At her first board meeting of Oxfam-Canada's Bridgehead Inc. in 1997, Tracey Clark was asked to prepare it for bankruptcy.

The request from Canada's fair-trade pioneer confused Clark, who had volunteered with Bridgehead in the mid-1980s, when social justice was beginning to direct her future, and understood its potential.

But what Clark, who has an MBA from Concordia University, saw when she reviewed the company's balance sheets was shocking.

"They were a shambles," she says of the company that gave producers in lesser-developed countries a fair price for their food and handicrafts, and then sold it at its outlets.

Ashley Fraser, Business Edge
Bridgehead managing director Tracey Clark resurrected an idea that had been given up for dead and has made it work.

"They had taken on Oxfam America's trading business that had 90-per-cent overlap with (competitors) and were involved in a marketing campaign that lost $700,000 on sales of $5 million," says Clark, who was Ottawa manager of Mountain Equipment Co-op (MEC) at the time.

"They had even outsourced their core coffee business and some producers weren't getting paid. This wasn't what fair trade was about. This was spread for spread's sake."

At that first meeting, Clark's insights convinced the board that Bridgehead might be salvageable and she was asked to reorganize under a new holding company - Shared Interest.

She cut the marketing budget and sliced the company's losses to $100,000 in 1998 from $700,000 the previous year by getting rid of things that didn't make sense, such as mail-order handicrafts, which had inventory and quality problems.

Clark also convinced creditors to write off all the company's debt, except for an Oxfam-guaranteed retainer, to keep Bridgehead going.

It wasn't enough, however, and by early 2000 with the debtload at $3 million, Shared Interest chose to dissolve the company.

"We decided the business just wasn't viable, too many competitors and accumulated debt," says Oxfam-Canada spokesman Mark Fried.

Clark nods when she hears this. "Too much bad management, maybe. Bridgehead was a great brand with great growth potential. I thought if it got back to its core business and adopted a coffee-house idea, then it could survive," she says. "Fair trade is a vital, ethical component of our economy; I wanted to make it work."

Since fair-trade coffees and teas are grown in the shade, they don't lead to clear-cutting of producers' forests.

They're also organic, which means they don't add toxins to the ecosystem. But they're also more expensive to grow - starting at about 70 cents a pound for coffee, or double market rates - so using them is more about commitment than taste.

Despite a bad business model, Bridgehead had brand equity. During the Oxfam tenure, it had four storefronts in Toronto, Ottawa and Vancouver, as well as a loyal customer base that preferred principled purchases.

Clark decided to buy what was left after bankruptcy proceedings and try a new retail model in Ottawa that focused on the neighbourhood image that sells coffee today.

She and her partners put up $30,000 to buy the name and mailing list, and then did the rounds of every friend and family member to get operating capital.

"I told them I wouldn't take a salary for two years and that they probably wouldn't see any return for five. But most of all, I told them that if they invested, they still had to love me even if it failed," she says.

It wasn't a classic sales pitch, but it worked, bringing in $313,000.

Clark spent most of it to open the first store in June 2000 on Ottawa's Richmond Road.

She retained a bit of the old mail-order business to help ease the transition, but refocused Bridgehead on the coffees and teas that had historically made up most of its sales.

The result was an eclectic mix of bohemian coffeeshop and Third-World thrift store. "We never had plans to expand. Most fair-trade coffeeshops are one-offs because they tend to have small, local, loyal constituencies. What we wanted was to make the social justice thing work," she says.

As managing director, however, Clark was also a businesswoman and couldn't help tinkering. In 2001, she cut the mail-order marketing budget to $30,000 from $160,000, while maintaining a 10,000-name mailing list.

She kept her word about taking no salary, but veered from the original business plan by opening new stores. By 2004 there were four outlets; two more are scheduled for 2005.

Not everything has gone smoothly. A foray into Montreal with Mountain Co-op as a partner failed when MEC set up in an industrial area with only a discount mall supplying walk-through trade.

It's also been hard raising capital for new outlets in what is considered a mature market, especially when existing operations have competition from Starbucks, Second Cup, Timothy's and Tim Horton's all within a two-block radius.

"We can't compete with them on number of locations or price, so we don't try. We're not looking at a franchising model. We can only go as fast as our (fair-trade) culture can keep up to," Clark says.

That culture is as broad as any in retail. Bridgehead stores use banquettes, couches, chairs and tables to create intimacy.

They attract community-association meetings and the full complement of bored children in strollers, as well as cabinet ministers, television personalities and college students. Unlike most of the coffee chains, Bridgehead serves sandwiches and desserts made onsite.

Bridgehead's administration is run from what amounts to a hallway perched above the Glebe store, about 10 metres long with workspace on one side and shelves of product on the other.

It's hard to rationalize spending on fancier space while the company is still trying to find its path in a market that charges about $250,000 to kit out a new coffee shop.

"The challenge is to be an efficient operator. People like the good-work part of fair trade, but we still have to provide a competitive consumer experience or we'll be gone," says Clark, who charges about 10 per cent more for items than Starbucks.

"We've been successful because we've been able to take fair trade to the mainstream, and still keep growing."

Today, Clark draws a full salary, employees get market wages and Bridgehead is profitable. Clark even has an exit strategy and it, too, has a conscience.

Eventually she and her partners would like to sell out to a multi-stakeholder co-operative that holds social justice as a core value.

To get there requires taking Bridgehead into three or four other cities to increase exposure and cash flow, a huge task for a company with limited outlets and restrained enthusiasm for growth.

But no more difficult than resurrecting an idea that had been given up for dead by one of the world's largest charities.

(Mike Levin can be reached at mlevin@businessedge.ca)