This Pennsylvania-based business says that the minimum wage in the state is a “poverty wage.” Instead, they’re opting to pay their employees nearly twice that.
The Lancaster Food Company was started last year by Charlie Crystle and Craig Lauer, an entrepreneur and a foodie, respectively. They sell breads, seed butters, salsas, and maple syrup -- all organic and all local. But aside from serving up high quality food, the duo want to solve some serious social issues in the area.
Lancaster City has a high poverty rate. About 30%, Crystle and Lauer say. While their business alone can’t feed all those individuals, the two want to use their company to show that local businesses can help change that. So, they’re opting to hire folks who come from low-income backgrounds. But they’re going beyond the minimum wage, by offering them a starting hourly rate of $14 an hour plus paid time off and benefits. (According to the Bureau of Labor Statistics, about 50% of the companies in the area are offering compensation around $11 an hour, higher than the minimum wage.)
“We feel people who put in a full day of work should get a full day’s pay, which to us means enough money to pay the bills and have some left over so they’re not just scraping by,” says Crystle.
There’s also employee ownership: 30% of the company will be owned by the employees. Right now, the company has 14 employees. Crystle says it pays in the long run to invest in your staff -- financially and emotionally. “It leads to less turnover, which is costly.”
So, how do they find these people and make sure they actually get the job done?
It requires some hand-holding and attention, says Polly Lauer, the COO at Lancaster Food Co. Lauer says the company helps them with “wrap around” services, i.e. finding safe housing with no or bad credit. There’s also the fact that many of them have not had real jobs in the past, so they have to be coached in professionalism and developing a strong work ethic.
Photo Courtesy of Subject.
So far it’s worked, Crystle says.
“We find that once they realize it’s a place that works as a team with trust and respect, they understand how important an opportunity it is for them.”
Lancaster Food Co. has ambitious plans for expansions: they want to go from 14 employees to 100 in the
Tackling the poverty issue in Lancaster City is only one part of the company’s mission. The other is centered around their zeal for organic, locally grown ingredients. Lancaster County is home to many farms with more than a 100 organic farms, in particular.
Craig Lauer, cofounder of the startup, is a passionate cook who prefers to make everything from scratch. Crystle is as invested in the local food scene; he used to run a CSA, has started community garden programs, and even tried to improve the quality of food at local schools. Food, and that too good food, is the common denominator between these cofounders.
Currently, the company sources its flours for the breads from regional mills. Later this year, they’ll be launching a Lancaster organic grains bread. The apple cider that goes into the bread comes from Oyler’s Orchard, a family farm near Gettysburg, Pennsylvania.
“It’s the best apple cider we’ve ever had,” says Crystle.
The sunflower seed butters, jam, and salsa are also made with local organic ingredients. Next up is a line of canned goods for the company. Those too will be using vegetables from Lancaster County’s organic farms.
In just a year, the startup has already landed its products in 100 stores, including Whole Foods in the area.
Crystle says they expect to get to profitability in the first half of next year.
"Margins are always tough in the food business, but we're doing fine even though we're competitively priced. As we scale we should be able to get some ingredient costs down, but we also plan to increase pay," he says. Scale is what's needed to do such an enterprise and be able to pay folks a reasonable wage.
Part of the answer, Crystle says, is also have executive pays that are not bloated. As the company expands, he says, their executive pay will be below industry average. "We're ok with that."
To grow, the company also needs further investment. Hence they're raising capital. “And that’s always a challenge for startups,” Crystle says. “We’re like any startup--we’re making it up as we go, learning along the way, and trying to build a consistently excellent company.”
At the core, though, is their passion to create change using business, he says.
Providing a “thriving wage” is as important as the food they churn out.
Thus, Lancaster Food Co. poses a question that’s at the heart of the social enterprise movement: Can businesses like this one make a serious dent in the local economy and help solve a problem that’s been negated by the public system?
