The East End Food Co-op 2012 Annual Report

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2012 Annual Report July 4, 2011- July 1, 2012

G M Transition Team Report By: Jane Harter and Justin Pizzella This last year at the East End Food Co-op was one of change springing from a wealth of opportunity and planned activity. Our store has undergone major physical renovations; we have hired a number of staff into new and pivotal positions; and the organizational systems, which are hard to ‘see’ except behind the scenes, are developing so the Co-op will be poised and ready for an expansion.

From physical renovations to record sales, the 2011-2012 Fiscal Year proved to be one of focused work, change and growth.

General Manager – A Time of Transition One of the biggest changes this year occurred with the departure of Rob Baran as General Manager. We’d like to thank Rob for his six years of service. Many kudos for his longstanding commitment to the Co-op and the Pittsburgh community! We wish him all the best!

To bridge the time our Board of Directors’ search committee requires to hire a new GM, a “Transition Team was formed comprised of Jane Harter, the Administration Manager, and Justin Pizzella, the Operations Manager. That’s us! Rather than settle for just keeping the Co-op on a tried and true path, our intentions have been to keep the momentum going, improving what we do and how we do it. We feel certain that not only will our membership realize the benefits on Meade Street, but everyone’s efforts will help prepare for the next big change – that of opening a second store (location yet to be determined).

Fiscally Sound Base and Growing The Co-op is in very strong fiscal position with a sound bank balance and record, increased sales over last year this time of 10.5%. All this has

placed us in an excellent position to continue to reinvest in our store, our staff and our membership.

Membership – Everyone is Welcome!

We have just crossed the 10,000 member mark as our membership grows and our outreach efforts expand. Last year we conducted a comprehensive member survey that will influence the way we plan for the future. We are encouraged to continue to focus on our growing and diverse Co-op community, organic foods and nutrition, SW Pennsylvania’s local food economy and sustainable practices in all that we do. We want also to further emphasize member benefits that may best be exemplified in, but certainly not limited to, the 10% Quarterly Member Discount. These are all areas in which the Co-op will continue to nurture and invest resources.

Physical Renovations – Big Changes – Big Improvements The past year saw a

significant investment in the store infrastructure. Visible changes are present throughout the store – new refrigerated cases and dry tables in produce, new bulk fixtures,

a redesigned café with a new hot/ cold bar and cheese walk-around cooler, new perishable refrigerated cases, a new meat case, new HBA shelving, and a redesigned front end and customer service desk.

Behind the scenes, we upgraded shelving in our stockroom and produce prep areas to increase capacity while providing a safer, more efficient layout for our staff.

We also relocated and improved our buying offices, in so doing expanded “shop-able” floor space. We started the first part of improvements to the HVAC and refrigeration systems which were long passed normal life expectancy. These improvements will continue into the 2012-2013 fiscal year. Finally, we have implemented comprehensive preventative maintenance programs for our key equipment.

All these improvements were done to invest primarily in the “fresh” areas of the store where we can best realize our values of organic, healthy, local, and sustainable products and practices. Additionally, the renovations were sorely needed as many of our fixtures were showing the wear of years.

The

construction also honored our sustainable initiatives by re-using materials wherever possible, using refurbished equipment when possible, and purchasing new equipment that

is energy efficient and reduces our overall energy consumption.

Management Team – New Participants During this past year, we hired several new Management Team members. Our new Marketing and Member Services Manager, Tara Powers, joined us with a wealth of experience in marketing and collaboration. Maura Allard was enrolled as Grocery Manager, a renewed position on the organization chart. Maura has an extraordinary background in nutrition, food preparation and management. Allisyn Vincent, our long-standing Front End Manager has moved into the Produce Manager position bringing with her a heart-felt enthusiasm for fruits and vegetables, not to mention her skills in merchandising. eric cressley (intended lower case) joins the team in the capacity of Interim Front End Manager. Erin Myers, our IT Coordinator, has just begun to participate in our meetings, to assure we keep automated solutions infused in the conversation. Add our two awesome Cafe Managers, Amber Pertz and Thomas Murphy, to the mix and imagine the lively discussions and innovative solutions our weekly gatherings bring.

Our Staff and Organization – Continuous Improvements Throughout and across all departments, we continue to work towards improving our internal, daily work processes and human interaction. Included in this are

documented shift responsibilities, targeted education as well as on-thejob training, and utilizing many modes of healthy communication.

We are striving to develop internal and acrossdepartmental consistency with policy and practices. Of course, what is key to all that we do is providing spontaneously great customer service that we’d like to think our Co-op’s staff is becoming known for.

Our exceptionally fine staff of over 70 dynamic individuals, make all this come about as they synchronize their understanding of the Co-op’s vision and work to improve practices in their world of work. We will continue to support this fine eclectic team with increased starting wages (now $9.00/hour), substantial annual performance raises, a “livable wage” income given a commitment to full time hours, and a year out of trial.

That would include a health care package that can’t be beat and lots of other smaller yet significant benefits for all. It is because we are the Coop, we understand that our values are essentially expressed by investing in those who work here.

Organizational Infrastructure – Getting Ready to do More & to have a Second Store In order to prepare to have a second store, many systems need to be adapted or replaced by scale-able counterparts. These systems include an upgrade to our time clock/payroll software, developing more userfriendly electronic communications solution, gaining capacity and shared

efficiency by further tapping webbased solutions, such as shared Accounts Payable file storage or Human Resource information systems applications. In essence, our administration functions will have to ‘morph’!

We are also upgrading our existing POS software which (p.s.) has become a model solution in the Coop world since we first opted for it in 2006. An upgrade will provide us some added benefits as the first step in our “Inventory Management System.” With the proper tools in place, we will be able to institute electronic receipt of purchases from all of our vendors, large and small alike. We will be able to do verification of orders, to refine our data-driven ordering processes, and ultimately provide some level of perpetual inventory. As part of this undertaking, we are also instituting a “Category Management” program that will help us determine the products most consistent with our core values and customer purchases and enable us to promote those products. Given some practice and refinement, we will be able to replicate these systems more easily in a second location.

Finally, we are working with the National Cooperative Grocery Association and their expert consultants for added strategic insight which will likely insure financial backing when we need it.

In a Nutshell The Transition Team has worked to maintain the momentum gained through the achievements of this last year, to continue toward the goal of positioning the Co-op for opening a second store and to do so in a way that honors the cooperative spirit that brings us together in the first place.

Board President’s Report By: Torey Verts This has been a busy year for the Board of Directors at East End Food Co-op, as a lot of changes and events have taken place over the course of this past year.

At last year’s Members Annual Meeting, we accomplished a huge milestone by passing new bylaws and articles of incorporation for our Co-op. The process of changing them was about a year in the making, but these new bylaws give us more flexibility and will allow us to do bigger and better things for our Co-op, like obtain member loans to assist in financing for expansion.

Also at the 2011 Annual Meeting, three new directors were elected to our Board. Christine Allen, Cortney Seltman, and Dennis Schauer have been doing a fantastic job as new directors. They not only are taking part in but are chairing and running several committees including Nominations & Elections and Member Linkage.

They have also been the primary planners of this year’s Annual Meeting.

As well, around this time last year, the Board approved the initial funds for a remodel of the store. This remodel has given us the opportunity to make much needed updates like purchasing new refrigeration equipment and shelving, renovating the restrooms, and adding updates to the café.

The remodel has also expanded shelf space and which has allowed us to provide a greater variety of products for our members.

Additionally, the remodel has been financially successful for us.

Compared to last year’s numbers, the Co-op is experiencing double digit increases in sales throughout the store. With this growth, we expect sales to exceed over $9 million for this year.

The biggest change this year has been with management of the Coop. This past March, Rob Baran, our General Manager, resigned from his position. The Board would personally like to thank Rob for his years of service to the Co-op, and we wish him the best in his future endeavors. As part of this transition, we appointed Jane Harter, HR and Administration Manager, and Justin Pizzella, Operations Manager, as our Interim Management Team to be the leaders of the Co-op. Both Jane and Justin have been doing an excellent job in their new roles.

Since that time, we have been in the search process for a new General Manager. We have worked with our consultants from Cooperative Development Services Consulting Co-op (CDSCC) to establish a sound process for hiring a new GM. This has included writing a detailed job description, establishing a matrix of hiring criteria, and 3 rounds of interviews for potential candidates. We hope to have a new General Manager in place by January 1st.

With all of these changes taking place, the Board has been quite busy, indeed. Our directors bring superb professionalism and expertise to the table, and they commit tremendous amounts of their free time each month to making sure that the work gets done. I am proud to say that I work with an outstanding group of people who are dedicated to making the Co-op the best it can be.

And finally, I would like to announce that on October 6th, 2012, the 10,000th active household membership of the East End Food

Co-op was bought. This number truly illustrates our growing success within our community.

What a great way to round out the year!

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 all of our members for a terrific year!

Board Treasurer’s Report By: Mike Collura INCOME/EXPENSE STATEMENT July 4, 2011 – July 1, 2012

ACTUAL BUDGET Sales

$8,546,539 $8,523,072 Cost of Goods Sold $(5,173,764) $(5,160,770)

Gross Profit

$3,372,774 39.5% $3,362,302 39.5% Personnel Expense $(1,958,139) 22.9% $(1,932,789) 22.7% Operating Expense $(1,346,815) $(1,302,023)

Net Profit

$67,820 $127,490

Net Income

$67,820 0.8% $127,490 1.5%

BALANCE SHEET AT JULY 1, 2012

Current Year Prior Year End 7/1/12 End 7/3/11

$1,429,949 $1,542,051 $727,419 $370,332 $72,811 $64,214 ------------------- ------------------- $2,230,179 $1,976,597

$562,950 $469,816 $203,722 $14,614 ------------------- ------------------- $766,672 $484,430

$1,023,211 $974,577 $372,477 $258,902 $67,819 $258,688 ------------------- ------------------- $1,463,507 $1,492,167

$2,230,179 $1,976,597

Current Assets Net Property & Equipment Other Assets Total Assets Current Liabilities Long Term Debt Total Liabilities Member Shares Retained Earnings Current Earnings Total Equity Total Liabilities + Total Equity

The fiscal year, July 4, 2011 – July 1, 2012, has come to a close. Sales were $8.55 million, exceeding our target by $23,000, which provided an additional $10,000 of Gross Profit over what was expected.

Operating Expenses came in over budget by $71,000. Personnel Costs remain our largest expense as EEFC stays committed to offering a livable wage. With the support of the Board, Management has filled some key position in the Co-op that had been previously vacant or consolidated under other positions. As a result, Personnel Costs came in 25,000 over budget.

We have finally reached the point where we have begun to use our cash reserves to reinvest in the Co-op. This is the time where we will begin to see the fruit of all of the hard work we have put in over the last several years. In previous years the Co-op built up its cash position in order to leverage it against a bank loan and provide some long overdue updates to the store. Capital projects in the current fiscal year will continue to be funded in this way as the store renovations are completed. Our cash position at year end was just under $900,000, which is still well over the NCGA benchmark for healthy Co-ops.

Refrigeration updates will be a focus in the next fiscal year as we invest capital into a redundant compressor system and a zero pressure air conditioning plan. We have also invested in various preventative maintenance plans to reduce extraordinary expenses like the ones that cause us to overshoot our budget this year.

Due to overages in Personnel and Operating Expenses, our Net Income came in at almost $68,000 which was under our target. This result does not yet include deductions for taxes or any other adjustments made by our auditors. Employee profit sharing also affects the outcome of these results.

NOTE: Results are subject to taxes and final adjustments by our auditors.

Member Services Report By: Tara Powers In 2011, the East End Food Coop continued to stand tall on its member-owned platform. We owe our success to you, Pittsburgh area community residents who have invested in us for 32 years.

The Co-op continued its mutual investment in its members this past year, in great appreciation. This model of give and take cooperation is how we continue to grow!

Community Involvement This year your Co-op has been branching out in its community involvement by partnering with the following local organizations who share common interests: • Pittsburgh Tote Bag Project (people can now donate their reusable bags to the community in our lobby) • Habitat for Humanity (5% Wednesday partners) • Pennsylvania Association for Sustainable Agriculture (sponsors/partners) • Bike Pittsburgh- Car Free Fridays (members/sponsors) • Food Is Elementary (sponsors) • Food Policy Council (board members)

Membership Your Co-op reached 10,000 members this year! We have been growing at a rapid pace with an average of 57 member/ owners investing in us per month.

Recognition Your Co-op, appointed by its members, has received the following awards this year: • The League of American Bicyclists, Bicycle Friendly Business Bronze Award • City Paper, First Place Award, Best of 2011 Places to Buy Health Food

Growth Input from last years’ member survey has guided the way to a lot of positive change and growth in infrastructure. Some examples are all of the store remodeling and our new bike parking! We value the feedback we obtained and plan to focus on even more topics mentioned, like hosting more educational, food related events. Thanks for your continued support!