Creative Commons/Eric Heath

Bi-Rite Market on 18th Street in San Francisco, pictured in 2008

When Bi-Rite Market owner Sam Mogannam took over his family’s Mission District business in the late ‘90s, he had a Manhattan-based grocery called Balducci’s firmly in mind.

“I saw the store in 1990, when the family was still involved,” says Mogannam. “They had all the great services—old butchers and produce people in there who knew everyone. They were part of the community.” The result — a popular, densely packed neighborhood market that puts all the services of a larger store into a space the size of a single urban flat — is a rare sight on the West Coast.

But Balducci’s doubles as a cautionary tale. Mogannam, whose father and uncle bought Bi-Rite in 1964, tracks the downfall of Balducci’s to the splintering of the family business and the decision to create additional locations. In 1999, after almost three decades of existing as a Greenwich Village landmark, the company was sold to a large Northwest chain.

This has special resonance now, as Mogannam’s portfolio of food and community projects keeps growing: Mogannam is currently building out Bi-Rite’s third storefront on 18th Street, effectively doubling the size of his nonprofit venture 18 Reasons; writing a grocery guide and cookbook slated for release next year; and yes, planning to open a second Bi-Rite Market in the San Francisco Panhandle neighborhood in 2011.

“There was family turmoil,” said Mogannam, referring to Balducci’s. “The products and the service began to slip, which makes me think, ‘Oh my God, what am I doing?’”

But the practical concerns are not the only potential pitfalls for Mogannam. At a time when quality and sustainability are seen as synonymous with small, scaling up — while maintaining your values, reputation and customer base — is a complex undertaking. Other high-concept small food empires, such as the multi-locationed Café Gratitude, Delfina, Tartine and, soon, Humphry Slocombe and Flour + Water, have dealt with similar issues. 

Bi-Rite’s bona fides as a sustainable business run deep. The business is deeply committed to sourcing from local, humane and organic producers, maintaining its own small farm in Sonoma to supplement its produce section.

According to Larry Bain, an advocate for social responsibility in the restaurant industry and the founder of the nonprofit NextCourse, sustainable businesses require a different approach from the get-go. Bain opened Acme Chop House under the ownership of Traci Des Jardins before starting Let’s Be Frank, a grass-fed beef hot dog operation committed to supporting family ranchers.

“Running a sustainable business takes more money and more time,” Bain says.

Many of the largest food businesses outsource everything from food production to employee health care in order to grow.  So, Bain adds, “it makes sense that most of the businesses focused on doing the right thing start small.”

And while there’s nothing unethical about growing, staying true to a socially responsible mission while doing so, he says, requires immense creativity. Limiting the number of rags a business uses, for example, may seem like a small step, but over the course of a year it could mean saving the few hundred extra dollars needed to pay local ranchers a fair price.

Creative Commons/George Arriola

Bi-Rite Creamery offers flavors like salted caramel, orange cardamom and Ritual Coffee toffee

“It’s not as if you never have to make compromises, but you do need to be able to recognize when you make an unacceptable one. And, in the best case, you’ll notice that a couple of beats ahead of your audience,” Bain says.

It can also sometimes be necessary to put the business’s values over revenue, according to Bain. He points to Acme Bread Company’s Steve Sullivan as a leader in this regard. A few years back, Sullivan was offered the opportunity to expand his popular bakery and ship par-baked loaves to grocery stores around the country. He considered it, but, says Bain, in the end “he couldn’t imagine baking bread in a way that wouldn’t allow him to touch the final product.”

But staying small just for the sake of being small has its own problems. For Mogannam, growth is an employee retention strategy. “If I can’t offer all these talented people new challenges, how can I expect to keep them around?” he asks. Bi-Rite’s 80-person staff is made up largely of long-term employees—from the head chef, who’s been with Mogannam since he ran a restaurant in the financial district over a decade ago, to his general manager who began as a produce clerk at age 22. The business also provides a full benefits package to everyone who works at least 20 hours a week.

Like many of Bi-Rite's neighbors, Tartine Bakery’s Chad Robertson and Elisabeth Prueitt have also dealt with expansion issues. Soon, their restaurant, Bar Tartine, will begin taking up twice its original footprint on Valencia Street, and they have a second cookbook coming out this year, focused on bread. They also see their employees as central to their growth. “Our whole business is built on our staff,” says Robertson. “You can’t grow sustainably if you don’t have people who really want to help you do that. You want to make sure [new projects] are benefiting the neighborhood—but mostly it matters that it’s benefiting the people who work for you.” 

For all the current action, Bi-Rite’s owner has approached his expansion rather cautiously, turning down offers from entrepreneurs to replicate his business in other places. “Most people have difficulty understanding how important it is to have a belief system behind the work,” he says. “You can’t just carry the product.”