Grocery Business Plan

TR ROSA GROC CERY STOR S RE PRO OJECT T DUKKE UNIVVERSITYY: ENTRREPREN NEURIA AL LEAD DERSHIIP INITI TIATIVE

Ch hristopher Chan 91 19­485­932 21 ch hristopher.ch han@duke.eedu

Linda Peng 20 03­980­935 51 lin nda.peng@d duke.edu

With h thanks to:: Wend dy Noel Chrisstopher Gerg gen Della a McKinnon Lina Feng Weldon Wil W Frankk DiSilvestro o

[TROSA GROCERY STORE] December 7, 2009

Table of Contents Contents

Table of Contents........................................................................................................................................ 2 Executive Summary ................................................................................................................................... 5 The “Big” Idea .............................................................................................................................................. 6 Introduction ............................................................................................................................................. 6 The Problem ............................................................................................................................................ 7 Fundamental Problems and Root Causes .............................................................................. 7 Importance and Size of the Problem ........................................................................................ 8 The Opportunity ............................................................................................................................... 9 The Solution ........................................................................................................................................ 9 Project Impact Potential – Target Outcomes ......................................................................... 10 Food Insecurity .............................................................................................................................. 10 Job and Life Skills for TROSA Residents .............................................................................. 10 Social Return on Investment .................................................................................................... 10 TROSA’s Organizational Sustainability ................................................................................ 10 Economic Development in East Durham ............................................................................ 11 Metrics .................................................................................................................................................... 11 Measuring Impact on the Community .................................................................................. 11 Measuring Impact on TROSA Residents .............................................................................. 11 Economic Development .............................................................................................................. 11 Market Analysis ....................................................................................................................................... 12 Analysis of Customers, Clients, or Users .................................................................................. 12 “Market” Validation ........................................................................................................................... 13 Competitive/ Collaborative Analysis ......................................................................................... 14 Operational Plan ...................................................................................................................................... 16 Implementation Strategies – Program Plan ............................................................................ 18 Initial Program Services and Target Market ..................................................................... 18 Service/Program Staging and Growth ................................................................................. 18 Grocery Delivery Service ............................................................................................................ 19 TROSA Farm .................................................................................................................................... 19 Marketing, engagement, and communications strategies ................................................ 19 Key Stakeholders/ Potential Partners ...................................................................................... 19

[TROSA GROCERY STORE] December 7, 2009

Neighborhood residents ............................................................................................................. 19 Preservation East Durham and Uplift East Durham ...................................................... 20 Partners Against Crime (PAC)1 ............................................................................................... 20 Religious Institutions ................................................................................................................... 20 YE Smith Elementary School .................................................................................................... 20 Joseph Bushfan ............................................................................................................................... 20 Durham Neighborhood Improvement Services Department ..................................... 20 Durham Office of Economic & Workforce Development .............................................. 21 Durham Police Department ...................................................................................................... 21 Leadership Team and Implementation .................................................................................... 21 Organizational Fundamentals: ..................................................................................................... 21 Organization Purpose .................................................................................................................. 21 Organization Values ..................................................................................................................... 21 Organization Vision ...................................................................................................................... 21 The Team & Current Levels of Support .................................................................................... 21 Leadership Team ........................................................................................................................... 21 Evidence of endorsement, sponsorship, and support ........................................................ 22 Community Organization Contacts ........................................................................................ 22 Funding sources ............................................................................................................................. 23 Additional students actively involved .................................................................................. 23 Coaches, advisors, and Duke Faculty mentors actively involved ............................. 23 Financials & Risk Assessment ............................................................................................................ 25 Financial Projections ........................................................................................................................ 25 Revenue Sources ................................................................................................................................. 25 Grants and Private Donations .................................................................................................. 25 In‐Kind Donations ......................................................................................................................... 25 Grocery Sales ................................................................................................................................... 25 Program Operations Costs ............................................................................................................. 26 Employee Compensation ........................................................................................................... 26 Grocery Operations Costs .......................................................................................................... 26 Raw Food Costs .............................................................................................................................. 26 Legal, Licensing, and Marketing .............................................................................................. 26 Net Income and Net Cash ................................................................................................................ 27 Expected Case Financials* .............................................................................................................. 27

[TROSA GROCERY STORE] December 7, 2009

I. Expected Three‐Year Projection ......................................................................................... 27 II. Worst‐Case Three Year Projection ................................................................................... 28 III. Best‐Case Three Year Projection ..................................................................................... 29 IV. 12‐month Expected First Year Projection .................................................................... 31 Risk Assessment and Management ................................................................................................. 31 Primary Risks ....................................................................................................................................... 31 Partnerships .................................................................................................................................... 31 Financials .......................................................................................................................................... 32 Job and life skills development quality ................................................................................ 32 Pricing competitiveness ............................................................................................................. 32 Prejudice against TROSA residents ....................................................................................... 32 Concerns about safety in the store area .............................................................................. 33 Risk Mitigation Strategies ............................................................................................................... 33 Appendix A ............................................................................................................................................ 35 Fig. 1 ......................................................................................................................................................... 35 Fig. 2 .............................................................................................................................................................. 35 Fig. 3 .............................................................................................................................................................. 36 Fig. 4 .............................................................................................................................................................. 36 Appendix B ............................................................................................................................................ 38 Number of surveys ........................................................................................................................ 38 Mean amount of money spent on food/week ................................................................... 38 Most popular grocery stories ................................................................................................... 38 Appendix C ............................................................................................................................................ 42 Main Competitors .......................................................................................................................... 43 Closest Competitors ..................................................................................................................... 44 Appendix E ............................................................................................................................................ 45 Appendix F ............................................................................................................................................ 46 Appendix G ....................................................................................................................................... 50

[TROSA GROCERY STORE] December 7, 2009

Executive Summary 13,000 people live within one mile of the Angier Avenue/South Driver intersection in East Durham, and yet there are zero grocery stores in the area. To combat this problem of food insecurity, or the lack of availability and access to high‐quality food, we propose to launch a full‐service grocery store in the middle of the neighborhood. The presence of the grocery store will help ameliorate the under‐nourishment of the neighborhood residents, as well as jumpstart economic rejuvenation in the area.

The need for our intervention is clear. This specific community is part of the two square mile area in East Durham affected by Operation Bull’s Eye, a targeted effort aiming to reduce crime in the zone surrounding the Angier/Driver corridor. This region represents 2% of the city’s area, but reports almost 20% of the city’s shots fired, calls, and documented gang members.

The 13,000 people living within one mile of the grocery store intersection earn an average income of $11,000 per capita. There are zero grocery stores in the area, and no less than four convenience stores. Surveys show that these specific convenience stores do not offer any kind of produce, have a very limited selection of meat, have high prices, and are dangerous and dirty environments. Also, a number of chain grocery stores that border the East Durham boundaries offer high‐quality food at good prices, but they are not easily accessible for majority of the East Durham neighborhood residents.

The lack of availability and access to high‐quality food can result in skipped meals or poor quality foods. Continual lack of food can result in consequences like more frequent severe illnesses, reduced ability to concentrate and learn, and impaired social functioning.

Also, food insecurity often translates to unhealthy food, making obesity a major problem. An estimated 130 million, or 64% of Americans, are overweight or obese. According to the State of Durham County's 2008 reporti, nearly 2 in every 3 Durham adults are overweight or obese, and obesity has been linked to higher rates of diabetes, heart disease, asthma, and several types of cancer.

The breakthrough innovation of our plan is to have TROSA, or Triangle Residential Options for Substance Abusers, manage the full‐service, 3500 square‐foot, alcohol and tobacco free grocery store in this specific underserved neighborhood in East Durham.

TROSA will be cooperating with Joseph Bushfan, an entrepreneur who hopes to re‐spark development in East Durham, starting with the corner of the Angier Avenue and Driver Street intersection. Joseph Bushfan's plan is to open the grocery store in conjunction with an Internet cafe and a restaurant.

TROSA is a two‐year rehabilitation program for substance abusers. This non‐profit organization helps substance abusers overcome their addictions and reintegrate into mainstream society by providing its residents with work‐based vocational training, education, and, continuing care. The issue of substance abuse is difficult to address because numerous factors contribute to a successful recovery, not just face‐value sobriety. Barriers to successful recovery include medical problems, mental health issues, criminal histories, lack of education or job skills, and lack of self‐confidence.

[TROSA GROCERY STORE] December 7, 2009

The TROSA grocery can have a powerful impact. First and foremost, the target neighborhood in East Durham will have easy access to a grocery store that has competitive prices and a high quality food selection. In addition, employing TROSA residents in the TROSA‐run grocery store will provide them with an opportunity to develop the job and life skills necessary for a successful recovery from substance abuse. The TROSA grocery also has the potential to become self‐sustainable. If it has high enough revenue, it will be able to continue its good work and run on its own without the handicap of requiring government aid or financial donations.

The TROSA grocery will be open seven days a week for full business hours from 8am to 6pm. It will employ five to six TROSA residents and Ms. Wendy Noel, TROSA’s current New Project Manager, will act as the grocery store’s manager during the launch of the store.

For funding, we have already received in‐kind donations of most of the necessary capital equipment, including freezers, counters, checkout lanes, and display cases. We have received a small $2000 grant from Duke University, and a number of individual donors have pledged monetary donations to this project. We estimate the cost of the initial food inventory to be about $50,000, and we expect that raising this value before the launch of the store will allow us to safely navigate through the first year of operation. By the third year, we expect to see positive revenue from the TROSA grocery.

The TROSA grocery is a multi‐pronged effort that will combat the issues of access and availability to high‐quality foods in the Angier Avenue/South Driver Street district in East Durham. The store will also provide TROSA residents with job training to better reintegrate into society after graduation from the program. There is both a clear, demonstrated need for the TROSA program and support from community leaders towards the grocery store project. TROSA Grocery has the potential to become a valuable operation in the East Durham community.

The “Big” Idea Introduction A young, teenage boy called Lance looks up frantically at the clock. It is 7:22am. He has eight minutes to get to school. His teacher will surely yell at him again, and maybe even threaten to give him detention as he has in the past. He watches as his mother throws something into his lunchbox – he has had nothing but peanut butter and jelly sandwich for lunch every day this week. His mother has been worked to the bone, but her jobs have never paid enough to buy everything they need. She works one job in the morning and another part‐time late into the night; she does not get to tuck Lance in at night, let alone cook him a healthy dinner. In fact, she has not been able to provide a healthy dinner for at least two weeks. She just doesn’t have the time or energy to travel to Food Mart or one of the other grocery stores. She shuffles Lance out the door, hoping he will find something other than junk food to eat after school. Before closing the door to their home, the woman glances over at a leaflet lying on the ground. It bears the sun‐burst symbol of TROSA. TROSA, a non‐profit that is opening a new, much‐needed grocery store in the community. The woman stares,

[TROSA GROCERY STORE] December 7, 2009

taking in the meaning of this sun‐burst symbol, wishing she could absorb some of its strength before entering the world where she is yet another desperate, nameless face.

Maybe there is a way she can…

The Problem Fundamental Problems and Root Causes Take a moment and think of the top twenty‐five must‐see attractions or trendiest restaurants to dine at in Durham. Almost certainly, none of the areas you thought of are in East Durham, which is referred to as the “rough side of Durham” by some Bull City residents. Even native Durhamites tend to avoid East Durham. It is an area to drive through, not a destination. In fact, East Durham is probably responsible for much of the negative perception of Durham. The neighborhood was once a fairly bustling commercial districtii, but numerous factors including drugs, alcohol, and prostitution have contributed to its decline.iii The first thing you may notice about East Durham is its reputation as a dangerous part of Durham. Upon closer inspection, you will discover that East Durham lacks the presence of a full‐service, neighborhood grocery. The United States is producing and exporting the greatest amount of food in world history, and yet increasing numbers of Americans suffer from hunger or food insecurity. Food insecurity can manifest itself in skipped meals or poor quality foods. A continual lack of food can result in consequences like more frequent and severe sickness, reduced ability to concentrate and learn, and impaired social functioning.iv At a recent East Durham Children’s Initiative community conversation at the Holton Career and Resource Center gymnasium, somebody mentioned, “one of the challenges that [she’s] aware of is that the kids in schools are hungry. The only place they get food is at school.”v Also, food insecurity typically translates to unhealthy food, making obesity a major problem. In Durham County, an estimated 64% adults are overweight or obesevi. More than 1 in every 3 children is overweight or obese.1 Obesity leads to problems like significantly increased chance to develop heart disease, cancer, diabetes, and premature death.

Poverty is the primary cause of food insecurity in the U.S. Compared to higher‐ income areas, low‐income neighborhood residents tend to have more limited access to high quality food, enjoy fewer selection of food, and often pay higher prices for their groceries. In fact, the target neighborhood in East Durham has a median household income of $25,616, 62% of the median income for the rest of the city of Durham. 2 Because this community is low‐income, there are transportation barriers that prevent residents of low‐income neighborhoods from accessing nutritious foods. Those who do not have access to transportation must rely on public transit or friends for trips to distant grocery stores. Even when available, public transit can be variable and unsafe.3 Also, friends are not always available or reliable. When children are involved, factors get even more complicated.

www.schs.state.nc.us/SCHS/champ/index.html http://eastdurhamchildrensinitiative.org/Overview.html 3 http://www.healthpolicyguide.org/doc.asp?id=6375 1 2

[TROSA GROCERY STORE] December 7, 2009

Seniors would also be discouraged from walking to bus stops due to safety concerns and factors of distance. While East Durham may lack a full‐service grocery store, it has plenty of corner convenience stores, which are primarily alcohol, cigarette, and convenience food outlets.

Importance and Size of the Problem East Durham is practically synonymous with crime, narcotics, poverty, prostitution, and despair.vii City officials have devoted program after program and meeting after meeting for years, to little visible effect.4 Recently, a two square mile area in East Durham has become the target of Operation Bull’s Eye, a targeted effort aiming at crime reduction in the zone surrounding the Angier/Driver corridor. This region represents 2% of the city’s area, but has almost 20% of its shots fired, calls, and documented gang members.5 The relatively large gang presence in the area has done its part in curbing economic development. A study done in 2000 reports that the median household income in East Durham is $24,689, while the median income for the city of Durham is $41,160. Also, compared to 1990, there was a 28.25% increase in families that live under the poverty level.

In fact, the area lacks a neighborhood grocery store or establishment where residents can purchase quality foods. “Community Grocery,” M&M Mini Mart and Buy Quick Food Marts are convenience stores, and the area’s only food retail establishments. The only places to obtain healthy and quality foods are outside the neighborhood. In terms of East Durham residents’ accessibility, 78% of whites had access to a car in 2000, but only 58% African‐Americans had access to cars. Four DATA bus routes run through East Durham, but only 13.7% residents reported using public transportation to get to work6. This poses a significant problem because many people are either forced to walk to and from distant grocery stores, or forced to shop at the mini‐marts. East Durham is economically under‐ developed, lacks a true grocery store, has a large percentage of people who live below the poverty level, and has a large population without access to cars.

A survey conducted by Christopher Chan, Linda Peng, TROSA staff, and a Masters of Public Administration class from NCCU on October 2009 in the Angier/Driver area revealed some interesting results. 88.6% of respondents said that they would indeed shop at the store if placed at that specific intersection, and 86% of respondents rated having a grocery store “close to home” as being either “extremely important” or “very important.”

Additionally, the NCCU students surveyed and compared the surrounding mini‐marts and convenience stores in the area (Buy‐Quick Food Mart, M&M mini‐mart, and the Community Grocery) to assess their competency as grocery store replacements. The NCCU students recorded items offered as well as their respective prices. None of the convenience stores offered any type of produce (leafy greens, potatoes, onions, fruit) or frozen dinners and vegetables, and the selection of meat was extremely limited (pig’s feet, ham, hot dogs). The items that are provided at these convenience stores are over‐priced, and the locations are typically unsafe. Three NCCU students witnessed different drug deals taking place at the stores, and people seen lounging outside the stores smoking cigarettes and drinking alcohol.

http://www.thedurhamnews.com/front/story/183807.html http://www.bullcityrisng.com/2008/12/operation‐bulls‐eye‐crime‐reduction‐or‐crime‐displacement.html http://www.durhamnc.gov/departments/nis/necd/pdf/necd_east_durham_nhood.pdf

4 5 6

[TROSA GROCERY STORE] December 7, 2009

There is clearly a problem of inadequate food access in this neighborhood in East Durham, and the convenience stores and mini‐marts are clearly not sufficient substitutes for a full‐ service neighborhood grocery store.

The Opportunity The city of Durham has been extremely supportive of initiatives to develop East Durham. With the financial support of numerous people like businessman and former City Councilman Dan Hill III, Mr. Joseph Bushfan has purchased three vacant buildings and a parking lot at the intersection of Angier Avenue and South Driver Street and is transforming them into a sandwich deli, Internet café, and small grocery store. Mr. Bushfan will receive a $200,000 city grant for "neighborhood commercial revitalization" once the businesses are running, and TROSA, the Triangle Residential Options for Substance Abusers, has agreed to run the grocery store.7 There has been nothing but good press and positive support from Bull City media so the time for action is now.

TROSA’s involvement is consistent with its overall mission ‐ to enable substance abusers to be productive, recovering individuals by providing comprehensive treatment, work‐based vocational training, education, and continuing care. Having TROSA residents work in the grocery will introduce them to a whole new set of job skills that will be beneficial for re‐integration into mainstream society after graduation from the substance abuse program. Skills that can be developed by working in a grocery store include customer/employee relationship, work ethic, and responsibility. Also, consistent with the views of TROSA and with the greater belief to promote healthy living, the grocery store will not be selling alcohol or tobacco products. Additionally, Mr. Bushfan has agreed to give TROSA free lease for one year. By maintaining the grocery store in the area, TROSA is helping to provide a much‐needed source of healthy and accessible food for neighborhood residents while simultaneously acting as a frontrunner in an effort to stimulate economic revitalization in the area. The grocery store also has the potential to be TROSA’s sixth business, and would be providing valuable job experience and life skills for TROSA residents.

The Solution

TROSA will be managing a 3,500‐square foot grocery store in an underserved community in East Durham, specifically on the corner of Angier Avenue and South Driver Street. Issues like poverty, substance abuse, and prostitution in East Durham are preventing most neighborhood residents from getting out of their dismal position. The full‐service TROSA grocery will bring nourishment to the community, with a meat department, a large selection of fresh produce, and affordable canned and dry grocery items. The grocery store will be staffed and run by TROSA residents with the possibility of a full‐time store manager.

TROSA will also promote healthy living by refraining from selling alcohol or tobacco products. TROSA residents will learn proper work ethic and develop job skills such as customer/employee interaction, proper dress code, and management. While preparing for a successful post‐TROSA future, they will be providing a good service to the neighborhood by

7

http://www.thedurhamnews.com/front/story/198973.html?storylink=MI_emailed

[TROSA GROCERY STORE] December 7, 2009

offering healthy foods that are currently not offered in the convenience stores. We believe that the store will become a national model for businesses fighting food insecurity across the country.

Project Impact Potential – Target Outcomes Food Insecurity By increasing the availability of nutritious and high quality foods in this neighborhood, we expect to help families save time and money through easier accessibility and availability of a store that has a quality selection of fruits and vegetables and meat at an affordable price. In the long term, we expect consumption levels of fruits and vegetables in East Durham; decreased health risks like heart disease, cancer, and diabetes for residents; and lower percentages of obese or overweight adults in Durham County.

Job and Life Skills for TROSA Residents TROSA is first and foremost a rehabilitation program for substance abusers. Its residents often lack the self‐confidence and work ethic to break their reliance on drugs or alcohol. TROSA’s model rests on helping residents develop the necessary mentality and skills to remain sober upon their graduation from the program. By working in the TROSA grocery, TROSA residents would get a rare chance to interact with community residents and learn the business of running a grocery store. Furthermore, entry‐level grocery job positions should be relatively available “because of the relatively short tenure of the many young and part‐time employees in the workforce,” according to the Bureau of Labor Statistics’ outlook as of 2008viii.

Social Return on Investment According to a study published in 2009 by the University of Miami, people that graduated from a substance abuse treatment program gave back to society an average of $4307‐$6209 in economic benefits over a one year period after their releaseix. This $4307‐ $6209 can be explained by opportunity costs saved from fewer police arrests, jail time, and drug‐related obstructions to society. TROSA graduates only have an 8% recidivism rate compared to the national average of 60%, proving that TROSA is a therapeutic community that only works. TROSA’s impact translates to substantial positive social returns to taxpayers.

TROSA’s Organizational Sustainability TROSA already runs five successful businesses. Because more than 90% of TROSA’s operations (e.g. keeping a full‐time staff on payroll, building maintenance costs, providing food, shelter and clothing to the residents, providing a therapeutic program for the residents, giving residents the opportunity to take classes at Durham Tech, etc.) are possible due to income from its businesses, the TROSA grocery must make a profit, or at least break even with its cost stream. This would allow TROSA to continue to serve the food insecurity of East Durham while keeping the costs of its substance recovery program free.

[TROSA GROCERY STORE] December 7, 2009

Economic Development in East Durham Divestment in the Angier Avenue/South Driver district began in the 1990s, when Wachovia withdrew its business from the area. The subsequent exit of the post office and the pharmacy, contributed to the serious paucity of robust businesses in the community.

The lack of community support, parking, and concerns about drug, alcohol, and crime activity encouraged divestment. Joe Bushfan and TROSA’s grocery project will strive to act as a forerunner in the area by proving that businesses in this area can once again succeed.

Ideally, TROSA’s grocery would help get rid of the negative perception of East Durham, which would encourage other businesses to follow their example of investing in the area.

The project’s timing is ideal because the city government and the community is concurrently backing East Durham’s economic revitalization through a streetscaping project of the Angier‐Driver intersection.

Metrics Measuring Impact on the Community The envisioned TROSA grocery store is on its way to becoming a reality, and the project’s potential impact on health and nutrition in the neighborhood is expected to be great. A simple way to measure this would be to conduct focus groups or to carry out additional surveys about changes in fruit or vegetable intake within the community. A more scientific way to measure this would be to use the Nutrition Environmental Measures Survey (NEMS), a tool developed by researchers in Emory University. NEMS specifically measures food nutrition access and prices within grocery stores or restaurantsx. The nutritional impact of TROSA Grocery might also be measured with the Affordable Nutrition Index (ANI), a new food rating system that analyzes both the nutrition value and the cost of the food.xi We also approached Professor Wagner Kamakura of the Fuqua Business School, who expressed interest in measuring the impact of the store on consumption and nutrition in the neighborhood. His plan was to start an in‐store “loyalty” card program within TROSA grocery, allowing him to track each cardholder’s household purchases over time. This would give TROSA valuable information about trends in the consumption habits of East Durham neighborhood residents.

Measuring Impact on TROSA Residents A more easily measurable impact is the effect of the store on TROSA residents. This impact can be properly documented by seeing what jobs the TROSA residents successfully take on after graduating from the program. TROSA would keep in contact with the residents and follow up with them. TROSA already has some initiatives in place to keep track of their graduates, but these are sometimes not sufficient. The non‐profit is currently revamping its system by developing a new method of after‐care tracking.

Economic Development Additionally, we hope that the presence of the grocery store can stimulate some kind of economic revitalization in the East Durham neighborhood. This would eventually

[TROSA GROCERY STORE] December 7, 2009

translate into positive externalities such as: increased presence of businesses, the decrease of crime in the area, safer perceptions of the area, more homeownership in the area, etc.

This information can be obtained from statistical surveys like the U.S. Census, surveys, and focus groups.

Market Analysis Analysis of Customers, Clients, or Users

TROSA Grocery’s target market is the population living within 1 mile of the Angier Avenue/South Driver Street intersection. This specific neighborhood in East Durham is low‐ income and has been called a food desert. It also suffers from food insecurity, or the lack of access and availability to high‐quality foods. According to 2000 census data, the area has a population of 12,863 and a very low average income of $10,711 per capita. This is only 35% of the per capita income of the entire city of Durham as a whole. Approximately 23% of the population is of school age, or between the ages of 5 and 18, representing a recent shift towards a younger population. Although the population is predominately Black or African‐ American, there is a rising Latino resident population (See Appendix A). According to the Zoning Classification in East Durham, 720 of the 921 parcels of this neighborhood are residential homes. The average household is comprised of 2‐3 people. There is also the problem of accessibility. According to the most recent U.S. census, 78% of white people in East Durham had access to a car, but only 58% African‐Americans had access to cars. There are four DATA bus routes that run through East Durham, but only 13.7% residents report using them.

Business in the Angier Avenue and South Driver Street intersection include “several barbershops, storefront churches, the Angier Avenue Baptist Church, several restaurants, a trophy shop, and two auto repair shops.” Since the closing of the Atlantic Food Mart at 2022 Angier Avenue, the neighborhood lacks a grocery store that offers quality foods. In place of the grocery stores, there are four convenience stores/mini‐marts that service the area.

In October, we partnered with a group of NCCU students and went into the neighborhood to survey the area. We found that the average amount a family spends on groceries every week is $140/month. However, the options that families have within the neighborhood for buying groceries are limited. According to a field survey conducted by the Durham City Government’s Department of Neighborhood Improvement Services, only five of the twenty‐five storefronts in the Angier Avenue/South Driver neighborhood business district appeared to be occupied.

The NCCU students also surveyed the four specific convenience stores that service the East Durham neighborhood. They found that none of the stores carried any kind of produce (fruits and vegetables), the selection of meat was limited to hot dogs and ham, and the prices were severely marked up.

Neighborhood residents, such as Kim Sage, the owner of a renovated home in the Angier Avenue/South Driver area, are interested in seeing economic revitalization in the area.

[TROSA GROCERY STORE] December 7, 2009

According to Sage, “the revitalization of the commercial core is the key to East Durham’s future.”

“Market” Validation We determined that the main problems East Durham residents face are access and availability. The convenience stores are easily accessible, but they do not carry high‐quality food. The grocery stores outside of East Durham carry produce, meat, and a selection of quality food, but they are not easily accessible. In order to find out first‐hand what the neighborhood residents wanted and needed, we drafted a survey and carried it out in the neighborhood.

When we were conducting the survey, all of the participants were excited to learn that TROSA was going to come in and set up a full‐service grocery store. There was positive feedback from the 90+ people we talked to, and many of them gave suggestions for improving the store and for stocking the store. The people who participated in the surveys cited “price” and “convenience” as the main factors for whether or not they ultimately decide to shop at the TROSA grocery (See Appendix B).

[TROSA GROCERY STORE] December 7, 2009

According to the same survey, a majority of respondents rated “high quality fruits and vegetables,” “low prices,” and “proximity to home” as “extremely important” criteria in their decision to visit a grocery store.

Recently, the Obesity and Chronic Illness (OCI) Committee of the Partnership for a Healthy Durham sponsored a survey and six focus groups focusing on fruit and vegetable intake and barriers. Their target respondents were low‐income Durham residents. Through the study, the OCI Committee discovered that “some of the grocery stores that are closest to Northeast Central Durham do not have the freshest produce. “xii Similarly, national studies have indicated that supermarket chains tend to stock lower quality foods in poorer neighborhoods and higher quality foods in wealthier neighborhoods. xiii

Competitive/ Collaborative Analysis

TROSA Grocery’s main competitors are Food Lion, WalMart, Lowes Foods, and Krogers.

(See Appendix C for maps). Each of these franchise stores serve a high volume of consumers, and are able to save supplier agreement costs with grocery item distributors (distributors of dry and canned goods, etc.) due to their economies of scale.

Because of TROSA Grocery’s size, it does not have the resources to contract with a manufacturer or a grocery distributor. It can, however, pursue a competitive contract with produce, meat, milk, and bread distributors, who do not division themselves by size.

Although it may not be competitive on dry good items bought from a convenience store distributor, TROSA Grocery expects to offer a level of quality and prices that is competitive with what is being offered at Food Lion in terms of in terms of produce, meat, milk, and

[TROSA GROCERY STORE] December 7, 2009

bread. Unlike these large food chains, our location makes us far more accessible to East Durham residents ‐‐ and this is our main advantage.

Main Competitors (Grocery Stores) Distance from TROSA Store Address Grocery 1. Food Lion 2400 Holloway St # C, 1.7 Miles Durham, NC

2. Lowes Foods 1000 N Miami Blvd # 1.3 miles 207, Durham, NC

3. Walmart 5450 New Hope 1.4 miles Commons Dr, Durham,

NC

4. Kroger 3457 Hillsborough Rd, 4.8 miles Durham, NC

TROSA Grocery’s closest competitors are M&M Mini Mart, Drive Through Produce, Buy Quick Food Marts, and Community Grocery. (See Appendix C.) None of these convenience stores offer produce. Furthermore, according to a survey done by NCCU studentsxiv, their quality of meat, bread, and milk is limited. The prices offered for groceries at these convenience marts, in addition, are exorbitant; milk costs $5.89/gallon at Buy‐Quick Food Mart, for example. Finally, these convenience stores make a majority of their income from the sale of alcohol and tobacco.

Our mission is not to out‐compete Food Lion or WalMart, but to offer accessible alternative location for purchases of fruits and vegetables with competitive prices. We hope to be recognized within our own right as a healthy, local alternative to a supermarket franchise.

Secondary Competitors (Convenience Stores) Distance from TROSA Store Address Grocery 0.1 miles M&M Marts 2128 Angier Avenue Buy‐Quick Food 419 South Briggs Avenue 0.2 miles Marts 0.1 miles Drive‐Through 2201 Angier Avenue Produce Community Grocery 106 South Guthrie Avenue 0.4 miles Note: Google Maps inaccurately lists Atlantic Food Marts as another convenience store located across the street from TROSA Grocery. Atlantic Food Marts has been converted into an appliance store.

[TROSA GROCERY STORE] December 7, 2009

Operational Plan

Growth Goal Areas Goals I. Program Participation Number of TROSA grocery Y1: By the end of one year of operation, customers we hope to have 150‐170 households shopping at the TROSA grocery Y2: After two years, we expect 230‐250 families to regularly shop at the TROSA grocery Y3: After three years, the goal is to have 280‐300 households regularly obtaining their groceries from the TROSA store TROSA resident participation

II. Program Operations Leadership growth and retention

Stretch Goals

Y1: A stretch goal for the first year is 180‐200 families getting their groceries from TROSA. Y2: After two years of operation, a stretch goal would be to have 250‐ 280 families regularly shopping at the TROSA store Y3: The stretch goal for three years is 310‐330 families relying on the TROSA grocery Y1: We are expecting to have 3‐4 TROSA Y1: A stretch goal for the number of residents in the store TROSA residents working in the Y2: We expect to have 3‐4 TROSA store is 4‐5 residents in the store Y2: The stretch goal is to have 4‐5 Y3: By the end of the third year, TROSA residents working full‐time depending on sales, we may have 5‐6 in the store TROSA residents working in the store Y3: At the end of three years, a stretch goal would be to have 6‐7 TROSA residents working in the TROSA grocery

Y1: TROSA already has a board of Y1: At the end of the first year, a directors and a CEO, as well as a very stretch goal would be to have a efficient staff. At the end of the first year, project manager working at the the goal is to have a project manager in store with limited support needs charge of the grocery store and to be from TROSA. directly in charge of its progress

Y2: At the end of the second year, the goal Y2: Our stretch goal after two years is to find a dedicated project manager is to have a full‐time project and have the TROSA grocery join manager and assistant manager TROSA’s list of successful businesses running the store.

Y3: Find an assistant manager to help the project manager run the TROSA grocery Y3: Our stretch goal after three years and to fill gap in the manager’s absence is to ease potential leadership transitions by have a comprehensive and referable manual of what it takes to specifically run the TROSA store.

[TROSA GROCERY STORE] December 7, 2009

Facilities

Products

III. Financial Annual revenue

Sustainability

Y1: The growth goal of the first year is to Y1: The stretch goal for the first year be able to adequately furnish the 3,500 is to have the 3,500 square feet square feet building on the Algiers and St. building ready fully operational, and Drivers intersection with the necessary also build a 40‐space parking lot in equipment. an adjacent lot Y2: In the second year, our growth goal is Y2: By the end of the second year, a to be able to purchase and build a stretch goal would be to have a parking lot (approximately 40 spaces) functioning grocery, a maintained next to the grocery store parking lot, and also a storage Y3: The goal for the end of the third year facility to store all the things needed is to have a fully functioning grocery to stock the grocery store as well as a well‐maintained Y3: The stretch goal for the third parking lot. A possible goal is to expand year is to have the resources to to a an adjacent lot, where we can build identify the need for a second storage or additional parking, depending TROSA grocery store in another East on the need Durham area.

Y1: The goal for the first year is to be able Y1: Stretch goal for the first year is to stock the TROSA grocery with the to be able to stock the TROSA essentials (meat, produce, dry grocery grocery with all the essentials, as items) well as offer specific brand‐name Y2: The goal for the second year is to be products requested by customers able to sell some specific brand‐name Y2: By the end of two years, we hope products requested by the customers to be able to offer a competitive Y3: By the end of the third year, it is our range of products that are not growth goal to offer a vast range of foods foodstuffs. as well as other products like toiletries Y3: After three years, we want to be and related products comparable to well‐established grocery chains like Lowes Foods and Food Lion in terms of product quality and selection

Y1: By the end of the first year of Y1: A stretch goal for the first year operation, accounting for employee would be to break even or just have salaries, we are expecting a negative net a small negative net profit profit just in terms of grocery sales Y2: By the end of the second year, a Y2: By two years, we expect to break‐ stretch goal would be to have a even or just have a small negative net positive net profit profit Y3: A stretch goal would be to have Y3: At the end of three years, we expect a enough positive return that TROSA positive return considers expanding and starting another store in another location Y1: After one year, the TROSA grocery is Y1: In one year, a stretch goal would expected to have a negative net profit. be for the grocery store to be However, TROSA has lots of funds and sustainable. If it breaks even in its five other businesses so it should be finances, then it will be fine possible to cover this loss Y2: At the end of two years, the Y2: By the end of the second year, the grocery store hopefully will be TROSA grocery should be at a break‐even making a small positive net profit. point so there will be no financial loss This would mean the store is already

[TROSA GROCERY STORE] December 7, 2009

Y3: By year three, the grocery store is self‐sustainable. expected to begin making money for Y3: In three years, a stretch goal TROSA. This would prove that the project would be for TROSA to have is sustainable and reproducibility should established a sustainable model and be considered be able to replicate the grocery store in other locations, or at least help others replicate it.

Implementation Strategies – Program Plan

Initial Program Services and Target Market The mission of TROSA Grocery is three‐fold: first, the store presents an opportunity to diversify TROSA’s business operations, which cover 90% of program costs and help to keep the program free for its residents. Secondly, the store will provide a new set of job skills and development opportunities for its residents.

Third, the store will provide a full‐service grocery option to a community that desperately needs it. The store will be located in one of the poorest areas of Durham, where members of the community are forced to pay high prices for the unhealthy food available at the four mini‐marts and convenience stores in the area. With a meat department, a large selection of fresh produce, and affordable canned and dry grocery items, TROSA Grocery will have the opportunity to bring nourishment to the community. We also believe that the store will become a national model for businesses fighting food insecurity across the country.

Service/Program Staging and Growth Over time, we plan to offer additional programs within the TROSA grocery.

Some include providing a weekly recipe that uses products that can all be found in the TROSA grocery. There will be a new recipe(s) every week for the neighborhood residents to try. In addition, TROSA Grocery may hold a monthly recipe competition – wherein customers can submit a recipe that they made from products purchased in the store.

When TROSA purchases and builds the adjacent parking lot, commuters who do not live within comfortable walking distance to drive to the grocery store to buy products.

The critical factors in hitting these goals are effective leadership and planning. We need to find dedicated leadership that will see the project through and after initial completion. Currently, we are trying to gauge the true desires of the neighborhood.

Money is not a particularly critical factor because in addition to the free leasing policy for the first year and the in‐kind equipment donations that we’ve received, TROSA Grocery will be eligible for grant money.

[TROSA GROCERY STORE] December 7, 2009

Grocery Delivery Service

TROSA can leverage resources such as its residents and its catering trucks to expand the sustainability of the store and to increase the accessibility of healthy foods within the neighborhood. Since TROSA already run a catering business, its catering residents may be able to consult the grocery residents on best practices for delivery services.

TROSA Farm

A TROSA farm would be a new business that would do many of the things that its other businesses do, i.e. provide job training and life skills for its residents. As a multi‐ mililon dollar organization, TROSA has the land and the resources to find in‐kind donations of equipment (e.g. greenhouses, start‐up seeds, etc.) that would help it save costs on the farm’s launch. Ideally, the TROSA farm would grow to be able to supply organically grown fruits and vegetables to the TROSA store at a competitive price.

Marketing, engagement, and communications strategies

We are going to alert and engage our target clients through an integrated marketing communications plan. Although we plan to have a placeholder website for the store, we plan to focus more on word‐of‐mouth advertising through contact with local community leaders such as ministers, small business owners, and teachers at the nearby schools. This approach is motivated by the lack of technological access of the majority of our market.

An integrated marketing communications plan is essential to the successful launching of the store. We need to make sure that people in the target market know about the store before its launch.

Our approach of the community must be organized. We need to be able to communicate our specific goals for a pre‐opening partnership with the community organization (we need them to specifically help us pass out surveys, or recruit for a focus group, etc.) and we need to make sure that we follow up on questions and proposals regarding the store.

By conveying an attitude of responsibility and drive, we affect the attitudes towards the store even before its launch.

Key Stakeholders/ Potential Partners

Neighborhood residents The population that TROSA Grocery will be serving is primarily low‐income, African‐American, and Latino. The store must successfully catch the attention of the immediate neighborhood to be sustainable, since the 2000 cars that pass through the Angier Avenue/South Driver street intersection every day may not be compelled

[TROSA GROCERY STORE] December 7, 2009

to stop unless they see that the store is visually thriving. In the long run, the residents that we cater to will determine the sustainability of the store.

Preservation East Durham and Uplift East Durham Both organizations invested in educating the community about the unique architecture and history of the East Durham Historic District. Preservation East Durham also encourages renovation projects within the neighborhood. Although TROSA Grocery does not directly address housing issues, its business will benefit the image in the neighborhood. Therefore, TROSA Grocery should be able to look for potential allies in both Preservation and Uplift East Durham.

Partners Against Crime (PAC)1 A collaborative partnership of police officers, residents, and city and county officials that tries to find sustainable solutions to community crimes, problems and quality of life issues. PAC1 holds monthly meetings at the Holton Career & Resource Center.

Religious Institutions Churches comprise 10% of the commercial parcels in the district. xv The Angier Avenue Baptist Church, in particular, is right across the street from the TROSA Grocery store. We expect TROSA Grocery store customers to take advantage of the church parking lot on the weekdays.

YE Smith Elementary School A K‐5 elementary school for 350 students, YE Smith Elementary School is located 0.6 miles from the grocery store. The proximity of the school provides TROSA Grocery with the opportunity to spread awareness of the potential nutritional impact of the store to the community.

Joseph Bushfan Joseph Bushfan owns the grocery store space and is giving TROSA a one‐ year free rental lease to operate on the space. His involvement with TROSA is limited to TROSA’s agreement to manage the store with its residents. The lease that TROSA will have to pay to Bushfan will be negotiated after the first year.

Durham Neighborhood Improvement Services Department The Durham Neighborhood Improvement services Department is dedicated to improving the quality of life for Durham's residents by “increasing access to safe livable housing” and “improving the City’s physical environment.” xvi The

[TROSA GROCERY STORE] December 7, 2009

Department has published reports on the Northeast Central Durham (NECD) area.

They are a great resource for information on development issues in East Durham.

Durham Office of Economic & Workforce Development The Angier‐Driver intersection is one of the streetscapes targeted by the OEWD in a program “to enhance the design and visual appeal of five existing commercial corridors in Durham to promote economic development in the identified communities.”

Durham Police Department The perception of risk in the area around the TROSA Grocery store cannot be defeated without the help of the Durham Police Department in patrolling the area, installing working surveillance cameras, and measuring the impact of these crime reducing efforts.

Leadership Team and Implementation Organizational Fundamentals: Organization Purpose To provide quality access to affordable nutrition in the Angier‐Driver intersection through the hard work and personal development of TROSA residents

Organization Values ¾ Health – Striving towards both mental (non‐addiction) and physical (nutritional) health ¾ Discipline – Developing the work ethic and capability to learn ¾ Compassion – Delegating care for one’s self and others ¾ Teamwork – Willingness to learn, negotiate, and recognize the strengths of others

Organization Vision

TROSA Grocery is a national model for businesses fighting food insecurity and is an innovative example of how social impact can be combined with business to meet a social problem. We successfully give TROSA residents the interpersonal communication and work ethic skills that they need to return to stable jobs in society, and we are a national model for businesses that have found an innovative way to effectively fight food insecurity.

The Team & Current Levels of Support Leadership Team

Wendy Noel Wendy Noel has been a project manager at TROSA’s since May 2009. A graduate of Carleton College with degrees in Biology and Environmental Science, she is highly interested in food

[TROSA GROCERY STORE] December 7, 2009

equality issues and is evaluating several new business opportunities for TROSA while managing the start‐up of TROSA Grocery.

Chris Chan Chris Chan is good with numbers. He was Treasurer in four separate clubs through the course of his high school career, including Math and Science club, Student Council, Mu Alpha Theta, and National Chinese Honor Society. He has also continued his Treasurer‐type projects at Duke. Some projects include being part of a fundraising committee that raised over $20,000 for an Intercollegiate Taiwanese conference at Duke and being master of ticketing for the Asian Student Association's LNY show that raised over $1500 for charity.

Chris is organized and has ample experience in keeping track of money and balancing checks. He also has experience in fundraising and in writing letters for donations.

Chris likes to help people. Since he came to Duke, he has been involved in numerous volunteering projects. These include Duke China Care, a club that holds playgroups and fun activities for Chinese orphans in the Durham area. Chris also serves on the Asian Student Association’s cultural committee that played a vital role in raising money to build a school in rural China. He is a small group leader for Intervarsity Christian Fellowship, and he is also a member of the Unite for Sight club that goes to different schools to give free eye examinations to students. Chris was also a representative that went to Washington DC to spread awareness of the situation in Darfur.

Chris is trustworthy and reliable. He is also very perseverant. Once he has a goal, he will not stop until the goal is realized. Chris is Christian, and his ideals and actions are governed by this belief. For these reasons, he is committed to devising a plan for a successful promising idea!

Linda Peng Linda Peng is studying Public Policy and Markets & Management. At Duke, she is leader in various student organizations, including Partners for Learning, a service organization that tries to bridge the educational gap between Duke RLHS/Dining employees and Duke Students, Duke Student House Managers, and The Duke Journal of Public Affairs. She is a research assistant at the Policy & Organizational Management Program, an aspiring composer/arranger, and a firm believer in all individuals’ potential for self‐efficacy.

TROSA’s entrepreneurial model inspires her to pay attention to the value of every person.

Evidence of endorsement, sponsorship, and support Community Organization Contacts

Jenni Albright, Diane Beth, Karen Stanley – Eat Smart, Move More NC

[TROSA GROCERY STORE] December 7, 2009

“Eat Smart, Move More” is a statewide organization dedicated to increasing opportunities for “healthy eating and physical activity.”xvii As a statewide organization, it has many connections with Durham organizations that focus on nutrition and health. Jenni Albright and her team have expressed their willingness to help TROSA Grocery leverage these contact information with the Durham community.

Selina Sullivan, Becky Freeman ­ Durham County Health Dept, Nutrition Division

The Nutrition Division at the Durham County Health Dept. boasts a catalogue of regularly updated nutritional brochures and other materials that it is giving TROSA Grocery permission to use.

Funding sources Food Lion, Anonymous Donors With the exception of two coolers and one refrigerator, TROSA has been able to raise almost $100,000 worth in in‐kind donations from Food Lion and anonymous companies.

Duke Office of Durham and Regional Affairs The Duke Office of Durham and Regional Affairs granted TROSA Grocery $2000 to help allay its $50,000 startup cost .

Private/Anonymous Donors TROSA Grocery relies on the interest and support of wealthy donors to allay their $50,000 in startup costs.

Additional students actively involved Katherine Rock Katherine Rock, a senior majoring in public policy, is working to launch a small TROSA garden with the goal of introducing fresh produce to the TROSA kitchens. Her project will allow the employment of one or two TROSA residents. The success of this small project means that the feasibility of a TROSA farm will be one step more believable.

Coaches, advisors, and Duke Faculty mentors actively involved Christopher Gergen Director of the Entrepreneurial Leadership Initiative at Duke University

Della McKinnon ELI Social Enterprise Coordinator at Duke University

Lina Feng ELI PPS 144 Teaching Assistant

Dr. Gwen Murphy – Duke Professor Dr. Gwen Murphy is co‐chair of the Obesity and Chronic Illness Committee at the Partnership for a Healthy Durham and a professor at the Duke Center for Community Research. Recently, she and a team of researchers conducted focus groups and surveys targeted towards low‐income groups across Durham on issues of food inequality. Dr. Murphy has been supportive of TROSA’s efforts to fight food inequality in East Durham.

[TROSA GROCERY STORE] December 7, 2009

Dr. Fernando Fernholz – Duke Professor Dr. Fernando Fernholz teaches a graduate course on Economic Growth & Development and is a professor at the Duke Center for International Development. He has expressed his interest in the grocery store concept and the store’s potential to add social returns to society.

Dr. Rebecca Winders – North Carolina State University Professor Dr. Rebecca Winders teaches a Public Administration class at NCCU. In Fall 2009, she asked her class to write an evaluation of the TROSA Grocery store.

Dr. Wagner Kamakura – Fuqua Business School

Dr. Wagner Kamakura is professor of Global Marketing at the Fuqua School of Business. He expressed an interest in performing a statistical evaluation of the grocery store's true impact on nutrition intake in the neighborhood through a household card tracking system.

[TROSA GROCERY STORE] December 7, 2009

Financials & Risk Assessment Financial Projections Revenue Sources Grants and Private Donations We will be seeking $50,000 in startup capital, to be raised prior to year one by grants or private donations. We have already secured a grant from Duke for $2000 and some in‐kind donations have already been made. These funds will mostly go towards stocking the store with its initial food, produce, and meat. After the initial fundraising, there will be no need to seek additional donations or grants.

In‐Kind Donations TROSA is expecting to receive $150,000 worth of equipment in in‐kind donations. So far, $100,000 worth of equipment and material has already been received so only $50,000 more is needed before the required funds are obtained. If we receive extra in‐kind donations, we can always sell the equipment for money to use towards the start‐up capital. TROSA’s in‐kind department works every day so there is always the chance that additional equipment can be obtained through that department. However, the financial plans do not take into account any in‐kind donations after the initial start‐up.

Grocery Sales In our financial projections, we already have the 3,500 square foot building to start the grocery store. This is already being renovated by Joseph Bushfan. We determined the average sales per month by taking average sales for grocery stores and average sales for convenience marts and dividing by two. Then, we took the results from the survey to see how many times the residents usually went shopping for groceries to determine how much they would spend every month. We also made worst‐case and best‐case projections. In the worst‐case three‐year projection, we discovered that we would have to cut back on advertisement and miscellaneous funds in order to remain in the positive. For a best‐case scenario, we found that we would have enormous positive profit and we could increase the money allocated to advertisement and emergency funds.

[TROSA GROCERY STORE] December 7, 2009

Program Operations Costs Employee Compensation TROSA is planning on having five TROSA residents work in the store.

Tentatively, two will be cashiers, one will be in serving meat in the meat department, two will be stockers and baggers, and possibly a store manager. In our financial plans, we assumed the employees would work 60 hours a week at $14/hour. The residents’ labor is priced at $14/hour because this takes into account their living expenses at TROSA, including insurance and other benefits. Additionally, there would not be a manager salary for the first three years, at least. The manager would probably be paid around $35,000/year based on average grocery store manager salaries.

Grocery Operations Costs

Grocery Facility and Equipment For the 3,500 square foot property, the annual rent comes to $24,000. Also, the first year will be rent‐free for TROSA. The $24,000 was determined by average rental space per square foot in Durham. It will not cost TROSA anything for the pre‐ launch construction costs because Joseph Bushfan is using money from the government to fund that. We allocated $500 a month for additional supplies and $750 a month for repairs and maintenance. Additionally, we took into account the cost to set‐up credit card and food stamps for the store. According to a national average, 60% of Americans use credit cards so we took 60% of total grocery revenue and took 3% of that to pa the credit card companies. Utility costs and insurance typically cost $21,800 a year.

Raw Food Costs In a typical grocery store, 65% of the total grocery revenue is reallocated to buying food to restock the store every month. Therefore, we took 65% of our total grocery revenue and counted that as a monthly expense to restock the store.

Legal, Licensing, and Marketing Legal and licensing fees and marketing expenses are included in our financials. An annual license for the store would change depending on the total revenue of the store. In the first year, a license would only cost about $60, but by the second year, we may have to pay close to $300 for a license. We also set aside $6,000 for miscellaneous costs. The TROSA grocery will not serve alcohol or tobacco products so a license for those would not be needed.

[TROSA GROCERY STORE] December 7, 2009

Net Income and Net Cash Because of the initial capital fundraising, TROSA grocery should open with approximately $200,000 in the bank. In the first year and a half, it is expected that each month will have a small deficit. However, the overall money in the bank will remain positive. By the third year, the TROSA grocery is expected to have a positive cash flow every month. The lowest amount of money in the bank would be $72,370, which would occur in the third year of operation.

Expected Case Financials* *For full financials, please refer to Appendices.

I. Expected Three‐Year Projection

Expected Case 3­year Projection

REVENUES Project­generated Revenue (grocery sales) Average sale Monthly customers Average # Households Served Total grocery sales In‐kind donations Duke Grants Grants and private donations TOTAL REVENUES EXPENSES Cost of Food Products (Assumption: 65% of Sale Prices) Salary Expenses Employee Salary Manager Salary General Program Costs Advertising Insurance Supplies (office and operating) Repairs and Maintenance Licenses Electric and Water Rent

Year 1

Year 2

Year 3

$

$ 25 $ 3,800 $ 950 $ 95,000 $ 150,000 $ 2,000 $ 50,000 $ 297,000

$

25 1833 458 $ 550,000 $ $ $ $550,000

25 2425 606 $ 727,500 $ $ $ $727,500

$ $ $ $ $ $ $ $ $ $ $ $

$ 357,500

$ 472,875 $ $ 172,800 $ $ $ 3,000 $ 3,000 $ 6,000 $ 9,000 $ 400 $ 16,800 $ 24,000

61,750 86,400 1,900 1,500 3,000 4,000 100 8,400 -

$ 172,800 $ $ $ $ $ $ $ $

3,000 3,000 6,000 9,000 300 16,800 12,000

[TROSA GROCERY STORE] December 7, 2009

Food Stamp Vendor Set‐up Credit Card Vendor Set‐up Miscellaneous Telephone TOTAL EXPENSES NET INCOME Cash Balance

$ 150 $ 1,860 $ 3,000 $ 600 $ 172,660 $ 124,340 $ 124,340

$ $ 9,900 $ 6,000 $ 1,200 $597,500 -$47,500 $76,840

$ $ 13,095 $ 6,000 $ 1,200 $728,170 -$670 $76,170

Year 2

Year 3

II. Worst­Case Three Year Projection

Worst Case 3­year Projection

REVENUES Project­generated Revenue (grocery sales) Average sale Monthly customers Average # Households Served

Year 1

Total grocery sales In‐kind donations Duke Grants Grants and private donations TOTAL REVENUES EXPENSES Cost of Food Products (Assumption: 65% of Sale Prices) Salary Expenses

$ 65,550 $ 120,000 $ 2,000 $ 45,000 $ 232,550

$ 379,500 $ $ $ $379,500

$ 40,641 $ -

$ 235,290

Employee Salary Manager Salary General Program Costs

$ 64,800 $ $ -

$ 129,600 $ -

Advertising

$

1,900

$

2,700

Insurance

$

1,500

$

3,000

Supplies (office and operating)

$

3,000

$

5,400

Repairs and Maintenance

$

3,200

$

7,200

$ $ $

23 475 119

$

23 1375 344

$

23 1892 473

$ 522,100 $ $ $ $522,100 $ 323,702 $ $ 129,600 $ $ $ 2,400 $ 3,000 $ 4,800 $ 7,200

[TROSA GROCERY STORE] December 7, 2009

Licenses

$

100

$

200

Electric and Water

$

8,400

$

16,800

Rent Food Stamp Vendor Set‐up

$ $

150

$ $

12,000 -

Credit Card Vendor Set‐up

$

1,330

$

6,831

Miscellaneous

$

2,400

$

4,800

Telephone

$ 600 $ 128,021 $ 104,529 $ 104,529

$

1,200

$ 300 $ 16,800 $ 24,000 $ $ 9,398 $ 4,800 $ 1,200

$425,021

$527,200

-$45,521

-$5,100

$59,008

$53,908

TOTAL EXPENSES NET INCOME Cash Balance

III. Best‐Case Three Year Projection

Best Case 3­year Projection

REVENUES Project­generated Revenue (grocery sales) Average sale Monthly customers Average # Households Served Total grocery sales In‐kind donations Duke Grants Grants and private donations TOTAL REVENUES EXPENSES Cost of Food Products (Assumption: 65% of Sale Prices) Salary Expenses Employee Salary Manager Salary

Year 2

Year 1

Year 3

$ 28 $ 792 $ 198 $ 133,028 $ 160,000 $ 2,000 $ 65,000 $ 360,028

$

28 1971 493

$ 86,468 $ -

$ 430,430 $ -

$ 86,400 $ -

$ 172,800 $ -

$

28 2721 680

$ 662,200

$ 914,200

$ $ $

$ $ $

$662,200

-

$914,200 $ 594,230 $ $ 172,800 $ -

[TROSA GROCERY STORE] December 7, 2009

General Program Costs

$

-

Advertising

$

2,700

$

4,200

Insurance

$

1,500

$

3,000

Supplies (office and operating)

$

3,000

$

6,000

Repairs and Maintenance Licenses

$ $

4,000 100

$ $

9,000 400

Electric and Water

$

8,400

$

16,800

Rent Food Stamp Vendor Set‐up

$ $

150

$ $

12,000 -

Credit Card Vendor Set‐up

$

2,545

$

11,920

Miscellaneous

$

4,500

$

9,000

Telephone

$ 600 $ 200,363 $ 159,665 $ 159,665

$

1,200

$ $ 4,200 $ 3,000 $ 6,000 $ 9,000 $ 500 $ 16,800 $ 24,000 $ $ 16,456 $ 9,000 $ 1,200

$676,750

$857,186

-$14,550

$57,014

$145,115

$202,129

TOTAL EXPENSES NET INCOME Cash Balance

[TROSA GROCERY STORE] December 7, 2009

IV. 12‐month Expected First Year Projection

Risk Assessment and Management Primary Risks Partnerships

TROSA’s relationship with Joe Bushfan is important given the free lease that he has offered TROSA for the first year. TROSA’s relationship with the Angier Avenue/South Driver community must also be clean. The TROSA Grocery must distinguish itself as a better alternative to the convenience stores while not antagonizing the convenience store consumer base. In addition, TROSA Grocery must maintain a strong relationship with organizations in the area that are also invested in the development of the neighborhood.

These organizations include Uplift East Durham, Pac1, Angier Avenue Baptist Church, The Nativity School, and YE Smith Elementary School.

[TROSA GROCERY STORE] December 7, 2009

Financials TROSA Grocery needs to raise $150,000 worth of in‐kind donated equipment and $50,000 in startup capital for the initial inventory, to be raised prior to year one by grants or private donations. We have already secured a grant from Duke for $2000, approximately $100,000 worth of in‐kind donations (companies unnamed), and $23,000 from private donations.

Job and life skills development quality

TROSA Grocery must ensure that its residents benefit from a safe and productive work environment. Although residents usually transition between different TROSA jobs every 6‐9 months, we must make sure that their learning experiences at TROSA are compatible with the quality of their experiences working in the kitchens, the Moving Company, at the catering business, etc.

Pricing competitiveness

TROSA Grocery expects to work with a grocery distributor, a produce distributor, a meat distributor, a milk distributor, and a bread distributor. Although TROSA is in the process of contracting with price‐competitive produce, meat, milk, and bread distributors, it is forced to contract with a smaller convenience store distributor instead of a larger grocery distributor. This is because grocery distributors require stores to contract a minimum of $6000 worth of products per week, an amount that TROSA Grocery will not be able to pay until its consumers truly show their sales demand. TROSA Grocery is currently looking into convenience store distributors, which sell their products at a less competitive rate but only require clients to contract a minimum of $2000 worth of products per week. TROSA Grocery’s pricing in terms of grocery items such as cereal or canned goods, therefore, may not on par with that of larger food chain stores such as Food Lion, whose size allows them to save costs by buying directly from manufacturers.

Again, in terms of fresh fruits and vegetables (produce), meat, milk, and bread, however, TROSA expects to be price‐competitive.

Prejudice against TROSA residents

Despite the fact that all TROSA residents are required to be completely drug‐and‐ alcohol free, and all TROSA residents are required to go through a training program before they can work at a real TROSA assignment, the stigma against drug or alcohol addicted users may cause unfounded nervousness in the community near the store.

[TROSA GROCERY STORE] December 7, 2009

Concerns about safety in the store area

Violent crime, prostitution, and drug calls are some of the most publicized issues in East Durham. The Durham Police Department’s Operation Bull’s Eye was conducted in part to address the issue of high crime incidences in the neighborhood.

Risk Mitigation Strategies

Risks Partnerships: Joe Bushfan, community residents, community organizations

Risk Mitigation Strategies ‐ Establish clear communication channels between TROSA representatives and Joe Bushfan ‐ Ensure transparency of store’s actions and marketing campaigns ‐ Take advantage of potential partners with community leaders and ‐ Keep community residents in the loop about changes/actions in the store Finances: in‐kind donations and start‐up ‐ borrow money from TROSA, if capital necessary, to cover the remaining $27,000 needed in start‐up capital ‐ push TROSA’s impacts (in terms of social return on investment and ability to address East Durham’s food insecurity) to government organizations that can offer subsidies in the form of grants ‐ Keep track of non‐governmental grant opportunities and deadlines ‐ maintain good relationships with donors, especially those who have expressed particular interest in the store

Job and life skills development quality ‐ establish relationships with the management of other TROSA businesses to learn best management practices and to ensure that residents in the store are not given too few or too many responsibilities ‐ Consistently track the value that residents place on their experiences working in the store in terms of skills learned, skills improved upon, self‐ confidence developed, public interaction

[TROSA GROCERY STORE] December 7, 2009

opportunities, etc. ‐ research distributor alternatives thoroughly ‐ make sure that fresh produce (fruits and vegetables) can at least be offered at a very competitive price level ‐ subsidize produce prices if necessary and wait until sales are sustainable enough to switch to a larger grocery distributor ‐ allow consumers to use the Woman, Infant, and Children (WIC) government subsidy ‐ allow consumers to use food stamps

‐ market the “humanness” of TROSA residents through a replaying video/documentary in the store and/or a TROSA section that profiles some of the residents working in the store ‐ distribute flyers into neighborhood residents’ mailboxes in January to announce the store’s opening and to provide background on the TROSA organization ‐work with Durham Police Department to increase their patrol presence in the area ‐ fix security cameras on Angier Avenuexviii ‐ increase awareness of the fact that although crime is a concern in this area, resident testimonials (Kim Sage and David Archer) indicate that the issue is “largely perceptional.” xix Furthermore, since the Bull’s Eye Operation, calls for service and violent crimes have decreased in the Bull’s Eye area (which includes the TROSA Grocery location).xx

Pricing competitiveness

Prejudice against TROSA residents

Concerns about safety in the store area

[TROSA GROCERY STORE] December 7, 2009

Appendix A Fig. 1

Demographics (within 1 mile) Population

#

%

12863

100%

6264 49% Male 6599 51% Female 2969 23% School‐Age (5‐18 years) 1049 8% 65 and older 1930 15% Latino 10933 85% Not Latino 951 7% White 9814 76% Black or African American 36 0% Native American 1 0% Pacific Islander 4 0% Asian 4 0% Some Other 123 1% Multi‐Race Source: 2000 U.S. census of Population and Housing* Fig. 2 Households (within 1 mile) Households

#

%

4456

1188 27% 1 person 2957 66% Family 12739

Persons in households 2.86

Persons per household Source: 2000 U.S. census of Population and Housing*

[TROSA GROCERY STORE] December 7, 2009

Fig. 3 Housing Occupancy (within 1 mile) Housing Units

#

%

4939

4456 90% occupied housing units 0.9022

occupancy rate 1134 25% owner‐occupied 3322 75% renter‐occupied Source: 2000 U.S. census of Population and Housing* Fig. 4

[TROSA GROCERY STORE] December 7, 2009

[TROSA GROCERY STORE] December 7, 2009

Appendix B

Survey Date: October 2009 Survey area: within 1 mile of TROSA Grocery Conducted by Christopher Chan, Linda Peng, and NCCU Master of Public Administration students

Number of surveys: 90 Mean amount of money spent on food/week: $140 Most popular grocery stories:

How often do you eat dinner at home?

How often would you eat dinner at home if there were a store near you?

[TROSA GROCERY STORE] December 7, 2009

If someone in your household cooks, approximately how many people do they cook for?

Importance Scale Responses Close to Home

High quality fruits and vegetables

[TROSA GROCERY STORE] December 7, 2009

Large variety of selections

Low Prices

Courteous, friendly employees

Weekly discounts/specials

[TROSA GROCERY STORE] December 7, 2009

Ideas for recipes provided in store

Fast check­out

Locally raised products

[TROSA GROCERY STORE] December 7, 2009

Organic products

Are you interested in buying dry goods in bulk?

Appendix C

[TROSA A GROCERY Y STORE] December 7 7, 2009

Main n Competitors

Main n Competitorrs (Grocery Stores) Store

Distance frrom TROSA Groccery 1.7 miiles

Address

Food Lion n

2400 H Holloway St # # C, Durham m, NC

Lowes Fo oods

1000 N N Miami Blvd d # 207, Du urham, NC

1.3 miiles

Walmart

5450 N New Hope Commo ons Dr, Durh ham, NC

1.4 miiles

Kroger

3457 H Hillsborough h Rd, Durham m, NC

4.8 miiles

[TROSA GROCERY STORE] December 7, 2009

Closest Competitors

Secondary Competitors (Convenience Stores) Store M&M Marts Buy‐Quick Food Marts Drive‐Through Produce Community Grocery

2128 Angier Avenue 419 South Briggs Avenue

Distance from TROSA Grocery 0.1 miles 0.2 miles

2201 Angier Avenue

0.1 miles

Address

106 South Guthrie Avenue 0.4 miles

[TROSA GROCERY STORE] December 7, 2009

Appendix E Theory of Change

Needs

¾ Food Insecurity in East Durham

¾ Employment skill opportunities for former substance abusers

Solution

Outcomes

¾ East Durham: 9 Help families save time and money through easier access to a store that has a Providing affordable, quality selection of accessible, and foods nutritious foods to the 9 decrease health risks local community like heart disease, through the TROSA cancer, and diabetes Grocery Store 9 lower the percentage of obese or overweight adults 9 Raise personal consumption of fruits and vegetables ¾ Personal Development: Opportunity to 9 Communication skills develop job and life 9 Self­confidence skills through the 9 Responsibility TROSA Grocery Store 9 Job skills

[TROSA GROCERY STORE] December 7, 2009

Appendix F

[TROSA GROCERY STORE] December 7, 2009

[TROSA GROCERY STORE] December 7, 2009

[TROSA GROCERY STORE] December 7, 2009

[TROSA GROCERY STORE] December 7, 2009

Appendix G

References

i

Downey‐Piper, Mel. “State of Durham County’s Health Report: 2008.” Partnership for a Healthy Durham. 2008. <http://www.healthydurham.org/docs/file/durhams_health/DurhamCounty2008SOTCH.pdf>. ii Anderson, Augustus et al. “East Durham Neighorhood Plan.” City of Durham, Department of Neighorhood Improvement Services. 2009. iii “East Durham: A Neighborhood in Transition.” The Herald Sun. 03 May 2009: A1. iv www.accfb.org/pdfs/ConsequencesofHunger.pdf v http://www.heraldsun.com/pages/full_story_news_durham/push?article‐ Community+voices+target+East+Durham+problems%20&id=4012075‐ Community+voices+target+East+Durham+problems&instance=main_article vi Downey‐Piper, Mel. “State of Durham County’s Health Report: 2008.” Partnership for a Healthy Durham. 2008. <http://www.healthydurham.org/docs/file/durhams_health/DurhamCounty2008SOTCH.pdf>.

[TROSA GROCERY STORE] December 7, 2009

vii Miranda, Marie Lynn. “The Community Assessment Project: Durham, North Carolina.” Children’s

Environmental Health Initiative. 2008. viii “Grocery Stores.” Bureau of Labor Statistics. 2008. U.S. Department of Labor. < http://www.bls.gov/oco/cg/CGS024.htm#outlook>. ix French, Michael and Fang, Hai. “Economic evaluation of a prerelease substance abuse treatment program for repeat criminal offenders.” Journal of Substance Abuse Treatment. (2009): 1‐11. x http://www.sph.emory.edu/NEMS/ xi http://www.medicalnewstoday.com/articles/167989.php xii Murphy, Gwen. Personal Interview. October 2009. xiii Smith, Nareissa. “Eatin’ Good? Not In this Neighborhood: A Legal Analysis of Disparities in Food Availability and Quality at Chain Supermarkets in Poverty‐Stricken Areas.” Michigan Journal of Race & Law. (2009): 1‐59. xiv NCCU Master of Public Administration Students. “Urban and Regional Economic Development Policy and Planning: TROSA Project Written Report.” October 2009. xv Anderson, Augustus et al. “East Durham Neighorhood Plan.” City of Durham, Department of Neighorhood Improvement Services. (2009): 22. xvi http://www.durhamnc.gov/departments/nis/ xvii www.eatsmartmovemorenc.com xviii Coleman, Vernal. “Durham's police surveillance camera system barely functions.” Indyweek.com.

10 December, 2008. xix Anderson, Augustus et al. “East Durham Neighorhood Plan.” City of Durham, Department of Neighorhood Improvement Services. (2009): 18. xxCrime Analysis Unit. “Operation Bull’s Eye – Year 2 Report. “City of Durham Police Department.

August 2009.