Affordable Homes of South Texas Executive Director Bobby
Calvillo needed a new idea last year as the nonprofit struggled with the
pressures of a tough economic climate.
Low-income families needed affordable homes more than ever, but federal grants -- the organization's main source of income -- were declining steadily as a result of government budget cuts.
But something of a light bulb went off one day when Calvillo left Affordable Homes' downtown Weslaco office about noon to see lines of cars and crowds of people dressed in scrubs leaving the Valley Grande Institute to go to lunch.
Curious, Calvillo followed them. A number of the students crowded into Subway, where they told him they could get sandwiches during a short lunch break that were somewhat healthier than fast food.
Those interactions sparked an idea that became a reality last week: the opening of a Blimpie sandwich shop franchise whose revenues go to Affordable Homes.
"It's kind of a crazy idea," Calvillo said. "But if it can provide one house, that's one family."
GOING INTO BUSINESS
The transition from building houses to making sandwiches wasn't simple.
After Affordable Homes' board approved the idea in December, the organization approached three national sandwich chains: Blimpie, Subway and Jimmy John's, Calvillo said. They chose Blimpie because it had less expensive franchise fees than Jimmy John's, but was less common in the Valley than Subway.
As a nonprofit, Affordable Homes couldn't just open a corporate franchise. So, the organization created TuCasa Investments as a parent company and, under it, formed the limited liability corporation Esperanza on Fifth to be the actual franchisee.
The structure required legal review and extensive negotiation with Blimpie representatives, who typically required a franchisee be an individual -- not a board whose members can't be held personally liable in case of problems.
"When we approached them: nothing but blank stares," Calvillo said. "It's a completely different animal."
The entities agreed to the idea of holding $25,000 in a separate fund in case the business closed, he said.
The situation is uncommon, but not unique.
Alan Crites, Blimpie's area developer, noted that the company has a similar shop in Phoenix that funds community development group Chicanos Por La Causa. He said Blimpie offers lower franchise fees to recently returned veterans and groups tied to nonprofits.
"Being associated directly with an organization like Affordable Homes is out of the ordinary, but it's an association we encourage," Crites said. "Every time we get the opportunity to do something like this, we jump at it."
With a $200,000 investment and the help of a $5,000 fa ade grant from the Weslaco Economic Development Corp., Blimpie opened May 13 in the building Affordable Homes owns at 120 W. Fifth St. It is planning a grand opening for June 7.
The business isn't likely to single-handedly solve Affordable Homes' financial challenges. After startup costs, leaders hope it will make some $20,000 to $30,000 in its first year -- roughly the equivalent of half a house -- and grow in revenue every year thereafter, Calvillo said.
The shop has already come with a learning curve. Managers have had difficulty drawing interest in breakfast offerings, but have had repeated requests for the store to stay open later into the evening, so it will be revising hours accordingly.
Several patrons eating lunch Wednesday said they loved the location already for its sliced-to-order deli offerings. Sarah Cuadra, owner of downtown bookstore The Storybook Garden, said the location is good, the mission is important, and she's already found a favorite sandwich in the hot pastrami.
"We don't get to have a long lunch, so it's quick," she said. "And anytime it gives back to the community, it's good to know and extra incentive."
(c)2013 The Monitor (McAllen, Texas)
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