Rainbow Grocery has a long and rich history. We've lived in three locations, survived the demise of the People's Food System and still have workers who joined us when we were a volunteer organization. Through it all, we've developed into a strong and diverse organization, which is owned and operated solely by its workers.

The Origin of Rainbow
Although it quickly became a secular project, Rainbow Grocery was started by a spiritual community, an ashram that existed in San Francisco in the early 1970s. In order to have access to inexpensive, vegetarian, "pure" foods, the ashram had a bulk food-buying program. The buying program was coordinated by Rich Israel, an ashram member who happened to work for the People's Common Operating Warehouse of San Francisco, a political project using food distribution as a form of community organizing and political education. The People's Warehouse was striving to build a "People's Food System," including a network of small community food stores throughout San Francisco. Rich helped convince the ashram to launch a community food store.

When Rainbow opened in summer 1975, the People's Food System already had two stores: Seeds of Life, in the lower Mission, and Noe Valley Community Store. The ashram members who organized the opening of Rainbow Grocery ­ Rich Israel, Janet Crolius, Bill Crolius, and John David Williams ­ did so largely by studying and copying the operations of the Noe Valley store.

Around that time, many other community food stores opened, including: Community Corners (Bernal Heights), Noe Valley Community Store, Haight Community Store, Inner Sunset Community Store, Other Avenues Cooperative (Outer Sunset), The Good Life Grocery (Potrero Hill), Flatland Community Store (Berkeley), Ma Revolution (Berkeley), The New Oakland Community Store and Rainbow Grocery (The Mission).

The first Rainbow store was located on 16th Street near Valencia (where Café Macondo now resides), on what was then considered a "skid row." Despite the rundown nature of the street, Rainbow's location turned out to be auspicious as it was close to many neighborhoods populated by counterculture youth. Rainbow quickly became the busiest of the dozen or so community food stores launched in the mid-70s. Besides being in a favorable location, Rainbow's founders have pointed to the following factors to explain its preeminent performance among the Food System stores:

1. Service-orientation: as an outgrowth of their spiritual community, the ashram members viewed Rainbow as an outlet and opportunity for service to their fellow humans. Many of the more politically-motivated food stores had a disregard or even hostile attitude towards customer service. Even though Rainbow quickly grew to have a majority of workers/volunteers from outside the spiritual community, it retained a greater commitment to service than other stores.
2. Attention to business: While some of the other stores did not value business skills ­ or were even suspicious of people attentive to business concerns ­ Rainbow valued and followed initiatives from those with business skills and/or backgrounds (in the first few years, particularly Bill Crolius, Nancy Crolius, Ryan Sarnataro, Patrick Smith, and Judy Brewer).
3. Superior product selection: Perhaps as a by-product of its commitment to service and its concern for business, Rainbow developed a wide selection of products - whereas other stores were slow to move beyond bins of whole grains, etc. Rainbow was eager to introduce shoppers to a wide variety of healthy products they might enjoy ­ rather than operating from strict ideological criteria about what people should eat.

Rainbow opened with exclusively volunteer labor. After the first few months, there was enough income to pay the project's two most active workers (its de facto coordinators) something approximating minimum wage. As the store became increasingly successful, it was able to bring more workers on paid staff, although people were generally not brought on to payroll until after several months of consistent volunteering. As the staff at Rainbow grew larger and more culturally diverse, the need for more defined organizational relationships increased.

For the purpose of simplicity, Rainbow was started under the legal ownership of founders Janet and Bill Crolius. What this meant primarily is that Bill & Janet were responsible for reporting Rainbow's operations on their tax forms and were on the hook for any debts or lawsuits, even though the store operated collectively; so they transferred ownership in 1976, to a nonprofit corporation. When incorporating, Rainbow workers simply adapted the corporate documents of the People's Warehouse, which included the Warehouse's statement of six political principles underlying the Food System. Including the six principles was done, in part, as an attempt to appease the Warehouse's activists who thought Rainbow was not political enough. Copying from the Warehouse's incorporation documents also simplified the legal work; unfortunately, the Warehouse's legal model was not very appropriate or functional. The Warehouse had written up their incorporation documents with the hopes of obtaining tax-exempt charitable status, which they were unable to do. While Rainbow's workers already knew Rainbow would not qualify as a tax-exempt charity, they still incorporated using the nonprofit model of the Warehouse.

Growth in the Early Years
As it happened, Rainbow started generating financial surpluses soon after incorporating as a nonprofit. In order to avoid generating a taxable profit, Rainbow distributed its financial surplus through (a) increasing the compensation of its workers (through bonuses) and (b) reinvesting money in Rainbow to fuel expansion. Rainbow's first substantial expansion, in 1978, was the opening of a general store (selling vitamins, dry goods, housewares, books, clothing etc.) a few doors down from the grocery store. It was contemplated that selling such items as vitamins and supplements would considerably boost Rainbow's financial surplus since these items have a higher mark-up than food items. Contrary to expectations, the general store initially ran at a considerable loss and became a significant financial drain on the grocery store. The eventual turnaround ­ through which the General Store became Rainbow's financial engine as originally anticipated ­ has been attributed to two factors: (1) moving vitamins away from the door, where they could not be so easily shoplifted (the days of hippy trust and goodwill were evaporating) and (2) improvement in pricing and buying skills, particularly with the bringing on of buyers Dennis Wagner and Ryan Sarnataro who introduced such practices as going to trade shows, and taking inventory.

Breakdown of the People's Warehouse
Meanwhile, the People's Food System was becoming increasingly politicized and polarized. The various food collectives had been meeting in the system's Common Operating Warehouse. The group of representatives meeting was called the "representative body" or RB. The members of the RB were torn between paying attention to food politics and collective food stores as a revolutionary act vs. using the energy of the Food System to participate in the broader counterculture movement of the time.

In addition, the adoption of a representative democracy was somewhat at odds with the collective/consensus process of many of the stores. Finally, the RB elected a steering Committee to organize and facilitate its regular meetings. This committee in turn drafted a "Principles of Unity" statement to which member stores had to ascribe in order that they might retain their membership in the Food System. At this point, the members of the Rainbow Collective opted to go it on their own, preferring to focus on the issue of food and food access as right livelihood. It turns out that this decision was a smart one.

The Warehouse increasingly became embroiled in political infighting which took on a violent character when, as part of its political program, the Warehouse began actively recruiting recently-released prisoners for its workers. Unfortunately it recruited members of rival gangs, which engaged in a gunfight at the warehouse. The final blow to the Warehouse came in 1981 when a flood destroyed much of its stock. There is some speculation that the demise of the food system could have been facilitated by infiltration and undermining on the part of members of government agents involved with Cointelpro. This however, has not been proven.

History Continued...