EL SERENO, Calif.-The match was perfect, according to the owner of a coffee shop that had lost its lease-a credit union looking for a branch location and a charter school seeking an alternative revenue stream.
On Jan. 1, Xocolatl Cacao Tea and Coffeehouse held its grand opening in part of a building leased by Cal State L.A. FCU. According to Connie Smith, CEO of the credit union, everyone's a winner in this match-the CU, the school and the community all benefit.
"We lease the building and the charter school pays part of the rent," Smith explained. "We advanced the charter school a $30,000 interest-free loan to purchase equipment and get the coffee shop up and running. The school pays rent plus a portion of the loan each month. It helps our bottom line because we are not paying full freight on a building that was too large for us. The building was perfect for us with its parking and location, but it was just too big."
Cal State L.A. FCU received El Sereno as an underserved community shortly after moving off the college campus and into an office here. Smith said the CU became very involved with the Chamber of Commerce and realized there was only one financial institution in the area.
"We had marketed in the community, but it was time for us to open a branch. I made the decision not to be a storefront branch because there are so many check cashing facilities here. The one bank was Washington Mutual, now Chase, and if we were going to be competitive we needed a building that looked like it was ours, not just a small, confined space in a strip mall."
Another problem, Smith said, is parking is at a premium on Huntington Drive, the main thoroughfare, and the credit union needed a place where its members could have access.
A building was found that had adjacent parking, but it was a banquet hall, she continued. Besides having too much square footage, it had a full-sized kitchen which did not lend itself to credit union operations. A small, local coffee shop had lost its lease, so management was in conversations with the owner. The man happened to sit on the board of Semillas Community Schools, a charter school that was facing state budget cutbacks. The school board wanted to be involved in running a coffee shop to raise funds.
Said Smith: "The owner of the coffee shop put us in touch with the school and said, 'This would be a perfect match.'"
More benefits for the CU: many parents, students, teachers and community members have opened accounts with it since the coffee shop made a soft launch Nov. 1, and several news organizations picked up the story, with the credit union receiving complimentary press coverage. Cal State L.A. FCU proudly noted it is doing something positive, while the Obama administration criticizes banks for not lending during the ongoing economic slowdown.
From the building's parking lot there are separate entrances for the credit union and the coffee shop. Smith said in between the two spaces there is a community room that is used by both entities. The credit union hosts educational seminars and the coffee shop and school use it for meetings.
Recently, the school began using the kitchen for making lunches for the students using parent volunteers, Smith said. "The coffee shop has definitely been driving foot traffic for us during the short period of time it has been open," she reported. "The branch has a younger demographic group, so we believe the coffee shop is bringing in these younger people. Non-members are contacting us to join after visiting the coffee shop. We are very excited and happy."
