2017 EEFC Annual Report

2017 ANNUAL REPORT July 4, 2016 - July 2, 2017

President’s REPORT

By Eddy Jones, Board President

On behalf of the Board of Directors, I am excited to share with you news and updates about the past year for our Co-op. Reported herein are metrics from fiscal year 201617, which officially ended July 2, 2017. The narrative in this report also provides a few updates regarding our Co-op’s governance and leadership that occurred between the end of fiscal year 2016-17 and the time of writing.

In the past year, the governance of our Co-op has experienced significant change. We’ve had 100% turnover on our board, with all current directors serving for the first time in this capacity at our Co-op. In addition to acclimating to our roles and responsibilities as directors, the board faced added challenges including the resignation of our General Manager in October 2017.

Amidst these challenges are incredible opportunities, and while we intently focus on our fiduciary responsibilities, we are working hard to best position our Co-op for future success.

A Designated General Management Team (DGMT) is in place comprised of Shawn McCullough (Finance Manager), Jennifer Girty (Human Resources Manager), and eric cressley (Front End Manager). As an initial step in the general manager search process, the board spent considerable effort in November and December listening to member owners including employees about the desired attributes of a general manager. Feedback was gathered through multiple surveys as well as facilitated sessions. Among the attributes most desired are the ability to positively interact with members and employees, a commitment to cooperative values and natural and organic foods, and the ability to operate a business in a competitive retail market. The board continues to work closely with the DGMT as it simultaneously navigates the general manager search process.

In addition to reviewing fiscal metrics, the board invested time this past year in

establishing more tangible metrics related to our “ends,” the ways in which our Co-op positively impacts people and planet. We categorized these metrics in the areas of Local Products and Vendors, People and Community, Planet and Sustainability, and Engagement and Democracy. In this annual report, you’ll see various metrics that are sourced from our Ends Monitoring reports, which the board reviews quarterly along with our fiscal reports.

The board is also thinking ahead to the future.

Data shows that our Co-op has experienced stagnating sales over the past three years.

Quarterly revenue plateaued in early 2015 at around $2.8M following years of steady growth, and in recent months has retracted some.

All the while, we continue to add over 500 new members each year. This data suggests that in the past three years our members, on average, are spending less at the Co-op. In our most recent comprehensive member survey, conducted in January 2017, less than one-half of respondents reported visiting the store at least once a week. On this measure, our Coop ranks 38th of 41 cooperatives in a national database. In the same survey, just three in ten members report that our Co-op is their primary grocery store (as measured by spending at least 50% of their grocery budget at the store).

As the board continues to review data and engage with members, the limitations of our current physical space surface continually.

Shoppers report significant variation in satisfaction across store departments, and those consistently ranking high (such as bulk and health & beauty) are departments that are generally allocated more floor space. Four in five members favor growing the co-op in the next 3-5 years, and members rank improved parking as the top-desired design feature of any new space.

Staff have also expressed opportunities available with an improved physical space.

These include more efficient operations by potentially having a loading dock and more storage space. Also, there is a general feeling

that the culture of our workforce could be strengthened by more closely integrating floor staff and management. These employee groups are physically separated in our current space.

In addition to limitations for shoppers and staff, our physical space enables limited opportunities to broadly engage with the community. Meeting and classroom space is limited, as is space for educational sessions related to food and cooking.

The board is aware that expansion has been in our Co-op’s narrative for well over a decade. We’re also aware that expansion can mean different things, from expanding to a single, larger store, to expanding to a second store, to expanding into a delivery business.

A top priority for the board in the coming year is to continue to define what expansion means to our Co-op, to educate ourselves about development already happening in our community, and to continue to engage with this important topic.

We are also aware that a prerequisite to any expansion effort is board stability. Thus, successful board perpetuation and board sustainability are top priorities. Several controls put in place last year, including custom printed ballots, led to a greatly improved election process in 2017. We plan to build on these successes. In addition, we are actively seeking ways to make the monthly workload realistic for directors. This includes carefully assessing the right mix of meetings, committees, and goals that strike a balance between advancing our Co-op and maintaining board stability.

Finally, as we continue our work as directors, we will be seeking ways to utilize the collective knowledge and expertise of our members. This is a topic that received much discussion this past year, and one that several directors advocated strongly for while campaigning. We are still navigating how best to achieve the goal of increased engagement. Some ideas that have surfaced are holding additional member forums and

creating opportunities for members to serve in purposeful ways on committees.

Thanks for being a part of our Co-op! I am excited about the future and look forward to building on the progress made during the past year.

0+ 125,00 dits re Bag C ed issu

s 2of5s% ale al c o l

$11.1 M.

s

are oduct pr

IN STORE SALES

10,000+ lbs.

of food donated to 412 Food Rescue

61,731 lbs.

COMPOSTED

469,416 lbs.

RECYCLED

OPERATIONS REPORT

Jen Girty has filled a variety of roles at the Co-op since January 2000 and has been the Human Resources Manager since July 2013. She is certified as a Professional in Human Resources (PHR) through the Human Resources Certification Institute (HRCI) and a SHRM CP Certified Professional through Society for Human Resources Management. She supports all EEFC employees with Coop policies and procedures, insurance and benefits, and oversees all Co-op recruitment and hiring.

Shawn McCullough worked as the Co-op’s auditor for seven years before becoming the Finance Manager in January 2014. He has a degree in Accounting from Duquesne University and studied Russian and Spanish at Ohio State University. Shawn is responsible for monitoring the Co-op’s budget, physical inventory process, and for providing financial analysis in monthly reports and weekly Open Book Management (OBM) sessions.

eric cressley began a student membership with EEFC in 1996, and for the most part, has remained a member ever since. eric has a BA in English Literature and Creative Writing and an MFA in Poetry Writing, both from the University of Pittsburgh. In May 2007, eric began employment in the Co-op’s Front End, and in addition to serving the co-op community, eric runs, bikes, and promotes justice and joy for all.

Together, Jen, Shawn, and eric make up the Designated General Management Team (DGMT), which was put in place in October 2017 upon the resignation of former General Manager Justin Pizzella. The DGMT jointly share the responsibilities and duties of the general manager until the board of directors hires a new GM. A primary focus of the DGMT is renegotiating the union contract and ensuring the Co-op meets its ends and remains fiscally viable. The Co-op thanks Justin for his six years of service and wishes him well in his future endeavors.

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822 al job extern tions a applic pted acce

0 $70,00ff a t in S unts Disco

FINANCE Report

By Shawn McCullough, Finance Manager

Fiscal year 2016-17 was a year of dramatic ups and downs--debits and credits so to speak.

Our audited financial statements display this: our balance sheets are strong and our income statement needs work. There are two quotes about accounting (one serious and one not so much) that stuck with me in assessing how the past fiscal year went: “Every generation inherits a world it never made; and, as it does so, it automatically becomes the trustee of that world for those who come after.

In due course, each generation makes its own accounting to its children.” - Robert Kennedy “The company accountant is shy and retiring. He’s shy a quarter of a million dollars. That’s why he’s retiring.” - Milton Berle

Our sales decreased by approximately 2.1%, however this is exclusively due to FYE 2016 having 53 weeks in the fiscal year and FYE 2017 having 52 weeks (every 7 years we have a year that has 53 weeks). Factoring out the extra week, our sales were nearly the same as last year.

For fiscal year 2016-17, our audited net loss was $31,769. For the prior year, our audited net loss was $99,572. The improvement from prior year was a result of focusing on cost containment, primarily lower operating and personnel expenses. The majority of that cost-savings occurred in lower legal fees for the current year.

We continue to face the ever-present external challenge of competition, which has resulted in flat-to-near-flat sales for about three years. To offset languid sales, we have had to focus on our expenses in order to be financially sustainable.

Switching over to the Balance Sheets, the vast improvements occurred in current assets, of which our largest component is cash. Our current assets increased from $977,704 in prior year to $1,088,763 for the current year; an increase of ~$111,059, or 11.4%. Conversely, on the liability side, current liabilities decreased from $589,287 in prior year to $569,983 for the current year, or a decrease of ~$19,300, or 3.3%.

BALANCE SHEETS

INCOME/EXPENSE STATEMENTS

YEAR ENDED 7/2/17 (AUDITED)

YEAR ENDED 7/3/16 (AUDITED)

$1,088,763

$977,704

Current Assets

519,602

665,442

Net Property & Equipment

326,675

283,467

Other Assets

$1,935,040

$1,926,613

Total Assets

569,983

589,287

Current Liabilities

13,629

13,686

Non-current Liabilities

$583,612

$ 602,973

Total Liabilities

$1,319,751

$1,260,194

Member Shares

63,446

163,018

Retained Earnings

(31,769)

(99,572)

Current Earnings

1,351,428

1,323,640

Total Members’ Equity

$1,935,040

$1,926,613

Total Liabilities & Members’ Equity

YEAR ENDED 7/2/17 (AUDITED)

YEAR ENDED 7/3/16 (AUDITED)

$11,102,371

$11,346,851

Net Sales

6,979,731

7,069,654

Cost of Sales

4,122,640

4,277,197

Gross Profit

2,845,127

2,836,649

Personnel Expense

1,501,045

1,702,317

Operating Expense

191,763

162,197

Other (Expenses)/ Income

$(31,769)

$(99,572)

Net (Loss) /Income

MEMBER SERVICES Report

By Kate Safin, Marketing & Member Services Manager Membership

Co-op Membership continues to grow organically.

Fiscal year EAST END FOOD CO-OP 2016-17 overall was the second best year for membership NEW in a 10-year MEMBERS span with 595 net new members.

We also welcomed 75 new members during our annual member drive in July, exceeding our goal and breaking a new record-high for new members during a drive.

595

Outreach & Education

Co-op outreach representatives connected with more than 19,000 people across 11 community events this fiscal year, including large- and small-scale gatherings like Pittsburgh VegFest, the Farm to Table Conference, a cooking seminar at UPrep Pittsburgh Public School and a healthy eating class and store tour for Shady Side Academy Pre-K. CLASSES, WORKSHOPS AND EVENTS HELD The Coop hosted 26 events for 3,383 attendees in partnership with 16 organizations.

Our educational programming focused on high-quality events in collaboration with local businesses and non-profits. Proceeds

26

from fee-based events supported partners Grow Pittsburgh, Burgh Bees, and Slow Food Pittsburgh. In April, we hosted our first-ever Springfest (in lieu of Winterfest) to support 412 Food Rescue. More than 100 people gathered at the Hosanna House in Wilkinsburg for a family-friendly Earth Day celebration complete with children’s activities and a delicious spread of food from the Co-op, local vendors, and Pittsburgh Sustainable Restaurants. The event raised $1,581.91.

Community Giving

27.33 $8,2 NERAL Through E in G ATIONS our General DON Donations $22 Program, REG ,877.4 the Co-op ROU ISTE 3 .91 T 1 ND R contributed 8 5 S UP $1, NGFE $8,227.33 I R P S in cash, sponsorships, gift baskets and food to 80 local non-profit organizations.

The Register Round Up raised $22,877.43 for 12 nonprofits: Reading is Fundamental, First Waves, PASA, East End Cooperative Ministry, Rainbow Kitchen, Carnegie Library of Pittsburgh, Free Store Wilkinsburg, 412 Food Rescue, Pittsburgh Center for Creative Reuse, Nine Mile Watershed, Bike Pittsburgh, and Group Against Smog & Pollution (GASP).

DONATIONS

Member Communication

In January 2017, East End Food Co-op worked with the Survey Research Center (SRC) at the University of Wisconsin-River

Falls to conduct our bi-annual member survey. A total of 491 usable responses were received. The results help us to better understand our customers and improve services for Co-op memberowners and shoppers.

Also in January, the format and frequency of The Co-operator changed to a full-color magazine produced on a bi-monthly schedule. The change reflected member preferences collected in a newsletter readership survey and significantly reduced production and mailing expenses and paper use.

On April 9, 2017, we launched a new website! This was the first major update to the site since October 2011. New features include a Co-op history timeline, online forms, a Member Center, blog, recipes, a local food map, and sales flyers and information. In May 2016, the EEFC established a new social media presence on Instagram (find us @eastendfoodcoop)!

Co+op Kids

1,897

Participation in our free fruit program for kids pieces of fruit were given to more than doubled this fiscal year!

Children ages 12 and under have their choice of a free organic apple or fair trade banana each time they visit the Co-op.

c

p ki s

Wellness Wednesday

Wellness Wednesday was estabished as a way to promote affordable health and wellness. The first Wednesday of each month shoppers recieve 10% off fullpriced supplements, vitamins, and health and beauty products. Shoppers saved $3,076.61 during Wellness Wednesdays from September 2016 to the end of the fiscal year.

Ends Policy Statement East End Food Co-op exists to enhance physical and social health in our community.

To these ends, we will create: • A sustainable memberowned business open to everyone • An ethical and resilient food infrastructure • A vibrant, dynamic community of happy, healthy people • A creative vision to transform the future

Board of Directors

Eddy Jones, President Patrick McHale, Vice President William Warnock, Treasurer Emily Deferrari Malcolm Ferguson Sarah Trist Sarah Trafican Katy Nevinsky

Open to everyone, every day 7516 Meade Street . Pittsburgh, PA 15208 412.242.3598 . wwww.eastendfood.coop