The People's Food Co-op grew right through the Great Recession, but now it's losing money.
From the December, 2015 issue
Near the end of the People's Food Co-op's September board meeting, president Ann Sprunger asks general manager Lesley Perkins if she has "visions of the co-op you want to share with us."
"You're supposed to share your visions with me!" Perkins replies. A fair-haired woman whose soft voice shows traces of her native Scotland, Perkins launches into an account of how, "on my own time," she's driven employees to other food businesses, telling them, "I want you to walk through that front door and tell me what you see." She wanted to impress upon them the importance of an attractive store. Perkins enthusiastically describes how, in one store, LED lighting cast a glow on the produce.
The six board members in attendance look tired. A frustrating meeting, running late. They had discussed, without success, a replacement for board member Rebecca Kanner, who had recently quit.
When treasurer Matt Graff asks for a financial report, Perkins replies that it isn't ready. Someone says it's time for a new membership survey; someone else replies that the survey should have been completed a year ago.
At the meeting's end, vice president Gaia Kile complains, "We're stuck in minutia and mud and not getting anything accomplished." Board member Bruce Curtis says there's a "bad vibe." Perkins disagrees. "I didn't sense tension or bad vibes," she says. The board's "caring about the co-op--it kind of excites me."
Next year, the People's Food Co-op will turn forty-five. While celebration plans are in the works, its finances are nothing to cheer about. The member-owned natural foods store weathered the Great Recession surprisingly well, with sales rising from $5.5 million in 2009 to $6.5 million in 2012. It earned a total of more than $380,000 over the four-year period and returned more than $170,000 to its members in rebates. But in 2013 sales barely grew, to $6.7 million, and the co-op "lost money, a lot of it," Graff wrote in his annual report. Sales slipped slightly last year,
and losses continued. While the board hasn't released any results for 2015, Perkins, who was hired in the spring of 2013, says sales fell about 3 percent after Lucky's Market opened in February. And there's apprehension about the impact of the new Plum Market on Plymouth Rd.
No one's talking about the co-op closing its doors, but "I am concerned," says former board president Linda Diane Feldt. "The fact is that the co-op is struggling because our values have become more mainstream." In the co-op's 2014 annual report, Graff cited a sampler of the store's products--certified organic produce, free-range eggs, and rBGH-free milk--and then listed a dozen other stores in town where a shopper could find them.
"Co-ops across the country had been double digit [in sales growth]," says former PFC manager Carol Collins, who now works at the National Cooperative Grocers Association. Today, she says, "They're single digit." Independent food co-op consultant Stuart Reid emphasizes that to survive in an increasingly saturated natural foods marketplace, the country's approximately 400 food co-ops "need very strong management skills" and a clear identity. "They need to promote and explain why it matters that they're co-ops."
In the early 1970s, most shoppers didn't need an explanation. Ann Arbor was an epicenter of the antiwar movement, the "Pot Capital of the Midwest" (to quote a vintage T-shirt), and a magnet for the country's restless young. In the parallel universe dubbed the "counterculture," rebels who sneered at existing institutions as top-down, corporate, and therefore corrupt, created their own information network (the Community Switchboard), entertainment venue (the People's Ballroom), and even health care center (at the Free People's Clinic, a story has it, a volunteer male doctor was "fired" for asking female clients to cover themselves).
Most counterculture institutions vanished long ago. Two prominent exceptions are Ozone House and the food co-op, which opened for business in February 1971, in a rented space on South State St. There, an all-volunteer crew "began selling peanuts, peanut butter, honey, sunflower seeds, brown rice and soybeans," then-board member Rebecca Kanner wrote last year in the co-op's newsletter. "Sales averaged $30 a week."
By 1980, the co-op had two locations: one near its current spot on N. Fourth Ave., the other on Packard (now closed). Living in a student house near the Packard store in the early Eighties, I happily bagged and labeled cheese for an hour a week, receiving in exchange a 10 percent volunteer discount. Standing around a long table chatting with my fellow baggers made me feel a part of the co-op--and a bit smug. I was making the world a teeny bit better, two dozen cheese bags at a time.
By then, paid managers were on the job and learning to balance idealism with pragmatism. Collins, general manager from 1994 to 2006, laughs when she remembers how canned tuna was "sold out the back door," furtively, because of the co-op's strong vegetarian orientation. She remembers battles over "selling sugar and even coffee because they weren't good for you."
Those battles had mostly ended by the time the co-op moved to its current location in 1993. "We went from having to police what people want to eat to [selling] what people want to buy," says Collins, who oversaw a subsequent expansion into the space next door. It now houses hot and cold takeout bars, grab-and-go sandwiches, and a fair-trade coffee shop, Cafe Verde. On the grocery side, there's less cheese and more frozen organic dinners.
The co-op's modernization continued under Collins' successor, Ken Charboneau. He installed credit/debit terminals, purchased energy-efficient freezers, and added craft beer. After he left in 2011, co-op veteran Kevin Sharp ran things for a year and a half before the board hired Perkins. The former president of the Kerrytown Market & Shops, she had come back to town after running a B&B in Frankfort.
When I first met Perkins in her basement office in July, the Eden Foods controversy was finally drawing to an end. Last year, under pressure from members upset with Eden CEO Michael Potter's successful court challenge to Obamacare's contraceptive mandate, the board approved a motion allowing members to vote on whether to boycott the company--only to cancel the vote at a subsequent meeting. Furious would-be boycotters circulated petitions to force a vote, but, when the signatures were counted, they fell short. An outspoken boycott opponent, Perkins complains about the "negative publicity" the campaign caused. The Eden critics say taking ethical stands is what separates co-ops from private businesses.
Perkins says she walked into a situation where the co-op had "been resting on our laurels ... a lot of things needed to be changed." That included what she calls an "unwelcoming atmosphere"--she says customers were being put off by people who were "not taking their medicine" smoking on a bench near the entrance and vendors hawking the homeless community's Groundcover News. She removed the bench, and she told the vendors to move farther away.
Perkins cleaned up cluttered and disorganized storage areas, made changes to improve the kitchen's efficiency--including hiring bakers to work overnight--and added a cooler to the popular grab-and-go section. And she's proud that she integrated Obamacare health insurance and allowed new employees to receive it immediately. But she acknowledges tensions with employees who resisted other changes, like being required to wear a PFC T-shirt or apron.
The co-op has always had high turnover, so it's difficult to know how many people left because Perkins was unhappy with them or vice versa. The most prominent departure was that of the well-respected Sharp, a longtime co-op employee and its most recent interim manager. (Sharp declines to discuss his departure.)
Former co-op cook Daniel Michniewicz credits Perkins with reorganizing an unproductive kitchen and hiring a strong executive chef who "played a big role in turning it around." But he also says that Perkins's style had a "calculated shade of corporate" that didn't sit well with "a very crunchy and independent-minded bunch" of employees. Michniewicz himself left this past spring after running for a board seat in the aborted election.
I'm still a co-op member. For legal reasons, members can no longer do hands-on volunteering in the store, but for a $60 fee we get a sense of belonging, some discounts, and, in profitable years, rebates based on our purchases.
Members also select the board--but not this year, when for the first time the turnout fell short of the required quorum. Michniewicz, who considers the failure "a very big deal," points to the lack of a "concerted get-out-the-vote effort" and a decision not to mail ballots to the entire membership.
The only immediate consequence was to make board members who hadn't sought reelection stay on--though Kanner subsequently resigned. (In November, the board was still seeking a replacement.) Longer term, though, it's worrisome if members feel less connected to the co-op--according to shopper surveys, we account for 60 percent of the store's sales.
When I stop by in November, I meet white-haired Maysel Brooks, who tells me she's been coming here from Dearborn for ten years. She says she now does most of her shopping at Whole Foods because it's cheaper but still comes here for a few items. Thirty-something Dory Mead also shops around--"I go to Trader Joe's, Kroger's, or Meijer's"--but tells me, "I like shopping here--I grew up here." The only member of her family who's a vegetarian, she's been coming to the co-op since she was a student at nearby Community High School.
In July 2014, Perkins submitted a lengthy "visioning" statement to the board. "The Co-op has weathered many storms over the last 43 years and could be seen to be going through a midlife crisis," she wrote. It was struggling with the questions "Who am I?," "Why do I exist?," and "Am I living up to my true potential?"
Perkins' statement included a long list of changes she'd already made. Her suggestions for the future included developing ties with local schools; creating "a private label product line of foods" to be sold at the Farmers Market; and starting a worm farm.
But the statement lacked financial data. The board, she says now, wanted "more spreadsheets" rather than the "general narrative" she gave them. She is now working on a long-term plan for the co-op.
"I desperately want the co-op to succeed," she stresses.
Former board president Feldt says the co-op needs to do more long-term planning. "That was true under my leadership," she adds. "I'm part of that criticism."
Asked why it hasn't happened, Feldt sounds uncertain, then offers two potential explanations: either Perkins is "not good at doing that, or the board didn't give her clear enough directions. I don't know which is true."
Even as a member collects photos for a forty-fifth anniversary book, co-op leaders will soon close another year of financial unease. And another election is coming up next spring. With five seats up for grabs, the co-op is accepting applications from members who want to shape the future of the city's most idealistic grocery store.
[Originally published in December, 2015.]
On December 30, 2015, Chuck Barbieri wrote:
I was President of the Board at PFC in the early 1990's. We almost moved PFC a few blocks west during that time. I am curious to see to how PFC pays [for] that location. It is a great location if you do NOT drive a car. Oftentimes, I cannot find a parking space and go to another store. Also, it will be great if workers get paid $15/hr - if we can get lower rent or monthly payments this will be possible. Another thing that I will like to change is to have more older folks work at the coop (well, if they paid a living wage!). This may help tone down the loud music that has a negative impact on building a community store where people actually can talk with each other.
On December 30, 2015, wrote:
The coop outreach has been faltering. Efforts should be made to mail out the ballots and newsletters to all members in a timely manner. Keep it positive and make sure the member owners know what's going on. This article comes as a surprise and I'd rather hear about it in the newsletter than in the observer.
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