A Sustainable Model?


By Lisa Autz

Photo courtesy of Chorus Photography.

There are locations within the United States where nine-year-olds have never seen a fresh strawberry or grape. Such children are a percentage of the estimated 23.5 million people living in the US without ready access to fresh, healthy food.

Also known as “food desert tracts,” the United States Department of Agriculture (USDA) identified 6,500 of these deprived regions throughout the country.

“It’s like you’re struggling to find water in an actual desert,” remarks Mari Gallagher, founding president for The National Center for Public Research and owner of Mari Gallagher Research & Consulting Group, in her TEDx speech on Food Deserts.

Such a shocking parallel of survival gives these precise locations the analogy of living in an uninhabitable environment. These communities–where at least 33 percent of the population lives more than a mile away from a grocery store or supermarket–experience higher percentages of obesity, diabetes, and heart disease, according to the USDA. Research by the Journal of School Health suggests that children living without the sustenance of fresh produce execute worse academic performance.

The town of Chester, PA, is one of these food-deserted communities. It hasn’t had a local grocery since 2001. After its last supermarket, Bottom Dollar Food, shut down over a decade ago, the residents of Chester began relying on the local Philadelphia food bank, Philabundance.

As the demand grew greater than donations supplied, Philabundance’s executive director Bill Clark realized a new creative business idea was needed. Thus, Fare & Square, America’s first nonprofit supermarket was born.

Fare & Square modeled its supply sources around the use of food from Philabundance and obtained philanthropic donations. The nonprofit supermarket provides over 30,000 residents with healthy, fresh food at affordable rates.

Just 15 miles south of Philadelphia, about 30 percent Chester’s residents live below the poverty line with an average household income of $27,546. In 2012, households spent an average of $7,739 on food, according to the Labor Statistics Consumer Expenditure Survey–meaning that they spent more than 30 percent of their salary on sustenance.

However, by cutting a roughly 10 percent off prices (in comparison to traditional grocers) to meet the needs of its customers, the store faced times of struggle in maintaining a sustainable model.

Interim Executive Director of Philabundance, Mark Bender, spoke with BTR about how the nonprofit business model came about and its greatest obstacles in surviving for the long haul.

“With the food supply chain fundamentally changing, the methods used to meet the needs of food insecure people must evolve beyond food banks and soup kitchens,” says Bender. “Fare & Square is an innovative model to address food insecurity in a place of extremely high need but with any new venture, there is an initial period of learning, and we’re still in ‘Fare & Square 1.0.’”

Bender elaborates on the severity of the area’s “extremely high need.” Chester is just one of 35 food deserts clustered in Philabendance’s nine county service areas.

In a survey by Philabundance, 44.5 percent of the residents are food insecure, Almost half of families must travel more than 2.7 miles for fresh groceries, according to Bender.

“In wealthier communities, the revenue base is totally at the cash register from shoppers,” he continues. “In a community like Chester, self-sustaining is a combination of sales but also underwriting support from philanthropy and perhaps the public sector that understands the value Fare & Square brings to the community at-large.”

Martin Meloche, a recently retired food marketing professor that helped develop Fare & Square’s business model, admits in an article in Next City that the nonprofit supermarket has to sell double of its current volume to be self-sustaining.

With a nonprofit model, any profits of the store get recycled back into the business either as lower prices of goods to the consumer or by adding additional services like budget training, diabetes screening, and nutrition programs. However, the creation of Fare & Square required $7 million in capital and relied on the financial support from numerous organizations such as Commonwealth of Pennsylvania, the Robert Wood Johnson Foundation, and the Delaware Valley Regional Economic Development Fund.

“We recognize that solving this problem is not something we can do on our own,” says Bender. “It is therefore critical that we develop partnerships and address the problem of food insecurity collectively.”

Over 10,000 households are registered members at the store’s Carrot Club, which helps give customers rewards and credit toward future purchases. The store also accepts federal food assistant programs like the Supplemental Nutrition Assistance Program (SNAPS) and offers deals like a free Thanksgiving turkey with a purchase of $50 in groceries.

Researcher Mari Gallagher spoke with BTR to dispel the frequent oversimplifications made about food deserts.

“In America we like to believe that everybody has a choice and it’s very 1980s of us to say, ‘Just say no to junk food,’” explains Gallagher. “But if you have to take three or four buses to get to healthy food it’s not that easy to improve. It requires a foundational platform unique to that area.”

Gallagher stresses there is no single solution to the issue. A nonprofit supermarket might work in a town like Chester, where as a food co-op, food accelerator, or mobile markets might work elsewhere.

However, Gallagher adds that there are many ways to attempt to improve the situation.

Michele (Shelly) Ver Ploeg, an economist at the Economic Research Service of the USDA, told BTR that compared to other census made across the states, the “food desert tract” is associated with a lack of employment.

“We found that relative to all census tracts, food desert tracts had smaller population totals, higher rates of vacant housing units, lower education levels, and higher unemployment rates,” she explains.

At Fare & Square, about 82 percent of the store’s employees are local, Chester residents. With a current 13.3 percent unemployment rate–higher than the national average of 7.3 percent–the nonprofit is attempting to tackle the issue from its roots.

Though only time will tell of Fare & Square’s life span in a town not frequent to long-lasting businesses, their efforts to trump Chester’s food insecurity are holistic. Bender praises the team of experts and consultants who guide the staff as they grow with the community.

“There is still much to learn,” he realizes, “but we are already seeing tangible results of our efforts.”