How Alvarado Street Bakery went from hippie collective to commercially successful co-op.

Steven van Yoder | October 2010 issue

Alvarado Street Bakery traces its roots to the Red Clover Worker’s Brigade, a 1970s Northern California workers collective dedicated to providing natural food products in the San Francisco Bay Area. By 1977, the Brigade was comprised of several businesses, including the bakery, a retail store (Santa Rosa Community Market), a trucking company and a wholesale warehouse. In 1980, five workers left the Brigade and spun off the bakery, Alvarado, into a separate entity.
“Members of the Brigade were trying to create an economic and political alternative to the predominant corporate food industry of that time,” says Joseph Tuck, Alvarado’s CEO and general coordinator. “It was centered on the ‘Food for People, Not for Profit’ movement, and comprised of hippies with an aversion to authority who wanted to create a more democratic business model, a non-exploitative work environment. But [they] eventually learned that a bakery could not run on ­idealism alone.”
In its early days, Alvarado remained committed to collective decision-making. When Tuck arrived in 1981, for example, all employees had a say in designing packaging. “Do you know how hard it is to design the label on a bag with 40 people in the room?” he asks, not rhetorically. Though leadership was trying to turn Alvarado into a legitimate business, effective planning and management were practically non-existent. Because everyone had a say in decisions, there was no accountability. It was clear that many of the co-op’s founding ideals had become liabilities. So those same hippies re-engineered Alvarado into a more professional enterprise. “We knew that sustainable growth required better business practices,” Tuck says.
The changes paid off. Today, the company, based in Petaluma, California, employs 117 people, ships 40,000 units of certified whole grain bread and bagels a day and generates $24 million in annual revenue. The average hourly wage earner at Alvarado makes $65,000 to $70,000 a year; production workers average $28 to $39 an hour. The ratio of compensation between executives and workers is less than 4 to 1. Every employee receives dividends in relation to the number of hours he or she puts into the co-op. Alvarado’s hybrid model encourages participatory management, enabling workers at the lowest levels to make decisions. But while worker input is encouraged, management gets the final say on operational issues, such as product development. Workers guide the company’s direction, voting on budgets, business plans and board elections at quarterly meetings.
Though Alvarado has struck a balance between traditional business standards and cooperative values, Tuck is quick to point out that co-ops survive or fail based on the realities of the marketplace. “To be successful, co-ops must lead with a competitive, quality product, not their cooperative values.”