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Weekly UpdatesBlue Moon began as a natural foods market and deli in Exeter, New Hampshire, added a small restaurant, and had just opened an upstairs space for classes by local instructors. Founder Kathy Gallant had a vision that had evolved over time and a strong commitment to her customers and employees. At the end of 2002, Kathy was considering future paths for Blue Moon and herself. She was contemplating ways eventually to leave the business but still had many ideas for Blue Moon and its community.
Introduction
Late in 2002, Kathy O'Leary Gallant was pondering her plans for the new year and beyond. As the New Hampshire weather grew colder, she increasingly thought about her upcoming trip to warm and sunny Mexico, where she and her husband Jim had purchased land and were planning to build a house. Every year, ir became harder to endure the local winters, and she looked forward to the warmth and to the complete break from day-to-day business concerns.
Simultaneously, Kathy was looking back over the many changes during 2002 at Blue Moon Natural Foods--notably the upstairs space created from an attic and the development of a record-keeping system. Kathy had many more ideas for changes and improvements, as well as for entirely new projects but had not decided which, ir any, to pursue.
Kathy's livelihood and lifestyle had always been intertwined. She knew that she needed to think about some basic issues, including what future she wanted for Blue Moon. Revenues had grown from $116,000 in 1995 to ah estimated $800,000 in 2002. Both consumer interest in natural foods and the utilization of local sources of food were on the rise. At the same time, she was not sure what she wanted for herself. Was she ready to explore seriously how to separate herself from her business? The year 2003 looked to be another challenging year.
Origins of Blue Moon
Kathy O'Leary Gallant had been interested in food for most of her life and, as a teenager, became interested in cooking when she took on the responsibility of preparing most of the meals for her family. After dropping out of high school, she worked a variety of jobs, but the ones she enjoyed most were food related, mainly in restaurants. She made hand-dipped candy for The Chocolatier, a store in Exeter, for its first 4 years, and remembered, "I learned a lot from them. I knew one day I would have my own business, so I really was like a sponge."
Her start in catering came later, while she was living in Nottingham, New Hampshire, with her husband (a mason) and their three children. She cooked for parties given by her sister and brother-in-law, a doctor in Portsmouth. Kathy developed a clientele initially based on her sister's friends. One major account was the twice-weekly board lunches for executives at Tyco International. That work led to catering orders from the executives' wives. At the same time, she was also involved in community affairs, serving on Nottingham's conservation committee, on her church's board and as its treasurer, and as Sunday school superintendent for 7 years.
One of her last catering jobs while living in Nottingham had been for a wealthy woman, well known in the Seacoast, who tried to "nickel and dime" Kathy to bring down the catering bid. Kathy understood that the woman might simply have expected that people would try to take advantage of her but also realized that "these aren't the kind of people I wanted to be cooking for." As a result, she had decided to stop catering when the family moved to nearby Exeter in the mid-1990s. When Kathy announced her decision, Dennis Koslowski, the CEO of Tyco, offered to cancel his Executive Committee meetings for the summer in order to await her return to catering.
Kathy's trip to the Pacific Northwest just after her move to Exeter sparked the idea for Blue Moon. She stayed with a friend whose organic produce farm in Corvallis, Oregon, sold to markets in Beaverton and Portland. While in Seattle, Kathy visited the Seattle Open Market, a covered and partially enclosed market where farmers rented booths to sell their produce, fruit, and flowers directly to shoppers. Other booths were occupied by suppliers of fresh meat and fish, while some catered to tourists. The market covered several city blocks and was surrounded by a thriving area of cafes, restaurants, and small shops. Kathy realized then that she "must bring some of this West Coast progressive food back to my life."
Once in a Blue Moon
"I came back and I was going to take some time off, but then one thing led to another. I hadn't even unpacked all my boxes [from the move]," Kathy recalled. The Gallants had $12,000 left after buying their home in Exeter, which they had planned to use to renovate its kitchen:
"So I said to my husband, 'What do you think of taking the kitchen money and opening a store?' He said, 'Let's go for it!' ... We looked at a couple of spaces in town; this building in particular was empty.... I had lived in Exeter about 20 years ago, when this space housed the Seafood Center, and it was a hot spot. People would line up on Friday night to get their fish and chips or whatever. That restaurant just cranked! Then it was a breakfast spot, and it was very busy."
The most recent occupant was a plumbing supply company that had left 2 years previously. Although the building was for sale, Kathy negotiated a 3-year lease. "We really started on a shoestring. We just used a huge amount of elbow grease. We painted everything white, we ripped up red carpeting, we scrubbed floors, and we really were kind of creative about getting the space clean because it was a really dirty space."
Funds for equipment--refrigeration, shelving, and cash registers, most previously used--came from a $15,000 small business loan with Community Bank & Trust of Exeter. Kathy sought help in selecting her starting inventory from a childhood friend whose mother was a vegan (1) and now owned a health-food store, as well as from a representative of Stow Mills, the company where she placed her first order. "It took us three days of going over the catalogs and weighing what I could afford and what I couldn't." The market opened on Earth Day, April 22, 1995. She did not hire her first employee until several weeks later. According to Kathy, the store was successful from the beginning: "Definitely it immediately did the business it needed to do to satisfy my loans."
Two factors concerned Kathy initially: what to name her store and whether to have a kitchen. She wanted to name it "Once in a Blue Moon" but had received negative feedback from her sister-in-law. At a friend's wedding, she met Robert Sprague (1992), author of A Handbook for Independent Merchants. Kathy recalled, "He was really intrigued about my opening up a business." His advice was to be consistent with her vision and go with the name she liked.
Customer service was key to Kathy's vision of Blue Moon. She wanted "everyone to feel welcome and not intimidated, because I think a lot of health food stores get arrogant. People should be able to walk through the door and ask questions and not be embarrassed."
Kathy's other concern was that she was "just not sure on doing a kitchen." She had looked forward to taking a break from catering as part of the move to Exeter, but then Sprague advised her,
"'[Catering] is your foundation, and you really shouldn't do away with that.' That made a lot of sense to me. And also Doug Forest at the bank really wanted to see a kitchen because he knew, as well, that was what I had been doing. So I trusted their advice and I said, 'All right, I will just do something simple. We will just do wraps and deli and keep it small.'"
At the end of the 3-year lease, in 1998, the building's owner wanted to sell the building and offered to finance a mortgage. Without knowing his price, Kathy was concerned, since, 3 years earlier, the owner had been asking $190,000--more than Kathy then was willing to pay, particularly after the improvements she had made. She had accumulated $10,000 by taking a daily draw-out of the cash register and figured that she could afford up to $175,000. To her surprise, the owner presented her with a price of $158,000.
"... and I said, 'You have got a deal!' It felt so fair, and it felt great, and he was financing it and he was looking to make money on the interest. So it made it really affordable, it made me be able to do it, and otherwise I don't know that I would have been able to buy the building at that time."
In less than 2 years, she was able to finance the loan through her bank, with additional funds for renovation.
The Blue Moon Facility
Blue Moon Natural Foods was located in Exeter, a town of 14,058 (2000 Census) in the Seacoast region of New Hampshire, an hour's drive from Boston and a 2-hour drive from the skiing and hiking attractions of the state's White Mountains. Town residents' median age was 40 years, with 24.2% of the population under 18 years, and 17.0% were 65 years and older. The median household income in 2000 was $49,618, with only 2.9% below the poverty level. A total of 38% of the population had at least a college degree. The largest employers were Exeter Hospital, which was founded in 1897, and Philips Exeter Academy, a private secondary school established in 1781. Local employers of at least 150 people included Tyco, Osram Sylvania, Hutchinson Sealing, Timberland, and Lindt Sprugli, Inc. (Community Profiles, http://www.nhes.state.nh.us).
Blue Moon Natural Foods was just a block off Water Street, Exeter's downtown shopping district and less than one block from the town's parking lot. Located on Clifford Street in an area zoned for "mixed use," Blue Moon's building abutted several properties containing single-family dwellings, while a commercial establishment was adjacent to the parking lot. Blue Moon's building and land were estimated to be worth $350,000 at the end of 2002.
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