On Wednesday night, the Center for Civic Innovation hosted the second installment in our Real Talk series. We started Real Talk to highlight the triumphs and challenges of those who are doing the daring work of trying something new and different in their communities. Our speakers were the brother and sister team, Alison and Alphonzo Cross, founders of the Boxcar Grocer in Castleberry Hill. Despite tons of great press, a wealth of talent, and support from the community, Alison and Alphonzo made the difficult decision to close their business earlier this year.
Both entrepreneurs have been transparent about the reasons behind their decision, with Alison writing a heartfelt and honest post on their blog back in May. We are so grateful to them for joining us last night to continue the conversation in what Alphonzo jokingly referred to as their “exit interview.”
Alison and Alphonzo went into their venture with a strong skill-set: Alison brought expertise in art and design, while Alphonzo had experience in retail food sales; both described themselves as entrepreneurs practically from birth. They expected challenges as pioneers working with an untested business model in an underserved area, but felt strongly that people should have access to the same variety of services in Castleberry Hill as they do in Buckhead.
One of biggest difficulties with their venture came from location: “food deserts are usually everything deserts”, lacking other amenities like banks, community centers, and transportation. It made capturing the community market difficult. In Alphonzo’s words, “if someone has to leave the community to get seven of the eight things they need, then it doesn’t make sense to buy that last one locally.”
Another challenge was managing expectations about food costs. Boxcar’s biggest competition came from other food choices in the area, mostly fast food and local corner stores selling snacks, soda, and alcohol. Residents expected food to be relatively inexpensive or free. In seeking a larger cultural shift in food attitudes, Boxcar aligned itself with the slow food movement and the higher costs that come with working with smaller scale local farmers.
Other takeaways from the night:
- Capacity is a major challenge. In Alison’s words, “lots of expertise is needed in a startup. Someone has to run the social media, do the outreach and marketing and food education. We had to do it all ourselves and learn from scratch.” You also can’t be everywhere at once. There were a lot of community demands on Boxcar Grocer, and they had to learn the hard way to say no.
- Looking “put together” can be a surprising double-edged sword. Alison’s design eye and Alphonzo’s retail experience made for a well structured store and a neatly designed website. As a result, Alphonzo said, “we looked to the outside like we had more money than we did” and people were less willing to help out because they thought the business was doing fine.
- Urban density poses a problem for retail in Atlanta, especially food retail. A community grocery model doesn’t work unless there is a continuous flow of customers buying lots of little items. In cities like Atlanta there often aren’t enough people who live in walking distance of a store to support that activity (and in many neighborhoods, walkable sidewalks are not guaranteed).
- A key metric for any startup is the owners’ ability to pay themselves. Alphonzo’s rule of thumb for retail was that if owners cannot afford to pay themselves within six months, the business is unsustainable.
- It’s important for budding entrepreneurs to know that a brick-and-mortar business needs different types of capital over its lifetime. Many entrepreneurs are comfortable with attracting startup capital, but don’t gather enough operating capital to take care of business operations in those early months. The last and toughest kind of capital to get is growth capital, which is needed for expansion. As Alphonzo pointed out, “You can’t use your operating capital to grow; you need it to run your business.”
At the end of the night, Alison and Alphonzo got the question: “Will you stay in Atlanta?” and to much applause, both said that they’ll be staying. In true entrepreneurial fashion, they’re treating this as “chapter 1 in the book of how to do food retail.” The plan is to reformulate their business model and start a new version of Boxcar Grocer sometime in the near future. When that happens, CCI will be there to support them.
Thanks again to Alison and Alphonzo for your honesty, insights, and real talk!