At my recommendation, the board voted to put an indefinite hold on the Eureka remodel that was slated to begin in January 2018. As some of you have followed, this project was introduced to the membership in 2015. Time and time again, our groundbreaking date has been pushed back. Most recently, we were not able to start in January because there were delays in getting our health department permit. Once we had that resolved, our equipment financer backed out at the eleventh-hour in February. When we finally got them back on board in March, they had doubled their rate. With new, unacceptable terms and eroding cash, the remodel just doesn’t pencil out at this time.
This is a big disappointment to many employees and will be a disappointment to many of you who were excited about our proposed new offerings. Never fear, our co-op is resilient! Within an hour of breaking the news to our Department Heads, several came forward with exciting new ideas for meeting the needs of our members and shoppers in the absence of a remodel. In addition, much of what we paid for and had already gotten out of the remodel had to do with consultants and the knowledge they imparted. Our Deli team is ready to move forward with new training programs and even some new menu items, within the limitations of our current production spaces. For instance, they have already rolled out a new grab-n-go pizza program in Eureka that has been very popular. Made in-house from scratch with our own sourdough crust, homemade organic sauce and fresh, organic toppings that are local when available, these pizzas are a refreshing alternative—especially the one with kale, mushrooms and white sauce!
We have been putting off many preventative maintenance repairs and delaying the replacement of failing equipment, both of which were major components of the remodel. The management team has developed a plan to address these issues for the short term, in anticipation of picking up the remodel in April 2019 (this would need re-approval by the Board of Directors). We also added labor in anticipation of the remodel, mostly in the Deli, and have worked creatively to ensure we can bring our labor costs down without laying anyone off. Increasing sales is the best way to mitigate this, so thank you for shopping the Co-op!
One of the biggest impacts to our financial situation is ongoing health care expenses. We are self-insured, meaning that every claim is paid by the Co-op, minus the portion our employees pay. We spent more than one million dollars alone in fiscal year 2018, with $700,000 of that hitting in the first quarter. The board will be reviewing proposals for better cash management in relation to health care expenses in the coming months. While reducing expenses is part of the objective, another part is reducing the fluctuations in our profit and loss statement as well as our balance sheet from quarter to quarter. It is pretty frustrating to increase sales, reduce expenses and hit targets for key indicators such as Cost of Goods and Labor, just to have it undermined by unpredictable health care costs.
We have been devoting our attention and resources to the Eureka remodel for so long that the current management team does not know what it is like to operate without it hanging over their heads. This relatively new team has done an amazing job of getting settled into their positions and taking on this project. I am excited to see what will happen now that they are bit more seasoned and will have more time to devote to daily operations. Please let me know how you think they are doing.
Really, our success as the Co-op depends on all of you. We appreciate your continued patronage and commitment to this 45-year-old institution! If you have questions or concerns regarding the remodel, please don’t hesitate to contact me at (707) 822-5947 ext. 220 or firstname.lastname@example.org. I really enjoy talking to you all when I get chance—I was recently lamenting to our Board President Colin Fiske that since taking the General Manager position (previously I was Marketing & Membership Director for the Co-op), I haven’t had much time to interact with members. I miss that aspect of my previous work and would like to make it a higher priority in the coming year. I’d love to know what format would work for you. Maybe "Coffee with the GM", a special invite to brunch or a quarterly open forum? I’m open to ideas. I’m looking forward to connecting soon!