The Yahara River Grocery Cooperative (YRGC) will be closing on or before June 1 after more than a decade in Stoughton.

The announcement was made last week in a letter from the YRGC board of directors to the co-op “owners,” or members, and employees.

“Unfortunately, the financial situation of the co-op has continued to decline since the March 2018 owner meeting,” the letter stated.

The board had been working with a lawyer, recommended by the UW Center for Cooperatives, and based on their advice, Wisconsin statutes and the cooperative’s bylaws, the board made the decision to close the store, the letter said.

A meeting will be held at 6 p.m. Tuesday, April 16, at the co-op, to share more information about the board’s decision to close the store, as well as answer questions from the owners and employees.

Co-op representatives did not respond to request for further comment.

The co-op opened March 2008 and faced early financial struggles. Despite work to recoup early debt, the letter sent last week detailed continued financial difficulty.

“We believe the co-op is clearly insolvent,” the letter said. “This conclusion is based on the fact that sales have not been sufficient to sustain the business for at least two years.”

The topic of a possible closure was discussed at last year’s annual meeting, when issues with limited parking and competition with other grocery stores were discussed.

The primary creditor, Summit Credit Union, has the primary legal rights to determine how the store will close and how the remaining proceeds will be distributed. The letter explained that several creditors, including the landlord and the store owner, are entitled to be paid before members can receive return of their membership payments.

“Sadly, we do not expect to have any funds available to return to any owner’s (member) capital,” the letter said.

Membership fees were $100 for a one-time investment, the co-op’s website states.

The closing date of “on or before” June 1 will be determined by Summit and other, unnamed creditors, according to the letter.

“This is not a decision that we, as the board, have arrived at easily,” the letter said. “The co-op has served the Stoughton community for well over 10 years, and will be greatly missed.”

Early efforts

The grocery store opened in March 2008 in what was known as the Jensen Furniture building, which had hosted two coffeeshops before the cooperative moved in.

YRGC officials had eyed the building as a spot for the store after the Main Street Market closed in 2006, leaving the city with only one grocery store, Pick ‘n Save.

Seven months after opening, co-op officials announced the venture had lost $160,000, and that it still owed $400,000 for a startup loan.

Fundraisers were held throughout the following years, including a $30K in 30 days fundraiser in January 2009 that yielded more than $32,000. That included $5,000 from the Cooperative Network, a group of 600 cooperatives across Wisconsin and Minnesota.

At the time, the Dane County Revolving Loan Fund Committee had contributed a $60,000 loan to the co-op, which relied on the successful $30K fundraiser before being dedicated. That total $92,525 was used to “revitalize the store and provide services and products that our members have been requesting,” Norma Sampson, then president of the board of directors, told the Hub in February 2009.

A grand re-opening celebration was held in March 2009, and at the time members and owners celebrated the co-op’s plan for revitalization.

Despite that work, the Hub reported that the business suffered a net loss of more than $75,200 in 2010.

YRGC had taken measures to reduce costs, including trimming weekend hours, reducing utility costs and improving inventory records. Food costs were reduced shortly after opening, and with some help from community fundraisers, such as the Tour de Food, the annual loss was reduced to $17,200 in 2012.

The store turned a profit for the first time in 2013, netting more than $7,000, the Hub reported that May.

The next few years, the cooperative focused on improving its deli section, which led to a 30 percent growth in that department in 2017, an April 2018 newsletter said.

“At the same time, we have maintained our dedication to offering the greatest variety of local and regional products under one roof in Stoughton,” the newsletter said. “These small but significant accomplishments – higher deli sales and the focus on local and specialized products – have helped mitigate the effects of overall diminishing sales and provide the blueprint for an envisioned next phase of YRGC.”

Walmart woes

During the planning process of the relocation and expansion of Walmart to Kettle Park West over the past several years, some worried about how the development would impact downtown businesses.

A 2007 economic impact study done when developers were considering building a Walmart Supercenter on County Hwy. B claimed there would be no impact on the cooperative – which was only an idea at that time.

“While Walmart has ventured into organics, the consumers who shop the co-op are unlikely to be lured to Walmart as an alternative,” the report said. “The greater competition for this future co-op will be Whole Foods, Trader Joes and the Williamson Street Co-op in Madison.”

Less than a year after the co-op posted profits for the first time, in January 2014, the mystery retailer at KPW was unveiled to be Walmart, which had already operated a much smaller store in Stoughton since 1988.

A letter from the YRGC to the Hub in October 2014 cited “significant concern” with a KPW economic impact study.

“We are concerned that any reduction in sales would not only significantly impact the viability of YRGC but also other local businesses in and around the Stoughton area,” Lawrence Beck wrote in the letter. “We represent over 1,100 member owners, many who are very concerned about the future of YRGC as a result of KPW and who have questions for us as the directors of their organization.”

Contact Amber Levenhagen at amber.levenhagen@wcinet.com.