No one knows how many community cafés are operating in the U.S. today. The model is just now gaining momentum. The movement’s de facto trade association, One World Everybody Eats, is affiliated with 50 cafés across the country and expects another 20 to open within the next 18 months. Its oldest member, SAME (So All May Eat) Café in Denver, is eight years old. One of the newest, FoCo (Feeding Our Community Ourselves) Café in Fort Collins, Colorado, is just six months into operation.
Both are part of a national network of experienced and inexperienced restaurateurs operating cafés as nonprofits with the goal of ending hunger and food insecurity in their communities. As affiliates of One World Everybody Eats, they operate on a business model based on One World’s “7 Core Values of a Community Café,” which establish models for pricing (pay what you can), food waste (guests choose portions), sourcing (healthy, seasonal food), staffing (meals for labor), community engagement (volunteer recruitment), staff pay (living wages of $12–$15 per hour), and restaurant layout (community table at the core).
The restaurants are intended to act as beacons in their communities. Their mission is to provide nutritious meals and job training, while also encouraging volunteerism in neighborhoods in need of revival. They are the first wave of economic recovery in many of the communities where they are located.
“We don’t make money, but in the last few years, we’ve served people who needed it,” says Libby Birky, cofounder of Denver’s SAME Café.
The day begins at 5 a.m. at SAME. That is when prep begins for lunch, the only daypart that the café is open. From 5 to 6 a.m., a mixed team of staffers and volunteers prepare the day’s menu from scratch.
“We call it the Power Hour,” Birky says.
Lunch service begins at 11 a.m. and ends at 2 p.m. Sometimes the kitchen runs out of food, but the goal is to serve everyone who walks through the doors. On any given day
the café serves between 50 and 60 guests. Most pay something for the meal. Others pay nothing at all.
Birky estimates that she and her husband, Brad (who is also the head chef), work 75-hour workweeks to keep SAME afloat. One part-time and three full-time staffers, plus volunteers—some of whom work in exchange for meals—support them. There is no budget for advertising or marketing. Word gets out about the café and its mission, though. Social media helps.
Margins are tight. Keeping them positive requires carefully managing plate costs and limiting food costs. The menu’s small size—soup, salads, and pizzas—and reliance on seasonal and local produce makes it possible to keep average plate costs to $1.30. Cooking in small batches keeps food waste to a minimum.
“It’s a gamble every day,” Birky says. “We have to be smart about managing the flow of the day. We only cook what we think people will eat. Come 1:15 [p.m.], we put a brake on everything.”
Lunch service is followed by prep for the next day’s meal and administrative tasks. The Birkys eat at the café every single day—usually leftovers.
“Even though it’s hard—trying and challenging at times—watching someone gain some self-worth and get back on his feet is magical,” Birky says.
The organized community café movement has its roots in Salt Lake City, where Denise Cerreta changed her restaurant, One World Café, to a “pay what you can” model in 2003. Cerreta in turn helped the Birkys open SAME three years later under the same pricing model, traveling to Colorado to assist in the early days. A second One World Café opened in Spokane, Washington, in 2008. Restaurants following the One World model opened in Arlington, Texas, and Highland Park, New Jersey, soon after.
One World Everybody Eats, the consulting arm for Cerreta’s work, was incorporated in 2005. Its services and reach have grown since then. Today, the 501(c)(3) nonprofit provides a mix of in-person and online mentoring and resources to would-be café operators. In January, the organization held a summit in Florida, and a new online training program launches this spring. The movement is beginning to gain traction; Food Network personality Chef Amadeus signed on as official spokesman in January.
“We are seeing existing cafés convert to the community café pay-what-you-want model—the 100th Monkey [Café & Books] in Chico, [California,] for example,” says Bob Pearson, chairman of One World Everybody Eats’ eight-person board. “We’re definitely getting contacts from different groups interested in what we’re doing.”
One World’s partners are not exclusively independent operators. Panera Bread reached out before launching its nonprofit community café concept, Panera Cares, in 2010. Panera Cares provides a list of suggested prices based on the retail price of its meals. Sixty percent of guests leave the suggested donation, Panera reports. The rest are evenly split between those who pay more and those who pay less or nothing at all. The five Panera Cares units—operating in Clayton, Missouri; Chicago; Boston; Portland, Oregon; and Dearborn, Michigan—collectively serve 1 million guests a year, according to Panera. Panera Cares is run by the Panera Bread Foundation.
Jon Bon Jovi’s JBJ Soul Kitchen, another high-profile community café concept that worked with One World, is also operated by a foundation. It’s a model Pearson suggests other for-profit companies explore if they are interested in running a community café. Doing so allows the cafés to be self-sustainable by supplementing sales with grants, donations, and other fundraising efforts.
The nonprofit community café operators who spoke with QSR all cite fundraising as a key component of their success. Not only does it provide much-needed dollars to offset costs, but it can also rally the community around the café before it even opens.
“We opened the café with no debt,” says Kathleen Baumgardner, cofounder of FoCo Café. “We fundraised in a lot of ways: events and solicited corporate and individual donations. [We] wrote grants, took in-kind equipment and services donations. Some of the funds were used to renovate the 102-year-old building we’re in.”
Nonprofit-affiliated Rooster Soup, a for-profit café in development in Philadelphia, is also relying on fundraising for start-up funds and to build community support. The café is an offshoot of Federal Donuts, a popular Philadelphia chain. Though not a community café by One World’s definition—prices are fixed—all profits will be donated to Broad Street Ministries, a local nonprofit addressing long-term poverty and homelessness.
Federal Donuts has an existing relationship with Broad Street through cofounder Steven Cook, a member of Broad Street’s Hospitality Collaborative. Cook and his Rooster Soup partners launched a Kickstarter campaign in July 2014 with the goal of raising $150,000. They raised $179,000 in 45 days.
“We weren’t able to service a loan or offer [return on investment] to investors because we’re donating all profits,” says Felicia D’Ambrosio, a partner in both Federal Donuts and Rooster Soup. “We wanted to raise money through the community as proof of concept. It helped us bring larger donors on board.”
Remaining connected to the community also means a steady stream of paying customers.
“Our guests are a microcosm of our community,” FoCo’s Baumgardner says. “We have city council members, the homeless, judges, the under-employed. We got the word out through social media and quite a bit of public speaking. In a year and a half, I attended more than 350 meetings.”
Baumgardner’s community network also came in handy when she needed advice on running FoCo. Neither she nor her husband and cofounder, Jeff, had real restaurant experience before opening FoCo.
Her local contacts and resources provided by One World helped Baumgardner find equipment, make connections with local vendors and co-ops, and develop a business plan that allows FoCo to operate within its “Pay What You Can. Pay It Forward. Pay With Your Time” mission.
It is not uncommon for community café operators to have little to no hospitality background. Most are drawn to the model because of the community service mission. Yet the mission is reliant on the café’s ability to keep its door opens.
“You have to understand the numbers, the food costs, the business of running a foodservice operation,” says Melissa Mueller, proprietor of 2 Cups Coffee in Miamisburg, Ohio, another community café. “I wish I had understood the business on a broader spectrum.”
Adding a layer of complexity is the decision of whether to operate as a nonprofit or a for-profit restaurant. Rooster Soup, for example, will be run as a for-profit concept, though there is talk of applying for 501(c)(3) status. The process can be labor-intensive; pages of paperwork and fees are involved. However, as a nonprofit, a restaurant would be eligible for federal and local grants. And because of the flexible pricing model central to the community café concept, those extra dollars are often needed.
“We would be closed if we were a regular business,” SAME’s Birky says.
Vimala’s Curryblossom Café in Chapel Hill, North Carolina, runs as a for-profit community café. Anyone can eat, regardless of their ability to pay, though there is a menu with fixed prices. Those who eat free on the “Community Card” have a choice between two entrées—one vegetarian and the other meat-based. The card is funded by donations from paying guests and profits from Curryblossom.
“Even those who eat free sometimes give change,” says Curryblossom founder Vimala Rajendran. “Some guests will give an equal amount to the tip jar and the Food For All fund. Sometimes I eat the cost of the plates. On a busy day, we’re giving away $45 worth of food, on a slow one $5–$7.”
Pyngle’s, a One World–affiliated fresh juice truck based in Santa Monica, California, also operates as a for-profit. While juice is never free, owner Ryan Trainor puts the financial decision in the hands of his guests. All drinks are 16 ounces. Market value is somewhere between $7 and $10, but guests typically pay $4–$6.
“My approach is, ‘Here’s the product. What is affordable for you?’” Trainor says. “A homeless man might give me $1, and I’m losing money on that deal. But someone else might give $8. It eventually averages out. Generally people are good people.”
Volume accounts for Pyngle’s and Curryblossom’s ability to make a profit. Trainor’s truck parks at high-traffic areas throughout Los Angeles—the Santa Monica Pier, near the University of Southern California, office parks. Curryblossom Café is located on Chapel Hill’s main thoroughfare, Franklin Street, and pulls in guests from nearby businesses and the University of North Carolina at Chapel Hill.
Nonprofit community cafés like SAME and FoCo are less likely to be located in prime areas. Rent is too high, and the populations in need of their services are less likely to be nearby.
“One of our biggest obstacles was finding the right location,” FoCo’s Baumgardner says. “We are in the exact area where we needed to be to help the people we want to help.”
Keeping things simple allows nonprofit cafés to offset the nonpaying customers. Operating hours are limited. Most cafés are only open for lunch, though some also offer breakfast. Creative budgeting and sourcing is employed. Ingredients are bought locally in season. Volunteers supplement paid labor hours. Menus are basic. Soups and salads are popular; high-quality versions are inexpensive to make in-house and nutritious.
Balancing business with mission is not for the faint of heart, though.
“This is so much more intense than just a kitchen job,” Birky says. “Part of this job is relating to people on a deep level. Many of our customers need support in an emotional and social way.”
Still, for those who make it work, the rewards are great.
“We’ve found that if cafés follow our values, they’ve seen great success,” One World’s Pearson says. “This is a different idea. It’s not a traditional restaurant or soup kitchen. It takes a while for people to wrap their heads around it.”
Nonprofits as Franchisees: A Convergent Path
There are fewer than 200 nonprofit-owned franchisees in the U.S., says Dr. Ben Litalien, founder and principal of Franchise Well, a Virginia-based franchise consultancy. The notion of a nonprofit acting as an owner-investor in a for-profit business, he says, is mostly foreign to both sides of the conversation.
“The idea is in its very, very formative stages of development,” Litalien says. “But the investor side of franchising is growing. The two sectors are on a convergence path. They need to better understand each other.”
Four percent of the 1.6 million U.S. public charities with operating budgets of $10 million or more account for 85 percent of all charitable spending, according to the National Center of Charitable Statistics’s Nonprofit Almanac 2012.
Many organizations are looking to diversify revenue streams. That is what led Affordable Homes of South Texas to become a Blimpie franchisee in 2013.
“We’re a 40-year-old daughter living at home with mom and dad,” says Robert Calvillo, executive director of Affordable Homes, to describe the nonprofit’s dependency on city and federal funding. “At some point, you’ve got to start earning money to ensure sustainability.”
Affordable Homes operates its Blimpie under Esperanza on Fifth LLC, a subsidiary of its TuCasa Investments. The parent company loaned Esperanza on Fifth the roughly $200,000 needed to open, including build-out. The store is housed in a building owned by Affordable Homes. Two experienced restaurant managers, one of whom is a Blimpie veteran, run it.
Calvillo expects the restaurant to be operating in the black by this summer. Its catering sales are among the best in the system. “The community has been very supportive,” Calvillo says, citing a recent order for catering service for 1,200 people.
That type of support, Litalien says, is one of the advantages nonprofits have over traditional franchisees.
“Their local share of influence is in the thousands,” he says. “Those ready-made relationships are a clear competitive edge.”
Both Blimpie and Esperanza on Fifth are pleased with their partnership. But both sides say initially putting the deal together took time.
“We worked together to find creative solutions when the situation arose,” says John Wuycheck, senior vice president of franchise development at Blimpie’s parent company, Kahala Corp.
Many franchise agreements call for a personal guarantee. That is not possible when partnering with nonprofits. Having information like that going in can make the process less painful for both partners.
“These are very complicated models,” Litalien says. “There can be a huge disconnect unless they take the time to be educated.”
For nonprofits, that means learning about the foodservice business and hiring from the industry whenever possible. For franchisors, it means understanding that nonprofits are businesses with the same corporate rights and reporting responsibilities as for-profits.
Also important for franchisors to keep in mind is the mission behind their nonprofit partners’ operations.
“The success of these franchises impacts real lives,” Litalien says. “There are real consequences at stake.”