Dear Fellow Members, As the President of the Board Directors of the Organ Mountain Cooperative (doing business as Mountain View Market Co-op), I would like to take this time to personally invite you to participate in the Grow With Us! - Member Investment Initiative. The Co-op has experienced exponential fiscal growth over the last seven years, and we feel that the Co-op is at a critical stage for expansion. From 2007 until our last full fiscal year of 2013 the Co-op has grown 33% in total sales. With an average annual growth of more than 8% this is the time to capitalize on our continued success and our members’ interest in an improved shopping experience. Key elements of the planned expansion and remodel of the Co-op include:
Expanded commercial kitchen to serve a new deli service counter featuring a soup and salad bar Remodel and upgrades to shelving and displays allowing the addition of fresh meat and new dairy selections Improved office, receiving areas, and refrigeration systems for greater efficiency and store profitability New produce racks and store décor
The Grow With Us! initiative is a $1,000,000 expansion of our store and services. We are asking our members to contribute $250,000 to supplement the cost of the expansion. The remaining cost of the expansion will be supported by existing cash reserves (member equity) and a secured bank loan. To facilitate the member portion of the financing, we are offering 500 Promissory Notes valued at $500.00 and earning simple interest of 3%. Half of the notes will mature in five and the other half in six years. Our of Board of Directors and staff have already demonstrated our shared commitment to this project by committing to invest 15% of the $250,000 member loan total. To help ensure the success of this project, we have enlisted the help of the National Cooperative Grocers Association’s Development Cooperative. The NCGA DC has extensive experience in facilitating expansion projects at natural foods co-ops throughout the country. They have a proven track record of working closely with store management teams to develop strategic remodel formats including equipment and fixture plans, negotiate agreements with contractors/designers and to assist with project oversight. In this packet you will find detailed information about our past and present operations, plans for future growth, details about the investment opportunity, as well as bios of key NCGA and Mountain View Market Staff. This is a very exciting time for the Co-op and the greater community. We are standing on the precipice of a future full of change and opportunities. I hope that you will take this opportunity to invest in the future of our community and Grow With Us! In Cooperation,
Paul Heiberger, President
Executive Summary Mountain View Market Co-op is poised for significant growth if we can capitalize on opportunities directly in front of us. In 2013 our annual gross sales were $4,581,129, which was 5.71% higher than our 2012 gross sales of $4,333,736. This continues a trend of growth of over 33% since 2007 with average annual growth of 8.23%. This trend is indicative of the national growth of the natural and organic foods market share over the same period. The growth in the sector has attracted more competition nationally, as well as locally. Not only are our existing retail grocery competitors carrying more of our product lines, we are also faced with our most direct competitor in natural and organic foods since our inception. In order to meet the challenges of new competition as well as the demands of our members, the Co-op must continue to improve and expand its offerings. MVM Gross Sales 2007-2013 Gross Sales (Millions $)
5 4 3 2 1 0 2007
2008
2009
2010
2011
2012
2013
Fiscal Year
Strategic Business Expansion “A remodel or relocation of the existing store could result in a significant sales increase, particularly if it includes improvements to customer service departments such as the deli, meat, bakery, and wellness departments.” Debbie Suassuna- MVM Market Analysis November 2013 After reviewing the results of the Analysis of Present Performance, and Evaluation of New Store Opportunities conducted by Research Consultant Debbie Suassuna, the Mountain View Market Co-op Management Team has developed a business plan based on the study’s findings. Considering the amount of time necessary to complete either a remodel or relocation (18-24 months), we have developed a strategy that allows us to take advantage of existing opportunities by implementing immediate improvements. We will be increasing our availability in the “fresh” category by adding more fresh meat and deli items, investing in merchandising displays for produce and broadening our selection of local options. We will take steps to begin development of an in-house bakery line, which will include fresh pastries and specialty baked goods (gluten-free, vegan, etc.). Our Wellness department will also be reformatted to provide a better customer service experience. In addition to these changes, we will be rearranging the retail floor to accommodate better product arrangement and ease of shopping. We will reduce some product lines while at the same time add an aisle to create better product alignment. Our perimeter aisles will be enhanced to more closely resemble a typical grocery store format. Kitchen sales in 2013 were $292,565.21, which reflects an increase of 102% over 2012. To take advantage of our unique prepared food opportunities, we will be renovating our food service counter and deli seating area to improve visibility and prominence within the store. We will also be increasing the selection by introducing self-serve hot and cold food display merchandisers for soups, salads, fresh vegetables, prepared hot entrees, a burrito bar and rotisserie chicken.
In 2013 the Co-op hosted 125 unique classes and workshops with at least 489 attendees. Co-op staff taught 43 these classes to over 250 people. The attendance and frequency of classes continues to grow, as well as the demand for more class offerings. To better accommodate the growing attendance, we will be relocating and increasing the size of the Community Room. At least once a year, MVM conducts a member survey to guide long and short-term growth based on member input. Highlights of the survey are as follows, members have asked for:
Additional services and locations
Expand juice bar and deli
Fresh organic meat, poultry, eggs and cheese selections
More classes and outreach
Increased variety
Local and organic produce and fully stocked shelves
More cashiers
The enhancements over the next 2 years will provide the capacity to upgrade our products, services and member shopping experience. Grow With Us! Member Investment Initiative Levels of Participation:
Promissory Notes valued at $500 each are available to Active Members only Each Promissory Note earns 3% APR, Simple Interest, payable upon maturation Only 500 Promissory Notes are available—250 Five-year notes and 250 Six-year notes Promissory Notes may be purchased by contacting the Customer Service Desk until all Notes are issued or October 1, 2014, whichever comes first Once the allotted number of each type of Note is acquired, additional Notes will not be issued No interest will be paid if Promissory Note is redeemed any time prior to maturation o Five-year notes will mature on or before October 31, 2019 o Six-year notes will mature on or before October 31, 2020
Why Should I Invest in the MVM Co-op Grow with Us! Member Investment Initiative?
I am an active member that believes in and supports the MVM Co-op’s principles to support the local economy, ecology, environment and education.
I will benefit financially as my investment will earn more interest than it would at a bank, while simultaneously supporting local economic development and growth, which in turn supports environmentally-friendly and locally-owned businesses. I am excited by the plan to expand fresh food, produce, deli, meat and natural grocery items to meet my needs and those of others in my community.
I believe in the value of a community-owned, democratically-run business to effect change and benefit the local economy.
I support MVM’s socially conscious community education and outreach programs. I value the well-trained and knowledgeable MVM staff and support their on-going development.
I value that the Co-op sells natural products that are friendly to the environment. I enjoy being part of the biggest and best natural foods Co-op in Southern New Mexico.
Sales Growth Since 2007, sales have grown 33% (see table at right). Our service and product offerings have also increased exponentially over the years. We have outgrown our capacity requiring us to expand our operations to meet the needs of our patrons. Over the last 3 years:
Net sales have increased approximately 18%
The Kitchen Department has grown by 680% Produce sales are up 30%
Bulk sales up 24%
Year 2007 2008 2009 2010 2011 2012 2013
Total Gross Sales $ 3,063,387 $ 3,350,744 $ 3,555,879 $ 3,760,187 $ 3,825,801 $ 4,333,736 $ 4,581,128
Details of the Expansion
Upgrade and/or expand retail, office, and receiving areas
Construct a new and larger Community Room space Install new, more efficient refrigeration systems
Remodel and upgrades to shelving, display racks and the addition of dairy and fresh meat displays Obtain new equipment for Produce Department, including more efficient displays Expand commercial kitchen facilities to support an expanded menu, including soup and salad bars as well as a deli service counter. Necessary equipment includes stoves, ovens, sinks, food preparation equipment, and deli equipment Update store décor, including chairs and tables
Project Goals
Increase sales through optimizing the deli size and introducing a fresh meat department “Right-size” the retail area to achieve optimum overall sales per square foot and desired sales distribution by department Have appropriate kitchen and other prep areas to support a greater presence of Fresh Foods Give Members and patrons a “new and improved” shopping experience
Renovations
Consolidate the retail square footage and layout to provide members a better shopping experience Re-grind and re-finish floors Upgrade entryways to improve energy efficiency Enlarge receiving doors to ease and accommodate larger shipments Add new Community Room with windows to exterior to provide natural lighting to room Upgrade plumbing and electrical to support remodeling Obtain additional commercial appliances to accommodate kitchen expansion
Timeline Preliminary Planning: April to May, 2014
Secure the $1,000,000 budgeted for the remodel, including $250,000 from Member investment Solicit bids for construction
Project Development: April to October, 2014
Establish design criteria with architect and store planner Fixture plan schematic design
Fixture plan preliminary design, equipment & construction renovation specifications to assure that the Co-op remains operational throughout the renovation
Develop preliminary equipment list and estimated costs
Develop preliminary construction estimates
Acquire bids from professional services and electrical, refrigeration and construction contractors Select Store Designer, Architect, Project Manager and Contractors (Electrical, Plumbing, Refrigeration, Equipment Suppliers, and Construction) based on project specifications
Develop and Finalize Fixture Plan Acquire permits from City and State to commence phased renovation
Implementation: October 2014 to Spring 2015
Review construction timelines with all designers, architects, contractors and suppliers at project kick-off
Begin construction Monitor construction process and have weekly meetings to receive progress updates with project managers, professional services, construction contractors and suppliers
Order and acquire equipment from supplies based on price and specifications Renovation phases: 1) flooring, plumbing and electrical; 2) Back room entry and space; 3)Entrance renovations; 4) Light fixture installation; 5) Kitchen and deli upgrades; 6) Store shelving, signage and refrigeration installation and set up; Receive final inspection and approval from City and State departments Hire and train additional staff
Prepare new space for operations and merchandising
Departmental layout complete
Final store cleanup Reception for all Member investors
Grand re-opening!
Mountain View Market Co-op’s Financial Capability to Invest in Renovation
1. MVM Co-op has achieved consistent growth. Net sales have increased over 17.8% over the last three years (2011 to 2013) showing a steady 6% average growth per year. See table below.
2. Operating expenses have remained relatively flat as a percentage of net sales. 3. The Management Team continues to prove its ability to balance costs as sales increase each year. In addition to keeping operating expenses relatively flat (see #2), compensation expenses have also remained relatively flat as a percentage of sales. The Co-op has established a compensation rate which enables us to retain our highly qualified staff.
4. Member equity increased by 12.5% over the last 3 years. 5. MVM Co-op returned over $182,000 in patronage rebates over the last 3 years. 6. Members received $117,707.85 in member discounts over the last 3 years. 7. Gross margins as a percentage of sales have stayed consistent over the last 3 years. 8. Kitchen sales increased by 680% over the last 3 years. 9. Cash on hand for the last three years has ranged from a high of $326,829 in 2011 to a low of
$222,222 in 2013. This shows that the Co-op has the financial ability to meet the ongoing daily and short-term needs of the business.
10. MVM Co-op has no amount of long-term liability. Category Net Sales Operating Expense Employee Compensation Cash On Hand Sales Grab-n-Go/Kitchen
FY 2011 $3,775,992 $195,038 (5.17%) $962,923 (25.51%) $326,829 $43,373 (1.15%)
FY 2012 $4,275,383 $198,851 (4.65%) $1,069,658 (25.02%) $352,339 $144,785 (3.39%)
FY 2013 $4,594,744 $263,768 (5.74%) $1,123,322 (24.45%) $222,222 $294,179 (6.4%)
As noted above, cash on hand decreased from FY 2012 to FY 2013. This can be largely attributed to the commitment made to support the MVM Farm, as well as expansion of the Kitchen to facilitate that department’s exponential growth, including the addition of a downtown location. Both of those expansion projects were completed without taking on additional debt. MVM Farm History In September of 2011, Mountain View Market Co-op made a three year commitment to a 2.5 acre farm in the Mesilla Valley. Part of the purpose was to gain a better understanding of the challenges of producing and selling food, with the added intention of helping to develop the necessary infrastructure for local producers to meet the growing demands of the regional market. We entered this project expecting a serious financial commitment, but confident that the investment would be worthwhile in the long term. Additionally, the MVM Farm project is in alignment with our stated ends: continuing to ensure the community benefits from the co-op as we provide an increase in health, awareness, potential for long term well-being, and community self-determination.
Present A large focus of the farm is the development of innovative, low-cost, water-wise systems. We use drip irrigation, aquaponics systems, composting, and vermiculture at the farm, which all contribute to creating a healthy, vibrant ecosystem as well as the conservation of resources. Another focus is building strong community partnerships, including but not limited to: Community Foundation of Southern New Mexico Rio Grande Prep Institute New Mexico State University Agricultural Department Anthony Youth Farm La Semilla Food Center Las Cruces Public Schools MVM Farm staff has provided over 1,200 hours of training in the last six months to high school students, college interns and community members.The farm has provided an opportunity for two different farm managers and three farm assistants to gain real and practical experience. Three of our former farm employees have continued their pursuit of sustainable food production in the region. Future At the beginning of 2014, we began the process of establishing the MVM Farm as an independent nonprofit. This will allow the MVM Farm to pursue grant opportunities to further the education and outreach missions of the project and become less dependent upon the financial support of Mountain View Market Co-op. The Co-op will continue to provide administrative support to the MVM Farm in addition to other local producers. Additional Information We are available to answer any questions you may have about the Investment Initiative and the remodel. Five meeting times are scheduled—we hope to see you there! Times and Dates of Informational Meetings:
Wednesday, April 23rd – 5 to 6 PM Saturday, May 10th – 10 to 11 AM Wednesday, May 28th – 5 to 6 PM
Saturday, June 14th – 10 to 11 AM Wednesday, June 25th – 5 to 6 PM
Meetings will be held in the Co-op Community Room. If you are unable to attend these meetings and would like to speak to someone in more detail about the Initiative, please contact: Mo Valko, Marketing Manager at Mountain View Market Co-op Phone: 575-523-0436 Email: mo.valko@mountainviewmarket.coop or Paul Heiberger, President of the Mountain View Market Co-op Board of Directors Phone: 773-841-7285 Email: pheiberger@gmail.com
Mountain View Market Co-op Staff Bios Shahid Mustafa, General Manager. Shahid began his career in the natural/organic grocery sector twenty five years ago while working as a cashier at Green Earth Natural Foods in Evanston, IL. In 1994, he joined the Management Team at the Bethesda Co-op in Cabin John, MD. He was promoted to Produce Manager in 1996 and was subsequently hired as the Co-op’s first General Manager in 1998. In January of 2006, he became the General Manager of Mountain View Market Co-op. While at Mountain View Market Co-op, Shahid has placed a great emphasis on staff training to ensure operational efficiency and excellent customer service. Over the years Shahid has demonstrated a passion for community cooperative development and has proven his ability to develop organizational structure and strategically plan for the future. He has served on the Board of Directors of the National Cooperative Grocers Association and currently serves as Chair on the MVM Farm Board of Directors. Shahid Mustafa attended Howard University in Washington, D.C. studying Communications with an emphasis in Broadcast Journalism. Mike Perriguey, Controller. Mike has over thirty-five years of comprehensive experience in all finance, accounting and contract disciplines, as well as general business functions. Mike has a strong background in financial operations in government, commercial and retail environments as well as strategic planning and business development. Mike is also experienced and capable in the application of computer systems and associated software with a background in development, implementation and operation of management information systems. Mike was hired as the Finance Manager of the Co-op in 2004 after retiring from General Dynamics Network Systems Inc. as Director of Business Administration. Mike holds Bachelor of Business Administration degrees in Finance and Real Estate from New Mexico State University. He currently sits on the Board of Directors of White Sands Federal Credit Union. Sierra Hirtzel, Store Manager. Sierra has been the Store Manager since June of 2013. She first started at the Co-op in 2006 in Grocery and then became Kitchen Manager. She returned to the Co-op in 2012 starting in Customer Service and soon became the Kitchen Assistant. In 2013 she was promoted to Store Manager. Sierra grew up shopping here and has always loved being a part of such an amazing community! She truly believes in what we are doing and what we stand for. Caitlin Karrenberg, Kitchen Manager. Caitlin was hired into the Co-op Kitchen in July 2010. She brings over 10 years of experience in the food service industry, as well as many hours volunteering at organic farms and with different cooperatives. Since she took over as the Kitchen Manager, her department has seen 350% growth, including the creation of a made-to-order menu and the opening of the Downtown Kitchen location at 120 South Water Street. Caitlin is dedicated to sourcing clean and responsible ingredients for the menus, using over 70% organic and local products. She currently serves as the Employee Board Member at Mountain View Market Co-op. Mark Mercado, Grocery Manager. Mark started at the Co-op back in 1994, when our starting wage was $4.45/ hr! He knows the Co-op inside and out, having worked as a buyer for Bulk, Dairy, Frozen and Grocery. He was the Interim General Manager’s Assistant starting in April of 2004, then served as the Interim General Manager from November of 2004 through January of 2006, when current General Manager Shahid Mustafa was hired. Mark currently works as the Grocery Manager. Trish McCaul, Wellness Manager. Trish is the Wellness Manager at Mountain View Market Co-op. She has been working for the Co-op since April 2005. Throughout her time at the Co-op, Trish has worked
as a cashier, courtesy desk employee, bulk & candy buyer, as well as a customer service assistant in the Vitamin, HBA & Herb departments. She moved into her current position in March of 2012. As Wellness manager, Trish focuses on increasing the availability of ethically produced wellness products, and has ensured the department is completely free of items containing parabens, as well as boycotting companies that engage in animal testing. The department has seen positive sales growth every year under her management. Tara McManus, Produce Manager. Tara was hired at the Co-op in 2008. She came with a background in cheese and specialty foods. She became the Produce Buyer in 2010 and Produce Manager in 2011. She is currently the “Fresh” Coordinator, overseeing produce, dairy, and our new specialty cheese and fresh meat departments. Tara is passionate about finding high quality food and great companies to carry at the Co-op. If you love our new selection of specialty cheeses, thank Tara! Mo Valko, Marketing Manager. Mo has been employed at the Co-op since May of 2009. She started out as a cashier, and worked in almost every department of the store before moving into the Outreach and Marketing Department. Mo works as a member of the Purchasing Team to vet new products and coordinate merchandising efforts. She spearheaded the implementation of the HowGood program at the Co-op and teaches classes on a regular basis. She has worked closely with the Board of Directors and the General Manager in the Development of this Member Investment Initiative. She is passionate about growing the local economy through strengthening local businesses, and represents the Co-op through work with local non-profits.
NCGA DC – Staff Bios The National Cooperative Grocers Association Development Cooperative The NCGADC was developed for the purpose of providing targeted development services to strengthen the operations of food co-ops, help them expand, and to support the development of new co-op stores. C.E. Pugh, NCGA Chief Operating Officer. C.E. has worked in food retailing for over 35 years. He has extensive experience in all aspects of retail food operations and new store development, including direct oversight for over 20 store expansions and new store development projects in both conventional and natural food cooperative retailing. These include 8 acquisitions, 7 existing building build outs, 4 new constructions, and 4 store expansions. Dave Blackburn, NCGA DC Executive Director. Dave has worked in food co-ops for over 25 years. He has been with NCGA since the reorganization in 2004 mostly as Director of Purchasing, but also as East Corridor Development Director. Prior to joining NCGA, Dave worked in co-op development as Executive Director of CGANE and as an area manager of the Manager-on-Contract program with Northeast Cooperatives overseeing the operations and planning for 8 co-ops. He also has over fifteen years of retail management experience with food co-ops in Michigan and Minnesota. Frank Worrell, NCGA DC Business Development Director. Frank has worked in food retailing for over 40 years. He spent over 20 years with a Midwest grocery store chain where he managed all aspects of the business – profit & loss, marketing, distribution and store development. Additionally, he was the vice-president of an eight store up-scale chain in the Twin Cities of Minnesota. For the past twelve years, Frank has owned and operated a three store group of independent stores until the sale of the company in 2011. He has extensive experience in developing budgets and financial modeling for operations as well as for expansion financing.
P.J. Hoffman, NCGA DC Business Development Director. PJ has worked in food retailing for almost 40 years. He has worked in several Twin Cities area food co-ops as well as conventional grocery stores over the years. For most of the past three decades, he has been working in store planning and development with Blooming Prairie Cooperative Warehouse and UNFI, supporting over 400 expansion and improvement projects of co-ops and natural food independent retailers. Rob Martin, NCGA DC Business Development Director. Rob has worked in food retailing for over 30 years. For over 10 years, he worked as an independent consultant working with dozens of food cooperatives. Before he entered the consulting world, Rob worked in co-op management with Seattle area co-ops for nine years with Madison Market and PCC. In addition, Rob has over twenty years of conventional grocery experience with Kroger’s and Fred Meyer’s in a variety of positions.