February 14, 2021

Michigan Good Food Fund to forge long-term relationships

Last year, when COVID-19 forced people into isolation, Quiana Broden’s Detroit restaurant and kitchen classroom,…



Last year, when COVID-19 forced people into isolation, Quiana Broden’s Detroit restaurant and kitchen classroom, The Kitchen by Cooking With Que, had to shut down like all the rest.

But even with the loss of cash from dine-in customers and in-person classes, she was able to sustain takeout at the restaurant and meet surging demand for her company’s meal-prep or prepared healthy meals delivery and purchase food up front, thanks to a $30,000 loan from the Fair Food Network’s Fair Food Fund and ongoing technical assistance from the Ann Arbor-based nonprofit and other partners in the Michigan Good Food Fund.

The fund’s partners knew Broden and her ambitious business model (which also includes a catering business and fresh produce food boxes) and had built a relationship with her starting in 2018 when she attended an accelerator event. They often spoke weekly to help ensure finances were in order, to set pricing for the prepared healthy meals service she added in late 2019 and to provide secondary financing to ensure her business could stay afloat and meet rising demand in the midst of the pandemic.

Year over year, Cooking With Que’s business is up 43 percent right now, with increased demand for prepared meal boxes, virtual classes and takeout at the restaurant, Broden said. She ended 2020 with revenue of just under $600,000, about double the amount she brought in the year before.

Now, as she makes plans to gain much-needed additional space by renovating the basement in her leased Woodward Avenue space on the border of Detroit’s Midtown and New Center areas, the Michigan Good Food Fund partners are there again, working with her to identify funding for the renovation and helping market the prepared meals line after working with her to set new pricing — $180 per box for a week’s worth of healthy prepared meals — that took effect Feb. 1.

“When the pandemic started, I had my (13) employees still working, and it was draining our operations because we couldn’t have customers in,” Broden said.

The fund’s partners walked Broden through how she could pursue bigger government contracts with the Detroit Health Department and Detroit firefighters to keep revenue coming in. And they stepped up with the loan to help her cover up-front costs until payment came in.

“That was a big deal for us. We needed that,” said Broden, 42.

“If they didn’t support me in that way, I would not have been able to keep my doors open.”

That’s the type of relationship the Michigan Good Food Fund will look to expand as it heads into its next five years, said Mark Watson, managing director of the Fair Food Fund, which took on the role of administrator of the larger fund in January.

“There’s a lot of activity around incubating and catalyzing them, but a lot of (minority-owed) businesses fail,” he said.

“We need to increase the chances of businesses being around in five years, especially for Black- and Brown- (owned) businesses.”

Even before the pandemic, minority-owned small businesses in Michigan were under pressure.

In 2018, there were 169,363 minority-owned businesses in the state, according to the U.S. Small Business Administration. By the first quarter of last year, that number had dropped by 100,000 to 69,149.

“It’s a shocking statistic,” Watson said.

As it heads into its next five years, the Michigan Good Food Fund is shifting to a relationship-driven model with small businesses rather than a transactional one to help ensure small businesses have the support they need to grow.

The fund’s partners also plan to introduce new products and expand the offering of others. And they will put as much as half of their resources behind Black- and Brown-owned businesses, Watson said.

“While we’ve done some transactions and we’ve provided a lot of (technical assistance), we will do more as a portion of the work we do over the next five years.”

Focus on relationships

The Michigan Good Food Fund, a $30 million public-private loan fund, launched in 2015 to provide financing and business assistance to entrepreneurs engaged in food production, distribution, processing, marketing and retail projects in underserved communities across the state.

It began with four partners: Capital Impact Partners, Fair Food Network, Michigan State University Center for Regional Food Systems and W.K. Kellogg Foundation, with initial funding from the Kresge Foundation, Max M. & Marjorie S. Fisher Foundation, Northern Trust Corp. and the federal Healthy Food Financing Initiative.

Over the past five years, the fund has invested $17 million, providing support to over 300 Michigan food businesses that have created or retained more than 1,000 jobs, according to a new report. Of those, 53 percent were owned by people of color, and 52 percent were led by women.

Going forward, it will seek to expand its relationships with the companies it supports, Watson said. As it takes on administration of the fund this month from Capital Impact Partners, the Fair Food Network will coordinate resources the Good Food Fund partners can provide to better support healthy food entrepreneurs.

“That’s a shift; it’s more about growing and cultivating business than just focusing on the near-term transaction,” Watson said.

With that approach, the fund will be able to offer companies additional support as they grow, increasing the chances they will succeed over time, he said.

“I think we all realize it does take an ecosystem to support any entrepreneur,” but the approach will be particularly helpful to Black- and Brown-owned companies that traditionally struggle to get follow-on capital, Watson said.

New and expanded products

At the same time, the Michigan Good Food Fund will expand its support for healthy food businesses in underserved areas by expanding what it can offer companies, Watson said.

It will continue making grants and expand microloans and lines of credit, while adding loan guarantees, convertible securities/debt and mission-related private equity (from investors interested in supporting efforts such as those tied to social determinants of health, the environment and social justice) to its offerings.

“We all know we need to lean in this direction, but this is the design year of what do we do differently,” Watson said.

The fund plans to put in place systems to measure the outcomes of the relationship-driven strategy, he said.

“It won’t just be how many loans or grants we gave. It will be what happened to the business over five years.”

First published by Crain’s Detroit Business on February 14, 2021.

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