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Fast-growing City Fresh Foods sells a minority stake to its employees

Partners Sheldon and Glynn Lloyd say it’s a way to address inequity

City Fresh Foods management is selling a stake in the business to its workers via an employee stock-purchase program. CEO Sheldon Lloyd posed at the company.
City Fresh Foods management is selling a stake in the business to its workers via an employee stock-purchase program. CEO Sheldon Lloyd posed at the company.Jonathan Wiggs/Globe Staff

City Fresh Foods in Roxbury is in high demand, as the food provider has raced to distribute locally produced meals to homes in and around Boston during the pandemic on behalf of various nonprofit agencies.

Now, City Fresh co-owners Sheldon and Glynn Lloyd say they are offering a way for employees to share in this success — by bringing them on board as equity partners.

About 90 of City Fresh’s 150 workers were eligible to participate in a new “employee stock purchase program” that closed to applicants last week. The company said 35 employees opted to buy shares in the privately held company through paycheck deductions, collectively representing about 3,500 shares, or a 35 percent ownership stake.

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Bringing employees into the fold as owners has been a longtime goal for Sheldon Lloyd, the chief executive, and his brother Glynn, who now leads the Foundation for Business Equity, launched by Eastern Bank.

City Fresh workers, many of them immigrants, will now be able to directly benefit as the value of the company increases, through the appreciation of stock and the granting of dividends during profitable years like the last one. The hope is that the dividends employee-owners receive will at least compensate for the cost of the new paycheck deductions.

Sheldon Lloyd said he expects the company will offer shares to employees on an annual basis.

“We’ll still make money, but it’s going to be shared differently,” he said. “It’s not a huge capitalistic moneymaking venture, ultimately, if it continues down this path. But it’s the right thing. It keeps me going. I think it keeps Glynn going.”

The transfer of ownership in the nearly 30-year-old company helps provide for an exit for two of its investors, Boston Impact Initiative and Cienega Capital. Those investors had together held a 40 percent stake in City Fresh since 2015, when minority investor Unidine Corp. was bought out.

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For City Fresh, employee ownership is seen as a way to help workers from diverse backgrounds share in the company’s financial success and build equity, much as they would if they owned a house. Many of the workers are first-generation immigrants, hailing from places such as Cape Verde and the Dominican Republic.

“Everyone talks about homes as a way to build wealth,” said Joe Kriesberg, chief executive of the Massachusetts Association of Community Development Corporations. “But business ownership is also an important way to build wealth.”

Employee ownership also helps ensure a shared interest in a company’s financial fortunes, said Eastern Bank’s chief executive, Bob Rivers, whose firm helped finance the stock sale at City Fresh.

That’s been the case at Harpoon, a.k.a. Mass. Bay Brewing Co., one of the best-known employee-owned companies in Boston. Years ago, Harpoon cofounder Rich Doyle was looking to be bought out. So Dan Kenary, working with Citizens Bank and JPMorgan Chase, was able to engineer an employee stock-ownership plan in 2014 that acquired Doyle’s stake and in turn gives equity in the company to workers over time.

That paid off during the pandemic, Kenary said, when employees banded together to figure out how best to position Harpoon to weather the storm and what new business tactics the company should try.

“You really create a group of people who should be motivated to work hard and make their own decisions . . . because it’s in their best interest to do so,” Kenary said. “We feel like we’re coming out of this thing way better than we went into it. A lot of it is because of employee ownership.”

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At City Fresh, Sheldon Lloyd envisions a company that outlasts him and his brother. The pandemic, he said, is exacerbating the gap between haves and have-nots, favoring white-collar employees who can work from home and who have money in the stock market.

“There’s an inequity within the inner city, in the Black and brown communities,” he said. “In a small way, this helps to bridge that gap.”


Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.