Project Equity was proud to assist Proof Bakery, located in Los Angeles, CA, with its transition to employee ownership in August 2021. It was a recipe in the making for owner Na Young Ma, who planned to eventually turn her business into an employee-owned one.
Proof Bakery, a beloved community institution, was opened in 2010 by chef / owner Na Young Ma in the Atwater Village neighborhood of Los Angeles. Over the following decade, Proof built a deeply loyal customer base–and earned recognition by the James Beard Foundation, The New York Times, Food and Wine, LA Times, and more–by consistently delivering high-quality baked goods, lovingly made by hand using the finest seasonal ingredients.
After 10 years of running the business through good times and bad, Ma felt that she was ready to step back from the day-to-day work of managing the bakery. “I think owners–especially sole proprietors–often feel weighed down by the responsibility that comes with running a business,” she said.
While many business owners may feel overwhelmed by that common feeling, Ma chose to use it as an opportunity to achieve a dream that she had for Proof from the very beginning: to turn it into a worker-owned cooperative.
Project Equity was proud to support Ma and the team of 25 employee-owners at Proof in making that dream a reality.
A coop in the making
After graduating from culinary school, Ma worked in a series of restaurants and bakeries. She quickly realized that the best path to job satisfaction for her would be to open her own business.
“I wanted to be my own boss,” she said. “I wanted to have a say in what I made.” And from the time she started Proof Bakery, she always hoped to be able to extend that same feeling of freedom and responsibility to her employees.
In Proof’s fifth year in business, Ma began seriously investigating the logistics of turning the bakery into a coop. She researched other coops in the food service industry, and spent time in the Bay Area familiarizing herself with popular coops like The Cheese Board and Arizmendi.
It was clear early on that with all the daily pressures and responsibilities of running a small business, she would need a partner to help guide her through the transition process. After visiting Project Equity client A Slice of New York, Ma did her own research into Project Equity and realized she had found the partner she had been looking for.
A helping hand
Toward the end of 2019, Project Equity performed a feasibility study and financial analysis to determine if employee ownership would be a good and sustainable fit for Proof Bakery. As part of that initial conversation, Project Equity worked with Ma to identify what, if any, role she would want to play in the business after the transition.
“One of the things that makes employee ownership unique is that it allows owners to set their own future involvement,” said David Gray, Senior Client Services Manager at Project Equity.
Ma decided she would stay on as part of the board of directors after the transition. “That way the employee-owners can continue to benefit from her wealth of institutional knowledge, but she’s also able to put boundaries around her own involvement,” Gray added. “That’s something I think a lot of selling owners can appreciate.”
Gray helped create a five-person transition team and began the process of educating the employees about what the transition would look like, and what it would mean to be owners in a worker coop. He helped them figure out crucial details that make every coop unique, such as the specific criteria for how new employees become eligible to be participating members in the cooperative.
They were only a few months into the process when the COVID-19 pandemic struck. “They were on the frontline. There were fears and anxieties about what it would mean for them. But their commitment to their business and to this transition never wavered,” Gray said. “The determination of the employees and the owner made this all possible.”
Project Equity was able to pivot to supporting Proof through virtual meetings during the pandemic. Gray also helped them navigate a bureaucratic landscape that had suddenly become more complicated. “There was also an impact at the state level. Filing documents took longer, getting responses and approvals took longer,” he recalled.
Despite the roadblocks, they persisted, and in 2021 Proof Bakery successfully completed their transition to a worker-owned cooperative.
“Working with Project Equity was great. I don’t know if we could have converted to a coop without their assistance,” Ma said. “They helped with everything from the initial education about worker coops; to hands-on training with the transition team; to connecting us with legal, accounting and financing resources.”
“I can only imagine what it would have been like if we’d tried to do this alone,” said Stephanie Sharp, a server at Proof Bakery. “We all might have given up if we didn’t have someone to guide us through the whole process and provide the connections we needed. Project Equity is very professional in their approach. They made the process so smooth.”
So much excitement
A neighborhood bakery is more than a place for people to pick up their morning croissant and a cup of coffee. It’s a community gathering spot. It’s a part of the way people celebrate birthdays, anniversaries, graduations and more. And of course, it’s there for people who just want to add a little bit of sweetness to an otherwise ordinary day.
A great neighborhood bakery adds immeasurably to the character of a neighborhood. And while Proof has been in business since 2010, the space it occupies holds a powerful legacy; it has been a bakery for over 60 years. Ma and the employee team at Proof Bakery appreciate the role they play within their community in Atwater Village.
“We have customers who have been coming here since the beginning,” Ma said. “There are customers who we’ve seen get married and start families, and now their kids are coming, too.”
It was crucial to everyone at Proof that they continue to provide the same quality customers had come to expect, both during and after the transition.
“Before we became a worker-owned cooperative, my biggest fear was that our customers would start looking for our quality to change,” said Sharp. “But that’s not been the experience at all. People continue every day to be like, ‘Oh wow! You’re a cooperative now, that’s so cool! Tell me more!’ There’s so much excitement.”
Like many areas across the country, Atwater Village is experiencing rapid gentrification that is pushing out small businesses and making it difficult for many people to stay in the area. As a worker-owned coop, the profit-sharing will help the employee-owners stay local in a challenging housing market.
“Because of their conversion to employee ownership, the longevity of this business has been extended,” said Gray. “Not only will the business not be displaced, the workers won’t be displaced. Profit-sharing creates high-quality jobs that allow folks to stay and continue to survive in an area with a really high cost of living. The people in the community don’t need to worry that this neighborhood institution is going to disappear and be replaced by a giant chain.”
Evan Backes was just one of Proof’s longtime customers who saw their transition to employee ownership as a sign of their commitment to the neighborhood. “I think it’s important for companies like Proof Bakery to plant their flag in the community,” he said. “Proof has kept the magic by enduring in the Atwater area.”
Shared responsibility
“For the last ten years, both collaboration and cooperation have been a driving force behind daily operations at Proof,” said Ma. “When employees help to build a business and keep it going, I think it’s important that they have a chance to reap the benefits.”
For the employee-owners at Proof Bakery, the benefits go far beyond profit-sharing. “The best benefit of being an employee-owner is that we get to take more responsibility for what’s going on,” said baker Ronnie Salas.
Fellow baker Sarah Brown agreed. “Our consciousness has broadened in terms of the things we’re taking into account,” she said. “It’s not just a thing that you clock in and clock out of anymore. We get to partake in something that is shifting our industry at a core level. I love the energy that it’s creating amongst our team. It’s really exciting.”
Becoming employee-owned has taken the culture of shared responsibility at Proof and elevated it to a new level. The employee-owners now get to review financial information and participate in making decisions that will shape the future of the business.
“I’m excited to have the opportunity to explore ideas like opening additional locations or expanding production menus,” said Sharp. “Doing it together and getting to decide how we want to do it together is a way better experience than doing it alone.”
The experience of ownership has the potential to shape the future of employee-owners who may have an interest in management, or in one day opening businesses of their own.
“There was a barista who started at Proof right around the time that the transition process began,” Gray recalled. “She took on a role on the transition team, and she had a strong interest in finance. She started taking accounting classes, and now she’s the treasurer of the board. She’s going to get to grow her skillset and gain experience in ways that will benefit her throughout her entire career, and that also benefit the business.”
Moving with intentionality
Since their transition, Project Equity has continued to support the employee-owners at Proof Bakery through the Thrive program. This two-year program helps to foster a robust ownership culture and ensures that the new owners have the collaborative tools and decision-making framework they need to be able to successfully face challenges together.
As they look to the future, Proof’s employee-owners are driven by a mindset of shared success. Worker-owners see how the long-term success of a company can be impacted by each individual, and they know that when the business does well, they will benefit from their efforts both individually and as a group.
“It’s no longer about just what I want,” said Sharp. “I’m co-creating with other people and can see us expanding and continuing to exceed customer expectations.”
“Proof has taught me to move through the food world with intentionality and accountability, not just in the kitchen but in the areas of service and our local community,” says front of house manager Jen Salgado. “We have the opportunity to do something different, and my hope is that we inspire other businesses to follow suit.”
Ma had always hoped to turn Proof into a coop. Seeing the way that the employees have embraced the responsibilities of ownership, she is certain that she made the right decision. “Owners who are ready to step back from their business should seriously consider selling to their employees,” she said. “They’re the ones who’ve kept the business going. They know what it takes to run the business, and they want to keep its culture intact.”
As she looks ahead to her own future, Ma is positive that employee ownership will play a crucial role. “I would love to start another business,” she said. “And this time, maybe it will be a cooperative from the start.”
