Zingerman's Community of Businesses

Zingerman’s is one of the most financially stable and profitable of the enterprises studied in this report. Our financial analysis shows that over the last three years, revenue has grown more than 10% per year and profits have steadily increased as well. The ZCoB has become a model for other local businesses in terms of its planning, management style, and customer service. Yet there have been a number of unique challenges the partners have had to cope with:

• Margins: The Zingerman’s partners are constantly struggling with to how to maintain the inherently slim margins in their businesses. This is especially tough with their commitments to provide decent wages and benefits to their employees, to support local producers, and to give back to the community.
  
  
• Growth: Ten years after its founding, the deli could no longer provide new opportunities for staff. Managers felt stifled and left. Mid-level employees were waiting on people to move away or retire so they could move up in the organization and grow professionally and financially. Observes Paul, “We had spent enormous amounts of time and resources training staff, but now we were losing them to competitors.” When Zingerman’s put together its first 10-year vision and strategy document, Zingerman’s 2009, the problem was solved by creating an expanding community of local businesses.
  
  
• Brand Protection: Perhaps the biggest threat to Zingerman’s has been from copycats in the region. Paul admits, “We got complacent, thought we owned the market, but people aren’t stupid and understand what
• parts of your business are successful. Competitors come along and offer fifty percent of your quality at seventy-five percent of the price, embarrass you and make you look like you’re ripping off the public.” The answer has been to focus relentlessly on quality products, excellent service, and innovation.
  
  
• Workplace Democracy: Paul and Ari are devout believers in fostering a participatory organization, but also believe that an organization needs someone to say yes or no at the end of day. They have worked very hard to create a workplace where decisions are made not based on who has the most authority, but rather by those who have done the research and have a viable solution.
  
  
• Sustainability: Paul feels Zingerman’s still has much progress to make in greening their enterprises, such as purchasing more local and organic foods, using energy more efficiently, seeking out renewable sources of energy, taking advantage of transportation efficiencies, and more. Identifying needed environmental improvements and then executing them is now an organizational imperative.
  
  
• Inter-Business Collaboration: One problem in the ZCoB model is that occasionally the interests of one business lie opposite to the others. Paul explains one such incident: “We have the Delicatessen, and the Bakehouse that sells to the Delicatessen. The Bakehouse also sells to a lot of other wholesale customers; seventy percent of their business is outside of the ZCoB. Yet the Delicatessen sees the Bakehouse as their partner, but it’s a partner who is selling to their competitors. If they each owned some portion of each other’s businesses, then the sale of bread would be the sale of bread for the ZCoB no matter which business it’s happening out of.”

None of the Zingerman’s businesses are unique. In just the United States, there are thousands of successful delis, restaurants, bakeries, creameries, and coffee roasters. Nearly all of them are small. Many are successful. What ultimately is unique about Zingerman’s is the relative volume, productivity, and visibility of its enterprises. And much of this comes about because of the common brand and joint efforts at quality control. Many small businesses dream of diversifying, but those that do usually create new branches or subsidiary companies. Few create sister programs or businesses under a common vision and set of principles, or deliver such a unique experience to customers, coworkers, and the community.

What is also distinct about Zingerman’s is the brilliance of execution. Among their business peers, Paul and Ari are recognized for exemplary leadership and business practices. To their credit, they have tried to ply everything they have learned into the ZingTrain seminars—yet another successful enterprise. The fingerprints of Zingerman’s can thus be seen on dozens of ZingTrained businesses across the country.