Annual Meeting of the ROCKBRIDGE FOOD CO-OP   February 26, 2010

At least forty members, including seven Directors met in the Parish Hall of the RE Lee Episcopal Church from 7:15 PM to 8:30. The Directors were Lloyd Goad as chair of the meeting, Mitch Wapner, Tara Miller, Yates Spencer, Peter O'Shaughnessy, Phil Coulling, and Cindy Miller. Harmony Leonard, Joyce Moore, Toria Brown, and Larry Evans were there from the staff. Ben Brown wrote these minutes..

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Lloyd gave the report on the state of the Co-op, starting with the good news. He said that since the last Annual Meeting, we passed three health inspections from several agencies, and the most recent inspection told us "No objectionable conditions."  This is a perfect score. The store looks great. Harmony has done a great job, and she has put in a lot of work. A major change is that cooking for the Café is now outsourced to the Patisserie.

This would be a good time to explain that. One goal for the year was to find out how to make some money. Performance has been flat in past years, and we have made no headway in paying off any of the Co-op's $80,000 debt. In fact, we have not even been able to pay some of the interest. With interest, the amount is around $84,000. (We owe that to members who financed the 1999 doubling of the size of the store, and from the 2004 rescue from bankruptcy.) So is the Café making or loosing money? There were too many things to count to know, but we suspected that it was not making money. So Harmony had the idea to have the Patisserie cook, to make that a quantifiable cost. We did learn what the cost is for the store to "open the door."

Still, the lack of progress on that huge debt is an albatross. We talked with Roanoke Natural Foods Co-op about a merger. They have buying power to gain wholesale discounts which would address a concern of our customers that we hear often - high prices.. We would lose some autonomy if the Co-op becomes a satellite of Roanoke.. We need to consider the advantages, but how can we get out of the hole we are in now? It makes any deal with Roanoke impossible. If we declare bankruptcy, we would only give our lenders thirty cents on the dollar at best. "No one in this room wants to do that."

Lloyd is rotating off the Board, after being on it since 2006. He had three goals.

1.   Bring the profitability of the business up to "Good standing."

2.   Hire a new manager who would be a step up from Jo Ellen, thought Jo was also good.

3.   Become able to pay the employees a living wage, perhaps even provide health insurance.

The results are that there is no profit, the manager we hired is leaving in May to get married, having done an excellent job, and we have not increased pay in a couple of years. Lloyd wanted to show slides of last year's spreadsheet, the chart of our debts, and the preliminary results of the survey going on now. But the equipment can't do it. He can print copies for anyone interested.

He gave us the preliminary results from the survey. (Which is now on the Co-op's web site, and members can fill it in electronically.)  Few responses have come from students so far.  Respondents love the store, and they buy fresh produce, bulk foods and groceries. They love the Café less than the store, but when more students take the survey, that may rise.

Another challenge for this year will be the renewal of our lease. We now pay $1850 rent. The landlords will not be easy on us because they are unhappy that a roof leak caused a lot of damage that we asked them to pay for.

A member asked, "Are we behind on paying suppliers?" No, though we were a little behind in November. Lindy Felix described her impressions of the Roanoke Co-op's store. They are very well stocked, and their prices are about the same, on average.

She said that the Aloha fund raising Silent Auction has received more than seventy donations, that this will be the fifth auction we have held, and the most they earned for us was $2,500. She asked, Did Roanoke tell us that our equity had to match our debt? No. If we reduce the debt to a level Roanoke accepts, and they take over, could we then continue independently to hold fund raisers to finish paying the lenders?

Lloyd answered that Roanoke's manager (Bruce Phlegar) has talked in a general way, guessing our inventory to be worth $20,000, leaving us short by $60,000. Lloyd thinks we could continue holding fund raisers after a merger. It might facilitate a merger if Rockbridge members agreed to become personally responsible for the debt.

Dori Hamilton said that if we could handle the debt in such a way, why would we merge?

Mitch said that Bruce Phlegar (Manager at Roanoke) said our margin is too low. The "recommended" margin would raise our prices, which would drive away sales, so the better way is to lower costs. Marketing ideas like "10% off to students on Tuesdays" has worked well, and we need more ideas like that.

Morris Trimmer asked, "Do we have an agenda tonight? This seems to be drifting."

Lloyd said that our over-arching issue is how to become profitable, that we will discuss that "wide open" and then have the Board election.

Holly Brown took up the idea of assuming the debt. If we owe $84,000 and have 250 members, then that is $336 apiece, and she thought the members could raise that, even in this economy.

Dori thought that very few members would donate $336. She suggested that we recognize that county residents have a hard time making ends meet, and that the Co-op should educate them about way to make a food dollar go the farthest. Buy bulk food, as she did when she was poor.

Gwyn Campbell said that the letter to the membership in November asking us to spend $10 more at the Co-op was good, and she did that. All of us should keep this in mind when we shop.

Holly also suggested having a big membership drive, to bring in more dues. She said that we should tell shoppers that choosing Organic food is most important in the dairy and meat we buy.

Larry Evans (our bookkeeper) said that a few years ago we made a little money, now we are losing a little. Raising sales is necessary, and we should also cut costs. He thinks the Café does not support the huge area it uses, though closing it will make the store less attractive. If the lease goes higher, we can't win. Larry has been impressed with Bruce Phlegar's professional outlook and his expertise.

Marcia Crosbie asked Lloyd about a report that the W&L Commerce School wanted to become affiliated with the Co-op.  Lloyd started the idea that the Co-op could be as good a lab for business students as playing in the stock market. He it took to the Dean, and they were receptive at first, until they saw our finances. They turned it down.

Eric Sheffield said Roanoke Co-op is smart enough to make a low offer at first, in which they said that our Co-op is worth nothing. We should continue negotiating with them until they tell us their real offer, which will reflect the good will we have in the community.

Jo Ellen Parent wanted to poll this group of members, but that didn't happen. She endorsed lowering our debt by the ideas already mentioned. Use fund raisers to promote membership. Use volunteers in as many places outside of the store as we can, such as in fund raisers. A merger with Roanoke could be fine, if it works.

Ben Brown said that when the Board had energy to run four fund raisers in a year, they made five or six thousand dollars and kept us solvent. But they are an awful lot of work, and the Board got burned out, so it didn't hold any last year. He hopes the new Board will have some fund raisers.

Which prompted Lindy to remind us that we do have a fund raiser, and soon. The Aloha Ohana Silent Auction will be in this same room on March 19. We received fabulous donations, so come and bring some other people, because we need lots of bidders. Tickets are ten dollars, come and party!

Katherine Smith said that this Co-op was the first place in this area with local organic produce. We should take advantage of our knowledge, and give the details about the superiority of our eggs and produce: what the local gardeners and chicken keepers do that sets them apart from the supermarket's "organic." She also said that our present location serves poorly, and we should not be addicted to it. It is constrained in storage space and parking. It is overly close to Washington and Lee. Keep in mind that the Roanoke Co-op succeeds in a far larger population base than we have. Perhaps we will not merge, but rather we can ask them to help us with our weaknesses.

Mitch said that we should jump on the task of finding a new manager, and do some fundraising. Unfortunately we cannot do cooperative buying with Roanoke because they buy with an association of other Co-ops which we cannot join. Yes, the huge debt made Roanoke back away. Maybe if our work gets the debt down to $45,000 they would be interested, or we could ask an average of $250 in donations from our members to finish paying it.

Michael Todd said that he hopes the new Board becomes a team that can execute these ideas.

Lloyd said that it is hard to recruit a Board. The final question on the survey asked, "Are you willing to join the Board?" Out of 65 responses so far, zero said "Yes." Being on the Board involves work, ranging from Lloyd's twenty hours per week in the store helping Harmony, to committees, to coming to the meetings once a month for two hours. Others of the Board gave their thoughts on its role.

Tara said that her first year on the Board was "getting my feet wet."  She hopes that the Board will carry on with creativity and energy.

Peter said that the tragedy of near bankruptcy in 2004 brought out a lot of energy, and we raised enough money to pay off the debt to vendors. Then energy faded. He wants to see new energy from young people.

Phil said that it has taken him a year and a half to get familiar with the Board. The Co-op is a natural place for him in Lexington.

Cindy said that the more time the Board members put in, the more successful it will be.

Mitch agreed with Cindy, adding that it will at least be two hours of meetings plus fund raising. The Board can look for members to join events and committees. The effort can be intense.

Ben said that any member who does as Mitch said can be as valuable to the Co-op as a Board member, and for as long as the task lasts.

Ben got set up for the election by making lists of who will be staying on the Board and who are nominated for new places. The Board can be 7, 9, or 11 members, we try for eleven, and to elect around half of them every year. Because so many took new places on the Board a year ago, Mitch and Matt agreed to resign and run for new terms. Apparently, Yates resigned.

Five will be continuing their terms: Tara Miller, Peter O'Shaughnessy, Cindy Miller, Phil Coulling, and Dave Wiest. There is room for up to six new.

Six nominees came forward before this meeting: Mitch Wapner, Matt Langan, Ben Brown, Winona Parent Pryor, Gwyn Campbell and Chuck Cornell. One more nomination came from the members - Dori Hamilton. Which adds up to twelve. So the meeting decided that since Matt will be graduating later this spring, we will call him an "alternate," ask him to continue his active role, and the meeting would accept the other six to the Board by acclamation. Approved.

Ben said that he had another topic to discuss. In the absence of a clear state law against using volunteers in a for-profit store, he wants this meeting to direct the Board to restart the working member program. "Does anyone want to speak to this issue, for or against?"

John Kortmulder said that volunteers were a part of other Co-ops he has been involved with, and he remembers fondly the economic trade-off of some of his time for some savings.

Mitch suggested that we hold off on the volunteers until May, after Harmony leaves, since she is uncomfortable with them, and to give us more time to research the legality. That was OK with Ben, and he asked for a show of hands, "How many favor this?" About 75% raised a hand. "How many  opposed?" Two.

Harmony reminded us that we almost forgot to approve the Bylaw change. At the February 13 meeting, the Board  adopted a new mission statement based on ARTICLE II PURPOSE of the Bylaws, but with one line added: "to provide awareness of nutrition and environmental responsibility;"

The Board decided then to amend the Bylaws to agree with this, including its title. The amended Article Two will read:

"ARTICLE II MISSION

The Mission of the Food Co-op is

·   to provide whole and healthful food to our local community by a member owned, democratically controlled cooperative;

·   to provide awareness of nutrition and environmental responsibility;

·   to provide nutritional supplements and other quality goods and services;

·   to support local producers of food, other products and services that enhance our well being;

·   and to operate and maintain a store where this all can happen."

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