From the General Manager | Spring Quarterly 2019
Co-op Holding Steady, Ready for Lift Off
After reporting this winter that we turned a corner toward profitability, I wondered if our sales increases were due to holiday cheer and worried that they would not last into the spring and throughout the year, especially given that the economic future of our area is still unknown. January and February sales were disappointing during the government shutdown, but we have seen a strong upward trend in March. The major driver of those increasing sales we attribute to the new food bar at our Eureka location, as well as some recently added menu items at both stores. Customers can now enjoy hand-made chicken pot pies, value-priced burritos and hot cinnamon rolls at both stores. In Arcata, we now have fried chicken on Fridays. If you haven’t tasted it yet, give it a try, but get there early – the fried chicken is only available from 3-5pm and it goes fast. All our freshly prepared hot food and salad bar options are made using mostly organic ingredients and made with loving care. It’s a difference you can taste!
Left: Bourke, Deli Production Sr. Clerk, cooks Co-op chicken pot pies in Arcata. Right: Customers making sauce, grain, and protein choices at the new food bar in the Eureka store.
While we have been delayed in carrying out the major renovation of our Eureka store, we have found ways of making incremental improvements to meet our shoppers’ insatiable demand for the Co-op’s high quality, freshly-prepared food. The sandwich ordering station has moved around the corner and now faces the new food bar, leaving the main aisle open for customers to get to the food bar, meat department, specialty cheeses, cold beverages and access the rest of the store. A new juice bar will be added soon in Eureka (already in Arcata) and signature sandwiches are coming soon to both stores. Visit, try the food, and let us know what you think about the changes!
We continue to do all of this with less staff. Over the course of six months, we went from 230 employees to 189. We laid off six employees between late September and mid-October and lost many more through attrition (when an employee voluntarily leaves, and we do not fill the position). We’ve also maintained reduced schedules (30 minutes per day) for staff in most departments. This continues to be a hardship for employees and is probably a main contributor to so many leaving, but it is also part of how we’ve managed to survive our financial crisis and continuing cash crunch. With the sales lift we have seen in March, we will cautiously add labor where not having it creates a worse problem (ex: no bakers means no bread which means reduced sales). When you are next in one of our stores, let an employee know how much you appreciate their hard work and dedication. Those who have stayed have carried us through with their passion for the Co-op and their deep knowledge of our products and our customers.
While we have pulled through this rough patch by improving operations, we still have the issue of C-Share repurchases to address. When there were members tabling in front of our stores making accusations of embezzlement (not true) and news articles pointing to mismanagement, we received dozens of requests from Fair Share members who wanted us to buy back their C-Share investments. This is completely understandable, given that the picture painted looked so dire. As a consumer-owned cooperative, it is our responsibility to share with our 18,000 members how we are doing financially—transparency is key—but it has its drawbacks. At the height of the rumors that the Co-op would be closing (it won’t be), the repurchase requests exceeded $300,000 (out of roughly $2 million). Not all of these requests are related to fears about the Co-op’s financial status. We have members who are making investments in property, or settling estates of deceased family members.
Many of you chose to invest in the Co-op in its time of need—and we thank you! The fact remains, however, that any gains we have in building cash will be eroded by the need to repurchase more than $300,000 worth of shares over the course of the next few months. The board has been monitoring this situation and recently raised the C-Share dividend rate from 2% to 2.65% APR. This resulted in another roughly $50,000 in new C-Share investments. They will be considering further increases to the dividend rate as the rates at other institutions rise. They will also be reviewing proposals brought by staff to take a loan on the Arcata building (which we own) for cash needs and capital expenses such as retrofitting our refrigeration systems to accommodate environmental regulations around refrigerant gases.
And so, we have this double-edged sword. By being transparent, we risk generating more rumors and fears about the Co-op’s financial situation. On the other side, we could potentially garner the cash investments we need from members to fully access the road to financial recovery. The hardest part, in my mind, is simply keeping members informed with accurate information. In our small community, it is easy for misinformation to spread quickly, or for the lack of information to spread fear. I encourage members to get their information directly from the Co-op. Read Co-op News, read board minutes on our website or in stores, attend board or committee meetings, and correct misinformation when you hear it.
Now that we are holding steady in sales, and with the changes we are making to delight our shoppers, we are ready for lift off. If you’ve been reading Co-op News these last few quarters (or possibly for decades), you’ve noticed that the Co-op experiences rough patches and setbacks, but then recovers. Sometimes drastic measures are needed, but that is par for the course in business, especially for an institution that has survived 45 years in a rural community. We do not know what awaits us in this roller coaster political and economic environment, but we’ve got the bull by the horns and we’re ready to take on whatever challenges come our way. In fact, we already have.
Now more than ever, we need Member Economic Participation, cooperative principle #3. As our early investing members become older and have greater need for their investment elsewhere, investment from our newer members ideally will create stability for our working capital. If you are a member and have not become Fair Share yet, please consider doing so at this time. Your investment of $300 in Sustaining B-Shares will allow you to begin investing in, and earning dividends on, C-Shares. This is a fantastic way to support much of what you love about our community.
One of the things that makes this community so amazing is our cornucopia of local, organic produce. The Co-op has had a strong hand in the start-up and ongoing success of many local farms. We have done this by engaging farmers annually. Each winter we sit down with each farmer and determine what and how much they will grow for the Co-op. New this year, we are increasing our orders to ensure we have enough local, organic, delicious produce to use in our Deli recipes. It’s not as simple as placing an order when you need it. There is much pre-planning on the part of the farmer. They must consider the capacity they will have, the yields they will need for all of their accounts and the risk they are taking in doing more for the Co-op. We appreciate that they go through this process with us each year and that we can count on their dedication to being stewards of the soil and the land! When you invest in the Co-op, you are investing in our local food system and a healthier planet.
We truly live in a unique place. Navigating through this challenging financial time has magnified the importance of the Co-op in our community. We buy from more than 200 local vendors, 25 of them farmers, as well as local distributors. We are major accounts for out-of-the-area produce distributors who source from small, family farms—sometimes cooperatives, always organic—and have a positive impact on the food system. Our employees spend a good chunk of their paychecks on local products and services. By the Co-op’s very existence, we are able to participate in a regenerative economy. That’s something worth investing in!
I’m really excited about the progress we’ve made these last few months and the view of the horizon as we take off this year. Thank you for investing in us as we fly into the Co-op’s long-term future.
