Rainbow Grocery: Getting Bigger Without Going Mainstream

This natural cooperative has evolved from a small shop run by the local ashram to a Bay Area destination for food lovers, who are drawn by the locally grown produce, exceptional cheese counter and the vast collection of bulk foods. Read how the co-op stays true to its original principles.

By Janet Fletcher

Thirty-five years ago, members of a San Francisco ashram opened a small grocery store to supply ingredients for the vegetarian community. Since then, Rainbow Grocery’s membership has grown to nearly 240 and, in 1996, it expanded for a second time, moving to a larger location on Folsom Street in the Mission District. Shoppers can find 30 different types of flour in the bulk bins and 370 types of tea, but if they are looking for meat, they’ll need to search elsewhere.

“We’ve gone from being a small hippie collective to being a large natural food store, but we have managed to maintain the principles we started with,” says Gordon Edgar, a 16-year member of the co-op and the store’s cheese buyer. Those principles include worker parity and minimal hierarchy—there is no store manager—and a commitment to sourcing environmentally sensitive products.

An Unconventional Model

Unlike consumer cooperatives, which are owned by the customers, Rainbow Grocery is worker owned. Each of the 240 members, called worker-owners (as opposed to employees, as there is no employer), has one vote, and all receive the same hourly wage to start, although pay rises with seniority. Departments make their own hiring and purchasing decisions and elect people to key posts, such as buyer.

“The principle is that everybody’s work is valuable, skilled or not,” says Marcus Trigueros, store spokesman. “It can seem idealistic but it’s functional. We have the structure and the tools.”

Whether this retail model could work anywhere but on the country’s West Coast is debatable, but Rainbow Grocery is no fringe phenomenon. Many of the Bay Area’s most discriminating food lovers shop here, drawn by the locally grown produce, the well-curated cheese selections and the vast collection of grains, beans, flours, seasonings and specialty coffees in the bulk bins. The store’s customers are so devoted that they provided the loans for the last move when banks, uncomfortable with the cooperative’s unconventional business structure, refused to lend.

The Core Departments

Rainbow Grocery consists of 14 departments: bakery; bath & body; beer & wine; books & gifts; bulk foods; bulk herbs; cheese; housewares; packaged foods; produce; refrigerated foods; sundries; teas; and vitamins. Packaged foods account for the highest percentage of sales (19 percent) and include pasta and sauces, condiments such as tapenades, jams and nut butters, organic cereals, coffee, tea, raw foods and chocolate. The olive oil section boasts one of the co-op’s largest selections, with nearly 100 varieties (35 organic) from Spain, Italy, Turkey and Palestine, among other places. One or two bottles are always open for shopper sampling, and California oils stand out, with about two dozen showcased on an endcap display. One of the top sellers, the local Bariani olive oil is cold-pressed, unfiltered and sold at a competitively low markup.

Health and Wellness Shoppers Drive Sales

The store’s Mission District location is a mixed neighborhood, both ethnically and economically. Formerly a working-class area with some light industry and a largely Latino population, it has seen an influx of hip youth in recent years, many with well-paying high-tech jobs. “We get customers who come in for bulk rice and beans and others who want $40-a-pound cheese and $100 vinegar,” says Edgar. Shoppers are highly health and wellness conscious, with a predilection for alternative therapies. The vitamin and supplements department, with more than 8,000 items, produces 16 percent of store sales in products such as bee pollen, dried mushrooms, digestive enzymes and Ayurvedic treatments. Edgar estimates that 25 to 30 percent of the customer base is vegetarian, and a significant number are vegan.

Rainbow Grocery sees itself as an educational resource and a guarantor of product integrity. Reference books on diet and nutrition fill shelves, and among the roughly 20,000 SKUs, signage distinguishes items like Fair Trade coffee, rBGH-free cheese and no-sulfite-added wines. Color-coded stickers alert customers to products that are locally grown or from businesses that are locally owned. For instance, among the bakery department’s 700 offerings, bought from more than 30 different local bakeries, specialty items, such as wheat-free loaves from Grindstone Bakery in Rohnert Park, Calif. and San Francisco’s Crave Bakery’s gluten-free brownies, cupcakes and other sweets, get their own color codes. A chart posted on the refrigerated egg case outlines the practices of each of the store’s 10 egg suppliers, so shoppers can know which ones allow their birds access to the outdoors or clip the birds’ beaks. Cleaning supplies are closely scrutizined and selected for their minimal environmental impact.

“The community totally trusts us on these things,” says Trigueros. Even for items like cookware, the housewares buyers favor domestic products over less expensive alternatives made in China. “We struggle with organic versus affordable,” Trigueros admits. “But we asked consumers what was more important to them, price or organic, and they said organic.” To encourage recycling, Rainbow extends a small discount to shoppers who bring in their own containers for bulk purchases.

Accounting for 13 percent of sales is produce, of which 99 percent is organic. And while such staples as bananas and apples are the co-op’s bestsellers, shoppers can find seasonal exotic fruits such as dragon fruit, chayote and cherimoya. Comprising goods from about 20 local farms at any given time, the department highlights its selection of heirloom produce—indigenous, unmodified strains of fruits and vegetables, including apples, tomatoes, grapes, corn and potatoes. These wholly natural foods can appear quirky, revealing unusual colors and shapes, but their imperfect appearance only signals inimitable quality and flavor.

Local Cheeses, Endless Bulk Bins

Edgar’s cheese counter is one of the best in this cheese-obsessed city, with a strong focus on small-scale domestic producers. “I have tried to transition people from Europe to local,” says the cheesemonger, “but I’m not going to resist a sale on Parrano.”

Because of the grocery store setting, Edgar’s department has to satisfy the shopper who wants an inexpensive Gouda or a kid-friendly Cheddar for cooking. For every connoisseur who pounces on the next new creation from Andante Dairy, there’s a customer who notices when the price of the Wisconsin Asiago goes up.

The cheese department offers a vast selection of 500-700 types, ranging from $2.99 per pound for the basics to up to $34.99 for artisanal brands. The bestsellers are equally varied in terms of their claims to fame: the co-op prides itself on low markups of such classics as jack, Cheddar and higher-end Parmagiano Reggiano, while products from the regional Harley Farms and Pedrozo have charmed locavores.

The store’s bulk bins are a world unto themselves, an endless Eden for serious cooks looking for Italian olive oil, flour, Himalayan salt, Madagascar pink rice, Rancho Gordo dried heirloom beans or coffee beans from San Francisco’s cult roaster, Four Barrel. Brimming at more than 600 SKUs (more than 1,000 if you count the bulk herbs), this section draws the masses for its California-grown almonds, walnuts and olive oil, as well as short grain brown rice, organic rolled oats and even maple syrup.

Community Outreach

Rainbow Grocery does little advertising, relying primarily on word-of-mouth. In fact, a recent discount-coupon program aimed at building traffic during slow times (shoppers got 20 percent off on certain days) was almost too successful, creating so much business that it strained the staff and upset long-time customers.

However, the store does its share of community outreach, extending discounts to members of organizations that share its values, such as the San Francisco Bicycle Coalition, which promotes bicycle use. But it focuses most of its marketing efforts on local street fairs and events, often giving away organic apples or other produce to heighten awareness of the co-op.

For good measure, Rainbow Grocery extends its efforts to food education among local youth. “We go to schools, and sometimes schools come to us,” says Trigueros. In addition to having a presence at school health events, the collective invites classes to the store for educational tours, giving students samples as they learn about GMOs, organics and heirlooms. “Schools wind up being a cool way to get involved in the community,” he adds.

Future Expansion?

With its longevity and far-reaching customer base, Rainbow Grocery’s owners have considered adding more locations, but have never taken the step. “The number-one challenge is replication,” notes Edgar. “We’ve never been able to figure out how we would open another store or come to agreement about whether that would be a good thing.”

Trigueros raises another concern about expansion. “There’s the reality of spreading ourselves too thin and falling in on ourselves. One of the things that keeps us tight and operating well is our relationship with each other.”

Though the store’s non-hierarchical structure can slow decision-making and make responding quickly to trends more difficult, surprisingly, says Edgar, the most contentious issues are often the small ones.

“For really serious issues, people maintain a professional way of dealing with each other,” he explains. “The worst argument we ever had was over what color to paint the building: terra cotta versus forest green. It was brutal.” |SFM|

Janet Fletcher is the weekly cheese columnist for The San Francisco Chronicle and the author of Cheese & Wine: A Guide to Selecting, Pairing and Enjoying.

BY THE NUMBERS

Rainbow Grocery
1745 Folsom St.
San Francisco
415.863.0620
rainbowgrocery.org

Year Established: 1975

Total Area: 39,000 square feet

Retail Area: 18,000 square feet

Est. Weekly Transactions: 17,500

Average Transaction: $53

Top Three Departments (by percent of sales):

• Packaged Foods: 19%
• Vitamins: 16%
• Produce: 13%

This article was featured in the January/February 2011 Issue of Specialty Food Magazine. See other articles in this issue at:
January/February 2011 Specialty Food Magazine.

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