Joe DeLoss has a dilemma. The founder of Hot Chicken Takeover has been mulling the design of the next evolution of his wildly popular restaurant. It has operated from a takeout window at a co-op in Olde Towne East, a food truck, and the second floor of the North Market. Later this year, he plans to open a more traditional fast-casual version, which means he will get to build his own kitchen for the first time. The dilemma? The technology he’s employing in the design might make the kitchen too efficient.
It’s a desirable predicament for many entrepreneurs, but DeLoss isn’t typical—at least not yet. He’s one of a growing local community of social entrepreneurs, a subset of startup enthusiasts devoted to the idea of creating meaningful social change through for-profit businesses. In his model, he hires people who need a second chance at employment, typically due to homelessness, poverty, and prior incarceration. So that efficient kitchen, which would help him achieve his profit goals, would also cut the bodies necessary to run it, reducing the employment benefit to the community in the near term.
“We want bodies, but do we want people to be redundant?” DeLoss asked. “You know, that doesn’t build pride.”
It’s the pain of success in a social enterprise.
Social enterprise isn’t new, but the term has only recently begun to gain mainstream visibility and popularity, and it has taken many forms as the local scene has started to coalesce. Some are spin-offs from nonprofits seeking to increase revenue; others are startup-style ventures; some are subsidiaries. They can enact positive social outcomes in different ways—by funneling profits to a charity, by hiring those with significant obstacles to employment, and through serving a market other businesses ignore.
One of the most recognizable examples of social enterprise is Goodwill. The thrift stores, which are very profitable, provide funding for the nonprofit’s charity operations to supplement philanthropy. Although the practice of a nonprofit creating a for-profit entity is fairly common, Allen Proctor said that the more popular model for the younger generation has been entrepreneurs creating freestanding, for-profit businesses, like Hot Chicken Takeover.
Proctor is one of the founders of the Center for Social Enterprise Development, a nonprofit organization dedicated to promoting a thriving local economy of good by increasing awareness, offering educational programs, and encouraging investment. He has spent the last 15 years helping nonprofits improve their finances, and he noticed that the most successful ones at surviving the recessions had established sources of revenue beyond donations. Philanthropy is basically capped, Proctor said, and charitable contributions as a percentage of nonprofit revenues have been flat since 1985.
“What is going to meet all these needs in our community? You’ve seen the poverty statistics. It’s not gonna come through hiring another fundraiser,” he said. “Social enterprise is an additional arrow we need in the quiver to be able to meet the social needs of our community.”
Even though it’s still early in the development of the local scene, Proctor discovered that it was already much larger than he anticipated. He expected to find 16-20 social enterprises when he set about creating a directory for CSED; instead he has identified 88. Most of those businesses are in the volatile first few years of their existence, Proctor said, and the movement as a whole is still building awareness and momentum.
Even the definition of what qualifies as a social enterprise is still up for debate. DeLoss’s mission is built directly into his employment strategy; the business wouldn’t exist without it. By comparison, some companies operate using a “buy one, give one” model in which the social contribution changes based on success—it’s a fine line, DeLoss said. Proctor is less concerned with defining the term strictly at this early stage. Right now, if business owners consider their companies to be social enterprises, then that’s enough for him.
“Will people misappropriate the term social enterprise?” he asked. “Yeah they probably will, but the fact that a business thinks it needs to be doing good is still progress.”
Social enterprise has grown substantially here in recent years. DeLoss was one of the first people John Rush met when he arrived in Columbus five years ago, and the two of them comprised about half of the nascent scene. It made happy hours more interesting, DeLoss joked, because there was another person to talk to.
CleanTurn, Rush’s social enterprise, was founded with a group of investors as a for-profit business to provide jobs and skills training to those who have obstacles to employment. CleanTurn operates as an incubator for four different business lines: construction and general trades, demolition, landscaping, and janitorial.
Last spring, the janitorial line was spun off into She Has a Name Cleaning Services, a company that employs victims of human trafficking through partnerships with nonprofit organizations and the city’s CATCH Court program. She Has a Name supports workers’ transitions through mentoring, mental health services, career advancement training, and financial literacy.
“If you’re able to empower an individual to learn a skill and equip them to develop the mindset of pursuing a career where they’re providing for themselves and their families, you’ve not only reduced the cost of that individual by not having them incarcerated, you’ve also generated an individual that’s a tax contributor,” Rush said. Since CleanTurn launched in 2012, it has employed about 325 people, with approximately 50 on staff across all business lines now.
DeLoss used a similar employment model with Hot Chicken Takeover, which offers a second chance for people like Shannon Wilson and Earl Jackson,—pictured on pages 60 and 64—who had significant challenges to employment. Like CleanTurn, the company partners with referral sources from the nonprofit world, like Kindway, the organization that referred Wilson and helps people transition from prison to everyday life.
The social and bottom-line goals are both important to DeLoss, but he focuses the company’s message on the food and the dining experience first, treating the mission aspect as a “second- or third-date conversation with customers.”
“We always think of those SPCA commercials with the sick puppies and Sarah McLachlan—we don’t want our staff to feel like sick puppies,” DeLoss said. They’re motivated and working hard, he continued, so they don’t need sympathy. “We find that there’s more pride associated with their involvement at Hot Chicken if they involve it with being one of the best restaurants in town.”
The oldest freestanding social enterprise in Columbus, according to Proctor, is Pearl Interactive Network. Founded by Merry Korn in 2005, the company provides staffing for call centers, help desks, and administrative services, with hiring priority given to disabled veterans, veterans, and others with disabilities. She also may run the largest social enterprise locally, with 517 employees across 26 states at her peak periods of employment.
Her business predated common use of social enterprise, and it grew without a cause at first. She was raising sponsorship money for associations and was having trouble getting workers to stay. Her husband told her about a quadriplegic woman he knew who just watched TV all day, but her mind was still sharp and she could work. So Korn hired her and outfitted her with a software program that allowed her to talk on the phone, send emails, and create tracking reports without the use of her hands.
The woman was so excited for the opportunity that Korn began hiring other people with disabilities. The big break came when the Ohio Rehabilitation Services Commission gave her a grant to utilize a rehab engineer, who helped her hire people with disabilities to work from home using integrated assistive technology. She still struggled to get people to understand her dual profit and social missions until she included veterans in her hiring practices and began emphasizing her socially focused workforce priorities.
“I always lead with the social mission because it opens doors, and I charge more,” she said, adding that she’s careful to select clients who appreciate her mission. “I charge more because people are willing to pay more because they really believe in what we do.”
Suzy Bureau felt like something was missing. She attended all kinds of tech and startup events, with solutions prominently on display, but there was still a problem. The business plan competitions were lacking in workable tech solutions, and the hackathons—where computer developers convene to collaborate on software—produced brilliant tech without having any real purpose in mind. Enter GiveBackHack.
“Let’s connect these people who have so much passion and are incredibly intelligent and wanna build cool things,” she said. “Let’s connect those people with the social impact problems we see here in Columbus.” So Bureau and her colleagues organized the first GiveBackHack, in which 105 designers, developers, and social entrepreneurs came together last April to create viable businesses during a single weekend. They narrowed about 60 social enterprise pitches down to 12, and then teams formed around those ideas. On Sunday, they named three winners, who received funding and in-kind resources to help push them forward.
GiveBackHack and CSED are just two recent entrants into this supportive ecosystem. The Columbus Foundation has a fund specifically to promote social enterprises, like past recipient Freedom a la Cart. The Tony Wells Foundation offers education and investment for social entrepreneurs, including money for new ventures. CivicHacks (not affiliated with GiveBackHack) is a local consultancy with an accelerator program to help businesses become Certified B Corps, which holds them accountable for their social performance. A new company called Billion, one of the GiveBackHack winners, set up an online platform that “gamifies” crowdfunding primarily geared toward social entrepreneurship.
Thomas Adams was another of the winners. He’s the owner of the Red Plate Blue Plate food truck, and he’d wanted to find a way to serve the less fortunate ever since he moved to Columbus. He entered GiveBackHack with a name, Abe’s Kitchen, and the intention to provide cheap, healthy meals to people in food-insecure areas. He emerged with seed money and a team—“zero to 100 mph in a weekend,” he said.
Last fall, the Red Plate Blue Plate truck put on the Abe’s Kitchen banner three afternoons a week, mainly in the Linden STEM Academy parking lot. Abe’s offers the “HEAT menu”—healthy, economical, and tasty—and charges about $2 for familiar meals like tacos, spaghetti, and sloppy joes. Adams wants to provide affordable, nutritious food for working families that don’t have time, money, or access to healthy options otherwise.
Abe’s Kitchen served about 625 meals in two months; this year’s stretch goal is 20,000. Adams knows the chances of hitting it are slim, but he’s hoping to convince other food trucks in the area to take some shifts operating as Abe’s Kitchen. He would also like to expand the concept to Cleveland and other urban areas outside of Ohio.
That type of scalability is essential to most social enterprises. Korn is unveiling Pearl’s insurance and IT apprenticeship programs, which she thinks could double or triple her employment by giving the target workforce access to entry-level jobs while working toward industry certifications. Eventually all four of CleanTurn’s business lines will be separate entities—next up is landscaping, which focuses on veterans with employment challenges—and Rush wants to offer turnkey, franchise-style arrangements to nonprofits or investors in other major urban areas by 2020.
DeLoss hopes Hot Chicken will be a regional chain in the next five years. His fast-casual concept will increase the restaurant’s hours—currently open Wednesday through Sunday for lunch. His model will triple the number of staff, 60 percent of whom come from his target workforce.
His blueprint for social good is solid, but now he frets more about business decisions, just like the head of any young company. His mission doesn’t inform financing options for the next restaurant, or what the construction plan should look like. Plus, he has two goals to balance. Should he install that efficient kitchen? What’s better—some redundancy and more short-term jobs? Or less jobs now but more profit to attract potential investors, and more growth and jobs in the long run?
“As a for-profit, we earn the privilege of hiring who we want to hire by earning money,” DeLoss said. “We have to be profitable.”
One snowy morning, I made my way to the North Market to talk to a few of the workers at Hot Chicken Takeover. I wanted to hear in their words what this economy of good has done for them. The market had just opened, and it was empty of anyone except employees. I sat down at the communal picnic tables and spoke with Shannon, a business coordinator who had been in prison a year earlier, and Earl, a cook who had been in a shelter not long before that. They spoke of the opportunity the job has afforded them—to build trust, to become better people. Neither of them knew what the future held, but they both wanted to continue to be a part of the company and its mission.
I spent less than 10 minutes with them, only a few minutes each, about the time they would spend sharing their stories with a customer. Even though there was no line, no hungry guests yet at 9 in the morning, they were already busy—less than two hours until lunch in a place that’s only open for 20 a week. Those hours are sacred. Shannon and Earl have work to do, and that’s no small thing.
The second GiveBackHack (givebackhack.com) will take place at the CCAD Mind Market February 19-21. Ohio State’s annual Alleviating Poverty Through Entrepreneurship Summit (www.aptesummit.org) will be held at the Mershon Auditorium on February 13. In mid-February, Cleveland’s Business of Good Foundation (www.thebusinessofgood.org) will open the Columbus branch of its SEA Change accelerator, a 12-week course intended to spur social entrepreneurs toward making their ideas into reality.