Restaurants in Portland and Beyond Look to Cooperative Ownership Models During the Pandemic
Blue Scorcher Bakery and Café in Astoria, Oregon was forced to shut down on-site dining operations in March 2020, along with every other restaurant, café, and food truck in the state. Like other businesses, Blue Scorcher’s owners initially scrambled to figure out a plan. But a year into the pandemic, the business has managed not to permanently lay off any of its employees, and is doing surprisingly well compared to other food service businesses in Oregon—many of which have closed permanently in the last year.
Blue Scorcher’s success may be partially due to its ownership model: a worker-owned cooperative. More than a dozen worker-owners make decisions based on a democratic model called a sociocracy, which considers even newly hired employees’ opinions about business decisions. According to Erik Rodriguez, a worker-owner at Blue Scorcher, there is pretty much no hierarchy at the business. All major decisions, like when and how workers came back to work after its initial closure due to the pandemic, are made in “general circle” meetings to which all workers at Blue Scorcher are invited. Though the monthly meetings were conducted on Zoom for the first part of the pandemic, workers now sit in a circle on chairs and couches in the dining area of the café, and each person is given a chance to give their opinions on agenda items before they are implemented. Rodriguez says no major decisions are made without unanimous agreement.
Workers at Blue Scorcher say this sociocratic system has helped the business and its workers during the pandemic. Since last March, they’ve had a say in decisions like how the coffee service counter was set up for social distancing and how many people were allowed to work in the bakery at one time. Recently, a barista expressed concern at a meeting about the card payment system, which was not contact-free. The co-op members talked it over and decided to buy a new contact-free point of sale system for the safety of the baristas, even though it cost over $1,000.
The Democracy at Work Institute, a national organization that helps developing co-ops get off the ground, estimated that about 13 percent of America’s 375 worker cooperatives were restaurants or cafes in 2018, as first reported by Eater. That’s about 49 restaurants and cafes in total. The Democracy at Work Institute also surveyed 142 worker cooperatives nationwide between April and July of 2020 and found that very few co-ops permanently laid off people during the pandemic, and many found creative ways to make new successful business models.
“Co-ops, as a rule, avoid laying off people, if they don't have to,” says John McNamara, who provides technical support to co-ops in Oregon, Washington, and Idaho in his role at the Northwest Cooperative Development Center. “They tend to do pay cuts or limit hours, things like that, so that everybody has some income coming in.” McNamara says the exception to this are the co-ops that temporarily laid people off during the pandemic so they would be eligible for unemployment benefits.
When Blue Scorcher closed in March, all of the workers, including the worker-owners, were temporarily laid off so that they could collect unemployment benefits, says Adam Goldberg, who is a worker-owner and the front-of-house coordinator for Blue Scorcher. Later in the spring, when the worker-owners and employees decided to start baking bread and pastries to sell to a local grocery co-op, the worker-owners continued to be able to collect unemployment benefits while volunteering at Blue Scorcher to keep the business running, something that Goldberg says they could legally do as owners of the business. There are some regular employees at Blue Scorcher, but ownership is available to all of them after 1,000 hours of work and a $1,500 buy-in. The perks of ownership are a $1 higher hourly wage, more say in business decisions, and the possibility of a pay-out when the business declares a surplus, as it did in 2019.
While Blue Scorcher has been cooperatively owned since its inception in 2004, other businesses around the country are looking at this model in response to the pandemic. Experts including McNamara and Zen Trenholm at the Democracy at Work Institute say that cooperatively owned businesses may be more resilient to crises like the pandemic than traditional businesses because the larger number of owners in the co-op model fosters creativity and an ability to adapt. McNamara and Trenholm also say that in light of the pandemic, which disproportionately hurt economically disadvantaged people and people of color, many people don’t want to go back to the pre-pandemic economy that benefited the few, not the many. They say that people see co-ops as way to fight pay inequities and improve labor conditions in hierarchical businesses, especially in industries like food service that are known for bad working conditions, long hours, and low pay. And for women, trans, nonbinary people, queer people, and people of color, inequities in pay and risks of harassment are often multiplied.
Alex (who asked to be referred to only by his first name in order to emphasize the restaurant’s co-op model) is one of the four worker-owners of Mirisata. Mirisata, which opened as a brick-and-mortar restaurant last October after a series of pop-ups during the pandemic, is the only Sri Lankan restaurant in Portland—and it’s also vegan and entirely BIPOC-owned. Alex says that co-ops can be a way for people who have historically faced barriers becoming business owners, like women and people of color, to gain equity in a business.
“For anybody who is less likely to have capital to invest and start their own business, worker-owned businesses provide an opportunity to have an ownership stake in a business without having to put down capital,” Alex says.
Nobody has to put down money to become a worker-owner of Mirisata. They just have to put in a trial period of few months of work as an employee—during which they’re paid $18 an hour—before the current worker-owners decide whether to make them worker-owners.
Alex started Mirisata’s pop-ups with a personal investment of just $600. All of the original owners of Mirisata had lost work because of the pandemic, and were able to create work for themselves by starting a worker cooperative.
Mirisata’s pop-ups quickly attracted a large following, and Alex and the other owners opened their brick-and-mortar on Belmont Street using money from several small loans from customers and friends—some of which were given at a zero interest rate. He says these loans and interest in Mirisata came partially because of its ownership model.
“I think we have some customers who support us because we’re worker-owned,” Alex says. “I think there's people who feel aligned with those values that we are trying to promote, and maybe those values have become even more widespread because of the pandemic.”
November and December 2020 were slow months for Mirisata, so Alex started a membership program that costs $40, which gives customers discounts and some other benefits. Nearly 60 people joined. This helped Mirisata weather those months until business picked back up in January.
“We wouldn’t have had nearly as many people signing up as members if we were not worker-owned,” Alex says. “A lot of people are really eager to ensure that a company that is worker-owned is able to survive the winter.”
Alex plans to move on from Mirisata eventually, but believes his departure won’t change the success or the nature of the restaurant. Trenholm says an advantage of worker cooperatives is that they aren’t as reliant on one founding owner’s vision as traditional restaurants are. That’s one reason why he says 25 to 30 city governments in the U.S. have been talking to the institute recently to figure out how to convert existing businesses owned by retiring baby boomers into worker cooperatives, which could benefit local economies for generations. He hopes to work with the city of Portland on this type of project in the future.
Alex hopes the success of Mirisata will inspire other people to create worker-owned restaurants in Portland. Mirisata and Blue Scorcher are currently the only two worker-owned restaurants and cafes in the state of Oregon. While there are other food business co-ops in Portland like Equal Exchange, People’s Food Co-op, and Alberta Cooperative Grocery, there haven’t been many cooperative restaurants or cafes in Portland to inspire others to use the model. But this ripple effect has happened before. Trenholm says the success of the Cheeseboard Collective cooperative, founded in 1971 in Berkeley, California, inspired many other businesses to follow the model in the Bay Area. For example, the popular Arizmendi Bakery cooperative opened in Oakland, California, in 1997 with help from Cheeseboard Collective members, then opened three more locations around the Bay Area. McNamara says he believes Mirisata can spur the growth of more co-ops in Portland.
“The more people know about places like Mirisata, the more they're going to say, ‘Hey, they can run a restaurant co-op. So can we,” McNamara says. Eventually, he says, if there are enough co-ops in Portland, they can collaborate to find more success. For example, Trenholm says multiple co-ops in Portland could co-own a delivery platform, which would stop them from being charged high delivery fees from third-party delivery companies like Grubhub and Uber Eats. Or, McNamara says, they could collaborate to create a kind of co-op of co-ops to buy large amounts of products the way large corporations do to get lower prices, something that the Arizmendi association of co-ops already does in the Bay Area. Under these secondary co-op models, instead of CEOs and shareholders reaping most of the benefits like at traditional corporations, all the workers would benefit from these economies of scale, Trenholm says. And with more money in their hands, they could spend more money at Portland businesses and invigorate the city’s economy.