Preparing for Success

By Matt Stanley/ General Manager

We’ve been talking about expansion a lot over the last couple years. We received an overwhelmingly positive response from a shopper survey about expansion, created a Strategic Plan built around the idea that we’d expand and increase our impact in the community, and worked with the Board of Directors to design site-selection criteria that met our needs. Since then we’ve been looking for the ideal piece of real estate. The next big step in our progress towards expansion is signing a lease for a location that aligns with the Board-created site selection criteria.

Real estate negotiations don’t make the best news. We want to present our plan to the ownership when they are firm and in our best interests. In the meantime, I thought I’d use this opportunity to share some of the preparedness work we have accomplished or are currently working on. The goal of all this work is to give our new expanded store the best chance of success – and it has enhanced our current operation too!

Organizational Capacity

Last year we looked at an analysis of our current organizational structure and planned for how it will evolve as we continue to grow and eventually open our new store. Our staff size is expected to grow considerably right out of the gate. Think 60-65 staff members compared to our current staff of 25. We now have a clear path toward what our organizational chart will look like, how roles will change, and where new positions will be needed. This provides staff awareness for those interested in further developing their skills and interests as the Co-op grows. We’ve already implemented a new position, Front End Manager, who oversees the cashiers. We hope you experience continued enhancements in customer service when you check out your groceries.

HR Work

We’ve nearly completed a redrafting of our staff manual complete with legal review. It will prepare us to manage and apply our policies fairly to a larger staff. It will also serve as an improved tool for staff to use in order to understand the relationship between themselves and their employer. The plan for the new store calls for a part time HR person. We know this will improve the workplace because it will provide staff with a regular and accessible expert on the co-op’s benefits, policies, and the handling of sensitive situations in way that aligns with our cooperative values.

Financial Management

Last year we voluntarily underwent a financial audit of fiscal years 2014-2015. We had no material weaknesses – meaning from the auditor’s perspective there is no reason to believe that there has been any misstatement of the Co-op’s financial accounting. We are currently completing an audit of 2016. Producing audited statements will give validity to the financial performance of the Co-op as we seek financing for our upcoming project. It also offers us parameters for improving internal controls and ensuring that the Co-op is following Generally Accepted Accounting Principles for grocery retailers.

Staff Development

We have focused and will continue to focus on developing the leadership capacity of our management team. This includes trainings, weekly review and practice of leadership tools and educational material, and more. We regular read leadership themed books as a team and meet for discussion. Our latest read was a book called The Good Jobs Strategy. The book that demonstrates that companies that view their workforce as an asset to be maximized rather than a cost to be minimized have both happier workers and better business results. Of course, at the Co-op we want happy engaged workers because that translates to better service to our owners and shoppers. Better service means more folks support our Co-op and our impact on the community grows.

Competition

We got experience dealing with increased competition after Fred Meyer completed its remodel in 2014.  We planned and minimized the impact from the increase in their offering of natural foods. We added fresh meat to the store, expanded our deli offering, and improved our prices. Now we have our eyes set on how a Walmart may impact the co-op. The Management Team will be preparing a plan for how we’ll maintain our momentum after Walmart opens early next year. Preparing for competition or shifts in the market for natural foods is a skill we’ll want even after we open our new location. We know that our willingness and ability to support local producers sets us apart from stores like Wal-Mart and our capacity to sell more local products will only increase in our new store.

A Strong Investment

All this work in combination with the nitty-gritty details of the expansion project (signing a lease) which we hope to soon share means that when it comes time to invest in the Co-op’s preferred shares, you’ll know we’ve done our homework, planned meticulously, and thereby minimized risk to our owner-investors and shoppers who depend on our store for their diets. It doesn’t hurt that it improves the co-op experience now too! We look forward to sharing more of our plans soon!

Growing Forward

By Matt Stanley/General Manager
Published in the Co-op’s Winter 2017 Newsletter

I recently ran into Sarah, a regular Co-op shopper. She was excited to share with me her recent visit to Lexington Co-op in Buffalo, New York. I was excited to hear this, as Lexington Co-op is a favorite of mine for several reasons, and I haven’t even been there before!

Sarah noticed that they had the same Co+op Deals and many of the same products as our co-op. The store was abuzz with customers and staff. She said the retail area was larger but that it was similarly crammed with great products everywhere she turned.

We know our store and parking lot are getting pretty cramped, especially during peak times. For staff, the back rooms and office are often challenging to keep organized and difficult to navigate. Space is the main reason we are seeking to expand our store in the near future. And our pending expansion and current sales growth is the reason I love Lexington Co-op.

Lexington achieved an expansion in their recent history, and we’ll be seeking to emulate them soon. Their co-op stands as an example of successful, well-planned growth. And it also continually reminds me of the importance of collaboration among cooperatives.

Store frontFor their expansion, the Lexington Co-op issued preferred shares to their owners and raised $2.5 million for their project. We’ve been working with them to plan our own campaign – they’ve shared campaign strategies and materials. So they’ve set a great example and exemplify collaboration.

I know lots of folks are wondering when we’ll launch our own capital campaign.  Lots of pieces have to come together for us to launch the campaign. But trust me, when we do launch the offering (most likely in 2017), Co-op owners will not be able to miss it! We’ll make a pretty big deal out of it, since it will be key to successfully building our own new co-op.

Oh, and the great deals that looked awfully familiar to Sarah? Co+op Deals are the result of a huge collaboration between 151 food co-ops operating over 200 stores across the country. Our small store in Astoria is able to offer competitive pricing (not just Co+op Deals) because we pool resources with other food co-ops! And our collaboration with these fellow cooperators does so much more. My favorite work with the staff of these other stores is the opportunity to learn from each other and develop our careers in the challenging but often rewarding natural foods world.

Finally, if you check out the Lexington Co-op webpage, you’ll see that they are already working on opening a second store! They surely are committed to growing the food cooperative movement! May we do the same in our store’s future!

Generally Speaking

By Matt Stanley/General Manager
Published in the Co-op’s Fall 2016 Newsletter

Over the last year and a half the Co-op Board of Directors has spent considerable time overseeing the continued maturation of the business as we prepare for expansion. We also sought ways to maintain the relevance of our co-op amidst increased competition and continued mainstreaming of organic and local foods.

A primary way we are making the Co-op more accessible and welcoming regards pricing. We’ve joined forces with 150 food co-ops nationwide to bring our community the Co+op Basics program. Co+op Basics include items in an increasing amount of categories at amazing everyday prices. The program has helped us grow sales considerably which in turn allows our store to further leverage our volume. We saw 14% growth in sales during 2015 and over 20% sales growth so far in 2016. Needless to say, more and more community members are turning to the Co-op for their grocery needs!

Additionally, we are connecting the community to our store by way of their financial investment in the Co-op. In October 2015, we ran our Equity Drive with a modest goal of $10,000. Instead, our current and new owners together helped us raise nearly $30,000 in owner equity during the month, and all in $25 increments!

Our planning includes continued use of this unique and powerful way that owners connect with our co-op. In 2017 we hope to be ready to issue preferred shares as a primary way for our Co-op to finance our expansion and relocation. Finally, we continue to develop our staff with a framework based on preparation for operating a significantly larger store.

In early 2016 we received help with an Organizational Assessment in order to ensure we have the skills and systems necessary to make our expansion a success. We continue to send staff to workshops and trainings relevant to their areas of work in order to maintain engagement with their roles in a growing business. It is critical that we continue to grow our sales in the current location in order to maintain momentum as we prepare for expansion.

Thank you for your continued support of your local Co-op!

Planting the Seed

By Matt Stanley/General Manager
Published in the Co-op’s Spring 2016 Newsletter

You’ve heard us talk a lot over the last year and a half about our Co-op’s growth plans. Please be assured that despite a lack of big announcements about the where and when of our new store, lots of work is happening to prepare us for our expansion. Our focus on preparedness will ensure that when we do open the doors to an expanded location we will be successful. In the meantime, our store is growing rapidly in the current location and space is becoming a real challenge, both for shoppers and employees!

A critical step was checked off our to-do list when the owners attending our March Special Meeting at 14 Street Cafe unanimously voted to adopt preferred shares into our Articles of incorporation. We now have a powerful financial tool and new owner benefit at our disposal to raise the necessary equity to build our new store!

So now begins the hard work of preparing an effective capital campaign. By effective, I mean lots of member participation. For the purposes of this article, I want to plant the seed of an idea. What does it mean to invest in a local food co-op? Is it something we might consider as an alternative to traditional investments? What are the compelling reasons to purchase preferred shares?

In a capital campaign, the Co-op will reach out to the owners who use and benefit from the goods and services of the business to invest together to help it grow and thrive. A clear distinction to be made here is that the Co-op is not asking for handouts. Rather than making a donation, we’ll be asking you to invest in dividend-earning preferred shares.

I think the most compelling reason to invest in your Co-op is that it offers an opportunity to make a modest rate of return (3-4%) on something you’ll watch grow right here in your own community. You’ll see new jobs get created, more local products filling up the grocery shelves, and more fellow community members seeking out the Co-op as a way to live healthier lives. Even the strictest socially responsible index funds won’t let us watch our money turn into positive projects in our own community. Furthermore, parts of these portfolios won’t align with our values nearly as much as our food Co-op.

For the Co-op, the money we raise from preferred shares will create the necessary equity to leverage any third-party loans necessary to complete the project. The more capital we raise through preferred shares the less we need to borrow from a bank. The minimum investment in our preferred shares offering as per our recently approved designation rights is $2,500. For most of us, this is not an insignificant amount. We’ll be seeking an average investment of considerably more than that in order to reach our goal.

There are other ways to help us reach our goal of opening a new store if this minimum investment is beyond your household’s means. You can pay off your common share and even invest an extra $100 (for a total of $300), or you can encourage a friend to join the Co-op. Shopping at the Co-op as much as possible is a powerful way to demonstrate your support, too!

Finally, our capital campaign will require a dedicated team of board members, staff, and other volunteers. If you have experience with fundraising and want to lend a hand, please let me know (matt@astoria.coop).

For a detailed look at the approved designation rights, please check our web page. In the meantime, please trust that we are working hard to open an expanded location that will better serve our growing body of owners and staff.

Special Meeting of Owners

March 2 at 6 p.m. at Street 14 Cafe (1410 Commercial St. Astoria)

To approve amendments to the Co-op’s articles of incorporation to establish a class of preferred shares (an important step in our expansion).

The Co-op’s expansion plans require significant capital and fortunately we can raise money via our owners.  It’s a great opportunity for local people to invest in our locally-owned grocery store. Food co-ops are successfully using preferred shares as a means to generate funds for expansion.

Co-op owners would purchase shares and receive annual dividends.  In order to offer these preferred shares, we would need to amend the Co-op’s articles of incorporation.

Our board of directors approved the amendment at its October meeting and we need a certain amount of Co-op owners to vote as well.  Read the fine print by clicking here.

We’ll explain in greater detail and hold an election at a special meeting of owners on March 2 at 6 p.m. at Street 14 Cafe in Astoria.  It should be a fun evening full of tasty treats and a video showing another co-op’s success in raising funds for expansion.

If you have any questions you can chat with our general manager matt@astoria.coop or call the store (503) 325-0027.  You can also check out Matt’s article in our newsletter. We hope to see you at the meeting!

 

New Owner Benefit

By Matt Stanley/General Manager
Published in the Co-op’s Winter 2016 Newsletter

Our Owner Equity Drive in October 2015 was a resounding success. Hundreds of owners paid off their shares, made an equity payment ahead of schedule, and some even forked over an additional $100 in equity to help us raise nearly $30,000 to kick off our expansion. But our expansion plans require significantly more capital. Fortunately, we have capital raising tools at our disposal that we intend to use. To that end, we intend to offer preferred shares to our owners.

What are preferred shares?

Under the Oregon Cooperative Corporation Act co-ops can issue dividend earning preferred shares that have a specified par value. Members can purchase these non-voting shares that will provide Co-op owners an additional means of investing in and supporting a local business. Those who purchase preferred shares will watch as we build a new store with their equity! At the same time, preferred shares will allow the Co-op to leverage additional funds from banks or other lenders. Finally, preferred shares align perfectly with one of the seven cooperative principles: Member Economic Participation.

Preferred shares work like this: Co-op owner Tom wants to invest in the Co-op beyond his normal membership share. Each preferred share has a specified par value of $100. The minimum purchase requirement is 25 shares. So Tom invests $2,500 in the Co-op and will receive a 3% annual dividend on his shares, which amounts to $75 per year. If Tom has more money to invest, he can earn an annual dividend premium in addition to the 3% annual dividend. Owners who purchase 100 ($10,000) or more preferred shares will earn an additional 1% annual dividend premium. Our goal is to raise $1.3 million through the offering of these preferred shares. We hope to have an average investment of over $5,500 so we will need many Co-op owners to invest, some at the $2,500 minimum level and others at $5,000, $10,000, $20,000 and even more.

First Steps
But we are getting a little ahead of ourselves. In order to offer the preferred shares we have some preliminary work to do. Specifically, we need to amend our Articles of Incorporation to establish this new class of preferred shares. The board of directors approved this amendment at its October 2015 meeting.
According to state law, our owners must approve this amendment to the Articles of Incorporation, too. We’ll need you to attend our special meeting of owners on March 2 at 6 p.m. to approve the amendment to the Articles of Incorporation. We’ll make it a fun evening full of tasty treats from Chef Andy at Street 14 Café. The board of directors will also give owners an update on the progress of our proposed expansion. We look forward to having you there!

Capital Campaign
With the approval of the amendment to the Articles of Incorporation, we’ll tentatively plan on a capital campaign this year during which we’ll work hard to reach our goal of $1.3 million through the offering of these preferred shares. In the meantime, we’ll be working with our securities attorney and fellow food co-ops who have engaged in successful capital campaigns through the offering of preferred shares in order for us to create an effective and successful campaign.

If you have any questions you can contact me for more information. We are compiling a preliminary list of owner investors that I can add your name to, as well. I can be reached at the store or at matt@astoria.coop. We are excited to take this next step toward our expanded store!

When Co-ops Inspire

By Matt Stanley/General Manager
Published in the Co-op’s Winter 2015 Newsletter

Visiting our fellow food co-ops across the country is practically a pastime for me. My wife doesn’t always get what all the fuss is about, but she’ll oblige a visit to the local co-op because it usually means a source for eating healthy on the road.

Recently, our Board of Directors generously gave an entire weekend to the task of writing the store’s five year strategic plan. We decided to make a trip up to Port Townsend for our retreat this year. We chose Port Townsend because of the similarities between it and the City of Astoria.

Both cities have similar populations. Both have downtowns that are characterized by locally owned businesses. Astoria has slightly lower median household incomes (about 5% less). And Astoria and Port Townsend alike are relatively isolated from major highway corridors. But most of all, of course, we chose to travel to Port Townsend because it boasts a successful food co-op!

Kenna Eaton is the Port Townsend General Manager. She, too, generously gave of her time to give our Board of Directors a tour of the Co-op she manages. If you’ve ever had the pleasure of visiting this co-op, you’ll know that it is considerably larger than our food co-op. In fact, it is about the size store we are beginning to envision for ourselves here in Astoria. And this size is not overwhelming. Even though it is nearly quadruple our size, it still very much felt like a food co-op. Photos of local producers adorned the walls. Staff was accessible and friendly. We envied the expansive produce section, customer service desk, filtered water filling station, and more than ample deli seating area. They had some neat ideas in the store too. For example, a section of the store was reserved for local cottage industry producers to sell their wares (for no charge) directly to consumers.

But the Port Townsend Co-op is running out of room! They sell more than $13 million in heathy foods each year, mostly to their consumer owners. They employ over 100 folks. Their well laid-out and merchandised store betrays a back stock nightmare. They simply do not have enough room to store all the products that they sell. Each morning, staff rolls all the back stock of packaged grocery items outside underneath a tent. At night, it comes back in. This takes a lot of work!

Such a process reminds me of some of the inefficiencies that our store endures. Receiving our large grocery, produce, and meat deliveries outside in the rain comes to mind. Fortunately for both Co-ops, we are carefully planning our futures to accommodate our growing needs and aspirations. The Port Townsend Co-op prominently displays their recently created strategic plan. We are looking forward to

sharing our plan in the coming months. It will communicate the big ideas, goals, and focus points that will guide our decision making as we plan for more space.

Thank you to the Port Townsend Co-op for showing our Board of Directors what is possible, even in a small town, when we cooperate. And thank you to all Astoria Co-op Grocery owners for being a part of our planning process. We look forward to continually improving our store and all that it has to offer to our community. And next time you are traveling, be sure to check out the local food co-op. If you see ideas, products, or practices that you like, be sure to let us know!

 

Matt has been the Astoria Co-op Grocery General Manger since April 2008. To contact him, please e-mail matt@astoria.coop

 

Co-op Survey Results Update

By Zetty Nemlowill/Marketing Director
Published in the Co-op’s Winter 2015 Newsletter

Results of a recent survey we offered you are shaping the Co-op’s strategic plan. There were several ways we gathered community input, but the shopper survey in October, was the farthest reaching. We heard from advisors (National Cooperative Grocers) that based on our size we’d need about 300 responses to be statistically robust. Guess how many responses we received from you? 760! For those who took the time to complete the survey, thank you.

How did we achieve such a high level of response? I think first and foremost, we have a very engaged community. There was obviously a lot of interest from Co-op owners and shoppers in helping shape the Co-op’s present and future. We got the word out regarding the survey via emails, Facebook, newsletter, in-store signs, newspaper, and radio shows. There were many questions, but the big one was regarding expansion, and whether Co-op shoppers would align themselves with the Co-op board and management’s vision which includes a bigger space within the next five years. We heard a resounding “yes”.

85% of respondents support growing the Co-op, 13% neutral and less than 2% opposed. One concern cited was the Co-op re-locating too far away from its existing footprint. But rest assured, the survey also told us that if the Co-op were to expand, most people would prefer it to happen in Astoria.

The most important aspects of a possible expansion listed in the survey results include a greater variety of products, new or expanded services in the store (such as a deli, meat counter, bakery etc.), selling more local and/or organic foods, increasing the Co-op’s purchasing power (which could result in lower prices), and expanding the number of living wage jobs.

While an expansion would probably be months to years in the making, the survey results are really helpful for the work we do now, to know where your priorities lie. For example, the top social issues survey-takers thought the Co-op should champion are as follows: supporting local agriculture, providing nutrition education, promoting recycling, and addressing local hunger problems. We can keep this feedback in mind when planning outreach activities.

Overall, it is good to see we are doing a good job of meeting our shopper’s needs. Nearly everyone said they’d recommend Astoria Co-op Grocery to a friend. We are so grateful for all the feedback which will help us improve our cooperatively owned local food store.

Generally Speaking

By Matt Stanley/General Manager
Published in the Co-op’s Fall 2015 Newsletter

Our store has accomplished many things that set us up for a successful expansion. We have a board of directors aligned around the idea of building our co-op’s capacity as a grocer, a strategic plan that serves as our guiding document, and we have an engaged and growing ownership that shares what they’d like to see in a new expanded store. Our current store continues to grow sales and improve our operation, all in preparation for our evolution into a larger platform grocer. Staff, me included, continues to develop their capacity as leaders and operators of a natural foods store too.

Dollars and Cents

But no matter how much strategic alignment or community excitement we create, much of our project’s success will depend on our ability to raise financing. Fortunately, co-ops have unique opportunities to raise capital. Indeed, one of the seven cooperative principles is “member (owner) economic participation.” To raise capital, co-ops use common shares, owner loans, and preferred shares in addition to traditional loans from banks and credit unions. Owner investments help both with actual capital and with showing lenders that our owners are committed to supporting this business’s growth.

“Own a Grocery Store With Us” Equity Drive

As you may know, a fully paid ownership is $200 per household. Most owners pay this in annual $25 installments. By making payments early and adding more owners, we can raise $10,000 in owner equity in October! Everyone can participate in one of the following ways:

1) Sign up or encourage a friend to sign up and pay the full equity amount of $200.
2) Owners paying in installments can pay off the remaining balance on their $200 share.
3) Owners who have already paid off their $200 (or any owner) can pay an additional $100 in owner equity as allowed by the state of Oregon.

Anyone helping us reach our October equity goals in any of these ways will receive a free Astoria Co-op Grocery cotton tote bag as a thank you! Upon purchasing a full share you’ll receive your Astoria Co-op Grocery share certificate. And those who pay off their full $200 share can enter to win their own personal chef for an evening: Marco Davis, the fabulous chef from our farm to fork dinner events.

The capital that we raise in October will be used to strengthen our balance sheet as we move into expansion mode. Our normal monthly equity is around $3,500, so this will take a lot of help from a lot of owners to reach our goal. October is National Co-op Month too, so this is a great time to become fully committed to your local food co-op. It’s not just about the money; the success of this equity drive will show a future lender just how much community support our store has.

Next Steps
In the near future we’ll begin using the other methods used by many co-ops to raise capital. We’ll be sharing more information with you next year regarding owner loans and preferred shares. In the meantime, we’ll be hard at work developing our expansion plan and searching for a site.

Owner Loans
Owners loan the Co-op money and the Co-op pays it back with interest according to a predetermined schedule of payments. Our Co-op used owner loans in 2008 to make our move to the current location.

Preferred Shares, or Class B Stock
Preferred shares, unlike common shares, earn a dividend for owners who purchase them and may be purchased in quantity. When and how they are redeemed will depend on the Coop’s financial situation. Thanks to everyone who pays some equity during the month of October. Simply shopping at the Co-op and spreading good word of mouth about our store helps too. Cooperatively (and with a lot of hard work and careful planning), I know we can own a new grocery store!