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The worker-owners of Keystone Bicycle Co. (Courtesy of Keystone Bicycle Co.)<\/p>\nIt\u2019s a challenging time for bike shops right now, said Zach Rachell, of Keystone Bike Co., a worker-owned cooperative in South Kensington.\u00a0<\/p>\n
Rachell, who is a worker-owner, credits the unique ownership structure as one of the company\u2019s biggest strong suits.\u00a0<\/p>\n
\u201cA lot of bike shops have been closing the last couple of years,\u201d he said. \u201cMy personal feeling is that this kind of structure is what has helped us navigate the challenges of 2020, and even the tumultuous market that we\u2019re in right now.\u201d\u00a0<\/p>\n
Keystone Bike Co. was started in 2020. Woody Felice, another worker-owner, explained the five founding worker-owners are still the store\u2019s operating employees.\u00a0<\/p>\n
\u201cWe practice democratic decision making, as do most cooperatives, and operate with an operating agreement,\u201d she said. \u201cWe have an agreed understanding that we all have a control and say in the business.\u201d\u00a0<\/p>\n
The many kinds of employee-owned businesses<\/p>\n
Keystone Bike is not alone. There are more than 300 employee-owned companies in Pennsylvania. Philadelphia icon Wawa, for instance, is owned partially by its employees. And so is Wawa rival Sheetz, Voodoo Brewing Co., Hoss\u2019s Family Steak & Sea House and several major engineering firms, defense contractors and other companies.\u00a0<\/p>\n
There are several structures for employee-owned companies, said Kevin McPhillips, the CEO of PaCEO \u2013 a nonprofit that educates about employee-owned companies.\u00a0<\/p>\n
The model that Keystone Bike Co. uses is a worker cooperative, where the business is equally owned by the employees there.\u00a0<\/p>\n
\u201cIt\u2019s run democratically, meaning that if there are decisions to be made about the business, they\u2019re made as a group,\u201d McPhillips said. \u201cIt doesn\u2019t mean you\u2019re voting every day to decide whether to open the doors up in the morning, but if there\u2019s something that affects the business, financially or organizationally, then everybody would sort of weigh in on that.\u201d\u00a0<\/p>\n
Felice explained the structure was helpful for this particular industry. She said bike mechanics can sometimes experience struggles at traditional bike stores.\u00a0<\/p>\n
\u201cIt\u2019s hard to make a living as a bike mechanic,\u201d she said. \u201cAnd sometimes, bike shop owners don\u2019t work there full time. So, they\u2019re just someone that\u2019s getting a paycheck and they pay their workers. And so we felt that if we all were owners and had a stake in the business, it was more likely that we would be able to make this sustainable for the long term, both for the shop we were working at, and also for our own livelihoods.\u201d\u00a0<\/p>\n
Worker cooperatives aren\u2019t the only model of business that employee-owned companies can use.<\/p>\n
Which businesses make good ESOPs?\u00a0<\/p>\n
Another popular employee-owned company option, McPhillips said, is an Employee Stock Ownership Plan (or ESOP).\u00a0<\/p>\n
\u201cA business owner could sell some or all of their business to their employees,\u201d he said. \u201cEmployees pay nothing. Instead, the business takes a loan from a bank to pay off the owner, the federal government and the state of Pennsylvania turn around and they say, \u2018If you do this, you never have to pay taxes again on whatever portion of the business is owned by the employees.\u2019 The tax savings pay off the bank, and after a handful of years, the business has all this extra cash.\u201d\u00a0<\/p>\n
One newer form of employee-owned businesses that is already well-established in other countries is an employee ownership trust, or EOT. With this, the current owner of a business decides to sell the company to employees over time, McPhillips said, rather than selling it to a third party, as the owner transitions out of the business.\u00a0<\/p>\n
\u201cIt\u2019s a way of making sure that, particularly \u2018Main Street businesses,\u2019 don\u2019t get boarded up,\u201d McPhillips said. \u201cThey stay within the community.\u201d<\/p>\n
There are benefits to implementing any of these frameworks \u2013 increased employee productivity, more secure retirement savings and keeping businesses in the state, McPhillips said. There are some drawbacks as well.<\/p>\n
He said employee ownership doesn\u2019t benefit businesses that are looking to buy companies and quickly turn around to sell them, or businesses that are interested in keeping a company for themselves.\u00a0<\/p>\n
\u201cThe bulk of businesses are bought either by venture capitalists or by strategic buyers, the competitors,\u201d he said. \u201cThere\u2019s nothing in employee ownership that benefits either of those groups.\u201d\u00a0<\/p>\n
Additionally, there could be other issues \u2013 such as dilution of shares from many people participating, costs and logistics in setting up these companies, and lack of employee understanding and participation.\u00a0<\/p>\n
While McPhillips said the structure doesn\u2019t work for everyone, he explained it can be very successful for those who invest in the structure.\u00a0<\/p>\n
\u201cEmployee-owned businesses, on average, are 8% to 12% more productive,\u201d he said. \u201cAnd wages in individuals 24 to 36 are 33% higher, and nobody knows about it. This is why we exist today, to try to teach people about this.\u201d\u00a0<\/p>\n
McPhillips said employee-owned companies also tend to have higher employee retention, increased tax benefits and increased profits.\u00a0<\/p>\n
Unique benefits\u00a0<\/p>\n
For Felice, having a worker-owned structure at Keystone Bike Co. feels like the right path for success.\u00a0<\/p>\n
\u201c[Positive interactions] are especially easier for us to focus on when everyone is invested in the business,\u201d she said. \u201cIt is important to us that people have a good experience here and are happy, and that we\u2019re happy, and that the people that come in are happy, if we can make that happen.\u201d\u00a0<\/p>\n
The worker-owners of Keystone Bicycle Co. (Courtesy of Keystone Bicycle Co.)<\/p>\n
She said the shop\u2019s structure doesn\u2019t just help the workers, it also positively impacts the surrounding community.\u00a0<\/p>\n
\u201cI think part of being in a worker-owned cooperative is that the connections with community are kind of written into our operating agreement,\u201d she said. \u201cCommunity is a top priority, so we\u2019ve made sure to prioritize those things early on.\u201d\u00a0<\/p>\n
Ashleigh Newlin works with Chartwell, a Philly-based financial advisory firm with a specific focus on employee-owned companies.\u00a0<\/p>\n
In her experience, she said, those who run employee-owned companies are looking to build a strong company culture through retirement wealth, among other things.\u00a0<\/p>\n
\u201cAll different kinds of companies have ESOPs, small and large companies, but the one thing in common is that they want to build retirement wealth for their employees and not just the leaders, but everyone in the company,\u201d she said.\u00a0<\/p>\n
Convenience food rivals Wawa and Sheetz, which both have roots in Pennsylvania, are employee-owned companies. Newlin explained that this means all full-time employees are partial owners of the company and have a share in the business.\u00a0<\/p>\n
![\"\"](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/10\/wawa1000thstore-oaklyn-11.jpg\")
The 1000th Wawa store in Oaklyn, NJ. (Hillary Kissinger\/WHYY)<\/p>\n
\u201cEmployee-owned companies are more successful and they are more resilient in tough economic environments like in COVID, a lot less layoffs were needed at employee-owned companies,\u201d she said. \u201cIt really helps with the culture and just helps employees want to work hard because they know it\u2019s actually going to benefit them in retirement.\u201d\u00a0<\/p>\n
Recent research<\/a> from the National Center for Employee Ownership shows that certain ESOPs, the most popular kind of employee-owned business, have a quit rate that is nearly one-third of the national average and that these companies have more than double the retirement savings of their non-ESOP counterparts.\u00a0<\/p>\n Despite this, there are certain benefits that may make employee ownership more attractive to certain companies. In the above data, the ESOPs measured were \u201cS corporations,\u201d meaning they have a specific tax structure that is more beneficial for small businesses and protects owners from liability. This structure would not be the same for larger companies.\u00a0<\/p>\n Newlin said there are ways to make employee ownership work for companies of different shapes and sizes.\u00a0<\/p>\n \u201cThere is just a lot of flexibility in it,\u201d she said. \u201cIt can work for a lot of different companies and I think people on the right and on the left politically can support it and get behind it. It really is a way to make capitalism work for everyone.\u201d<\/p>\n ESOP foodies<\/p>\n There are also many employee-owned, food-related companies throughout the U.S. In Pennsylvania, there are several, including Redner\u2019s Markets, Hoss\u2019s Family Steak & Seafood House and Kennie\u2019s Marketplace.\u00a0<\/p>\n