Food co-op trying to attract investors

It's the proverbial Catch-22 — a cooperative needs member-owners' money to lease a building and go into business, but potential member-owners are hesitant to give money to a business that hasn't opened.

"We're not going to open doors if you don't invest now," said Ben Gaddis, a Wasatch Cooperative Market steering-committee member, in a pitch to about 70 mostly Salt Lake County residents last Wednesday. "The capital you provide is by far the most important capital we'll receive."

Wednesday night was the beginning of the membership drive for the nascent Wasatch Co-op, which will mostly sell groceries, focusing on local growers and natural and organic foods. Once the co-op begins making a profit, member-owners will receive dividends based on the amount they spent shopping each year.

Memberships cost $300 and can be found at wasatchcooperativemarket.com/application/.

The co-op will use the membership money to pay for a $10,000 feasibility study, which will help determine the location of the first 8,000-square-foot store. The co-op's steering committee envisions opening in about 18 months, in April 2011, and hopes to receive about $500,000, through about 1,800 members, before then.

"That amount of money allows the cooperative to leverage traditional forms of financing like credit unions," Gaddis said.

The steering committee also announced that it is registered in Salt Lake City to do business and has formed a limited cooperative association under state law, which allows it to officially kick off the membership drive.

"There's a chance the business that might not work," Gaddis said. "There's some level of risk on your part, that the $300 might be gone."

Cari Pinkowski of Salt Lake City wrote a check and became a member after the pitch. Pinkowski was a member of two co-ops in Minneapolis, including one that she helped form, called the Eastside Food Cooperative.

If you like brie from a certain farm in France or beef from a local rancher, the co-op will listen and likely get your product, since shoppers are considered members, Pinkowski said.

"The biggest obstacle here is people don't know what a co-op is," she said. "Once the co-op is in place, it'll grow exponentially."

e-mail: lhancock@desnews.com