RCC Owners vote for new Board members at the 2015 Owners Meeting

RCC Owners vote for new Board members at the 2015 Owners Meeting

Working with the City of Greensboro, Self-Help Ventures Fund, Fund for Democratic Communities, Uplift Solutions, Lakeshore Food Advisors, Cooperative Development Services, Community Foundation of Greater Greensboro, Cone Health Foundation, Shared Capital Cooperative, The Working World, Regenerative Finance, and the Northeast Greensboro community, the Renaissance Community Coop (RCC) is on track to open a 10,530 square foot full-service grocery store in the Renaissance Shops at Phillips Avenue Plaza in 2016.

The RCC will alleviate an 18-year food desert and bring good jobs, healthy living options, and community wealth to a neighborhood that struggles with obesity, diabetes, unemployment, and poverty. With RCC as a community-centered anchor, the shopping center will become a thriving example of community-based economic development.

Overview

  • 10,530 square foot full service grocery store will serve as the anchor tenant for the soon-to-be renovated Renaissance Shops at Phillips Avenue
  • Independent market study and multiple reviews of business plan by lenders show the store will be financially and operationally sustainable, needing no further public subsidy
  • Community-owned, with an explicit mission of building health and wealth in Northeast Greensboro
  • Professionally managed by a highly experienced General Manager backed by a well-trained management team, and democratically governed by a Board elected by its member-owners (Read more)
  • On track to open in 2016, concurrent with completion of the renovation of the Renaissance Shops

Milestones

  • Financing: $2.45 million of $2.48 million needed to open the store is in hand or committed
  • Community support: owner count has grown from 88 members to 728 members in past 21 months
  • Wholesale supplier: RCC has obtained excellent terms with MDI, a highly reputable grocery distributor that will allow us to sell quality food and merchandise at affordable prices
  • Management: Michael Valente, who brings 23 years of experience in conventional and coop grocery stores, joined RCC as full time General Manager on August 1, 2015.
  • Business Plan and Pro Forma: Significantly improved bottom-line is now consistent with industry results: 30.2% or better gross margin, 1.0% – 2.5% net profit

Local Economic Benefit

  • Alleviates an 18- year food desert problem via a full-service grocery store that sells a wide range of fresh foods and groceries at affordable prices
  • As a community-centered thriving anchor tenant, RCC ensures the success of the shopping center
  • Boosts economic development in a low income neighborhood
    • 28 good-paying jobs with benefits, filled by people from the community (lowest wage is $10/hour)
    • More than $2 million in wages and benefits circulating in the community in first 3 years
    • Wealth created by the community stays in the community: more than $300,000 in the first 10 years

Operations and Products

  • Store will be open 12 hours per day, seven days per week
  • Store departments and offerings will include Grocery, Frozen/Dairy, Health and Beauty, General Merchandise, Meat (with in-house butcher), Deli with hot food bar, Beer and Wine, Frozen Seafood, Bakery, and Produce
  • Lakeshore Food Advisors LLC, a national firm that works with grocery stores and distributors, assisted with bidding out, selecting, and negotiating the distribution contract with MDI, which will allow for a cost-of-goods-sold that helps store achieve profitability and keep prices low, while retaining flexibility to source foods locally (e.g., produce from Guilford County farmers)

Financial Projections

  • Year 1 Average weekly revenues are forecast to be $70,689 (consistent with a professionally conducted market study that shows weekly square footage sales to run in the $7 psf range)
  • Current grocery expenditures in area (population > 35,000) are over $1.34 million per week: RCC needs to capture just 5% share to succeed
  • Projected first year revenues of $3.675 million; first year net loss of $70,761 (-1.9%)
  • RCC will achieve profitability in year three, which is typical in the grocery industry
  • Conservative growth figures project revenue to grow to over $4.7 million by year five, with net pre-tax profit of a little over $78,000 (+1.9%)
    • Sensitivity analyses show that the projections are robust and that we have enough cash in the plan to handle a range of changes in estimates, including any of these “shocks:” 9.5% lower-than-anticipated revenues, an 8.5% increase in cost-of-goods-sold, a 17% increase in labor costs

Staffing

  • Operations will require a well-trained staff 28 people (24 FTE’s – 15 FT, 13 PT)
  • Experienced and professional management team of General Manager (GM), Assistant Manager, Customer Service and Community Manager, and dedicated department managers for the Front End, Dairy/Frozen, Produce, Grocery, Deli, and Meat departments
  • Continued support from Uplift Solutions, a nationally recognized non-profit that assists in launching grocery stores in urban food deserts, in selection, training, and ongoing support for management team
  • RCC is dedicated to hiring from the neighborhood and providing training and opportunities to develop a customer-focused team

Financing

  • RCC has raised $2.45 million of the needed $2.48 million for startup costs: leasehold improvements, equipment, inventory, pre-opening expenses, contingency on start-up costs, and operating capital
  • Committed Financial Partners in RCC Project:
    • City of Greensboro
    • Cone Health Foundation
    • Community Foundation of Greater Greensboro
    • Fund for Democratic Communities
    • Natural Capital Investment Fund
    • National Cooperative Bank
    • Shared Capital Cooperative (formerly Northcountry Coop Development Fund)
    • Regenerative Finance
    • The Working World
    • Self-Help Ventures Fund

Hundreds of Member-Owners and Supporters

  • Finance plan includes $1,499,352 in equity (including a $590,000 tenant improvement allowance from Self-Help) and $980,000 in debt financing.
  • Community has substantial “skin in the game”– $100,000 in member-owner shares (equity), $250,000 in owner loans and other local subordinated debt, and more than $650,000 in grassroots fundraising, local foundation support, and grant support from City government (equity)
  • RCC has secured supportive loan offers and equity investments totaling $880,000 from two CDFIs, who in turn have been supported by lenders and investors from around the U.S. who believe in the RCC. This has enabled our CDFI lenders to make capital available to the RCC at patient terms and affordable rates.
  • Debt service is carefully stacked to ensure we are able to repay all our debts within our cash constraints.

Updated February 26, 2016