The Little Co-op That Could



By Sara Calvosa



I’ve recently returned to Chico after a 3-year hiatus, spent on the Coast, in a little place I’ve taken to calling Detroit-by-the-Sea: Humboldt County. Returning to Chico was a breath of fresh, friendly air; a community full of smiling faces and kind words. We found a lovely little house next to the park and everything was coming up aces for our little household.



But, as much as I delight in all of Chico, there is one thing that continues to puzzle me. What is up with our wee co-op? How is it, that in Humboldt County, a place that’s more socio-economically depressed than almost anywhere else in California, they have managed to build and maintain two palatial, successful co-ops complete with community kitchens and classes, school outreach, a cornucopia of local foods from the entire bioregion and a formidable membership count?

And how is it that our co-op, Chico Natural Foods, is still, after 25 years, located in the same dreary little building? Being the first-class busybody that I am, I went straight to the source and asked self-described “co-op nerds” Liza Tedesco and Janae Lloyd just what the deal is.


Liza Tedesco has worked at the co-op for 11 years in a variety of positions, and has been General Manager for 4 years, including 1 year as an interim manager. Janae Lloyd is the Membership & Marketing Manager. They were both eager to speak to all of my questions and to address head-on the issues and conceptions about the co-op’s image and direction.



In looking at all your sister co-ops and the expansions that they’ve been able to undergo, why isn’t Chico Natural Foods expanding as well?


Liza: Each co-op has its own history and its own story independent to every other co-op. They’re servicing the community on a very independent level, unlike a Whole Foods that has a corporate office. It services the needs of the community on a very local level. However there is more of a risk running a business independently because if there are issues, they are contained to that operation.



From 2001-2006 we had significant financial issues. We had an accounting error that essentially projected a $100,000 annual net income, but in truth, and through no nefarious origins, we actually had a $100,000 deficit. We had to take out a loan and our distributor covered the cost of goods so we could keep food on the shelves. We had to go into a period of recovery. So, we were already dealing with old equipment, old everything, and then we went through a severe belt tightening period. We weren’t able to re-invest in the store and bring it up to a more current layout and get new equipment. But now, since 2006 we’ve had excellent sales growth, the past 3 years we’ve had a healthy balance sheet and now we can start reinvesting in our store.



Did the economic crash contribute to your financial woes?


Liza: We did certainly feel a hit to our operations in the economic downturn but because the co-op represents a different business model, the community really changed their priorities. Packaged foods and peripheral items weren’t as much of a priority, but bulk foods and fresh produce really saw an increase. We were able to be responsive to our membership during that time.



I moved back from the coast and the only thing I really miss is the co-op, but the customer service there was salty on a good day. The poor customer service at Chico Natural Foods has also been cited as a reason for people not coming in to shop. How do you feel about that?


Liza: Most co-ops have been trying to work on the perception that it’s a club and that you have to really know a lot about food to shop here. And I can understand that, there’s a lot of words and ideas that are very complex and maybe somebody who’s transitioning from a WinCo will walk in here, and it’s a very non-traditional model, even the layout, and it just doesn’t feel like a regular grocery store. So I can understand the intimidation factor. So part of our goal is to really increase the accessibility factor. I would really like this co-op to be accessible to everybody regardless of their income, all of the qualifiers. So we’ve been really working on our customer service model here, and across the nation that’s a conversation that every co-op is having. Making sure that our customer service is not salty and that it is not unfriendly and that we are attentive and that we’re here to educate in a non-pedantic way, but a really engaging sort of way.



Janae: And I think that those comments are also very, kind of, historical comments, and for us it’s been interesting to watch the changes. Take Yelp for example, you can see where some of the comments say things like, “They’re very snobby” but then you can see it progress to comments like, “I didn’t shop there for three years, I came back in and I couldn’t believe it, it’s not the same store.” People have commented that they can feel that the culture has shifted. We’re devastated when people have a bad run-in at the co-op.



It’s also got a reputation for being dirty, and not in the good way.


Liza: Yes, dirty. That was definitely a part of the worn-down element of not being financially soluble. We’ve really put a lot of focus on this. We shut down once a year and schedule an all-star clean.


Janae: We have a janitorial service that comes in and cleans every night, but things like the floor? Yeah, we need a new floor. But we also rent this building; it’s not our floor. And that’s part of our whole remodel process, taking those visual things and making them look better.


Liza: We can show you dirtier co-ops! *laughter*



Any scoop about what might be coming? The North Coast Co-Op has some unique community services, like public cooking classes for low-income families, what kind of community services might be in the works?


Liza: Our primary challenge is space. We have a 5-year lease with a 3-year option to renew. We try as much as we can to offer education, whether it is through classes or through visiting schools. We visit Hooker Oak once a month to teach classes with the kids. And March through October we teach cooking classes once a month at the Galley.



So, you’re planning on staying in this building? I’d heard you might be moving.


Liza: We had to examine the market and determine what the potentials were there. Moving is very very very costly. Even if you find something you can move into but you have to make modifications to. So it seemed to prudent to take steps towards a larger vision of being more of an expanded model in the community but start with right here, right now. We looked at moving opportunities, but the most responsible step was to stay here and sign a short-term lease and make some improvements. Improve our equipment and services; increase offerings that we know people are asking for.



Janae: And staying in this space doesn’t mean that there won’t be visual significant changes. Because the way the store is set up right now, we’re not at our maximum capacity for what we can have in here. We have old fixtures, old faulty freezers and energy efficient equipment.



Liza: Consider a really really old house that needs to be fixed, we had to prioritize what we could afford to fix over a short period of time. This floor for example, we can’t take the floor with us, it stays with the building. So no, we won’t be getting a new floor.



Now you’re at 3000 members, how do you go about getting new members?


Janae: Well, I think that our outreach naturally draws people in, we go to a lot of different community events, we’re tabling, we’re there with our blender bike, and providing prizes. A good example is next week, our sustainability coordinator will be leading a workshop at the butte sustainability convergence and that gets people interested in what it means to be a co-op. And a lot of people will come in because they’re looking for healthier food and then a cashier will ask them if they have an owner number and they’ll wonder what that means. It’s a natural process of curiosity and people wanting to be involved.



Liza: I think that Janae has been at the front, really telling our story and showing our work with local farms and that people really want to be a part of this organization. It’s completely risk-free, our bylaws state that if you decide you don’t want to be a member-owner anymore, all of your equity shares will be returned to you.



And now you’ve got a plan to offer dividends? Cha-ching!


Liza: That was the next thing that we started working on with our Board of Directors last year. Looking at a way that we can be even more democratically owned and operate, through the payment of patronage dividends, that’s been a really fun process for us to go through. We’ve seen on overwhelmingly positive response to this, which speaks to the value of member-ownership.



Janae: It’s the co-op and its owner’s responsibility to elect people to the board of directors, who they trust, who they admire, who they think can run our store. If the membership fails to do that, it’s the co-op that is going to see the effects of the decisions that the ownership makes. Our ownership is amazing. Liza has to pilot all the crazy business parts of this, but our Board of Directors are really the ones that bring the desire of the ownership to us and we make it happen.



So am I a lazy sod for not participating more?


Liza: I don’t want people to feel guilty about their level of engagement; we all engage in things that we feel value in, in very different ways. There are people that just shopping here, that’s their level of engagement. And then there’s folks who want to be on the Board of Directors, and that’s their level of engagement. There are many opportunities to engage and all of them are valuable. And in the past, the challenges were that the delineation between governance and operation were really mired. It’s really important that we stay in our roles, defining our vision and having a trusting respectful relationship with each other.

Personal, rant: So what’s up with the kale chips from Pennsylvania? Can’t we find kale chips from a more local source?


Janae: We used to sell local kale chips but then that company went out of business.

Liza: So then you go to the next level and see what’s available to us and who can distribute. The flow-chart behind that question is so complex!



Janae: It gets very complicated, local vs. organic. If it’s local and organic, perfect. But our owners dictate those priorities, maybe the owners are demanding kale chips at 5 dollars, but local kale chips would be 10 dollars.



Liza: It could be a matter of shipping and delivery. If you have multiple small deliveries from the Bay Area versus one large container being shipped into Sacramento from the East Coast and distributed, where’s the carbon footprint greater? One big shipment, or multiple deliveries?



It’s hard not sounding like a total dick by asking these types of kale chip questions and putting an employee on the spot.


Liza: Well, Janae has garnered this great locally hand-crafted comment box, and you can ask any question you want and get a detailed response with accurate information. Don’t be afraid to come in and ask questions, genuinely we are so excited to be here and to communicate with people. We really want to be the friendliest store in town. We’re nerdily excited to share that we are total co-op grocery dorks and we’re excited to talk about it! It’s just not serviceable to exist as the unfriendly dirty little grocery store and we’ve been working very hard to change that.



In Conclusion:


I contacted David Lippman, the General Manager of the North Coast Co-Op, with locations in both Eureka and Arcata, to ask him some questions about how they managed to have such a thriving, successful cooperative. David explained that he believed the success of their co-op was enormously dependent upon the original vision set when the co-op was established, and the subsequent execution of that vision over the years. The North Coast Cooperative has between 13,000 & 14,000 members, which clearly sets them apart from our co-op which only has 3,000 members. With membership shares of $25 per member, per year, we’re clearly not rolling in that kind of essential cheddar on an annual basis.  Imagine if Chico had a 14,000-member co-op? 

But, it isn’t just about generating funds through membership, it’s also about ongoing operational profits and having the sales to support growth. And as far as the co-op building in Eureka goes, David says, “Quite frankly, we’re still growing into it. But fortunately we have the Arcata store to help support that transition.” I asked David how we might grow our co-op into something that might be a cornerstone of our community and he replied, “Well, it’s really a chicken and egg problem. If the community really wants a bigger co-op, then the community needs to get active. And it’s not the size of the community that matters. If the current co-op members are happy with the store as it is, it’s not the job of the co-op management to change. The mission of the co-op is to meet the needs of (its) members.”

Our co-op belongs to us. The potential impact a co-op can have in our community depends on membership numbers and participation. Imagine having a co-op that offers classes 3 or 4 times a week on everything from making your own baby food, to cooking with commodities? Or what about a co-op that provides every school in Chico with monthly nutrition education, in partnership with local farmers? Or belonging to a co-op who supports agriculture by purchasing agricultural easements on local farmlands in support of both their mission and the local ag economy? Many of these programs are currently being implemented at co-ops throughout the state. 

With dramatically increased local support, all of these programs and more, along with locally produced farm-fresh foods, could become a reality for our community.  We’re looking at you, Chico.



Readers interested in supporting Chico Natural Foods,
please check out their location at 818 Main St,
or see their website:
http://www.chiconatural.com/


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Sara makes the words happen.