Close to 50 people filled the front of the Yahara River Grocery Cooperative, some sitting on chairs and grocery crates, standing around the checkout lines and crowding the doorway during its April 16 annual member meeting.
The meeting had been called in a letter announcing the closing that was shared to members and on social media earlier this month. Members were told it would explain in more detail why the store would be closing.
The group erupted into applause when Steve Lawrence, a member of the YRGC board of directors, credited manager Cindy Cwik for the longevity of the store being open.
“The cooperative is completely reliant on one person, and that’s Cindy, and she’s done a phenomenal job,” he had said.
The three board members, Lawrence, Cynthia Hurtenbach and Nancy Hubing, shared details about the financial struggles that have plagued the cooperative since it opened. Lawrence explained that last year, during the last member meeting, there was a motion to close the store “within a few months” if sales did not increase and some payroll checks were not cashed, which did not happen.
“The trend continued downward,” he said. “It’s been negative for a long time. What’s happening is payroll checks are being held so we can buy inventory… and it’s been going on for years.”
During the meeting, some members shared their appreciation for the dedication and flexibility of Cwik, who Lawrence said at the meeting has only cashed some of her payroll checks in the last two years.
Hubing said financial support from Cwik and the building’s owner and landlord, who has been flexible about rent deadlines, allowed the cooperative to stay open for so long.
But the board said they could not allow the trend to continue. The last day has been set for May 31, unless the primary creditor, Summit Credit Union, sets an earlier date.
“It’s not truly a cooperative if three people are maintaining it, it’s against cooperative principles if our general manager isn’t paying herself, she hasn’t taken a vacation since I don’t know when, and it’s not right that we let her do this,” Hurtenbach said. “It’s not the cooperative model anymore.”
The co-op has struggled financially from the beginning.
Several months after the store opened in 2008, cooperative officials announced the store had lost $160,000, and that it still owed $400,000 from a startup loan. Despite fundraisers and attempts to recoup that money over the next decade, the money never caught up.
Its best year for sales was in 2016, Lawrence said, when the store brought in over $600,000 in revenue. But in order for the store to be viable, sales need to be closer to $700,000 annually.
“And we’re way below $600,000,” he said.
The cooperative is not behind on loan payments, Lawrence said, adding that they have been made on time every month, meaning they are in good standing with the creditors.
The board spent a majority of the meeting thanking the employees and members who have allowed the cooperative to continue operating for the last 11 years.
“We’ve had over $6 million in revenue over 10 years, we’ve had over 60 employees, and for many of them it was their first job,” Lawrence said. “I’ve done 90 percent of my shopping here for the last 10 years, I love this store. This is not an easy process for us, as well.”
Group could go on
While the grocery store is set to close, the legal entity of the Yahara River Grocery Cooperative can continue to operate until 2020. The deadline for filing is March 31 of that year.
Some members spoke about wanting to continue the cooperative and turn it into something other than a grocery store.
Most who spoke at the meeting agreed that the current business model is not sustainable, and it would take a significant financial investment to turn it around.
“It’s not a viable business,” Lawrence said. “If there are owners here who want to change the direction and make it a viable business, that can be done, but from a legal standpoint the board does have the legal right, and in some instances the duty to act upon the financial state of the cooperative.”
The hiccup the board is now facing, though, is what would be the purpose of continuing the entity and who would operate it.
There has been a struggle to maintain a board of directors, Lawrence explained during the meeting. It has three directors and had nine initially, but fewer people began volunteering for the position.
“The key point is that without proper funding, it would be a really unwise decision, primarily from the liability of payroll taxes,” Lawrence said. “Folks need to be aware that if a decision is made and a vote is taken, there is a liability, it’s not simply ‘lets just refresh the store.’”