Location Study Shows Great Revenue Potential for West Chester Food Co-op
Our study examined four sites selected by the Board, in and around the Borough, all drawing upon the same trade area. The sites were chosen because they met size and other requirements for a grocery store but also because they represented distinctly different types of settings….from the extremely pedestrian friendly (the Post Office) to the extremely car friendly (a strip mall), to allow an understanding of the potential revenue impact of this important characteristic.
The study showed that the Co-op’s projected trade area (about 118,000 people) along with sales from outside the trade area is expected to produce annual revenue, on average, of about $6.6MM. Based on the characteristics of our community, the consultant recommended a store size of about 6,000 sf, which would mean revenue of about $1,100/sf, well beyond the industry benchmark of $700/sf for a viable co-op grocery. This also compares extremely favorably to other area co-ops-in-development who are moving forward with revenue projections from $500-$1,000/sf.
The best performing site (strip mall) was 15% above the mean annual revenue while the poorest performing site (walkable but no onsite parking) was 15% below the mean… and the Post Office was right in the middle. Although these differences are not insignificant, it is important to remember that revenue for ALL of the sites indicates that they are potentially viable, primarily due to the strong demographic characteristics of our community. As a cooperative, we are not obliged to be profit maximizers and are free to choose the site that best serves the community so long as it is financially viable.
The next step in determining viability is to better understand the development cost at potential sites. Clearly these will differ greatly from a strip mall tenant fit-up to the complex revitalization of an historic property like the Post Office, where industry average costs are clearly not applicable. In order to determine viability of the Post Office, a site study will be required.
The USPS is committed to selling the Post Office with a long term leaseback for a greatly downsized presence. We recognize the stake that the community has in this property– as an historic building owned by the public and as a hub of the community. Our location study has demonstrated that it has the revenue potential to be our community owned grocery store and we believe we must continue to pursue this location, regardless of the complexities. At this time the Board is considering a path forward to secure a site study of the property. We will continue to keep the community informed in subsequent newsletters. Have questions about our location study? Email us.