Looking to expand, Groundswell Coffee is offering customers $1,000 shares in the business in exchange for a wine or beer per day - for life.
Groundswell Coffee is a private business in St. Paul's Hamline-Midway district that nevertheless feels as if it's owned by the community. In some ways, it is.
Neighbors boycotted it a few years ago when they were unhappy with the way it was being run, and then they voted on a new name for it after Seth McCoy and Tim Gilbert took over in 2009.
Now, McCoy and Gilbert are proposing an even more unusual buy-in: They're inviting customers to purchase $1,000 shares in the business.
The dividend? One free glass of wine or beer at Groundswell per day, for the rest of your life. Or for however long Groundswell lasts.
"It gives us the money when we need it and it gives them the benefit once we're open," said McCoy, a Mennonite pastor who also works as an administrative minister at Hamline Church United Methodist.
They're consulting an attorney to iron out the details of the community-based capital concept. Nothing can happen until they get their liquor license. But a few people already have expressed interest in participating, said Gilbert, a regional sales manager in Minneapolis.
"It's a really cool way for them to participate in the expansion that we're doing," he said.
Hoping to sell 50 such shares, McCoy and Gilbert plan to expand Groundswell into the vacant yarn shop next door on the corner of Hamline and Thomas Avenues, where they want to introduce a bakery and food menu and install a new wine bar. Space also would be provided for the sale of local arts and crafts.
Michael Jon Olson, executive director of the Hamline Midway Coalition district council, said that the neighborhood is ripe for a family-friendly spot along the lines of the Birchwood Cafe in Minneapolis' Seward neighborhood.
"The neighborhood really lacks a signature restaurant. There are a few places on University and on Snelling, but nothing that's a really neighborhoody-type place," he said.
"And there's no competition for this kind of place, so they're making a move at the right time. The neighborhood is ripe for this kind of thing."
Neighbors seem to agree.
"A few of us were talking about how it would be kind of nice to have a place ... where children can come with their parents, and Saturday night you can go with a few people, have a couple of drinks and just walk home. This really will be a nice thing," said Ruth Belmonte, a picture frame designer.
The coffee shop began a few years ago as the Bean Factory, an offshoot of the popular Highland Park shop. Then new owners renamed it the Midway Cafe and miffed customers by laying off some favorite servers and replacing local products with generic brands. It was sold to McCoy and Gilbert in December 2009.
"We were looking for things that help us hang together, and coffee is one of those things," said McCoy, who handles the operations end while Gilbert oversees finances.
They enlisted Dogwood, a premier roaster in Minneapolis, to supply their coffee beans. Their milk comes from grass-fed cows in Forest Lake, and honey from a local beekeeper.
"When we can, we want to choose local," McCoy said.
After three years the business was breaking even, but the partners were eager to do more. When Borealis Yarns shut down next door, they decided to pick up the lease.
They've enlisted a designer and contractor to turn the yarn shop into a simple, uncluttered room accented with wood and 1950s-'60s era orange and green. It will host the main food and drink area, with a wine bar in the back near the espresso machine and a bakery counter.
Five people work at Groundswell now, but more will be needed to oversee the expanded services.
McCoy said that the build-out will cost an estimated $80,000 to $100,000 and operating expenses will amount to $50,000, requiring an infusion of capital. Olson suggested they follow the model of the Northbound Smokehouse, a Minneapolis brewpub that sold $1,000 beer-for-life shares to 75 people, most of them within walking distance.
"I think it's a really interesting concept and a great way for a local business to attach itself to the community," and vice versa, Olson said.
McCoy leads Third Way Church, a Mennonite congregation of 40 that meets Sundays at Hamline Church United Methodist. But he said there are no formal ties between the church and Groundswell. The coffee shop is a tax-paying business, not a nonprofit, he said, and it's not intended for proselytizing.
"Our hope is that the coffee shop can be a venue where ... our values as a community intersect," he said.
"It's going to be a neighborhood spot right on the corner with a family environment," Gilbert said.
Kevin Duchschere • 651-925-5035