3c hapter - Index of

118 Locavesting
Vermont farmer and the founder of Farmers Diner. When Murphy
opened his fi rst diner in Barre, Vermont, it was an experiment for
both him and his well- heeled investors. Murphy’s idea, fairly radical
back in 2002, was to serve great tasting, locally sourced food at
diner prices. Oh, and expand the concept into a franchise.
The Farmers Diner model centers on creating “pods” of several
diners in a region, supported by shared back- end services
and a commissary for central purchasing, delivery, and basic food
prep. By Murphy’s reckoning, each pod will spend more than
$1 million annually on food, generating $6 million in additional
economic activity and helping support 10 to 40 local farms—like
Gleason Grains in Bridport, which supplies the whole- wheat fl our
for the diner’s acclaimed buttermilk pancakes (served with pure
Vermont maple syrup, of course). The idea is to take that model
and replicate it all across the country. “We like to call it an agricultural
community revitalization project masquerading as a diner,”
says Denise Perras, Farmers Diner’s operations director.
Murphy closed the original diner, which had proven out the
model but was too small, and opened a new Farmers Diner in
2005 in Quechee, Vermont. That was followed by another diner
in Middlebury in 2008. For Middlebury, Murphy decided to invite
the community to participate. He threw a free dinner at a church
so people could hear about the plans and taste the food for themselves.
More than 150 people showed up, and many were interested
in investing. But (you guessed it) the deteriorating economy
in the fall of 2008 scared many away. Still, Murphy handily raised
$150,000 in two weeks from 15 investors, spanning the gamut from
a dairy farmer to a retired Morgan Stanley director. Investors earn
9 percent interest on the original investment, with interest payments
to begin in year three. After seven years, they can get their original
investment back or convert it to a bond. In addition, another dozen
or so people prepaid $1,000 apiece for $1,200 worth of meals.
“People were looking for alternative methods of investing
after the fi asco on Wall Street,” says Perras. There is a quarterly
investor meeting, but local investors often drop by to talk about
concerns or ideas for the menu. There is also an open- door policy
under which they can come in anytime and look at the books.