The Noe Valley Community Store is gone. So are Seeds of Life, Ma Revolution, Red Star Cheese, Uprisings Bakery and dozens more Bay Area food collectives birthed in the 1970s.

Rainbow Grocery, however, is still here.

As the collectively owned grocery store turns 40 this month, Saturday lines at the cash register can still stretch back into the aisles, and its bulk bins are refilled with the urgency of Muni N cars during rush hour. The store just paid off its mortgage and invested $3.1 million in massive renovations.

Not that the store’s 243 owner-workers believe that present-day success guarantees future stability. The grocery faces competition from Whole Foods with its deep pockets. And it must attract a generation of new San Franciscans unfamiliar with the collective ethos, and too tied to their laptops to shop for dinner.

Yet the counterculture values that gave rise to Rainbow aren’t holding it back. In fact, the store’s antihierarchical structure may give the collective the competitive edge it will need to survive.

Back to Gallery S.F.’s Rainbow Grocery: a counterculture success story 6 1 of 6 Photo: Michael Short, Special To The Chronicle 2 of 6 Photo: Michael Short, Special To The Chronicle 3 of 6 Photo: Michael Short, Special To The Chronicle 4 of 6 Photo: Michael Short, Special To The Chronicle 5 of 6 Photo: Michael Short, Special To The Chronicle 6 of 6 Photo: Michael Short, Special To The Chronicle











Even long-standing customers may not know that Rainbow was founded by an ashram. This one, in the Outer Sunset, coalesced around Prem Rawat (“Maharaji”) after the guru first visited the United States in 1971.

As with so many of the other communes of the time, the ashram’s residents formed a buying club, pooling money to purchase dry goods, cheeses and produce. In 1975, the Common Operating Warehouse, part of a network of alternative, anticapitalist enterprises called the People’s Food System, put out word that it would offer credit to any startup enterprise that agreed to a set of conditions, including collective ownership and openness to volunteers.

The ashram heeded the call.

“It was a marriage between Patty Hearst politics and the organic, natural food movement,” says commune member Bill Crolius.

Crolius and four or five other residents found an inexpensive space at 16th Street and Valencia, then a neighborhood full of boarded-up storefronts, cheap hotels and trouble. They sanded the floors and built a cash register station. They covered the floor in big barrels filled with oatmeal, whole-wheat flour and other dry goods. They hung signs in the window, announcing in English and Spanish: “This is a new community store — volunteer and get 10 percent off.”

Sometime in August — no one can remember the exact date — Rainbow Grocery opened.

‘Right time, right place’

“It was the right time and the right place,” Crolius says. Neighborhood residents, as well as the larger hip community, began shopping and volunteering. After just a few months, business was good enough to begin paying Crolius and a few other workers.

“Rainbow started being this very energized, high-volume store,” he says. “We were just throwing all the (extra) money into the store, upgrading to bulk bins, building walk-ins and a deli counter. Our mission became to provide as rich a spectrum of natural foods as possible.” A permanent workforce of 25 replaced the come and go of volunteers, though workers were paid a nominal wage.

“Our focus has never been about making money,” says Josefa Perez, who has worked at the store for 30 years. “Only in San Francisco could a place like that be.”

Yet it never ignored profitability, either. Rainbow’s focus on food and health, rather than broader social change, may have helped it survive the implosion of the People’s Food System, which collapsed in 1977 under the strain of political struggles that turned, at times, violent.

After a move to a much larger store on 15th Street and Mission in 1983, revenue shot up 60 percent in the first year alone, and the staff quickly tripled. In 1993, the store cast off all remnants of its origins and reorganized as a worker-owned corporation, which brought workers a living wage and better benefits. In 1996, aided by the city, Rainbow bought a warehouse on Folsom and Division with 17,500 square feet of retail space. The moment the new store opened both Rainbow’s sales and its workforce exploded once again.

How do you operate a business in which every worker is an owner and no one is a boss?

Rainbow defies all assumptions that companies are best run like a vertebrate body, governed by a central brain whose executive commands millions of neuron and muscle cells. It’s more akin to a slime mold.

What customers think of as one store operates as 14 semiautonomous departments. As a worker, you are brought on by a hiring committee in your department and trained by your department, which is then responsible for your work.

After a 90-day trial period, then 1,000 hours of labor, the department can vote for a Rainbow worker to become a worker-owner. Once a full-blown member of the collective, you earn the same base salary as any other worker (the rate increases with seniority). With time, you also build equity in the store.

“It’s not just your job,” says Eddie Southard, of bulk foods. “You own this business. It’s incredible to think that I own something with 200-something people.”

Tremendous pride

Such a system builds in a tremendous amount of pride, not to mention expertise in each person’s specialization. The spirit of equality means that buyers spend time on the floor, interacting with customers and seeing how the products they bring in actually sell. Workers who have been at Rainbow for only seven years still consider themselves junior, and some staff have focused on herbs, cheese or produce for 20 years.

Of course, 243 empowered workers have 243 different ideas of what Rainbow does right and wrong.

“Nobody is held individually accountable, which is great and awful,” says Kristen Connolly, a grocery buyer who has been on staff for 15 years.

Jose Vazquez, a member of the cashier department, phrases the current state of customer service diplomatically. “We don’t kiss cheeks,” he says. “Sometimes we’re a little dry.” Yet, he argues, workers at Rainbow will help customers with issues well beyond making a simple sale. They take the initiative to research whether workers at the farms that supply the store are treated well.

As Angie Visser-Keough, a member of the sundries department, says, “One of the things we all like to say is we don’t have bosses, but in the same breath, we each have 200 bosses.”

‘Meetings and magic’

The secret to coping with 200-plus bosses? “Meetings and magic,” jokes Bryn Dekker.

“There is a meeting every minute of the day,” concurs Mary Murtagh, a 40-year worker at the co-op, who then insists she is exaggerating, but not really. There are departmental meetings, board meetings, meetings of more committees than anyone can count. Then there are meetings to resolve disputes, whether between departments or individual staff members. There is even a committee to improve the efficiency of meetings.

The years have seen struggles over whether the store should boycott products from specific countries, whether to take credit and debit cards, and, of course, the perennial question: Should the all-vegetarian store stock meat? Individual answers to the last question, not surprisingly, vary in all but conviction.

Collective spirit

To outsiders, it’s a bewildering structure; to insiders, often a frustrating one. And yet it reinforces the collective spirit that keeps a team focused on the collective good of the enterprise.

A sense of ownership has never been limited to Rainbow’s workers.

“Our customers are the ones who make us who we are,” says Josefa Perez. “Our customers are the ones who tell us what to get and when we’re doing something wrong.” Rainbow’s customers are not shy about quizzing workers about GMOs or pointing out that a packaged good actually contains (verboten) MSG. Their requests are heard by the very people empowered to respond.

To spend time in Rainbow talking to customers is to realize what a vital institution the store still is, and how many embrace its core values. “I like that it’s a worker co-op,” says Madeline Lim, who has been shopping here for two decades. “It’s really important to me to come to Rainbow and see queer people, people of color. If I’m going to spend my money, I’m going to spend it here at Rainbow rather than Safeway or Whole Foods.”

It doesn’t hurt that the shopping is so good: Rainbow may have started out as a hippie shop with populist tastes, but now it’s one of the best places in the Bay Area to find products from small, local food artisans.

Which is good, since competition has increased. Austin-based Whole Foods opened its first San Francisco store in 1996; now it has seven. “Traditional grocers are increasing their (offerings) of natural foods,” adds grocery industry analyst David J. Livingston. “Costco has become a big natural and organic food seller. It’s not just the natural food retailers anymore.”

Gentrification worries

Rainbow workers say that they are counting on customers like Lim to sustain the store against its competitors. They mention how much Rainbow gives back to the community, donating food and money to local schools and organizations.

In the next breath, they worry that gentrification is pushing too many longtime shoppers out of the city and that newcomers won’t care about Rainbow’s values. “The tech industry tends to want to streamline their lives, being able to click and order,” says Jeff Ray of the maintenance department. “We can’t offer all that convenience.”

The collective may not be willing to budge on the idea of selling meat, but it’s not a static entity. Immediately after paying off the mortgage last year, workers voted to funnel their annual dividends into a massive renovation and the construction of an outdoor cafe. Last year, Rainbow began working with San Francisco delivery company Instacart, which sends workers to purchase items for shoppers who order online.

Now they’re considering — gasp — marketing. “One of our challenges is getting out who we are to people who don’t know what we are about,” says Gordon Edgar of the cheese department.

Adds Ray, “People don’t realize that we’re more than a grocery store.”

Jonathan Kauffman is a Chronicle staff writer. E-mail: jkauffman@sfchronicle.com. Twitter: @jonkauffman