The East End Food Co-op 2013 Annual Report

Page 1

2013 ANNUAL REPORT July 1, 2012 - June 30, 2013


COOPERATIVE IDENTITY

Definition

3. Member Economic Participation

A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Members contribute equally to, and democratically control, the capital of the cooperative. This benefits members in proportion to the business they conduct with the cooperative rather than on the capital invested.

Values

4. Autonomy and Independence

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.

Cooperatives are autonomous, self-help organizations controlled by their members. If the co-op enters into agreements with other organizations or raises capital from external sources, it does so based on terms that ensure democratic control by the members and maintains the cooperative’s autonomy.

Principles

5. Education, Training and Information

Most cooperatives around the world follow the core principles that were adopted by the International Co-operative Alliance in 1995. Cooperatives trace the roots of these principles to the first modern cooperative founded in Rochdale, England in 1844. These principles are guidelines by which cooperatives put their values into practice.

Cooperatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. Members also inform the general public about the nature and benefits of cooperatives.

1. Voluntary and Open Membership

6. Cooperation among Cooperatives

Cooperatives are voluntary organizations, open to all people able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

2. Democratic Member Control

7. Concern for Community

Cooperatives are democratic organizations controlled by their members—those who buy the goods or use the services of the cooperative— who actively participate in setting policies and making decisions.

While focusing on member needs, cooperatives work for the sustainable development of communities through policies and programs accepted by the members.


GENERAL MANAGER’S REPORT by: Justin Pizzella Fiscal year 2012/2013 was a great year for the Co-op and we are in excellent health. We continue to be a dynamic and impactful business. Some numbers really tell the story best. We ended the year with $9,578,613 in sales, which is 12.1% over the previous fiscal year. In October of 2012, we welcomed our 10,000th member, and overall our membership grew by 15% this year! We have increased our outreach and education efforts significantly, which is further detailed in the Member Services Report. This year also marked a time of transition and change. In January, I accepted the position of General Manager after serving the Co-op as Operations Manager and as part of the interim Management Team. It’s a great honor to lead this organization at this really exciting time. Just as sales have grown, so has our staff. We now have over 85 staff members, with 75% of them full-time. We offer a great benefits package, including affordable healthcare. Currently we are working on improving our existing benefits package, as well as adding some additional options. In the coming year our focus will be on staff development and we anticipate that considerable training investments will be made. Our operational focus has been on creating a culture focused on operational excellence. 750

2006-07

700

650 600

We’ve been reworking and refining our store systems and processes with an eye toward readying ourselves for additional stores. This will continue in the coming year as we advance improvements in our systems and product selection.

and cooperation, excellence, innovation, and customer focus. 4. Continually striving to learn what our members and customers value and delivering total satisfaction. 5. Creating an environment of teamwork and continuous improvement. 6. Dreaming big and having a never-ending search for a better way. 7. Working with our producers, vendors, and like-minded partners to create and sustain diverse, healthy sources of clean food. Generally this means that the food is grown without the use of pesticides or chemicals, is not genetically modified, is grown as close to the store as possible, animals are ethically raised, and everyone involved in the production of the food is paid a fair wage. 8. Being good stewards of our resources. 9. Reducing waste in everything we do. 10. Investing in the personal development of our staff and promoting from within whenever possible. 11. Being educators and advocates for the food we sell and the producers who supply it.

In addition to our staff and operations, we have also invested heavily in our physical store. Prior to the renovation work started in January 2012, there had been very little investment in store fixtures and equipment since 2007. We will continue to make prudent investments in equipment and infrastructure in the coming year to replace equipment that is beyond its useful life, as well as to handle our growth. Another notable change this year came in January when the Board put in place a new Ends Policy Statement for the business (found on Page 3). A considerable amount of effort has gone into interpreting how we as an operation will go about fulfilling these Ends. Over time, we’ve developed the following ways we aim to accomplish them: 1. Thinking for the long-term. 2. Recognizing that our business is evolutionary and revolutionary. 3. Living our core values of integrity, having a positive attitude, accountability, teamwork

2007-08

2008-09

2009-10

In short, we exist to nourish our community and enable it to prosper. In the coming years we will continue to strive to accomplish this to the best of our ability.

2010-11

2011-12

2012-13

Net growth of EEFC membership New members - Refunded members

555 525 503 498

550 Net member growth for fiscal month and year

Totals 675

500 450 400

391

350

362

300 250

200 150 100

50 0

76

Fiscal month

July

63

53

75

46

48

80

August September October November December January

2012-2013 New members per month

68

69

February

March

83

66

April

May

61 June

by:


BOARD PRESIDENT’S REPORT by: Torey Verts

East End Food Co-op Ends Policy Statement East End Food Co-op exists to enhance physical and social health in our community. To these ends, we will create: 1. A sustainable member-owned business open to everyone 2. An ethical and resilient food infrastructure 3. A vibrant, dynamic community of happy, healthy people 4. A creative vision to transform the future

As I sit down to write the annual report, I think about all of our accomplishments over this past year and how our work has reflected our Ends, which is the mission statement of the Co-op. It’s been another busy and exciting year for the East End Food Co-op, and your Board of Directors has been working hard to serve our members by living our Ends and growing the Co-op community. To this extent, the majority of our year has been focused on readying us for expansion. There are many things that a Board has to do to prepare for this, including making sure policies are updated and the right leadership is in place. One of the first steps we took last December was to rewrite our Ends Policy Statement. We found our old policy to be cumbersome to read, so we wanted to make the new one very clear and easy for management to interpret and report on. At our yearly professional development session, the Board created the new Ends Statement listed above. Personally, I am very excited about the new Ends, especially point #4 – A creative vision to transform the future. I think this is very innovative and not typically recognized in other co-ops’ Ends, and I hope that this statement allows us to think creatively about what the positive potential could be for members, future members, and the communities of our region. Another major achievement that the Board ac-

complished this year was hiring a new General Manager. We were pleased to appoint Justin Pizzella as the new GM of the East End Food Co-op in January. Justin was formerly the Operations Manager, and also a part of the Interim Management Team last year, and the transition to new leadership has been a smooth one. As I stated earlier, the main focus of the Board this year has been readying the organization for expansion. While we are not sure what the exact details of the expansion are at this point in time, we do know that we want to create prosperity and increase the opportunity for communities in Pittsburgh and the surrounding areas to have access to healthy, local, and affordable food. In order to help us with this process, we recently engaged experts from the CDS Consulting Co-op for a two-day session with our Board. To get ready for our time with the consultants, the Board prepared itself by reading several documents related to expansion planning, including a 70 page Expansion Planning Toolkit designed especially for co-ops. At the sessions, we discussed the highlights of the first stages of planning, some of which include assessing feasibility, establishing and conducting education of best practices, and evaluating organizational readiness. Once again, the goal of expansion is for us to live our Ends by serving and growing the Co-op community. The first stage of plan-

ning takes time to be done properly, and so the Board will continue to perform its due diligence by engaging with the consultants periodically during this process. On another note, we would like to acknowledge a long-term member of the management team who decided to step down from her role in order to pursue new ventures. Jane Harter, who was part of the Interim Management Team last year as well as the Human Resources Manager, worked at the Co-op for many years. The Board would like to thank Jane for all of her hard work and service and wishes her the best of luck in her new endeavors! As well, this marks the last year for me serving on the Board. I have been on the Board since 2007 and have served as president for the last four years. I would like to thank all of the directors, staff, and members of the East End Food Co-op for making my experience such a memorable and worthwhile one. I am very grateful for having the opportunity to work with such wonderful people, and I will miss you all! If you ever have questions or want to know more about the Board, please feel free to email us at boarddir@eastendfood.coop. Thanks to everyone for another terrific year!


BOARD TREASURER’S REPORT by: Mike Collura The fiscal year, July 2, 2012 – June 30, 2013, has come to a close. Sales growth was excellent this year at over 12%, putting us up over $1 million ($1M) from last year. Sales were just under $9.58M, exceeding our annual target by almost $434 thousand ($434K), which provided an additional $145K of Gross Profit over what was expected. Operating Expenses came in over budget by $235K. Personnel Costs remain our largest expense as EEFC stays committed to offering a livable wage. With the support of the Board, Management continues to fill key positions at the Co-op that had been previously vacant or consolidated under other positions. This is an important step as we assess our operational readiness before moving forward in our expansion process. As a result, Personnel Costs came in $185K over budget. Due to overages in Personnel and Operating Expenses, our Net Income came in at around a $46K loss, which was under our target. We incurred an exceptional expense for finishing the employee handbook that added to the Operating Expense overage. Although it was over budget, it was important to the Co-op to finish the work on the handbook; this expense will not need to be incurred again for a while. We continue to use our cash reserves to reinvest in the Co-op. The fruit of all of the hard work we have put in over the last several years is evident in our sales growth. The response to the renovations, along with enhanced merchandising and other changes, have made a big impact. Our cash position at year end was just under $641K, which is well over the National Co-op Grocers Association benchmark for healthy co-ops. Additionally, our longterm debt is currently very low, which will help the Co-op when we are ready to obtain financing for expansion. Results are subject to taxes and final adjustments by our auditors.

Balance Sheet

YE 6/30/2013

Income/Expense Statement

YE 7/1/2012

YEAR ENDED 6/30/2013

$1,152,185 $1,379,576 Current Assets $917,512 $714,625 Net Property/Equipment $23,045 $22,150 Other Assets $2,092,742 $2,116,351 Total Assets $567,758 $554,168 Current Liabilities $102,690 $156,065 Long Term Debt $670,448 $710,233 Total Liabilities $1,098,271 $1,036,236 Member Shares $369,881 $372,476 Retained Earnings $(45,858) $(2,594) Current Earnings $1,422,294 $1,406,118 $2,092,742 $2,116,351

Total Equity Total Liabilities + Total Equity

ACTUAL

BUDGET

Sales

$9,578,612

$9,144,800

Cost of Goods Sold

$(5,827,167)

$(5,538,977)

Gross Profit

$3,751,445 (39.2%) $3,605,823 (39.4%)

Personnel Expense

$(2,294,925) (24.0%) $(2,109,288) (23.1%)

Operating Expense

$(1,502,993)

$(1,465,670)

Net Profit

$(46,473)

$30,865

Net Income

$(45,858) (-0.5%) $30,865 (0.3%)


MEMBER SERVICES’ REPORT by: Heather Hackett

As Justin mentioned in the General Manager’s Report, in October 2012 your Co-op hit a milestone by selling the 10,000th active household membership. This year saw a continuation of growth – we are currently 10,673 members strong! Your Co-op strives to match and surpass the expectations of its members. In addition to providing healthy, nutritious food, we also aim to: • Provide education and information for our members and customers • Encourage our members to value their membership and to be active participants in the Co-op • Build strong ties to businesses and organizations in our local community EDUCATION & INFORMATION Since the beginning of the year, your Co-op has hosted 25 free events! Many of these workshops, lectures, and film screenings presented information about local, sustainable

agriculture, or food and nutrition, because these subjects were cited as most important to our members in the 2012 Member Survey. Nearly 300 people, both members and non-members, attended these events, many of which were offered by knowledgeable representatives of local organizations. The following are just some of the many community groups the Co-op partnered with this past year: • Pennsylvania Association for Sustainable Agriculture (PASA) • The Weston A. Price Foundation • Grow Pittsburgh • American HealthCare Group (founders of the Farm to Table Conference) • Green Building Alliance Your Co-op has also been especially committed to raising awareness in our local community about the potential impacts of genetic engineering. In addition to a number of other initiatives last year, this month we hosted our first GMO-themed community forum in observance of Non-GMO Month. “Know Your GMOs” was held on October 13th at the Eddy

Theater on Chatham University’s campus. The event featured speakers from a number of local organizations (i.e., GMO Free PA, Food & Water Watch, Burgh Bees) and was highlighted by a presentation from the founding executive director of The Institute for Responsible Technology, Jeffrey Smith. MEMBER VALUE & PARTICIPATION This year we provided a number of ways for members to learn more about the value of their membership in a thriving cooperative business. We gave support to another local cooperative, The Big Idea, which hosted a small group exploration of A Discussion Course on Cooperatives: A Manual for Community Self-directed Education, compiled by the EEFC. We hosted a number of in-store events to increase our members’ knowledge about cooperatives, including a screening of the International Year of the Co-ops’ Film Festival selections, and several lectures about cooperative history and values. We also elected Food for Change (a still-in-production film project depicting the significance of consumer food co-ops) as a Round


register

Round Up recipient to ensure that their film would be completed. This film, documenting and preserving the rich history that paved the way for retailers like us, will be available for viewing in the coming months and we can’t wait to share it with our members! The Co-op program that most directly involves member participation is our Volunteer Program. We saw a large increase in the number of active volunteers this year: currently 40 member-owners regularly contribute their time in the store, and 95 volunteers are eligible to provide support at special events. Since the beginning of the year through October 1st these volunteers have logged an astonishing 1,489 hours! COMMUNITY INVOLVEMENT Outreach Participation: We participated in a large number of community events this past year, which enabled us to increase awareness and visibility of the Co-op. Our involvement in these events also allowed us to strengthen our ties with partnering organizations. Since the beginning of this year alone, we have attended 40 events at which we reached an estimated 29,000 attendees. Below are just some of the many happenings around town where your Co-op was represented: • • • • • • •

Construction Junction’s The Big Pour The Mother Earth News Fair The Annual Just Harvest Dinner Regent Square’s Run Around the Square PASA’s Bike Fresh, Bike Local The Wild & Scenic Film Festival The Gasland 2 premiere

Community Partners Program: The aim of the Community Partners Program is to provide East End Food Co-op members great benefits while supporting our local community by promoting local businesses. Because we are committed to bettering the local community, we truly value the partnerships we build through this program. Locally-owned businesses have a huge impact on the infrastructure of our local economy and we firmly believe that we are all stronger together. This year we proudly welcomed three new partners to the list of participating businesses: Changin’ Time Diaper Service; the dental practice of Drs. Werrin and Gruendel; and Ming Yip Acupuncture & Herbal Therapy. This brings the program up to a total of 21 partners and we are hoping to increase that number even more in the upcoming year! Donation Program: This year saw the creation of an official donation policy to enable us to better manage the Donation Program. Although we would love to be able to support each and every request we receive, the volume of submissions had become overwhelming. The requests we received last year exceeded our budget and took a significant amount of time to process. After a lot of research and consideration we formulated a new policy and are certain it is the best way we can successfully run our organization and meet the changing and growing needs of the community we serve. This year the Register Round Up also made its debut. The Register Round Up is not a new

concept; several businesses enlist this type of program to support local non-profits and causes. As a customer is rung up at the register, they are asked if they want to round their total up to the nearest dollar, which is then donated to a charity. Although this rounding up only costs the customer a few cents, when combined with all the other customers’ few cents it can result in a significant contribution to an organization. Just some of the many organizations that benefited from both general donations and the Register Round Up this past year include: • POWER (Pennsylvania Organization for Women in Early Recovery) • Shady Lane School • PASA • Bike Pgh • Venture Outdoors • Grow Pittsburgh • Greater Pittsburgh Community Food Bank • Breathe Project • Institute for Responsible Technology • The Cornucopia Institute • City of Asylum • Homewood Children’s Village • Penn Future • Clean Water Action • East End Cooperative Ministry • Animal Rescue League We’re proud of what we’ve accomplished this year at the Co-op, both for, and on behalf of, our members. We thank you for your continued support!


Store Hours 8 AM - 9 PM Daily Phone: 412.242.3598 Fax: 412.242.7723

The Management Team

Café Hours 8 AM - 7 PM Juice and Coffee Bar 9 AM - 7 PM Salad Bar 11 AM - 7 PM Hot Food Bar

Credit Union Wednesdays 6 PM - 8 PM Saturdays 11 AM - 3 PM Phone: 412.243.7574 Fax: 412.243.9293

General Manager Justin Pizzella 412.242.3598 ext. 135 jpizzella@eastendfood.coop

Marketing & Member Services Manager Heather Hackett 412.242.3598 ext. 103 memberservices@eastendfood.coop

Store Manager Bryan Popp 412.242.3598 ext. 147 bpopp@eastendfood.coop

IT Manager Erin Myers 412.242.3598 ext. 121 emyers@eastendfood.coop

Human Resources Manager Jennifer Girty 412.242.3598 ext. 120 jgirty@eastendfood.coop

Café Manager Amber Pertz 412.242.3598 ext. 128 apertz@eastendfood.coop

Grocery Manager Maura Holliday 412.242.3598 ext. 160 mallard@eastendfood.coop

Front End Manager eric cressley 412.242.3598 ext. 104 ecressley@eastendfood.coop Produce Manager Allisyn Vincent 412.242.3598 ext. 117 avincent@eastendfood.coop

Board of Directors

Email boarddir@eastendfood.coop Torey Verts, President Sarah Aerni, Vice President Mike Collura, Treasurer Mark Frey, Secretary Emily Mercurio ‘15 Mark Frey ‘15 Dirk Kalp ‘15 Cortney Seltman ‘14 Tina Russell ‘14 Dennis Schauer ‘14