Bank leads effort to save Illinois grocery store

Northwestern Financial Review, May 15-May 31, 2002 by Bengtson, Tom

[economic development]

Washburn, a mid-state town of 1,100 people, has Illinois' only community-owned grocery store thanks to Alpha Community Bank. Operating since fall of 2000, the bank is keeping Main Street a-buzz in a town where every business is critical to its viability.

Tim Schoon, president of the Washburn branch of the $125 million bank based in Toluca, Ill., rallied the community around the effort to preserve the town's store. Two years earlier, the store closed for several months, forcing residents to drive 20 miles to get groceries. A vibrant grocery store, Schoon knew, was key to the success of a town whose business district consists of a pizza parlor, a cafe, a curio shop, an insurance office, the bank, and a post office.

The previous owner of the grocery store announced in February 2000 that he was going to close the place down after being unable to find a buyer. That's when Schoon went into action. He organized a group of 16 volunteers, including business owners, farmers and housewives, to come up with a way to save the store. As the group was bantering about ideas, a television news program ran a story about a store in Scranton, Iowa, that was purchased by a community group. Schoon and members of the volunteer group spoke to people in Scranton, getting a blueprint for how to proceed in their own town located about 30 miles northeast of Peoria.

The committee formed a for-profit corporation - the Washburn Grocery Association - and sold shares to the community at $50 each. Schoon felt that the more shareholders there are, the better, since it would broaden the base of support for the store. "All the shareholders would have a big incentive to shop at the store, so we wanted a lot of shareholders," Schoon explained. The goal was to raise $80,000 through the stock offering. In addition to purchasing $10,000 worth of stock, Alpha Community Bank agreed to provide the origination expenses associated with the stock offering and absorb them if the project failed. That proved unnecessary. Going door to door, volunteers eventually raised just over $100,000 from more than 360 shareholders. Help came from several local newspapers and television stations that heard about the effort and ran stories about it.

A total of about $200,000 was needed to buy the grocery store building and stock it with products. Schoon was able to arrange for the remainder of the funding from several sources, including the Woodford County Small Business Assistance Loan Program, the Illinois Department of Community Affairs, and Tazwood Community Services, Inc. Block Grant Economic Development Loan Program. Funds from the various sources were blended into a loan with an interest rate of 4 percent.

Washburn Community Foods opened on Nov. 6, 2000. The store is managed by three employees, who report to the Washburn Grocery Association. Several part-time employees and 30 volunteers keep the shelves stocked, cash registers operating, and groceries bagged. The store needs to sell about $20,000 in groceries per week to break even, a threshold it reached within two months.

The store has benefited from rental income generated by two businesses located within the store's 10,000-square-foot space. A local Mennonite family operates a "bake from scratch" bakery, which offers about 15 unique bakery products that attract people from miles away. In addition, another section of the store accommodates a video rental business.

Schoon describes the project as "win win, all the way around." He notes the store generates about $3,000 per year in sales tax revenue for the town. In addition, it has brought the town's people together like no other project. Schoon said he has received numerous inquiries from other communities looking to do something similar.

For the bank, the project is an unquestionable success. Not only does the store preserve the community's economic viability, but it led to the opening of a new six-figure deposit account at the bank, as well as a new loan relationship. In addition, the town picked up substantial positive exposure from the media. The newswire services have written articles, and so did Women's World magazine. A British Broadcasting Company television program on shopping is set to include a segment on Washburn Community Foods. Also, the Independent Community Bankers of America recently honored Alpha Community Bank for spear-- heading the effort. Last year, the Community Bankers Association of Illinois recognized the bank.

"It's a community effort," commented Schoon. "Many people have worked together to make this happen."