In the Roxbury neighborhood of Boston back in 2015, the people at the nonprofit organization Haley House came up with a novel idea. They would open a pizza shop based on the principles of economic justice and fair wages to support the community. Named Dudley Dough, the shop would pay wages far above the minimum which many people in that industry earn, with added incentives for training and community development. It was an inspiring idea.
Unfortunately for them, only two years later the place is closing down. It turns out that operating a for-profit business on the principles of a nonprofit social justice operation results in an undesirable side-effect. They were literally not producing a profit. (Boston Globe)
The loss of Dudley Dough means more than losing a pizza parlor to Roxbury regulars.
They say they’re losing a community resource in the heart of Dudley Square and a singular business based on a premise of economic justice and healthy food.
Launched in 2015, the fair-wage pizza shop will close at the end of the year, according to Bing Broderick, executive director for the nonprofit Haley House, which oversees the shop. While popular, the shop is not breaking even financially, which has put stress on the wider nonprofit organization.
One of the team leaders at Dudley is insisting that nobody, “is looking at it as a failure.” And on some levels, perhaps it wasn’t. For the period of time they managed to stay open they made lots of friends in the community and their employees earned a great salary and received other opportunities. But the fact remains that it was supposed to be operated as a business and would prove a point about a more “fair” economic system.
Here’s the problem with that theory. We live in a capitalist society and the business environment is fair… but it’s also harsh and very competitive. Going into the casual eatery business space is one of the more demanding challenges imaginable for a start-up. There is competition literally around almost every corner in most cities and everyone is fighting for a piece of the pie. (Or the pizza pie in this case.)
Plus, let’s face it guys… you’ve got way too much green stuff on your pizza.
Labor costs are a major driver in the business model of any such operation. Once you’ve accounted for the standard expenses of kitchen equipment, ingredients, utilities and the cost of your site (which are fairly standardized), labor costs may turn out to be the margin of error which makes or breaks you in terms of profitability and controlling your prices. Everyone in the neighborhood may love your social justice oriented, woke attitude, but if your pizza costs three bucks a slice when everyone else is selling them for two, you’re not going to last long.
Dudley Dough may prove to be a cautionary tale for everyone engaged in the debate over minimum wage rates and so-called “economic justice.” What they experienced was the sort of justice which the real world administers to the overly idealistic in a capitalist system.