Local Coffee Shop Employees Take Ownership With Evergreen’s Impact Investment
Nationally recognized Evergreen Cooperatives, building on more than a decade of impact investing to build wealth in local communities, has once more made a strategic investment that will allow a company—this time a Northeast Ohio coffeehouse chain—to transition to employee ownership.
The Fund for Employee Ownership (TFEO), an Evergreen initiative, has completed a transaction that will fund employee ownership in Cleveland-based Phoenix Coffee Co. The transaction is the third such deal for the Fund since its launch in late 2018. Phoenix joins Berry Insulation and R-Tek Insulation, which have since been combined into BI Cooperative, as targets of these high-impact investments.
Phoenix, a popular independent coffeehouse operator with five retail locations and a roasting facility, had been seeking alternative financing to grow its operation, since the hospitality industry is often considered too high-risk for traditional lenders.
“In the middle of a pandemic, with so many businesses in the hospitality industry closing, we’re proud to be able to help this company become a stronger competitor, with a renewed ability to compete, grow and serve its many loyal customers and employees,” said Brett Jones, Evergreen’s Executive Vice President. “Employee ownership and patient capital can unlock many new opportunities for small and medium-sized business looking for a succession plan.”
Added Jeanette Webster, Evergreen’s Chief Investment Officer: “TFEO and Evergreen’s mission of providing capital to companies to convert to employee ownership not only preserves jobs but more importantly provides wealth-building opportunities for the new worker-owners.”
Evergreen’s impact investing model is built around mobilizing socially responsible risk capital to increase employee ownership, thereby preserving quality jobs with living wages and rebuilding the middle class by reducing the wealth gap. Employee-owners—many of whom have low to moderate income–become eligible for healthcare plans, profit-sharing and even help buying a home. These companies also can call on the back-office services of the Evergreen network for help with such tasks as accounting and human resources.
The Evergreen approach—or the Cleveland model as it has been called by many—has won widespread praise in the national and international media and philanthropic community. Fast Company magazine once said Evergreen “is finding ways to make the city cleaner and more wealthy, in ways that will create permanent change for the city’s poorest residents.” The internationally influential British publication The Guardian noted in 2017 that “other U.S. cities are learning from Cleveland about how to make co-operatives competitive, as they implement their own iterations of the model.”
On a visit to Evergreen, Senator Sherrod Brown of Ohio called the Evergreen approach “a model for how we can create green jobs in communities all across Ohio and the country. These for-profit, environmentally responsible businesses are helping revive historic but often neglected neighborhoods in downtown Cleveland. Most importantly, the Evergreen Cooperatives are putting Ohioans back to work in good-paying jobs—and over time, those employees even have a stake in the company. It’s a truly revolutionary way of doing business that promotes local economic development.”
Launched in 2008 by several Cleveland-based institutions, the Evergreen Cooperative Initiative works to create living-wage jobs in six low-income neighborhoods in the Greater University Circle area. The Fund for Employee Ownership, an Evergreen initiative designed to preserve local jobs, helps employee-owners build wealth and assists small business owners interested in transitioning toward retirement.