Paul Saginaw and Ari Weinzweig often talked on the bench outside Zingerman’s Deli. In 1993, Saginaw asked “Ari, so we’ve been at this for about ten years; what do we look like ten years from now?” Weinzweig didn’t have an answer for that. “The bench got hotter out in the sun,” writes Weinzweig in his book The Story of Visioning at Zingerman’s. “So did the conversation. We talked, argued, agreed some, disagreed more … But in our commitment to each other, to our partnership, to Zingerman’s, we kept on looking until we came up with an answer we both liked.” | Photo: J. Adrian Wylie

“But what if we both die?”

Paul Saginaw, cofounder of Zingerman’s Community of Businesses, has a way of asking his business partner Ari Weinzweig big questions seemingly out of the blue. “I didn’t have an answer for that,” Weinzweig admits.

When the two men founded Zingerman’s Deli in 1982, they were the company’s only employees, and the question of how to eventually pass on the business was the farthest thing from their minds. Forty-one years later, the company has 750 employees spread across eleven businesses with revenues of $78.5 million.

Weinzweig and Saginaw are the main shareholders of Zingerman’s Experience, which holds the company’s intellectual property. They’ve long known they did not want to sell Zingerman’s Experience or leave it to their heirs but had not thought about succession beyond an insurance plan that allowed one to buy the shares of the other should he pass away.

Then in 2009, Saginaw, who was fifty-six at the time, had a heart attack. “I imagine that I reacted like most people, taking a pause and hard stock of my life,” he emails. “I realized we had no real succession plan and that the flippant answer, ‘Death is my exit plan,’ that I used to give was irresponsible.”

Weinzweig and Saginaw began to contemplate the options. Then they sought the advice of accountants, attorneys, and consultants, and they talked to each other. Some of those conversations took place on the bench in front of Zingerman’s Deli on Detroit St. It has been the scene of many conversations between the partners over the years.

Saginaw recalls one in 1993 beginning this way: “Ari, so we’ve been at this for about ten years; what do we look like ten years from now?” Weinzweig didn’t have an answer for that either. “The bench got hotter out in the sun,” writes Weinzweig in his book The Story of Visioning at Zingerman’s. “So did the conversation. We talked, argued, agreed some, disagreed more … But in our commitment to each other, to our partnership, to Zingerman’s, we kept on looking until we came up with an answer we both liked.”

It took about a year for the partners to form the vision for what became Zingerman’s Community of Businesses. It took thirteen years to finalize their succession plan.

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At a company meeting in March, Saginaw and Weinzweig announced that they are “giving away the store.” Rather than selling to the highest bidder, over the next ten to twenty years they’ll transfer majority ownership in their intellectual property to their employees via a “perpetual purpose trust” (PPT).  

Zingerman’s Perpetual Purpose Trust will be the legal owner of the Zingerman’s brand. Its terms prohibit the company from going public, being sold to an outside company, or franchising. “The intent is that it keeps the decision-making power and the profit local,” says Weinzweig, “as opposed to what generally happens [when founders sell], which is both of those move further and further geographically afield”—a process he likens to “colonialism.”

The eleven individual businesses that make up ZCoB are owned by their managing partners and are not part of the PPT. The businesses pay an annual fee to Zingerman’s Experience for the rights to use the Zingerman’s brand. Created in 2015, it’s owned by Saginaw, Weinzweig, and chief accounting officer Ron Mauer—as well as every ZCoB employee who’s bought a “community share” in the company. Each share costs $1,000 and can be purchased through a payroll deduction.

Dividends are linked to profitability and paid out annually. When employees leave, they have to sell their share back to ZCoB, thus keeping ownership within the company. So far, about 250 employees have purchased community shares. Mauer believes that number will increase as the partners relinquish a larger percentage of the ownership, and dividends paid to community shareholders rise accordingly.

Weinzweig says many people are bewildered by his and Saginaw’s choice to leave so much money on the table. “‘Aren’t you missing a lot of opportunity?’ they’ll ask. And I look down at their [wedding] rings, and I’m like, ‘Aren’t you missing a lot of opportunity?,’ and they go, ‘Yeah, I guess so.’” He laughs. “When you make a decision about what you want to do, by definition you miss opportunity.”

Since its first year of business, Zingerman’s homespun vibe of authentic Jewish deli with a regional twist has attracted a steady stream of would-be investors. There were the real estate developers, who, according to Saginaw, “would always start with the same line: ‘I’m from ____, and we don’t have anything like this, and I have the perfect location for you.’” This was a nonstarter, because the partners never wanted to replicate what they’d done. “And the other group of folks would come in smaller waves, wanting to invest in us and franchise across the country or open in every Big Ten town,” he says. “But after hearing our mission, vision, and guiding principles, how we shared wealth with our employees, and how committed we are to service and quality, the conversation always ended quickly.”

Saginaw used to field a half dozen business inquiries a month, but there are fewer now. “If you’re happily married, and everybody knows you’re happily married, they’re not hitting on you a lot,” quips Weinzweig.

Weinzweig first learned of the PPT model in 2017 from E.F. Schumacher’s book Small Is Beautiful, which describes the original PPT launched in 1951 by the owners of Scott Bader Commonwealth Limited, a global chemical company based in the U.K. In 2021, Weinzweig, Saginaw, and Mauer connected with Alternative Ownership Advisors in Portland, Oregon, who are experts in PPT legal structures. Only about forty exist in the U.S., and each one is slightly different. The most famous company to have a PPT is Patagonia.

With the help of Dexter-based lawyer Gary Bruder, ZCoB crafted a legal framework for Zingerman’s version of the PPT. And to make sure that everyone in ZCoB was comfortable with the plan, they used an inclusive decision-making process they call Bottom-Line Change that they developed with organizational strategy consultant Stas’ Kazmierski. ZCoB has used this process to make every decision for the past twenty years, from whether to remove nuts from the kids’ sundaes to how to create a succession plan.

In his book Bottom-Line Change, Weinzweig explains why they adopted the inclusive model: “Even though the autocratic top-down approach to change seems faster it’s rarely well implemented without buy-in and often disintegrates.” Making major decisions this way can take years, but “the time from the initial idea to its actual and effective implementation is always shorter than when we do it the old autocratic way. And we obtain more meaningful results in the end.”

It also reflects Weinzweig’s anarchist beliefs. “My anarchism is about a belief in human freedom and in the creative abilities of every individual to act responsibly when they know what’s at stake and they have a stake in the outcome,” he writes in What I Believe About Anarchism and Business. “Stories are just beliefs made manifest. Visioning is the story we tell about our future.” Borrowing a line from the late U-M sociologist Ron Lippitt, he adds, “Let’s tell a story of the future where we all come out ahead.”

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“It’s a very generous approach,” says Lisa Schultz, managing partner of Zingerman’s Roadhouse. “I’m grateful they took the time to research and look at all the alternatives and all of the options for themselves and chose this model.”

Schultz’s story at Zingerman’s is emblematic of the company’s employee-driven philosophy. She began as a server at the Roadhouse in 2000 when she was an undergrad at U-M. She had been working there for about seven years when she and Weinzweig struck up a conversation. “We were standing by the service bar,” Weinzweig recalls. “She was waiting to pick up her cocktails. I asked, ‘How’s it going?’”

Schultz told him she was thinking about getting an MBA. Weinzweig didn’t miss a beat. “Well, you could pay $50,000 a year to go to business school. Or you could get paid $50,000 a year, stay here, and get the same.”

“I mean, it was like a light went off,” says Schultz. She started to think, “What could I do? What is afforded to me? And I just went with it.” Zingerman’s practices open-book management, allowing all employees to see the metrics of the business. She took advantage of professional training opportunities and began to work her way into higher-level positions. “To learn the business side of things while working with the business and being able to move that business forward is like no other experience, honestly, that I could have had in school,” she says.

“And so, you know, now she’s a partner,” Weinzweig says. “I don’t think that would happen a lot of places.”

Saginaw agrees. Learning “how to get folks to work together in pursuit of a common goal, how to encourage someone to reach past their own self-imposed limitations to accomplish things they didn’t believe were possible—there has been precious little in my life that has given me more joy,” he emails.

Much of Saginaw’s business philosophy stems from his maternal grandfather, Ben Sherman. “He taught me that business is a tool and it can be used for good and noble purposes or for something less than that. He believed that half of what you have should go to those who need it. He told me that if I become successful, to work to make those around me successful.”

Saginaw moved to Las Vegas in 2020 to start a new deli and is no longer involved in the day-to-day operations of Zingerman’s. Weinzweig is still a part of the managing partners’ group and can often be found teaching, writing at one of the picnic tables by the Roadhouse, or pouring water for customers. At sixty-five, retirement still seems like a long way off. “I’m not like sitting here going, I wish I could do X, Y, and Z. You know, if I want to do something, I just figure out how to do it at work.”

Weinzweig says the PPT gives committed employees another reason to remain with the company. It also aligns with his philosophy of leading with generosity. Knowing that Zingerman’s will continue to be a strong part of the Ann Arbor business community is worth more to him than maximizing his personal wealth. “I think there is such a thing as enough. I’m not looking for a grand exit,” he says. “I wouldn’t mind if I just stopped coming in, and on it goes.”

Saginaw feels similarly content with where he is financially and does not believe that more money would bring him more joy. When asked about his idea of a big exit, he replies, “I’m living it. I don’t worry about where I’ll sleep tonight or where my next meal is coming from and more importantly, I believe my grandfather would be proud of me.”