From the outside, Cafe Euphoria might seem like any other coffee shop in downtown Troy, New York—an upstate city of 50,000 that has a café on practically every block. But inside this brick storefront, something much more radical is brewing: a business model that could upend the traditional capitalistic business structure.
“We are anti-capitalist in our composition to the core,” says Atsushi Akera, general manager of Cafe Euphoria, which also includes a coworking space and curated thrift shop. “We’re trying to create an alternative economic system that goes against the traditional ways of doing things, [one that’s] based on principles of equity, inclusion, all of that.”
Cafe Euphoria has a radical and unique approach: The business is a worker-owned cooperative run by a group of eight transgender and gender-nonconforming folks who are all paid the same wage—$18 an hour, with a goal to raise the wage over time until it reaches $32 an hour. The model is meant to lift employees out of poverty; according to a recent study by UCLA, almost a third of trans adults in the U.S. were living in poverty in 2019.
The aim is to ensure the café breaks even, with income covering all expenses. Akera says the café currently makes between $200 and $400 a day during the week, and up to $4,000 on a busy weekend. She estimates the café will break even after about 14 months and be able to increase wages after two or three years.
“There’s no investors, so there’s no profit. We push everything out in wages. So the idea is to balance things out,” Akera says.
The desire for better wages and more sustainable work-life balance has become a focus of worker concerns in the U.S. throughout the COVID-19 pandemic. Workers have also been seeking alternatives to the top-down corporate model that disempowers them. The “Great Resignation,” as well as a number of high-profile unionization drives, show that workers—baristas included—have had enough. Starbucks shops nationwide are voting to unionize, and independent coffee shops are trying out even more progressive policies.
Co-ops have increasingly been hiring people “who have really been excluded from decent work,” says Micha Josephy, executive director of the Cooperative Fund of the Northeast. “That could be for a lot of reasons: They haven’t been able to access decent education, there’s discrimination by people doing hiring that exclude them from the workforce. It could be that there are jobs in their sector, but that those jobs are dangerous or they’re just structured in a way that’s not worker-centric. Worker co-ops are a way to center workers in how you structure the work.”
At Cafe Euphoria, the worker-centered economic model was not initially the main goal, but has quickly become a defining feature of the business. The idea for the café emerged from a virtual support group during the pandemic focused on trans and gender-nonconforming folks. While the community was strong at first, it frayed as in-person activities restarted and virtual spaces lost their luster. That’s when Akera posed a question to the group: What if we create a transgender café?
“The main thing is that we were driven more by the social mission than by the idea of a worker-owned cooperative. So it was ‘We’re creating a safe space for the trans and the gender-nonconforming community,’” Akera explains. “And then we said, ‘And we are a cooperative, so everybody gets paid the same.’”
Josephy says this is a very common path into the co-op world: A business will start out with a social mission and realize that a worker co-op is an effective means of achieving it.
“One of the things that democratic workplaces can do is allow people to bring in aims that are not merely economic aims,”
says Joe Marraffino, a loan and outreach officer at the Cooperative Fund of the Northeast who has been advising Akera as the café gets off the ground.
Cafe Euphoria is still smoothing out the kinks, but here’s how its co-op model works: The wage for all positions starts at $18 an hour, which comprises $13.20 in actual wages and $4.80 in member equity. Consistent with the principles of a worker co-op, all employees are offered an ownership stake of the café after working their first 50 hours. That means that, as member-owners, all of the workers have an equal say in the direction of the business and own a real asset in the form of member equity. Depending on how the co-op is structured, that equity can be accessed over time or when a worker exits the business.
When wages do reach $32 an hour, the increase will also apply retroactively, Akera says, meaning workers will be paid the difference for all previous hours worked at the lower wage. There’s no set time frame for the increases, because that will depend on revenue growth.
“We’re still learning what that number needs to be,” Akera says. “Historically, food service is an industry that underpays their workers, so this will be a challenge for us. But we’re looking for ways to beat the curve; our tips, so far, have been close to 25% because of the tremendous support out there for our community.”
The commitment to equity, however, goes beyond the café’s workers. Everything at Cafe Euphoria—from the coffee and muffins to the thrifted clothing—is priced on a 3-to-1 sliding scale. Customers whose self-reported income is above $62,000 are asked to pay the highest price—say, $18 for a lunch. Anyone who makes less than that is welcome to pay the middle price, which might go down to $12. Then, the lowest “solidarity” price—say, $6—is intended “primarily for members of the trans and gender-nonconforming community who cannot pay the middle price,” Akera says.
“It is all self-declared, you don’t have to explain a thing. You just tell us what discount to apply, and we will apply the discount,” she explains.
The sliding scale makes Cafe Euphoria somewhat of an outlier, even in the socially progressive world of co-ops, Marraffino says.
“They’re asking their customers to have an experience of solidarity and not just to maximize their individual gain,” he explains. “They’re putting their social aims and their beliefs on their sleeve and hoping that the people reciprocate.”
So far, they have. Akera says 94% of customers are opting for the top of the sliding scale. It’s a reflection of growing consumer appetite for equitable business practices.
“If their model is radical, their timing is right,” says Marraffino. Often, he’ll point out that they are diverging from traditional work co-op practices, but it doesn’t seem to bother them much. “This is a different type of organization that is trying to break boundaries,” he says.
While Cafe Euphoria’s plans are ambitious, the staff’s experience so far also underlines some essential truths: The café has already been forced to make compromises and has hit more than a few road bumps trying to operate within its model.
Take one relatively simple piece of most businesses: running meetings. Without a traditional hierarchy in place, the Cafe Euphoria staff at first struggled to hold discussions that allowed everyone to contribute without the discussion descending into chaos.
“That is one of our challenges, because people can understand [a co-op] in principle, but to understand it in practice is very hard,” Akera says.
After a few iterations, they’ve found something that works: Each meeting starts with a brief general manager’s report, and then everyone suggests agenda items that are voted on and ranked, setting the course for the remainder of the meeting.
Cafe Euphoria, like many worker co-ops, also invests heavily in worker training. In trying to solve a labor problem—hiring and paying a historically excluded community, in the historically underpaid service industry—the café has a much different labor pool than its peers.
“We’re picking good people, but we don’t necessarily have all the skills,” says Akera. That applies to her as well: Akera has had a long career as an academic, and for the café’s early months continued to work full time as a professor in the Department of Science and Technology Studies at Rensselaer Polytechnic Institute, where she says she earned more than enough money to live a comfortable life. She retired from her academic post on June 30 to focus full time on the café, where her compensation will take the form of member equity instead of a wage, at least until the café is on stronger financial footing. “I’m a professor, I’ve never created a restaurant before. I’ve never managed a business before. So there’s a lot of figuring out that goes on.”
But overcoming these hurdles can allow entire communities and industries to reimagine their relationship with work. Josephy and Marraffino say a lot of service-sector workers in particular are now seeking out worker co-ops as a way to continue doing what they love, while seeking economic empowerment.
And it’s not just new businesses that are using this model: Josephy and Marraffino are also seeing a lot of conversions, especially as an older generation of business owners retires and looks for a way to sustain their enterprise. One recent example is White Electric Coffee Co-op, a café in Providence, Rhode Island, that was purchased by its own employees and converted into a worker co-op.
Chloe Chassaing, a worker-owner at White Electric, says the conversion to a co-op came from a desire to increase transparency and improve labor practices at the café. A year after the conversion, the shop’s 13 workers have hammered out a model that works for them. The formerly haphazard pay and raise structure has been flattened out, with a higher base wage and a plan to give 4% annual raises to everyone. All of the workers, many of whom are Black, Indigenous, people of color, women, queer, working class, or first-generation or children of immigrants, are offered an ownership stake in the business after their first six months of employment; the equity buy-in is $100, with the option to contribute more in each paycheck, and workers get the money back if they decide to leave.
“No one is looking to get rich off of this, we just want decent jobs and to be able to have a say in them,” Chassaing says.
The model can also allow historically marginalized communities—such as formerly incarcerated people, or immigrants, or transgender folks—to access jobs and wealth that otherwise might never be available to them, according to Marraffino.
“What better way to transcend workplace discrimination than to own the workplace?” Marraffino says.
Teaser photo credit: Cafe Euphoria Facebook page.