Initialize a Co-op With a Pizza Shop

I've been putting ideas together for a few years now and keep coming up with the same conclusions.  The main idea is to recruit a whole bunch of people to open a business using the money they are already spending.  The principles are sound and historically proven.  A corporation is an organization which utilizes a group of people as investors to form a company and conduct business.  A cooperative sees those same investors as the customers or workers.

I looked at opening a pizza shop.  In this town a pizza shop can be opened with an investment of 30-50k.  To pay the bills and keep the doors open, said pizza shop would need annual sales of around 75k/yr.  There are plenty of people out there who spend money on pizza regularly-it's what keeps all those other pizza shops open.  The numbers suggest that anyone spending $30/month on pizza would be an ideal candidate to invest in the pizza shop along with 200 more people.  At that level of sales it would not make a profit, but it would not be forced to shut down.  

200 people x $30/month =  $6000/month.  The bills are paid.  

Looking at the investment required, $50k, works out to $250 each.  This is an attainable amount for anyone who can afford to drop $30/month on pizza.  The shareholders can supply enough business volume to break even.  If the pizza shop can attract other customers it can begin to make a profit.  The nature of the group means there are 200 people spreading the word, telling their brothers, their mothers, their cousing, best friends, neighbors, coworkers, the folks at the gym, the people at church, the guys at the pub, parents at the soccer games, and everyone they ever met about the pizza shop.  I's not just the 200 shareholders spreading the word, its 200 families.  Rather than 200 people spreading the word, it's more like several hundred.  This is the sort of advertising money can't buy.  If a profit of $50k can be achieved, the investors recover their investment and the shop is still open to repeat that result the next year.  

Rather than spend their money on a national chain pizza shop, those investors have used the money they are already spending to keep their own shop open.  If the shop makes a profit, that profit is distributed to local owners rather than being sent to corporate headquarters for distribution to points unknown.  We buy our own pizza, create a few jobs, and keep the profits around to benefit the local economy.

I explain the idea to people and tell them right upfront:  It's YOUR pizza shop, you should pitch in some effort to keep it operating smoothly and keep the bills down.  You don't have to run the place, we'll hire a manager who knows his way around a pizza shop to run the place, all you have to do is help out.  There are plenty of things to do.  Wash the windows, sweep the floor, clean the bathroom, fold boxes, take out the trash, slice onions and shred cheese.  If we can shred our own cheese we can save a few bucks over buying it already shredded.  It takes labor hours to shred cheese.  As a group, we have a huge amount of time available if we all pitch in.  It's not a full time committment.  I'm not even asking for a part time committement.  Just a few hours each month.  Is 5 hours per month too much to invest in your own company?  With 200 people involved, 5 hours per month is the equivalent of 12.5 full time employees.  Spread out over the course of a month, 200 people would staff the place with 6-7 people every day.  An extra pair of hands during lunch and dinner makes a huge difference.  If we have 6 people every day, in all likelihood we would be overstaffed.  We can reduce the amount of time we all pitch in or find other things to do with ourselves.

This same business model can be employed in most industries.  In fact there are cooperative businesses all around the world in fields ranging from food service to manufacturing.  As long as the product or service is already being consumed or used by the owner/customers, feasability is dependent on investment capital and the number of people involved.  Food service works especially well because it is a product everyone uses, it can be produced and consumed locally, equipment is readily available, and the skills required by the staff are already in place or quick to learn.

Our nations current economic situation in combination with recent trends makes this business model attractive when coupled with the right plan.  What sets this plan apart from a pizza shop, a sub shop, or a supper house is the continual development of additional projects.  It's not simply a business designed to make a profit, but to improve the quality of life of the people involved and their community.  Using the pizza shop as the example, there are a number of products and projects that can be developed which offer advantage.  A pizza shop is a business which buys simple products, processess them and markets a finished product.  With 200 families involved, most of those ingredients are already being purchased and consumed in their homes.  Items such as flour, sugar, tomato sauce, cheese and meats have a market and that market is already coming in regularly to help out.  It makes good sense to make those items available in order to take advantage of the money people are already spending.  Rather than buy it from the supermarket, buy goods from your own company.  We'd be able to buy items in greater volume, keep it rotated and fresh, and probably save some money for the people and make some money for the company.  

Milk is a product which offers considerable potential.  200 families would regularly purchase 400 gallons per week.  While regulations regarding the sale of milk can prevent a reduction in the retail price, the company would stand to make a profit of around 30¢/gallon.  For the 20,000 gallons the owners buy each year, that's a profit of $6000 that could be realized.  That's equal to a month of pizza sales.  The group came together initially to open a pizza shop and keep the doors open.  The addition of a few retail products offers considerable opportunity to put that pizza shop to use in redirecting spending to ourselves rather than the local walmart.  A pizza shop would already have the required licenses to sell milk as part of the beverage product line.  It would already have coolers.  It would already have the staff to receive the milk, put it in storage, stock the cooler.  The only additional requirement would be a larger display cooler and perhaps a walk in cooler to handle storage.

The pizza shop uses cheese.  People use cheese at home.  A shredder and slicer would already be available as part of the equipment needed to operate the pizza shop.  There would already be staff available to slice a load of cheese, and a cooler to store it in.  Instead of only mozzeralla cheese, we could order american, swiss, cheddar, montery jack or whatever else the people enjoy.  Those 200 families would go through a mountain of cheese over the course of a year.  

There are meats used in making pizza.  Ground beef, meatballs, ham, chicken, and sausage top the list.  Adding these to the repertoire of retail products, along with the cheese transforms the pizza shop into a deli.  With cold cuts and cheeses, moving into subs and sandwiches in addition to pizza brings a whole line of products into view.  The additional equipment needed to make the leap from pizza shop to deli and subs are a cold display cabinet and cold table.   These 2 pieces of equipment as well as the slicer for the cheese were already included in the initial $50k figure proposed at the start.  

With the sandwich operation comes fresh produce.  Lettuce, onions, tomato, and peppers go well with sandwiches and they also go well with salads.  Adding salads as a product line takes little investment when most of the ingredients are already in place.  Adding fresh produce to the retail side of the operation immediately brings 200 customers to bear.  Sales of pizza begins to take a back seat.  It's not the pizza that brings the sales.  It's the 200 owner-customers dedicated to buying goods for their families from their own store which carries the great potential.  


The Power of 200 Organized People

Cooperative Enterprise, Plan Outline