by Lou Mancinelli
Back on Jan.10, Food For All, a Mt. Airy café and market specializing in food and groceries for people with food allergies, announced in an email newsletter that it would close just 16 months after opening.
The closing was the result of a promotion deal through Groupon that left the store low on cash and stock and with losses amounting to $10,000. The losses were compounded when the owner Amy Kunkle, took out a high-interest loan to try to save her failing business.
“I feel like it was my own fault for not asking the right questions and researching more into it,” Kunkle said.
The promotion ran from the end of May through August and enabled customers to purchase $30 worth of products for $15. The store, in turn, received – at most – $7.50, according to Kunkle. She said most of the customers who utilized the deal were one-time customers. Some used calculators to make sure their purchase added up to no more than the limit.
“It was basically a $30 gift certificate,” she said.
Kunkle thought it would be an opportunity to spread the word about her store to thousands of people, but realized she had a problem about halfway through the promotion. She said she was contacted by Groupon a few weeks before the promotion began. They sold her on a conceptual idea without providing numbers as to how her business might quantitatively benefit.
“It was just a big mistake,” she said.
When neighbors heard the news, they responded with tears and telephone calls and visits to the store offering support. They wanted it to remain open.
Kunkle opened the store with the vision that it would fit into a community steeped in the farm-to-table food movement. Her interest in preparing foods for folks with food allergies came about because all three of her children have allergies. Food For All serves local, fresh organic products like grass-fed beef and free-range produce.
Many of her customers, she said, often remark how great it is that an entire market’s stock is dedicated to people with food allergies. And it was one of her customers who, along with her family, has celiac disease – a condition that means one cannot eat gluten – that helped Kunkle save her business.
When Anne Marie Dunphy, cofounder and CFO of the Erdenheim-based indentiMETRICS, a finger-scanning identification company for schools, heard about the closing and saw the outpouring of local support, she wanted to help.
Dunphy, a former Wall Street investment banker who used to analyze young companies, asked Kunkle if she could look at her numbers, profit margins and costs to see if Kunkle was running a viable business. Dunphy found that the business was both viable and had been breaking even since it opened. There was a clear loss that appeared at the time the Groupon promotion began, she said.
“It was kind of Accounting 101,” Dunphy said in a telephone interview.
Dunphy was determined to help and learned how much Kunkle needed, not only to save her business, but also to restore it to a healthy place so that it might begin to develop. She was not alone in her efforts.
“It’s a group of people coming together for something that’s important to us,” Dunphy said.
Dunphy said the success of the Groupon method depends on the business. It might be a better idea for a restaurant that makes most of its money from alcohol sales or a small service-related business like a massage practitioner. But for a small business operating on small profit margins, it might not be the best idea, she said.
“The lesson, for me, is to be a responsible consumer,” Dunphy said.
She also said business owners’ need to be more responsible when thinking of offering similar promotions.
In hindsight, Kunkle said she should have set limits on the amount of coupons available as well as what products were offered. Food For All will utilize the downtime to develop more prepared foods in addition to its groceries and breakfast and lunch items like The Stuart, which features oven-roasted Eberly turkey breast sliced and topped with Café Estelle bacon, thinly sliced apple, mixed organic greens and mayonnaise. When it reopens more emphasis will be placed on prepared foods and less on groceries, she said.
Kunkle, 36, who was raised in the Northeast and earned a bachelor’s degree in psychology from Holy Family University in 2001, also has taken some postgraduate classes in psychology at the University of Pennsylvania. She worked at Penn for a number of years in a neuroscience research lab before opening Food For All.
She said that after several months of feeling stressed and defeated, “I feel revived.”