Baking up a new business model

  • Miguel Calderon places formed bagels onto baking sheets at Alvarado Street Bakery in Petaluma on Monday November 19, 2013.

While producing 50,000 loaves of bread a day, Alvarado Street Bakery has cooked up a new way of doing business that prioritizes people over profits.

Last month, the bakery not only earned a Leadership in Sustainability award from Sonoma County's Leadership Institute for Ecology and the Economy, it was named one of America's top 50 small- or medium-sized businesses to work for by Fortune Magazine.

The business raked in $28 million in revenue last year, and at this cooperative bakery, profits are shared equally among the 121 employees, whether they're a janitor or an executive. Each staff member has a guaranteed base salary, along with a generous benefits package. Once the bills have all been paid, any remaining money goes straight to the employees on a quarterly basis.

"Those profits can exceed $30,000 in a year per worker," said Michael Girkout, president of Alvarado Street Bakery. He said on average, workers take home $50,000 a year, but that can fluctuate. "There have also certainly been times in the past when we haven't had anything to share."

But the bakery's business philosophy is about more than just profit sharing. The entire company is democratically run by a board of nine elected employees who must represent all aspects of the bakery, meaning there must be at least two men and two women; managers and floor workers; and members from different departments. The board oversees everything from setting annual wage ranges, which are updated annually to reflect cost of living increases; to ensuring that the bakery is compliant with state and federal business regulations.

Larger financial decisions, such as the bakery's choice to install 1,700 solar panels making it the only solar-powered bakery in the country, are taken to the members for a vote. Because it required a big expenditure of company profits, all members were given a voice in the decision.

"We are a democratic workplace, so one person, one vote, regardless of what position you hold," Girkout said.

It's a model that has changed over time. Early on, as the business settled into the revolutionary model, issues between employees sprouted up at the whole grain bakery. "We had some rough times," said Frank Vallin, who has spent 22 years on the production line.

"That's when the committees were formed," added Julie Mager, a marketing assistant who's worked for the bakery for seven years. From grievances to employee wellness, the bakery has myriad committees to ensure the business is running smoothly for everyone.

"For the record, we have not had a grievance come up for 15 years," Girkout touted. "People are pretty happy here. We have nearly zero turnover in the bakery. My son started working here six years ago and he is still called the new guy."

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