Fort Collins Food Co-op BOD Retreat
Saturday, 21 January 2017
Room 008, Statistics Building, CSU Campus
Notes by Ed Secor
Attending: BOD: Ruth Inglis-Widrick, Steve Del Grosso, Jean Opsomer, Drew Jeffers, Ed Secor, Amber Lamb, Rich Gentile
Former BOD, Bookkeeper, IGMT: Patrick Gill, Tara McGuire, Chris Coen
IGMT joining at noon, for Session 3: Stephanie Bublitz, Oakley Davis, Theron Welch, Trinity Bigford, Kalidas
How do we self-monitor in more efficient manner, without so many reports.
Jean has found resource for “results based policy governance”—may be better model for us to use than current Carver Model. For now, we will postpone signing up for policy monitoring reports—Executive Committee will explore other policy governance model, bring recommendation to BOD at Feb meeting.
SESSION 1: FINANCIAL REVIEW, TARA MCGUIRE
Tara born & raised in Colorado, studied fine art at CSU. Started on Co-op staff in mid 1980s, became GM for ten years starting in mid-1990s. In 2011 Lynn asked Tara to take on some of books, so she could separate check signing from bookkeeping. Now Tara does payroll, all books; Chris Coen is check signer, Kalidas secondary signer.
Sales (volume, as well as in constant dollars) are down—have been at about 1.2 million since Tara left as GM in 2006. That said, we had positive year in 2016, rather than $89,000 loss in 2015, and about $20,000 loss in 2014.
$100K less payroll in 2016 than in 2015—only half was GM salary. 2016 had too much staff, payroll was too high. Margin in 2015 was 34.5%, increased to 37.6% in 2016. Margin goal is 38.8% in budget, but there will inevitably be shrinkage (was worse in 2015). Note that each department has different margin goal. (Books are being discontinued as separate dept, will be rolled into general merchandise).
2016 payroll expense = 26% of income (including employee discounts); in 2015 it was 33%.
Opportunities to decrease payroll as percentage of sales includes looking at ways to lower costs for workman’s comp, and health insurance (NB the Co-op utilizes a broker to find best deals on worker’s comp and health ins.); and/or increase sales—do NOT reduce wages, etc.
Interest only being paid on $100,000 loan (about 5.6% interest)—due June 2019. Lender does not want principal payments until entire loan due.
Tara does not recommend paying out dividends to owners—we have been working from losses for long enough that we need the current profit to fund petty cash/reserve. Suggestion to have BOD/president’s letter in next newsletter outline the financial picture and the reason for not declaring a dividend—we need to have reserve/use money for long delayed equipment needs. Jean would like to see cash flow statements—will help when deciding whether we can afford dividends, for instance.
What level of profitability do we need in order to be able to pay off the loan? Tara feels that current situation is sustainable, but we do have a lot of infrastructure needs to address.
Co-op is not legally required to have annual audit by outside accountant. It might be useful/required if applying for a new loan, or similar.
SESSION 2: CO-OP HISTORY Tara, Chris and Patrick gave perspectives on history of Co-op, especially highlighting ups and downs of plans to relocate over the last ten years or so.
A group of 20 or so folks got together circa 1970 to cooperate in buying “good food” in bulk from a Boulder wholesaler. Incorporated in 1972, the Co-op opened a store front at Mountain & Loomis. Later moved to E. Mountain (current location) and hired Jerry Manning as first real GM. Jerry was instrumental in getting building purchased. Co-op was most successful as it became a real grocery store (natural foods market) as the natural foods marketplace evolved. Most successful during Brian Gable’s & Tara’s management; the Co-op had a lot of loyal members at that time. The Co-op thrived as downtown emerged as a desirable location (Old Town Square redevelopment, etc.) . From mid-‘90s until about 2006 Co-op thrived, put money in bank. During this time other natural foods stores opened—Columbine, Wild Oats/Alfalfa’s (all mid-town area)—always panic when these opened, but never had any real impact on Co-op. When Whole Foods opened, it did finally impact the Co-op’s business.
Could Co-op survive chain natural foods store in Old Town area? Remark that the Co-op needs to reinvent itself.
Does Co-op still have loyal member/customer base? Maybe not so much. “Hippies” are aging out—how to engage younger people? Early round table meetings had long-time members who were loyal to cooperative idea, but less loyal to store itself. Later/newer members were more “loyal” to store—what store can provide them (and there was still a divide between “bulk customers” and “burrito customers”).
Chris Coen—Co-op has been schizophrenic over last ten years. Tara left suddenly at end of 2006. BOD hired Derek (2-3 yr staff member, then short tenure on BOD). Derek was well connected to people in town; rebranded store, remodeled, more marketing; generated enthusiasm. BUT—finances were not well managed or tracked, got to $100k in debt to UNFI; payroll was large (but good customer service). Construction on Bohemian building disrupted access to store for one full year (2009). No cash reserves, the Co-op would have been insolvent within one payroll. Derek directed by BOD to immediately dismiss five staff, and ultimately Derek left. Very hard time for staff and store. Staff had no idea finances were in such bad shape. BOD hired Lynn to replace Derek as GM. She is a bookkeeper, and got the books straightened out. Lynn was first GM to come in from outside of co-op land, but she “got it”. Lynn arranged $100,000 loan to pay off UNFI, around same time Bohemian building was finished and access to the store reestablished.
About this time the DDA floated idea of community marketplace, to be anchored by grocery store. The DDA was interested in having Co-op be the anchor, though there were concerns about its stability. Impetus to move was largely from “outside”—from DDA, not from within Co-op.
Lynn felt Co-op needed someone with more experience to lead move. Keith was brought in for that (from career at Vitamin Cottage). (Be Local was chosen by DDA to lead/manage the community marketplace.) Then the economic crash caused DDA to bail on the community marketplace idea. Keith did not get member communication, though had strengths in other areas. Co-op has been whipsawed by changing winds of community funding. City/DDA has talked over the years of supporting the store (as participant in the community marketplace), but has never in fact done so.
When Keith left, the store had lost a big part of communication with members regarding trajectory for a move. The whole move idea sort of evaporated. Sherpa had been in touch with Keith even before Keith left. Staff ended up spending time bringing GMs up to speed. Keith & Sherpa did not get Co-op climate or Fort Collins climate. Three managers in six years has been taxing for staff, and has been frenetic for customers.
When Keith was manager, the BOD took on the communication responsibilities. People tracking this communication tended to be those dedicated to the co-op model—they hoped a larger store would have more “Co-op” impact, and were not so concerned with the “store” aspect. Trolley Barn project was thought by city to be on timeline of about 10 yrs—based on redevelopment of area around trolley barn which would provide tax increment financing for the project. Meanwhile, consultants were indicating Co-op needed to move in five years. BOD pulled in two directions, with further complications of diversity of philosophies or desires from customers.
Member/Owners fall into four groups—those interested in Co-op as community and co-operative business; those interested in the store and what it has to offer in terms of product; those interested in the move from the Co-op standpoint; and those interested in the move from store and product offering standpoint.
Meantime, NOTHING was put into maintaining/upgrading infrastructure in the current store.
BOD and last two GMs had unrealistic concept that we have 1,200 committed members. Reality is that there are maybe less than 100 truly committed folks. We need to know who these committed members are and what they want. How many of these would remain committed to the Co-op even if a new grocery (e.g. Lucky’s) comes in five blocks away.
At the end of day, we have a cooperative model, but we are a store, and have to remain viable as a business. Also—we are too small to be in the driver’s seat on issues like the community marketplace. We need to focus on success of the current business. If successful, we may be invited to participate in other opportunities.
Tara thinks our current store location could handle $2 million in sales. Co-op lost folks when Lynn redid special order policy—special order/bulk fell off significantly when policy changed.
Digression into ideas to improve efficiency of deli—limit on kitchen, so what if contract out some of deli production to a commercial kitchen?
How to meet members’ expectations while still maximizing sales? How about short and long term thinking/planning—how to maximize sales while still thinking of eventual move to bigger store that can be “real” grocery store.
Highlights—
Staff is extremely loyal, committed, represents a very strong cultural aspect of co-op. BOD has to tailor communications to staff because they are best, most dependable core of folks, but they have a distinct view of what the Co-op can be. Policy governance is one sticking point with GMT/staff. Also, policy governance has been interpreted at times that BOD cannot communicate with staff at all. Can we re-title “Policy Governance” to something like “Best Practices”? On the other hand, over the last year staff and BOD have learned a lot from going through policies and evaluating compliance.
Two other big problems in recent years—BOD not paying attention to financials, and GM not treating staff fairly. Both are now addressed.
Lack of consistency over last six years with constantly shifting plans for future, as well as lack of communication with members. While acknowledging that planning for future is always something of a moving target, we should aim for consistent outlook.
SESSION 3. VISIONING
Can we focus on store we have now, be viable on our own (with likelihood of increased competition)? Consider the three or four different groups of shoppers/members.
Two things to discuss—strategic planning, and short term ideas/planning to address immediate challenges and opportunities (e.g. Safeway closing in four weeks). Let’s think of using current location, not count on move in strategic planning. Also—if (Lucky’s) does come into Sports Authority location the City might abandon the community marketplace idea.
The most important thing we need to do as co-op is renew community buy-in, why co-op is special, what makes it better place to spend your money. Current political climate makes for good opportunity to be involved in changing landscape in Fort Collins. Build community connections. Engage university students (project to have several students develop marketing plans after learning about the store and the co-op, sort of competition for the students—membership, or whatever, as “prize” for winning proposal. Then, publicize coordination with CSU.
Staff marketing committee would like some BOD participation—especially to utilization of contacts. But—make sure that marketing push does not just look like “one more flailing of a challenged organization”, consider using professional resources. Recommendations—One Tribe (Paul Jensen—member/owner) or Dawn at Toolbox Creative. We cannot afford to be just trying out stuff any more, we need to get in and do it right.
Strengths
We are a cooperative
Special orders and bulk buying (bring own containers)
Customer service
We own our building
Largest selection of local products/produce (25-30% of total sales)
Bike friendly (this, bulk buying, etc goes under something like sustainability)
Local business/locally owned/community owned/member owned
Limited product mix can be positive—less time spent trying to evaluate many choices—products are vetted.
Quality of products, product selection chosen to match values
Management does not get paid 400x regular employees—equitable pay structure/egalitarian organization (No fat cats on the top)
Run for and by the community it serves
Only not-for profit health food store in town—food for people, not for profit
Progressive-minded
Newsletter
Team managed
Accept food stamps (including deli, at least until deli sales exceed 15% of total sales)
No industry professionals on staff
No lines at checkout, staff will carry groceries to car
Staff knows many/most customers by name—personal, community feel
Weaknesses/Challenges
Price perception (high prices)
Competition (related—Co-op is no longer only place to get local/organic/etc)
Parking
Product mix/limited store space
Old equipment
Diversity of viewpoints/needs amongst customers (“schizophrenic”/”bipolar” customer base—some love that it is co-op, some love store as it is, some want to move/expand)
No industry professionals on staff—all self taught
Appearance of front of store—blinds make store look closed
Inability to have patio or other outside in front of store (and no access to outside at back of store—all DBA alley space)
No loading dock (UNFI exists for Whole Foods, dictates practices of largest cooperative association)
Community trust—Co-op not perceived as strong, vibrant organization (related to many changes in management, member benefits, moving plans over last several years)
Some customers don’t see the benefits of membership. Lack of clear benefits of ownership.
Lack of ability to educate consumers over last ten years as grocery landscape has changed, and price sensitiveness of many consumers. Need to create added/additional value and educate customers.
Old website
Struggling with identity
Lack of member involvement at co-op—e.g. discount employees
Various ideas for added value—
Online ordering before store places weekly order, so that store can have wanted ingredients on hand
Prepared meal boxes, ready to cook
Co-op should take stand on issues more often. Establish overarching parameters for activism, anything within those values would be appropriate for Co-op to address.
POSSIBILITIES FOR STORE:
Don’t want to lose the spirit of the co-op, but need to find a way to stay profitable.
How do we still meet needs of folks who cook, while perhaps ramping up grab-n-go stuff that seems to be a big draw?
Need identity that is consistent for internal and external observers—regular shoppers and others will give similar stories about perception about store, reasons to shop at Co-op.
When people go to farmer’s market, typically need to go somewhere else, because can’t get everything at market. Why can’t Co-op have similar approach—no, can’t get everything here, but we have a positive social environment/connections. Need someone who knows how to capture essence of Co-op (seven day a week “farmer’s market”, anti-establishment/rebellious nature) and be able to market it effectively.
“Local, it’s not just painted on our windows”, “Local, it’s not just a slogan”
As economic decisions get more local, work with City to be part of local food programs/efforts. Also, look for non-profit to partner with.
ASPECTS OF IDENTITY:
Local (including percentage of sales that stays in community, versus chain stores; recirculation through the community of $ spent)
Community investment
Community involvement
Sense of community
Grass Roots
Food justice, economic justice, (progressive causes)
Organic/healthy food
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INFRASTRUCTURE NEEDS
Produce cooler—can we get used cooler from Safeway as they close? (likely theirs are much too big and require too big a refrigeration unit, as well as might be as old as ours)
Currently need to replace the cooler—spent over $2,000 in Dec for repairs, still needs $2,700 compressor.
GMT has vision of redoing west wall with slightly smaller produce cooler, plus cheese case plus deli.
Will likely need to finance new cooler (about $15-18k): should we include more money in loan to address other needs? Or have cooler supplier/refrigeration contractor finance?
Possibility—get loan on building to pay off current loan, upgrade produce cooler and other equipment, and maybe finance marketing campaign.
What about moving produce cooler to east wall, to be first thing seen on entering? This would be part of larger vision for store, and part of large scale reorganization—would need to have large vision in place before moving produce to opposite wall. New cooler can be put where existing one is, any extra space filled for now with other merchandise; cooler could be moved across store later as part of bigger reorganization.
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Who are the members?—How do we address “members” that have made one or two payments on a membership, and never finished. They should not be getting membership benefits. Who will take on cleaning up membership rules/rolls? GMT will be discussing membership benefits at their next meeting, in terms of who gets periodic discounts/special order benefits.
SAFEWAY
Closure of Safeway will create something of a food desert downtown for lower income folks. How can Co-op try to address needs of this group without sacrificing values and margins? City should be concerned about this, having pushed for high density housing/senior housing in downtown area. Maybe bring back “basics” program—lower margin on some basics in each department (would have to raise the margin on other items to compensate). Could we get a grant to provide discounts when EBT (food stamps) used? Maybe member donation fund to “pay it forward” to fund discounts for EBT purchases. Maybe use EBT as criterion for special memberships/discounts.
What if we helped in some other way? (We did at one time offer bike delivery, mostly to DMA plaza—did free delivery on Wednesdays, but then couldn’t use senior discount.) So maybe give free delivery one day a week, to DMA, Northern Hotel, new senior housing on river. Trinity will contact Food Cluster contact to find out about double value on EBT transactions.
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Visioning should be action oriented, not reaction oriented. Define who we are, do what we do best we can. We should be aware of how we differentiate ourselves from competition without “freaking out” about the competition.
How about garage door on front of building to make the store more inviting? Need to check with health dept. as well as historic building or downtown regulations.
ACTION ITEMS
Contacting marketing agency—Rich will make contact with one or both agencies, make introductions to staff/BOD. Goal is that preliminary discussion will result in at least ball park cost of marketing to put into budget.
Clarification of active membership status—GMT will discuss, though while this is an ongoing “back of mind” issue, it is not highest priority
Set identity—Visioning Committee Visioning Committee to meet Tues Jan 31, 5-7 pm in room 213, Statistics Bldg.
Wed 2/1 is deadline for Newsletter items
BOD meetings to be third Monday 6-8pm, Room 213 Statistics Building
New website to be up in a couple of months. Monthly email will be used to disseminate BOD minutes, etc. in the meantime. Ed should make sure GMT is up to date on records that membership should have access to (BOD minutes).
Member Owner involvement (store maintenance, committee involvement)—Engagement Committee, with possible help from Research Committee. Engagement Committee to meet Tues 1/24 6 pm at Happy Lucky’s.
Membership changes, discounted memberships—Research Committee
Research Committee will coordinate via email—Ed to send out email with draft work plan (updated), solicit task sign-ups, results reporting.
All committee chairs should look at annual meeting notes and contact member/owners who expressed interest in committee participation
Committee sign-ups:
Visioning
Oakley
Drew?
Ed
Trinity (sometimes)
Kalidas
Rich
Chris
Engagement
Stephanie
Drew
Amber
Rich
Research
Steve
Patrick
Drew?
Ed
Trinity
Elections
Jean
Executive
Ruth
Amber
