Spreading Culture: Of Sourdough and Cooperation
July 10, 2013 | Article Miriam Joffe-Block
Leidy Fernandez, of Arizmendi Valencia Bakery speaks to Beneficial State Bank summer interns about running a small business and worker ownership. Pictured (from left) are Travia Smith, MBA candidate at Mills College and Katherine Murtha, MPP graduate from UC Berkeley’s Goldman School. | Photo: Maria Romero
Leidy Fernandez is only 26 years old and already owns a bakery in the heart of San Francisco’s Mission District. In less than three years, thanks to a reputation for quality pastries and distinctive pizzas, the bakery, Arizmendi Valencia, has grown to $1.5MM in yearly sales – and it is cooperatively owned and democratically managed by nineteen worker-owners, Fernandez among them.
Six Bay Area-based graduate students, all part of Beneficial State Bank’s summer internship program recently visited Arizmendi Valencia to learn about worker co-ops and to see the Bank’s loan capital at work. Arizmendi Valencia is one of six bakeries that – along with a development and support collective – comprise the Arizmendi Association of Cooperatives. Back in 2010, a loan from Beneficial State Bank, combined with direct loans from existing Arizmendi bakeries and equity from the Association provided the capital to launch two new bakeries: Arizmendi Valencia and Arizmendi San Rafael in Marin.
Fernandez, who had been working in the hospitality, was eager to take on the challenges and rewards of ownership and – as part of the unique Arizmendi development model - applied to join the bakery as one of the founders. Fernandez had no prior experience with accounting, but after receiving training, now does the bookkeeping for the bakery as part of the finance committee – one of eight worker-managed committees that run different aspects of the business.
Each bakery is owned by its workers who share profits and decision-making. At Arizmendi Valencia worker-owners receive fully paid healthcare premiums, dental, vision and a benefit for comfortable shoes, Fernandez explained, because they stand on their feet all day. Each bakery pays a portion of its profits back to the Association. The Association in turn provides technical assistance to existing bakeries – like the training in finance for Fernandez - and does development work to start new cooperative bakeries. Workers from mature bakeries like Arizmendi Lakeshore in Oakland also provided significant help to the new Valencia bakery; experienced workers provided training both in baking and in critical skills for co-op owners like conflict resolution. The mature bakeries also provide the original sourdough culture for each new bakery. That culture then takes on a unique flavor at its new location, much in the same way that each bakery’s menu evolves beyond a shared core to reflect the tastes of its host community.
Photo: Maria Romero
During the recent visit, Travia Smith, a Mills College MBA candidate and Human Capital Intern at the Bank, asked how employee morale differs at a worker co-op. Tim Huet of Arizmendi’s development and support collective pointed out that average yearly turn-over in food businesses is 150%. In contrast, twelve of fifteen founders are still working at Arizmendi Valencia three years after opening. This consistency creates a huge business advantage, Huet explained, and a real connection to the community.
The Arizmendi Association (named after Father Jose Maria Arizmendiarrieta, the Catholic Priest who founded the Mondragon cooperatives in the Basque region of Spain) has always had an ethos of creating more dignified jobs through developing cooperatives and it is on the cutting edge of new strategies for co-op growth. Under most co-op profit sharing practices, founders take on the bulk of the financial risk of the start-up business but share rewards equally with owners who join the business later. Huet wants to figure out how to incentivize senior worker-owners to create more jobs through mechanisms like shifting some profits back to founders as a reward for each new job created.
Michael Salemi, a Cal State East Bay MBA graduate and Beneficial State Bank outreach and marketing intern reflected that students receive little to no exposure to cooperative ownership through MBA programs. Huet commented that conventional attitudes toward business leadership point toward a single individual in charge of everything. The Arizmendi bakeries offer a vision of effective collective leadership.
“The wonderful thing about this model,” Huet said, “is you can own a business AND go on vacation, knowing that everything is going to be just fine."
Miriam Joffe-Block can be reached at email@example.com.