Sept. 17, 2020

With a second capital campaign underway, the Sioux Falls Food Co+op has started its expansion project.

Construction crews have gutted the space adjacent to the health food grocery store at 18th Street and Minnesota Avenue, and final plans are headed to the city for building permits, general manager Patrick Sayler said.

“The expansion is going to end up touching every part of the store. We’re not just building that addition and we’re done,” Sayler said. “We’re greatly expanding the deli. It will be four or five times the size of the deli we have now.”

The deli will be moved to the new area of the store and will include the addition of seating. A door in that area will serve as an exit-only to a patio, which eventually will be expanded to the west side of the building, Sayler said.

The frozen food, produce and main grocery areas will expand, and the checkout area will move.

“The entrance will stay where it is,” Sayler said. “It will be opened up a little bit. There will be more room for carts.”

Construction on the $2.4 million project is expected to take four months once it begins, he said.

While the co-op model is supported by member-owners, the grocery store is open to everyone. Sioux Falls Food Co+op has about 1,200 member-owners and hopes to get closer to 2,000 after the expansion, Sayler said.

An initial capital campaign sought to raise $1.5 million from member-owners for the expansion. They invested $450,000 in new money and rolled over almost $400,000 that had been loaned to the co-op after it needed to recover from a 2014 fire that led to its new home.

“After it fell short, we looked at other options, but on a federal level, there’s not a lot of assistance for co-ops to do something like this,” Sayler said. “When you have 1,200 people who own the co-op, you can’t go out and get all 1,200 people to sign off on an SBA loan.”

While Sayler was researching financing options, the coronavirus pandemic struck, and the focus switched.

“We had to run a very busy grocery store through all of that.”

Eventually, the co-op “found a path forward” and is working with Black Hills Federal Credit Union on financing for part of the expansion cost.

The second capital campaign seeks to raise $350,000. While it’s early in the launch, the co-op has received $50,000 in pledges.

“It truly is an investment and not a donation at all,” Sayler said. Investors will receive preferred, non-voting shares in the co-op that will be paid back as soon as the co-op can.

“We expect that to be in five years,” he said. “In the meantime, the shares accumulate dividends.”

Next month, the co-op will start an ownership drive. For $200, or $40 a year over five years, member-owners have a stake in the store, get money back based on their spending, have access additional sale prices and can vote for directors to serve on the board that oversees the co-op. The money is fully refundable if a member-owner decides to no longer participate.

“I always love to tell people this: A lot of people want to help the co-op and want to see the expansion happen, but they may not be able to purchase shares,” Sayler said. “We appreciate folks signing up to be member-owners. … It helps to have more community involvement in the store.”