-gy-efficient building; ample room for our staff to work efficiently; more local produce; a chance to offer our cooperative experience to more people.

The moral of my story is that I invite you to study the Development Report without too rigid a mind-set, without con-clusions you’ve reached in advance. Let the information take a while to sink in. This report is the result of much careful research and thorough analysis by very skilled consultants, and much dis-cussion (and even argument) among us Directors. After you’ve given it your best, open-minded attention, I hope you will then share with us your responses. On page 8 you’ll find how to do just that. We look forward to hearing from you!

Welcome to the process! by Chris Maher, General Manager

For almost a year BriarPatch has been involved in “Our Next Steps,”

a process in which we aim to chart our future direction. Why such a development process? Because our extraordinary success has our store bursting at the seams! In sev-en years, we’ve transitioned from the 5,000-square-foot store on Joerschke Drive that had annual sales of $6 million, to our current store, which has 9,000 square feet of retail space and generates $24 million in annual sales.

This growth has led to increased demand on our operations. Each year we are serving more customers, receiving more requests for new products and services, and becoming more involved with our community. Our parking lot has been monumentally busier, our aisles more crowded. Since early 2013, I have been leading a Development Team of staff, Board members, and experts in seek-ing the most effective ways for BriarPatch to respond to this grow-ing demand. We reported on this work at our Owners’ Meeting in October, and this report contains our findings since then.

BriarPatch’s planning process has not been typical. The con-ventional method of analyzing the growth of a business is to

evaluate a wide range of numbers and trends for gross sales, cus-tomers served, net income, assets, liabilities, debt/equity ratio, etc. While any future development and expansion of our cooperative business requires well-informed financial and operational deci-sions based on such parameters, our Board also has a duty to view BriarPatch’s growth and sustainability in the context of its Ends Policies, which are the guiding principles and goals of our opera-tion, and represent all that is special about us.

Throughout this development process, our Board is commit-ted to considering the impact of each of its options on all of these Ends.

We know that our success at Sierra College Drive has been driven by a great staff, and of course by you – our loyal owners and customers. We are also aware of how important it is for the Board to keep you up-to-date about our work and to solicit feedback to inform our decision-making.

This is an important moment for BriarPatch. We encourage you to read this report and give us feedback, with both comments and questions. We need to know your views on this important next step. You’ll find a variety of ways to give us feedback at the end of this report. We look forward to hearing from you.

BriarPatch Co-op’s Ends PoliciesBriarPatch Co-op exists so that owners, customers, and other members of our community have:1. A successful and vibrant cooperatively-owned business that acts as a leader among local businesses and food

co-ops nationally, and contributes to environmental stewardship through its business practices. 2. Access to high quality, healthy products, especially local and organic food. 3. A community center where people experience a sense of connectedness, ownership, and fellowship. 4. A stronger local food system. 5. A major local employer that provides a healthy, fair, and considerate workplace for employees.6. Access to education about food and consumer issues that encourages customers to make healthier food choices.

Join the conversation continued from previous page


Strategy A: Improve the current store and open a second location

Executive SummaryBackground

The main driving force for this development process is the fact that the current BriarPatch market at Sierra College Drive

is nearing its maximum capacity. When we moved here, we as-sumed that this store would fulfill our needs for the long-term – possibly for as long as 20 years. Our phenomenal success, though, has shortened this timeline dramatically. As a result, our planning team is currently looking at growth strategies for the short- (3 to 5 years), mid- (5 to 10 years), and long-term (10+ years).

The overarching question is whether BriarPatch should stay at Sierra College Drive for the long-term. During our discussions and analysis, the Development Team and Board have been asking this and other hard questions, including:

What are the most effective ways for BriarPatch to respond to the growing demand for local and organic foods?

What is the best strategy that will enable BriarPatch to fulfill its Ends Policies as it grows?

Is there a particular size/scale for BriarPatch that will best ful-fill our Ends Policies and is most conducive to future success?

Would BriarPatch benefit by being co-located with other retail businesses, or should it be a “stand-alone” retail development (like the current market)?

Is there a benefit in maintaining the current market with no expansion, while encouraging shoppers to shop during non-peak hours, if feasible?

Is a ‘multiple store’ strategy the best long-term strategy for BriarPatch?

As we proceed, how do we take the best interests of the whole community into account?

Based on answers to these questions and on a thorough plan-ning analysis, the Development Team has defined the following three viable options. This report discusses each of these strategies and provides a detailed comparative analysis in Appendix A.

In this strategy, we would maintain the existing Sierra College Drive market while coupling it with a second market in order to

relieve congestion and accommodate our expected mid- to long-term growth. We have not been able to identify any suitable loca-tions for a second store that are available, so cost estimates for this option are based upon the purchase and development of land, which drives up the costs as compared to finding a suitable leased property.

FeaturesThe existing market would receive a minor building expan-

sion and the interior would be reconfigured in order to improve our merchandising and our customer shopping experience. These measures would constitute our response to short-term growth during the next 3 to 5 years, until a second market is opened. Parking areas would be added on-site, and the existing market would receive a modest expansion that relocates the deli seating area, thus allowing for a reconfiguration of the deli and west wing of the market.

Development of a second market location that is complemen-tary to the existing store would be a top priority in order to ac-

commodate growth. This second market would ideally be opened within the next five years. An appropriate site for such a second market would consist of a 10,000 square foot building (minimum) that offers 6,000 square feet of retail space (versus our current re-tail space of 9,000 square feet), supported by 70 parking spaces on a two-acre site. This size would provide the operational scale needed to provide an adequate selection of groceries for custom-ers, and therefore relieve the pressure on the Sierra College Drive market.

Assuming that we can find a suitable existing building or land to develop, this strategy would require a total capital investment of approximately $4.95 million over the next three to five years, and would increase BriarPatch’s gross square footage to 31,000 (which does not include the continued leasing of separate office, warehouse, and community kitchen spaces, which are estimated to exceed 4,000 square feet). The retail floor area would increase from 9,000 square feet to approximately 15,000 square feet, which would accommodate our projected growth for the next ten years.



Progress so farThe Development Team has carried out an extensive investi-

gation during the past year, involving 20 possible sites for a sec-ond market, all in the Highway 49 corridor from Nevada City to the southern portion of Grass Valley. The search has included both existing buildings and undeveloped commercial property (Appendix B provides detailed information on the sites that have been investigated). As of February 2014, we have been surprised to

find no buildings that are readily available and suitable, and have therefore projected a budget for a second market strategy based on the purchase of a site and the development of a new building. We are continuing to actively pursue second market locations, and we welcome new ideas and suggestions.

This strategy would require a capital investment of an estimat-ed $6.25 million over the next three to 5 years.

Strategy B: Relocate to a larger buildingStrategy B consists of leasing and relocating BriarPatch to a

larger building that can accommodate short-, mid- and long-term growth.

FeaturesAny new market location would ideally be centrally located,

have optimal freeway access, and offer increased operational ef-ficiency; it would also be mindful of the possibility of increased competition in the years ahead. This strategy calls for coordinat-ing this relocation with the end of the current Sierra College Drive lease in May, 2017. We have not been able to find any current buildings that are suitable for a relocation of the store, so cost esti-mates for this option are based upon the leasing and development of land.

This approach to growth is comparable to our move to the Sierra College Drive site in 2007. It is a common strategy that re-tail food markets employ in order to avoid the conflict between operations and construction needs when facilities cannot be easily enlarged, or when a business has outgrown its facility.

This strategy would require a total capital investment of ap-proximately $6.38 million over the next three years. An optimal site would include a land owner/developer who could provide a building of approximately 35,000 square feet on a long-term lease basis. This square footage would also provide 50% more space than the facilities we are currently leasing (24,000 square feet). The retail floor area would increase from 9,000 square feet to ap-proximately 18,000 square feet, which would accommodate our projected growth over the next 15 years.

Progress so farAs mentioned above, during this past year our Development

Team has undertaken a thorough search for alternative existing and potential new sites for both a second market and relocation. The search for relocation sites has resulted in three possibilities that meet our basic requirements for central access and a site area that can accommodate a future Co-op market with adequate park-ing and other site-related needs (Appendix C is an aerial photo of these three sites):

Dorsey Center: To be located at the new Dorsey Drive/Hwy. 49 interchange, this is a centrally-located prospective retail shop-ping center that may be constructed within the next few years, if approved by Grass Valley. The current plans for this development provide an anchor tenant space for a food market.

Olympia Plaza: This plaza would be located near the Sutton Way/Olympia Drive intersection; we considered this site in 2003, before we selected our current site. The Olympia Plaza property is centrally located in the Glenbrook Basin area, and is large enough to accommodate a larger Co-op market as well as other compat-ible businesses.

Loma Rica Ranch: To be located at the intersection of Dorsey and Sutton Way at the west end of the Loma Rica Ranch develop-ment, this site is centrally located, with access from Dorsey Drive, Sutton Way, and Idaho Maryland Road, and is large enough for a food market and other retail businesses. The property has been approved for retail use by the City as part of the overall master plan for the Loma Rica Ranch development.


Strategy A: Improve current store continued from previous page


Discussions with each de-velopment owner are at an early

stage. As of the writing of this report, we are exploring the param-eters of the opportunities that each of these locations presents, in terms of finances, access, design, traffic congestion, and efficiency issues. The building configuration, adjacent outdoor areas, sur-rounding landscape, and parking would need to be constructed to meet BriarPatch’s standards and requirements. We would also need to have a say in the tenant selection for any adjacent devel-opment, as well as many other important details. Our team has had discussions with key people involved in each of these devel-

opments. We have not made any decision, though, or committed to any action. Other relocation sites have also been investigated (Appendix B provides detailed information on the sites that have been investigated), but are not being considered further since they have proven to be unavailable and do not meet our basic site requirements.

Since identifying the Dorsey Center as a possible option, we have seen a high level of community interest in this potential de-velopment, from many different viewpoints. Discussions with our owners and Board will reflect these varied perspectives and take into account the best options for our community as well as our co-op.

Strategy C: Maximize current storeStrategy C consists of building out the current market site to its

maximum potential, including expansion of the main building, the construction of an optional additional detached building, and site improvements for parking and other supportive amenities. This strategy does not include a second market location (as does Strategy ‘A’) or relocation (as does Strategy ‘B’). It assumes long-term tenancy of the Sierra College Drive site.

FeaturesExpansion of the current market would include:A 4,588 square-foot addition to the front of the store that pro-

vides 3,000 square feet of retail floor area (creating a maximum 12,000 square foot retail space).

The addition of 52 parking spaces. An optional detached new office building with up to 10,000

square feet, to house central administrative offices, a community room, a teaching kitchen, and warehouse space.

To pursue this option and undertake the liability of substantial capital improvements to the property, BriarPatch’s current lease would need revision and renewal.

Expansion could take place incrementally, over time. Options to expand the store, though, are limited. Expansion of the building can only take place on the entry side, since the City’s setback re-quirements prohibit us from adding an extra floor or building out at the back of the building. The amount of space we can add would likely result in just a short-term solution. Access to the market would be constricted during the construction period, which is estimated at six months. This would present significant logistical challenges to both store operations and the construction process,

and would result in higher building costs, as well as a possible drop in sales during construction.

Building out the store on Sierra College Drive would require a total capital investment of approximately $3.99 million over the next three years, and would increase the store’s gross square foot-age to 25,000 (which does not include the continued leasing of separate office, warehouse and community kitchen spaces, which are estimated at 4,000 square feet). At completion, the retail floor area would increase from 9,000 square feet to approximately 12,000 square feet, which would accommodate projected growth for the next 5 years.

Progress so farOur expansion beyond the original footprint of our current

store began almost immediately after we moved in. In 2010 we rented the adjacent Unit B as additional storage for our Deli Department. In 2012 that unit was improved in order to add re-frigeration and additional workspace. In 2012 we moved our ad-ministrative offices for our Human Resources, Marketing, Finance Manager, and the General Manager across the street, incurring additional rental costs, in order to free up space in our main build-ing. In 2011 we began renting the cooking school on Zion Street in Nevada City in order to offer cooking classes. We have also un-dertaken substantial reconfigurations of the store, including ex-pansion of the front area and the Deli, as well as parking improve-ments. Our current expansion plan has received a favorable initial review by the City of Grass Valley, as part of a “pre-application” process. We have discussed the potential terms of our lease re-newal with our landlord, Calloway Development, but nothing has been finalized.

Strategy B: Relocate continued from previous page


Based on our growth projections, Strategies A and B both pro-vide a longer-term development strategy. Strategy C provides

a market size that can accommodate approximately five years of growth, while Strategy A provides 10 years, and Strategy B 15 years of growth, based on modest growth projections of six per-cent per year.

We currently believe that Strategy C is the least cost-effective expansion solution, as it would expend BriarPatch’s financial re-sources while eliminating the option of a second market, at least through the mid-term. Strategies A and C lend themselves to a phased approach to facility development, and are therefore less reliant on a single, fixed financing plan.

The pros and cons of each strategyStrategy A: Improve the current store

and open a second marketPro:

• The second market would be more convenient for some. • We retain our much-loved current market, one in which we have invested heavily over the years.• The current location being near the high school, community col-lege, and multiple medical and office buildings is convenient for these important groups. • A new market would likely attract new shoppers and be a new show-case for cooperative principles and practices.

Con:• Shoppers may not be content shopping in a smaller second market, with less space and less selection. • We have not found a suitable space to rent or land on which to build a second market. • Managing two markets could be a challenge for store leadership: two staffs to manage, two facilities to maintain, and possibly two store cultures.

Overview*: Cost: $4.95 millionParking: 70 spaces at the second marketRetail space: 6,000 square feet at the second marketOverall space: 10,000 square feet at the second marketCompetition: This strategy would allow BriarPatch to compete as a two store chain against a corporate competitor. Ease of transition: This strategy would be disruptive to shoppers, as some construction would occur on the current store.Years of growth accommodated: 10 years from opening

Strategy B: Relocate to a larger building

Pro: • A brand new building built to our specifications would have in-creased efficiencies and lower operational costs and be better suited for our growing shopper and employee base over the long-term. • A new location would potentially be more accessible to more shoppers.• Relocating to a new location will be the least disruptive for shoppers and staff, as construction of a new site will not affect shopping at the current location.• A new market would likely attract new shoppers and be a new show-case for cooperative principles and practices.• A new location will bring new neighbors, which could include like-minded small businesses.

Con:• We leave behind a much-loved market, one in which we have in-vested and developed over many years.• A new location will bring new neighbors, which could include busi-nesses with different values.• Potential relocation sites may not be approved and/or may not prove to be feasible.

Overview*: Cost: $6.38 millionParking: 60 more parking spaces than current location, with 210 parking spaces totalRetail space: 18,000 square feet Overall space: 35,000 sq. ft.Competition: This strategy provides the greatest hedge against a cor-porate competitor, by virtue of its retail size, parking, etc.Ease of transition: This strategy would be the least disruptive to shop-pers and to staff, with no construction activity taking place. Years of growth accommodated: 15 years from opening


Comparing the strategies

*The data provided in the Overview sections are based on the best current estimates of costs, space, and growth.


Strategy C: Maximize current store

Pro: • We retain our much-loved existing store. • We continue capitalization of a facility that BriarPatch has already invested in heavily.• The current location being near the high school, community col-lege, and multiple medical and office buildings is convenient for these important groups.

Con:• We’ve outgrown the space, and the expense of expanding further is very high. • This strategy will “max out” the soonest, as we estimate that we would outgrow these expansions in five years.

• Construction may affect shopping extensively and adversely. • This strategy leaves BriarPatch most vulnerable should a competitor move to a more centralized location.

Overview*: Cost: $3.99 millionParking: this option features 30 more parking spaces than currently with 180 parking spaces total. Retail space: 12,000 square feet Overall space: 28,000 sfCompetition: Strategy C provides the least hedge against a corporate competitor by virtue of its retail size, parking, etc.Ease of transition: This strategy would be the most disruptive to shoppers due to extensive remodeling.Years of growth accommodated: 5 years from opening

All of the three strategies described above share the com-mon objective of expanding BriarPatch in order to meet the

community’s growing demand for local and organic foods. Any one of the options could be undertaken financially, assuming BriarPatch’s ability to develop a financing plan for capital invest-ment in the business within the next three years. Each option also provides a viable context for fulfilling our Ends Policies.

The decision to stay at Sierra College Drive or not will have a significant effect on our business and our profile for the next generation. Currently, we are continuing to investigate all options

CONCLUSIONand strategies, and are committed to maintaining an open mind about all possibilities. There are many details that still need to be gathered and analyzed for each strategy, and it’s crucially impor-tant for us to incorporate feedback, comments and questions from you, our owners and shoppers, so that our work is informed by your views and needs.

Expanding BriarPatch brings exciting opportunities as well as potential liabilities. We need you to help us with the Development Process by giving us your ideas and feedback.

Pros and cons continued from previous page

TAkE THE SURVEY about our next steps: https://www.surveymonkey.com/s/NCLG77T

COME TO A Q & A SESSION: Friday, April 4 • Thursday, April 10 • Monday, April 14

Our General Manager and Board members will answer your questions.

TALk TO A BOARD MEMBER. Ask questions. Tell them what you think. They’ll be tabling in the store at various times throughout April, between 1:00 and 8:00 p.m.

The Board needs your thoughts!

https://www.surveymonkey.com/s/NCLG77T


2014 Election Schedule

April 15 – 30 CampaigningApril 16 Candidate ForumMay 1 – 15 VotingMay 27 New Directors

seated at Board meeting

App

endi

x A


2014 Election Schedule

April 15 – 30 CampaigningApril 16 Candidate ForumMay 1 – 15 VotingMay 27 New Directors

seated at Board meeting

Appendix B


App

endi

x C

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