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Hyde Park Co-op enters period of increased challenge with closure of 47th store Jan. 2005 Presented by Hyde Park-Kenwood Community Conference and its website hydepark.org. The Conference monitors and as appropriate stimulates thought and or action on developments that can affect neighborhood well being and quality of life. Join the Conference! |
Continue to more recent material with the main Co-op page, from mid-2006
Community News, Business Climate, Economic Development and Policy. Tracking Community Trends
"It's not simple enough to say that redevelopment didn't proceed at the pace that was originally anticipated. That's true, but that's not all that happened." Ald. Toni Preckwinkle. (To what she said happened.)
A brief history of the Hyde Park Co-Op, from perspective of early 2008 Chicago Weekly News, January 24, 2008. By Juan-Pablo Velez The Life and Times of the Co-op Market: A storied institution comes to an end Birth The Hyde park Co-Operative Society was founded in the midst of the Great Depression, November or December of 1932, by the Shank Family, who lived on 57th Street on the second story of a bookstore, the same building that currently houses the Hyde Park Bank. It was originally a buying club, a strategy against the tough times, where members pooled their resources in order to buy in bulk from wholesalers and save money. When it became clear that the scheme was failing, the small group approached Chicago economics professor an eventual [U.S.] senator Paul H. Douglas for advice. He suggested they open a store. Mr. Shank was hired as its manager, and Mr. Leon H. Despres handled the legal birth of the store as a non-profit organization. Life Despres, a former alderman who is now [99] and has been involved with the Co-Op for the entire duration of its seventy-five-year history, remembers these earliest days: "One of the earliest developments came when we found out you could buy meat by the Grade. We began buying Grade A and greatly improve our diet and savings. We just didn't know before then." When the small store started to falter, Douglas took the initiative to hire a new manage, one Walker Sandbach, a committed co-oper and pacifist who would become a principal motivating force in the institution's development for decades to come. "The modest store went along for years.. it was getting along pretty well and we loved it." The stoke relocated from Cable Court, a small street between Harper and Lake Park that no longer exists, to 57th Street, taking over a former grocery space. The new location was "spic and span" and became an established store in the neighborhood. The years unfolded. On the written page, the life of an institution feels reduced to a skeletal chronology, but throughout these years the place was filled with the bustle of people making their lives and discussing the flow of events. In the early '50s, [just before] the time of bulldozed jazz bars and urban renewal, the Co-Op took over an old icehouse on Harper between the and 56th street. Icehouses used to store ice in the winter and sell it by wagon in the summer. They engaged an architect to redesign the place and the ribbon was cut in the spring of 1954. "The icehouse opening was, from our standpoint, sensational It was so well designed and so deep and so attractive and so crowded with buyers that we felt the Co-Op had reached an in important point," remarks Despres. Around [1959] the 55th Street shopping center was completed as part of the University's first urban renewal plan. They approached all the major chains of the time with the enticement of becoming Hyde Park's premier grocer, but the only tenant they could find was Walgreen's. In desperation the University eventually realized th Co-Op could take it over; the Co-Op recognized the same fact, and the move was made. When the Co-Op's current, now former, location opened forty-nine years ago, it was actually the largest supermarket in the city. In the following decades the store's sales climbed steadily at it became increasingly embedded in the life of the neighborhood, playing host and witness to so many chance meting and organized events that it gained the centrality and status of an institution. Nobel prize winners, politicians, students, and community members, low-income or not, shopped side by side. Since urban renewal didn't included a community center, t he Co0Op became the informal meeting place for half a century of community organizations, assisting them with storage, food, or volunteers. In the old days, it featured an in-store babysitter, a play script library, nutrition services and an educational program. Even in its last decade the Co-Op still ran several programs and events, including a shut in delivery service for people who couldn't do their own shopping. Illinois Link and WIC food stamps, purchasable food coupons for t he homeless to avoid panhandling, and an annual book sale and Christmas tree sale. It's unclear how many of these will continue under the new grocer. Lastly, there was the ever-divisive 'co-op' aspect of the enterprise. Co-operatives are businesses owned and controlled by te people who use their services, with the ideal of letting the member-consumer advance his interests and desires in the decision-making process and of letting the whole community manage its own food supply. For a grocery store this largely means individual can push for new products be stocked, that they get dividends at the end of a profiting year, and that they have a say in big decisions. While this approach worked relatively well for a number of decades, participation and voter turnout both dwindled during the Co-Op's final troubled decade. critics and cynics claimed this indicated that the co-operative model, as well as the shop, had outlived their their times. Proponents still felt it to be a significant and necessary attempt to unify workers, shareholders, and managers of all races into a community. Death The end really started with the Co-Op's expansion to its (former) 47th Street location. In 2000, the 47th St. commercial lot was developed with the intention of housing a grocery store. Fearing the potential completion, and expecting a development spurt for the surrounding area, a faction on the Co-Op's board pushed for an expansion, but this involved getting its main supplier, Certified Grocers, to adopt the store's lease and sublease it to the Co-Op. This was met with substantial opposition from some of the members in the form of vocal arguments, a lawsuit, and the election of a slate of anti-expansionists (including two former aldermen) to the Board that attempted (and failed) to persuade the expansionist bloc from moving forward. No one can say some of the captains didn't see the iceberg looming. The board went ahead and fatally tied the Co-Op to an outrageously asymmetrical twenty-five year lease with no escape clause and weighty annual rent of $1 million. These stringent terms placed the business in the vulnerable position of needing all its locations to turn a profit consistently for the next twenty-five years to prevent it form an easy slide into snowballing debt. And slide they did, after the 47th Street store failed to make a profit for five years straight. In 2006 the store was shuttered, and since no replacement was found, it was gutted beyond use while its annual rent continued to drag down the enterprise. (Certified seemed perfectly happy to bled its fellow co-operative, knowing now that the site was unprofitable but legally guaranteed a handsome inflow from the Co-Op while on indefinite life support on the University's dime, or until its dying breath.) The lease and the general mismanagement took their toll: last year, the Co-Op was consistently four, eventually ten months behind in paying the University, its 55th St. landlord, and 30-60 days behind in paying its suppliers. Despite efforts to increase profits and close these gaps, the Co-Op found itself $3.3-3.9 million in the hole to its various creditors, suppliers, and landlords while making $1 million a year (or less, it remains unclear) solely from the remaining 55th St. store and losing $1 million on 47th St's rent alone. Its insufficient profit margin meant the hole was growing deeper by the month, only to be further eroded by compounding interest [and a few disasters]. The situation was not sustainable, and the store was therefore financially insolvent. Only the University's leniency was keeping food on the shelves and paychecks in the mail. The force of these numbers, once released and publicized, helped spread the awareness that something had to give. For many this something had to be the Co-Op, and many, especially students, were glad. By all accounts, the Co-Op had been decaying: its food quality was poor, the service getting poorer, and the financial pressures had driven prices up while forcing it to shed many of its community programs and functions. It glory days had ended in the 80's, and now, for many, what was left seemed destined to end as well, on account of its own mismanagement. By last November, the numbers and the mounting pressure had pushed the board to make a decision. They announced to the Co-Op's members that there would be an advisory vote on the fate of the store, one they were not bound to follow, and they provided two options. Under Option A, proposed by the U of C, th Co-Op would close, Certified would cancel the lease for a single payment of $1 mil, and th University would forgive $1 mil in back rent as well as assume the rest (~2 mil) of the Co-Op's debts. This would allow the Co-Op to die with pride, evading a humiliating and time-consuming liquidation process that would leave the community without food for several months. It would also ensure a quick and painless transition, as the 55th st. location would be immediately taken over by one of two grocers the university had been in talks with. Employees would lose their job, with back pay and vacation compensation as well as the opportunity for re-hire, and members would lose their shares. Option B involved filing for Chapter 11 Bankruptcy, which would allow the Co-Op to reorganize and she the 47th Street lease. This was dependent on 1) getting a bankruptcy loan to pay their amassed debt 2) Certified agreeing to have th lease bought out for $2.2 million 3) fining $400k to pay for going into bankruptcy. A lot of contingencies and an even bigger resulting debt of $5 million, but th Co-Op would then be free to plug on, ideals and all, with the hopes of generating enough profit to eventually climb out it deepened, though reconfigured hole. Proponents claimed this was feasible in 5 years; skeptics doubted their optimistic profit-predictions and management capacity, or simply longed for a change in the sub-par status quo. At this juncture we should pause, step back, and consider the constellation of actors, all of whom were active in the unfolding of these events by especially in the vote itself. On the closure side, you had the University, particularly Hank Webber and his office of community relations, 4th Ward alderman Toni Preckwinkle, Hungry4Change, an organization formed solely for the election, the Chicago Maroon, and Hyde Park Progress, the most prominent and self-styled of a handful of blogs that cover HydePark and its development. On the other, the Hyde Park Herald; the everGreen, the Co-Op's newsletter; and Save The Co-Op (www.savethecoop.com) an ad hoc organization formed in reaction to Hungry4Change. In the middle was the board, split in its support, and the wider pool of members being tugged at from all sides and no doubt tugging at each other. Generally, the spectrum of opinion was weighted with the younger and university-affiliated preferring a, with the opposite demographic for b. These sides were surprisingly conscious of themselves and of their opponents, and reveal a lot about the current fault lines in Hyde Park politics, especially over issues of development. The ensuing information war raged in meetings, mailboxes, bulletin boards, and on the internet. Various interpretations of the situation, including of the relative responsibility of the involved parties, were pushed around, along with varying assessments of the merits and possibilities of each option. There was intense cross-analysis of arguments, actions, and strategies, and elements of each side accused th other of selectively framing eh Co-Op's circumstances or of outright distorting facts. The Herald was accused of yellow journalism, blatant spin, and obstructionism, while the everGreen itself claimed that Hungry4Change was part of an elaborate and well-funded University campaign of misinformation, including PR consultants, full page ads in the Maroon, a website, glossy pamphlets, mass mailings, and a phone campaign. In some readings the University was a gentrifying monolith, in others a generous landlord with the larger community's interests at heart. Conspiracy theories abounded and charges of corruption and collusion between the University and the alderman were aired a board meetings. Option B fell through because the bank wasn't wiling to risk giving the Co-Op the necessary bankruptcy loan. The option was changed to getting a regular commercial loan for the same amount, and pushing forward without going through bankruptcy procedure, which would've required the assent of th University, and most improbable of all, Certified's willing acceptance of a reduced sum of $1 million for the lease. Most voters probably weren't even aware of the switch. The vote helped settle things. Option A - 3,200; Option B - 2,049. 61 percent to 39 percent. All parties accepted the legitimacy of the vote. In the end, democracy killed the democratic institution. Funeral Last Sunday [January 20, 2008] the Co-Op went out in style with a New Orleans-style jazz funeral. The aisles were barren save for the few idle cans pushed together for the funeral-goers to peck at. The band and the crowd (which was mostly older) came together in the derelict produce section, now a linoleum ghost of its former green self. Speech-givers gave speeches between bright rhythmic numbers outlining the Co-Op's trajectory and accomplishments, underlining the sentiment that something unrecoverable was being lost, and trying to create a sense of closure. "The purpose of our meeting is to console each other," Mr. Despres declared as he looked out into the assembled crowd. "No chain store no matter how attractive in the beginning can possibly do for the comunity...what we did for ourselves." The mood was a mix of nostalgia and celebration. There didn't seem to many embittered feelings, at least overtly, though a woman passed out fliers confirming the existence of some final holdouts, a contingent of the Save the Co-Op group which was presently reviewing the legality of the University's actions and plotting some last counterattack. At one point when the assembly called out the things they had like best about the old store, it was clear that this was huge body of shared experiences being voiced in common for the last time. The band them lead the procession through the pregnant aisles and out into the freezing afternoon. On the way out: Wooo-eee it's been an exciting day." "You think so?" "Yeah...bittersweet." [Ed. Among the most notable of remarks at the "funeral" were recitations of innovations and firsts by the Co-op-- from posting price per weight in the aisles to thumb off the aisles to daycare to recycling.] Top |
Hyde Park Herald, January 19, 2005. By Jeremy Adragna
The Hyde Park Cooperative Society closed the doors of its 47th Street Co-op Markets store last Saturday, two weeks ahead of schedule. As patrons shopped at the store over the weekend seeking close-out deals many found long lines.
Board members made the decision to close the store at 1300 E. 47th St. last October to cut down major losses the three-store chain suffered beginning after the store opened in 1999. The Co-op also announced late last year that they had enlisted the help of a real estate agent to install a new tenant in the two-story, 42,000-square-foot store. Laurie Goodfriend of suburban Glencoe-based Goodfriend & Associates told the Herald Monday she has not yet signed a lease with a tenant. Earlier Goodfriend indicated she has looked to fill the space with a big box retail store or a locally-grown business. "We're working on some things," Goodfriend said. "We haven't signed anyone but we've had some offers."
The store was built to anchor the Lake Point Plaza shopping center and to help revitalize the North Kenwood neighborhood, which has been booming with new housing construction in recent years. But since opening it has done little but drag Co-op Markets $6 million into debt.
Many Saturday shoppers visited the 47th Street store seeing deals publicized in the Herald. An advertisement offered 50 percent off selected merchandise before the store closed Saturday night.
The economic impact of the store's closing has not yet been measured. Nearly 100 union employees worked at the 47th co-op. General Manager carl Waggoner confirmed the number, saying that half of those will go to work at t he other two stores and the other half will be laid off. "I'm saddened by it," Waggoner said. "The closing went as expected and now we're going to get back to basics. I'm going to do anything it takes to make it [the Co-op] successful."
LaDonna Appleby, 46, has worked as a cashier at the 47th Street store for five years. She says she has not yet heard whether she will be laid off but added that she is not worried about her job. "No, I'm not worried," Appleby said. "I have confidence. I just don't feel like I'll lose my job. I just take it day by day."
Last May, Co-op's 353 union employees made concessions when hammering out a new contract in order to help save the chain in the face of declining sales. But nonetheless Co-op board members confirmed in October that a number of jobs will be lost. In the midst of the closing some employees have complained that they are in the dark about which employees will stay and which will be laid off.
"Employees will be informed of their employment status within the next two weeks," Waggoner wrote in the January issue of the Evergreen. "As soon as a definite date is set, signs will be posted."
Co-op board Vice President Hope Mueller says the decision to close was not easy a she and other board members weighed the impact. "We tried to save it but we spent too much time waiting for time to change the outcome," Mueller said. "It was a well intentioned venture for the community but the only responsible thing to do was to protect the shareholders. We're not in a position to lose $1 million a year."
the Co-op has also attempted to draw North Kenwood residents into its two remaining Hyde Park stores through advertisements. Officials said second-floor businesses will remain open.
Co-op tightens belt after close Hyde Park Herald, Feb. 2, 2005. By Jeremy Adragna Co-op Markets moved closer to vacating its 47th Street store, which closed Jan. 15 after five years. Co-op board members announced they will invest in much-needed new cash registers at 55th Street and move those from 47h to 53rd Street. Since the closing, the Co-op has sought to rework its employee pool by laying off 50 people and re-shuffling its management from all three stores. The management shuffle, and specifically the demotion of 53rd Street manager Ernie Griffen, prompted a group of his supporters to attend the Jan. 24 Hyde Park Cooperative Society board meeting. "I've given the Co-op 100 percent," Griffen told the board. "To have someone tell me that I'm being demoted and $15,000 taken off my salary. I'm upset." Griffen had repeatedly been asked by Co-op management to move from the 53rd Street store to the 55th Street store and take a pay cut. But Co-op General Manager Carl Wagoner at the meeting told Griffen's supporters he would be asked to take the new job but without a pay cut. "We have been digging ourselves out of a hole that was monumental. I didn't cause it but I'm saddled with getting us out of it," Waggoner said. "Is there decisions that are going to be decisions that people don't like? You bet. But you know what? I'm here to try to save the Co-op ...I'm trying to make a difference here... We need to prepare ourselves to do battle against competition. It's coming. No question about it." In other news, Wagoner said the installation of a new information system for the Co-op is on the horizon. The system would connect both the 53rd and 55th Street stores' inventories and would likely cost $225,000. the decision to do so could take place within two or three months. By the end of the week, the co-op's 47th Street store should be completely vacated and its inventory distributed to the other two stores, Waggoner said. Until a new tenant is found to fill the 42,000-square-foot store, the board estimates the Co-op must pay nearly $100,000 per month. |
The following article from the February 11 Maroon presents in its body additional insights and background, including views from Ald. Preckwinkle. As to whether all the factors cited as contributing to failure were really relevant, at least during all the five years, will have to be judged by the reader. The article after gives the view that the Co-op markets are not that good and thereby lost customer base to aggressive competitors.
Bleeding money, 47th street Co-Op shuts doors. Grocery shopping becomes more inconvenient for area students. By Kat Glass
After five years in business, the 47th Street Co-Op closed on January 15, forcing some students to walk a little farther for their organic veggies. The Co-Op bard decided last October to shut down the store after struggling sales and hefty operating costs got the best of the flagging business. Carl Waggoner, general manager of th Co-Op Markets, was vague about the exact monetary losses, but the Hyde Park Herald reported that the 47th Street store gave the business a going-away present: $6 million of debt.
Marketing studies conducted before the store was opened in 1999 signaled that the Kenwood community would enjoy growth in two or three years. "Needless to say, that didn't happen," Waggoner said. Toni Preckwinkle, the fourth ward alderman, had a different view of the closing. "It's not simple enough to say that redevelopment didn't proceed at the pace that was originally anticipated, she said. "That's true, but that's not all that happened."
She cited three main problems with the 47th Street Co-op: construction work on Lake Shore Drive, financial difficulties, and competition from other grocery stores. The Lake Shore Drive construction discouraged customers and prevented the store from taking advantage of its proximity to the busy thoroughfare.
Preckwinkle said that the store suffered a debt during its construction that was greater than the management had originally anticipated. [Also,] "The design of the store made it very labor-intensive," she said. "Frankly, they fired the previous manager," Preckwinkle said. "I think the store wasn't well managed in the beginning."
The 47th Street Co-Op finally succumbed to strong competition from Jewel, Dominic's, and Save-A-Lot that attracted Hyde Park and South Kenwood customers elsewhere. Without the economic boom that the store was counting on and with a handful of other problems to boot, the business was doomed. "Frankly, the sales weren't what we needed to be at to be self-sustainable," Waggoner said. Waggoner said the rent at the 47th Street branch "was terrible," but he refrained from giving specifics. [see articles below]. "The operating costs were significantly higher than [the 55th Street store]," he said.
Waggoner said that the management is leasing the space, but he again refused to comment specifically. According to Ernie Griffin, the 53rd Store manager, the 47th Street store closing forced 50 employees to be laid off or reduced from full-time to part-time status. Griffin was one of those affected. Though the board's vote to demote him was overturned, he will soon start work as a customer trainer. Forty-six other employees were relocated to either the [55th] or 53rd Street stores. Rick Teliszczak, the 55th Street store manager, refused to confirm or deny the numbers.
All is not lost for the Co-op Markets, however. With the relatively new supplies from the 47th Street store, the management is "hoping to modernize both the 55th and 53rd Street stores," Waggoner said. Waggoner was unsure of the buildings' exact ages , but said that "they've been around for a while." (The Co-Op moved to the 55th Street location in 1959.) the 55th Street branch has not been renovated in nine years. Some of the closed store's newer refrigerators, display cases, and cash registers will be transferred to the 53rd and 55th street stores as part of this modernization process.
Waggoner was quick to insist that the Co-Op company is just as healthy as ever. "I think it's important to note that we plan on reaching out to University students and faculty," he said. Ready-made entrees, organic food, and natural products are all on the agenda for University-centered items, though no time frame for their installment has been outlined.
A bright red, green, and purple sign hanging outside the 55th Street store announced, "Welcome 47th street Shoppers." Some of those shoppers might well be University students, seeking and alternative to the closed store. Though there are no resident houses close to 47th Street, some apartment-dwelling students were hurt by the closing.
Susannah Ribstein, a fourth-year in the College who lives on 49th Street and Woodlawn Avenue, admitted that she [has been inconvenienced by the 47th closure.] Benjamin Gage, a third-year in the College who lives in a carriage house on 59th and Woodlawn Avenue, shopped at the 47th Street store once a week. He also preferred the 47th street store to the 55th Street store. ..."there were fewer people shopping there and therefore smaller lines, etc.," he said. "Furthermore, the high ceilings gave it a better feeling inside."
Griffin, the 53rd Street store manage, is making an effort to cater to the store's heavier customer traffic. Along with eight other displaced 47th Street employees, Griffin hire the 47th Street store chef to duplicate some of the closed store's more popular items. Business has been up at the store, but not quite as high as Griffin hoped it would eventually reach. He did not have exact figures, but he estimated an increase of 15 percent last week and 10 percent this week. "I anticipate about a 25 percent increase once everything settles down," he said. He emphasized the importance of University students, who make up about 25 to 30 percent of his clients. "I'm just hoping that the Co-op can make the necessary adjustments to please the 47th Street customers and th Chicago students, staff an administration," he said.
Ending our long affair with the Co-Op.
Adam Weissmann in the February 11 2005 Chicago Maroon argues that the community and the Co-op itself could gain from competition, now well provided by Jewels and Dominicks outside the neighborhood (especially at State and Roosevelt), where specials and 'preferred cards' allow one to buy "fresher foods at lower prices" at all hours in stores much bigger (or smaller) than the 55th Co-Op. The local monopoly, he says, especially hurts undergraduate students due to their lesser transportation options.
"It is commendable that the creators of the Co-Op strove to uphold workers rights and involved themselves in community activism, but, since its founding during the Great Depression, the needs of Hyde Parkers have changed. Allowing competition will not only make it easier for residents to make more choices about what they buy, but it will force the Co-Op to reevaluate its practices and help improve services. Nobody want the Co-Op to disappear entirely, but it is apparent that many in Hyde Park have grown tired of its monopoly and have a desire to see the emergence of a healthy and mutually beneficial competition. It is high time that the neighborhood's movers-and-shakers end their long, sordid affair with the Co-Op and give residents the opportunity to seek a new love with wonderful foods somewhere else."
In March Maryal Stone Dale called on those supporting the Co-op including allegedly
the University to end it's love affair with the Co-op and pave the way for a
Jewel or Dominicks. Dan S. Wang replied in April that it's not so simple and
the Co-op has value:
Co-op Markets serves a demanding clientele
Hyde Park Herald, April 6, 2005
...I don't think it is unrealistic to say that the Co-op serves one of the most diverse and demanding clientele in the entire country. Given the spectrum of eating habits, standards of service, and exacting demands for non-food products (floral, wine, etc) belonging to Co-op shoppers, it is bound to disappoint. But it is also a place for surprising food discoveries, a management obligated to listen, and social mixing unlike any other. While the shortcomings of the Co-op should not be minimized, neither should the Co-op's uniquely positive attributes be ignored.
While I agree with some of the criticisms I hear of the Co-op, I find it incredible that anyone honestly believes the neighborhood would be better served by an impersonal, formulaic chain.... Move to just about any other neighborhood or suburb and you'll have your Dominick's or Jewel. See how responsive to idiosyncratic needs those stores are. I say please let there be at least one place in Chicago that is served exclusively by locally owned supermarkets and grocers.
To the editor: For more than five years, the 47th Street Co-op has stood as one of the symbols of the revitalization of North Kenwood. we are proud of the role we have played in this community and find it disheartening and frustrating to have to close the store. But declining sales and high fixed costs have meant that we lose money at 47th Street every month. And sales have fallen significantly since we announced that the store would close. We no longer afford to absorb those losses, and so the 47th Street Co-op will close permanently on Saturday, January 15.
We are particularly gratified that the 47th Street Co-op generated so many new Co-op members. All of us at the Co-op thank shoppers for their patronage and invite them to shop at our other stores, the Co-op on 55th Street and the Co-op on 53rd Street, where we will try to offer the same goods and services that made 47th Street such a pleasant place to shop.
We are still working out many details related to the store closing. For example, we hope to bring much of the equipment in 47th street to our other stores, but his has not yet been settled. And we have arranged to keep the second floor of the 47th Street building open so that shoppers can still patronize the businesses on the mezzanine level, including the Credit Union and Mailing Center, both of which will remain open for the time being.
I have met with representatives of the Mayor's Office of Workforce Development, the Illinois Department of Commerce and Economic Opportunity, the Chicago Workforce Center at Mid-South, and the Illinois AFL-CIO to ensure that employees who are affected by the closing will have the support, as well as assistance finding a new job.
I thank everyone who supported the 47th Street Co-op and hope that I will see you at our other stores.
Dear fellow Hyde Park Cooperative Society member:
It is with deep sadness that I sit to write you this letter. It is no secret that we have struggled mightily from a financial point of view for the past five years. This is obvious from the fact that we have been unable to provide our membership with a dividend for more than four years. The Board has been forced to spend many hours wrestling with decisions to maintain the financial viability of the Hyde Park Cooperative Society. In other words, we have been trying to figure out what it wail take for us to survive as an organization.
It has now become apparent that we must close the 47th Street store. While it is a beautiful store and it offers a tremendous opportunity to expand...the cooperative movement to a new neighborhood, it has been a tremendous financial drain on the organization. It is clear that the terms of the lease for that store will prevent that store from becoming profitable any time in the immediate future. To continue to operate the 47th Street store would jeopardize the financial viability of the Society as a whole. It is for this reason, to allow the Hyde Park Cooperative Society to operate and have the 55th Street store; the Board has made the painful decision to close the 47th Street store. This was not an easy decision, for is it one any of us are happy about. However, the survival of the organization as a whole is more important than any one of stores.
It is our belief that closure of this store, even though it probably means another grocer will move into that location to compete with the other Co-op stores, we will focus our efforts on modernizing the remaining store and providing our members with the level of service they deserve. We hope you will continue to support the organization as we move forward.
We understand this decision will result in the loss of valued employees; members of our community will lose their jobs at a time when jobs are hard to come by. This will happen through no fault of their own, and yet the effect will be just as devastating. To the extent possible, we will offer some positions to valued employees at our other stores. We will involve an outsource agency to help people find positions elsewhere, but at the end of the day there will be people who will suffer unavoidably as a result of this move. We regret this. We hope the community will continue to support us as we attempt to move forward and remain a valuable member of the Hyde Park-Kenwood neighborhood.
The 47th Street store will close at the end of January of 2005. I will keep you informed as ore specific information becomes available.
Respectfully yours,
Claudia M. Fegan
President of the Board of
the Hyde Park Cooperative Society
Hyde Park Herald, January 19, 2005
..... My store of choice during these short journeys is the Co-op on 47th Street... Along the way, I knew that this would be one of my last walks, since the store is closing.
...I went to the meat counter to see what was on sale. On the counter were leaflets informing customers the store was closing, and reality sank in. ... I thanked the clerk for my order, but wondering about the impact of the store closing on her, I asked how she was doing. Her professional and courteous demeanor quickly turned into reflection and contemplation. She was resigned that this would going to happen, then began to speak with pride about how before she got this job, she had not really been doing anything.... What impressed me with her is that she was neither angry nor envious, but spoke with a sadness that comes with the impending loss of a job. ....
During my walk home, I thought about many of the reasons why the store was located there. While the primary reason was to operate profitably in its market, another was to also serve as an anchor for a developing neighborhood. Much was made of this, and in particular, how jobs would be provided for those who needed them most. Much of 47gth Street was still under- and undeveloped when the Co-op announced its intentions. For many in the surrounding community, this store was to be a door of opportunity, allowing many of the area's unemployed to develop and build skills, and in no small part, break the seemingly non-ending cycles of poverty and hopelessness. Each of our purchases provided the currency for some to earn their dignity and self worth. By the time you read this, the doors of the store will not only have closed, but that opportunity for some may have closed with it.
I imagine that closing the store was a very difficult decision, and the board of directors ought to be commended for their decision, as well as the one to open it. They were courageous moves, and I am sure much thought went into both processes. They probably wrestled with the issue of the employees in particular... I hope that one thing that won't be missed is what that store offered to many, the opportunity for some to continue climbing through life's twists and turns. This should not be their final walk to work.
Hyde Park Herald coverage, October 27, 2004. by Jeremy Adragna
Hyde Park's co-op Markets announced Monday night that its 47th Street store in North Kenwood will close at the end of January 2005, after officials cited a loss of nearly $10 million over the course of five years in business there.
In the past two months alone, the store has lost nearly $300,000. Board member made the decision two weeks ago and will inform all 26,000 members by the end of the week. Officials said the Co-op will not, however, file for bankruptcy.
"It's sad. These are economically hostile times," Co-op board president Claudia Fegan said. "The grocery business is a business that operates on very small margins.. It's just not going to be feasible to operate there under the current arrangement."
The announcement at the Co-op's monthly board meeting left 15 members there silent. Fegan said no employees had been told of the closing, yet several employees of the 47th Street store attended to ask questions about it.
Fegan said she is unable to speculate the number of employees who will lose their jobs but said the Co-op will help to find new jobs for affected employees.
The expansion into North Kenwood in 1999 was meant to help develop the burgeoning neighborhood north of Hyde Park and the Co-op by tapping into the growing population there.
"It was a loss of a longtime investment in the community," said board member Scott Marriott. "I think what we hope to gain from it is to hopefully make [the 55th Street store] a continued operation and to bring it back to it really shines. It's such a great part of the community and if we lose that...then we lose the potential of changing the community."
The price tag for the two-story Co-op, built to anchor the retail strip mall near 47th Street and Lake Park Avenue called Lake Park Pointe, rose to well above its stated budget of $7.5 million. the Co-op does not own the building but rather sub-leases from the Hodgkins-based wholesaler Certified Grocers.
The store has been mired in financial problems since opening and has dragged the three store chain into debt. In 2000, the Co-op owed over $6 million. "It was inevitable under the financial conditions," said board member George Cooley. "If we don't do it we collapse. We have a chance of not collapsing if we do it. It's the only thing we really could do rationally."
The announcement is unexpected though. Co-op General Manager Carl Waggoner as recently as September was optimistic of a turnaround for the store. He said large changes in the produce department preceding a mid-September board meeting and a lock of competition in the area could help turn the store around. He declined to comment after the announcement.
Hyde Park Herald, November 3, 2004. by Jeremy Adragna
As Co-op board members finalize the closing of their 47th Street store, 1300 E. 47th St., several employees anticipate the moments they will be laid off as a result. Officials said he store will close by the end of January, 2005.
At the Co-op's monthly board meeting Oct. 24, officials said they would close the store after losing nearly $10 million over the course of five years. The financial strain was punctuated bye a $294,000 reported loss at the store in the previous two months.... [Employee Jarvis McCraig said] "I think that it should have grown as the neighborhood grew and it's growing now. They should have started a smaller store and let it grow with the neighborhood."
Co-op board Treasurer Sandy Wilson said the store will close because of low sales. According to Co-op reports , the 47th Street store has sold half as much groceries in the past two months, but it is twice the size of the 55th store. "There's nobody making any money anywhere," Wilson said."If the money doesn't come in the front door, then the debts don't get paid. And people just aren't coming in the door."
Co-op Markets owes nearly $900,000 to its Hodgkins-based supplier and 47th Street store lease-guarantor Certified Grocers. Wilson says the Co-op will now attempt to pay down its debt using income from steady sales at their 55th Street store, which consistently turns a profit. Certified spokesman John Gruver could not be reached for comment.
Co-op Markets opened the 50,000-square-foot store in North Kenwood in 1999 after a bitter battle with some members who sought to stymie expansion. Co-op Markets eventually expanded from one to three stores after acquiring their 53rd Street store from Hyde Parker Bill Gerstein in 1997 and opening the 47th Street store in late 1999.
The store was meant to anchor the Lake Park Pointe shopping center near the corner of 47th Street and Lake Park Avenue but after one year in business it was starting to lose money from a lack of sales. ...
Hyde Park Co-op, November 10, 2004. by Jeremy Adragna
Some say the Hyde Park Cooperative Society moved prematurely in announcing it will close its 47th Street store by the end of January 2005 while others say closure was inevitable. South Side development leaders discussed the possible closing last week following a meeting of the North Kenwood/Oakland Conservation Community Council.
"This is really unfortunate for the North Kenwood Oakland community," said Ald. Toni Preckwinkle (4th). "The presence of the Co-op in that shopping center was not only an anchor for the shopping center but it sent a message that revitalization was well underway and that we'd have the same high quality retailers we have in communities to the south." [more further on]
NK/O CCC officials did not formally discuss the closing during a meeting held on Nov. 4. The committee, which vets nearly all construction within a specific area of the North Kenwood and Oakland neighborhoods, approved a plan for the Lake Park Pointe strip mall in 1997 which included Co-op Markets.
The Hyde Park Cooperative Society announced in late October it would close the store to stem losses throughout the co-op. In its five years in business, officials say the store lost $10 million because of low sales. The 47th street Co-op is currently losing $150,000 per month according to reports.
"People are disappointed," said NK/O CCC Board President Shirley Newsome. "They felt that with a little more time the Co-op may have been able to sustain itself... I know what needs to happen to keep it open and it's not impossible." Newsome says the Co-op should attempt to renegotiate it lease with Certified Grocers as well as update some of the groceries it sells. If they are really sincere about doing that then the Co-op can be saved," Newsome said. "It would eventually become a store that we could all be proud of as we were initially when it opened.
The Lake Park Pointe shopping center was a pipe dream for Preckwinkle and others for several years. A South Side non-profit development organization called the Fund for Community Redevelopment and Revitalization was the only group to submit an application to the city Planning Department and later won the right to purchase and build on the city-owned land there. In 1997, the "Fund" received nearly $2 million in government backing and other private funding to build to the shopping center.
Some Co-op member attempted to stop the construction in what resulted in a protracted legal battle. The 47th Street Co-op eventually opened n 1999 but began losing money almost immediately, according to Herald archives.
Preckwinkle said last week she would work with Certified Grocers, which leases the 50,000 square-foot retail space to the Co-op, to install a new tenant as soon as possible. She said she did not feel the Co-op could keep the store open any longer. "I understand that the Co-op was losing a lot of money at the store and it just couldn't survive that kind of financial drain," Preckwinkle said. "We're just hopeful that the time the space will be dark will be relatively short so we can get some other retail in there pretty quickly."
Hyde Park Herald, November 24, 2004. by Jeremy Adragna
Co-op Markets set a new course Sunday following the announcement that they will close a five-year-old store in North Kenwood at the end of January 2005. Officials say they will now focus on boosting services at two remaining stores in Hyde Park.
Nearly 100 Cooperative Society members met Sunday at the Hyde Neighborhood Club where they discussed the announcement. Board members say they plan to stem $100,000-per-month losses by closing the failing store at 1300 E. 47th St. But Co-op General Manager Carl Waggoner says the chain is making several other adjustments like the addition of catering services and the closing of a failing video store at the 55th Street store which could contribute to a turnaround.
"This is the first day of a new era, a chance for us to operate without the severe drain on our resources," Waggoner said. "We have learned from our mistakes and we will transform the remaining stores."
To boot, two teams of University of Chicago students have begun a research project to transform the Co-op's marketing and operational woes. The group will reportedly announce their findings to the board some time in January, 2005.
Officials announced the Co-op's financial state is intact as the 53rd Street store has broke even in the past year, and dome losses at the 47th Street store have been off-set by consistent gains at the 55th Street store.
"The 47th Street store was not as successful as we would have liked," Board President Claudia Fegan told members. "It was not the time when a Co-op could have flourished in that location."
Board members now say aside from low sales at the store, which was responsible for $4.5 million in losses, 11th-hour negotiations with landowner Lake Park LLC and leaseholder Certified Grocers of Hodgkins, Ill. to rework a long term lease (which ends in 2023) have also been fruitless. As a result, the Co-op will now be responsible for its rent payments and utility bills even after the 47th Street store closes. Officials said Monday they are working closely with a realtor to install a new tenant quickly.
"The lease at 47th Street is very expensive," Fegan said. "They were not willing to make adjustments. We requested some relief but they weren't forthcoming.
Some members on hand asked board members to clarify the problems that led to the store's closing. Some on the board dodged the question saying they were no present when the lease was signed and could not account for the problem.
One exception, current Co-op board-member George Cooley sat on the board when the decision was made to build at the Lake Pointe Place shopping center. "At the time the studies done on feasibility looked promising," Cooley told members, "and it just didn't work out."
The Co-op commissioned two studies, once in 1995 and again in 1997, which were used to qualify the expansion to members. Cooley headed a party of board members in 1997 known as the Unity Slate which pushed for expansion as other members known as the Committee for a Democratic Co-op attempted to block the new construction. Committee for Democratic Co-op, headed by one-time board member Richard Orlikoff, said the lease was too risky and pushed for a review.
Former 5th Ward alderman Leon Despres, spoke at this year's meeting telling members he had nothing to do with the lease signing in 1998. The Herald reported in 1996 that Despres, while serving as Co-op attorney, blocked Co-op member and expansion opponent David Mingay from calling for a review of the lease at the Co-op's annual meeting that year. He and others feared expansion was too risky. Cooley's Unity Slate eventually won out and the ease was signed complete with a condition that gives Certified Grocers a lien over all of Co-op's property, including the 55th Street store. [Note, the board's election was overturned in court challenge and a new election held.]
Jon Will presided over the Co-op board in 1997 during expansion. He says in 1997 the board did not look into the problems the lease could bring when it was signed, or the slow growth of development in North Kenwood. "We might have over-estimated the rate the area was growing as well," Will said this week. "We were interested in protecting our market."
The Herald reported in 1996 that the developers of Lake Pointe Place were looking to install any grocery chain that would sign on. Co-op Markets and the former Mr. G's grocery store were the only two stores with serious intentions on building in the retail strip.
As some looked back at the problems the co-op has undergone, others attempted to bring attention to other ongoing problems. Nell Whitman, elected earlier this year to the Co-op's nominating committee, criticized Co-op Markets, saying it is not affordable or well run. Despite her's and others's criticisms during the meeting, 50-year member Charles Staples said, "Co-op, in many ways, is still quite competitive."
Hyde Park Herald, December 8, 2004. By Jeremy Adragna
Who will fill the 42,000 square-foot storefront at the Lake Pointe Place shopping center, 1300 E. 47th St., soon to be vacated by Co-op Markets remains unclear this week.
The Co-op has commissioned Glencoe-based realtor Laurie Goodfriend to find a replacement tenant for the large-scale space. But as of last Friday none was found. Goodfriend says she is looking for any retailer to fill out the majority of the space which anchors the shopping center near the corner of 47th Street and Lake Park Avenue.
"The thrust is to find a big box retailer" Goodfriend said. "Someone who would use a substantial portion of the space." Goodfriend is not ruling out any type of business to install there including another grocery chain or even a start-up business.
The sooner she finds a tenant to take over Co-op's lease, the sooner t he Co-op can begin to take a breath of relief. Officials at Co-op Markets earlier reported they will still be responsible for some portion of rent payments until another business moves in, which is why they hired Goodfriend.
As for lease-owner and Co-op supplier Certified Grocers of Hodgkins, Ill., President Ken Koester refused to speak to the Herald last week. A spokesman said, "Mr. Koester has nothing to comment on." ...Only months before the decision to close was announced, Certified had reportedly taken on a large-scale effort to re-merchandise the store's produce department. Some insiders have speculated Certified could take over the store until a tenant is found...
Hyde Park Herald, January 5, 2004. By Brian Wellner. (parts omitted due to inaccuracies)
With its 47th Store to be shut down this month, Co-op Markets is reporting a 7-9 percent drop in sales compared to this time last year. Officials still remain optimistic over their decision in October to close the North Kenwood strode after reporting average $100,000-per-month losses over the last five years there.
General Manager Carl Waggoner reported to the Cooperative Society board Dec. 29 that overall sales have dropped 4 to 5 percent since the late October announcement. "Sales have been clearly affected by the news," he said in his monthly report, adding that between 1,500 and 2,000 customers have been lost over the last two months. The holidays gave Co-op Markets a small boost and Waggoner reported that the 55th Street flagship store continues to perform better than budget predictions.
To prepare for the 47th Street's closing,...Co-op Markets is discounting much [of the small part] of its merchandise that will not relocate to the other Co-op stores, officials said. Waggoner said the catering program that was launched at 47th Street has already moved into the other stores.
[As for releasing 47th} board treasurer Sandy Wilson was not hopeful. "I think it is safe to say there is moderate interest in the space," he said. ...Co-op Markets owes nearly $90,000 to [47th leaseholder] Certified. On Dec. 29 the board voted to sell "excess" shares of Certified Grocers stock, purchased two years ago, which will free up more than $200,000. "We need some bargaining room with [Certified] over the rent issue," Wilson said.
Due to the large number of layoffs expected of the least senior union members, figures that are not being disclosed at this time, the average hourly labor rate the Co-op will pay will increase 30 cents, Waggoner said.
To cut costs, however, board member Joel Gearring suggested a 10 percent pay cut to senior staff. "We need hard answers to a tough situation," he said. "The rank and file always get kicked in the butt." It was a suggestion that fell on deaf ears.
Little was discussed of customer retention after 47th Street closes. Rick Teliszczak, 55th Street store manager, said he would like to capture at least 50 percent of customers into his store.... Cooperative Society member Marion Batey warned that One Stop grocery store at 43rd Street and Lake Park AVenue, also stocked by Certified Grocers, and other neighborhood stores pose even tougher competition now. She advised the board reach out to the Co-op's 26,000 members for help in retaining customers.
Hyde Park Herald. March 16, 2005. By Jeremy Adragna
At a late February meeting of the Hyde Park Cooperative Society General Manager Carl Waggoner announced that plans are underway to close the video stores in the basement of the 55th street store in place of an expanded credit union.
...By the end of March the credit union be under construction there and its former space could be used s a smaller video store for members only. "I would like to keep a small library for members to rent and borrow," Waggoner wrote in the report. "[But} an opportunity may exist to offer some other services that would be exclusive for members." Another option ....would be to move the Co-op's membership desk to the basement space.
Waggoner also reported that negotiations with "a specific prospective tenant" to fill the recently closed 47th Streets store are underway....
Elected to the Board for 3 year terms:
Elected as First Alternate-
Scott Marriott- 300
Elected as Second Alternate- Wendy Allen-Ayres 267
Elected to the Nominating Committee
Interviewed by the Herald, several candidates say the first priority is to find a tenant for the 47th store. Marriott thinks the board needs to be more aggressive on that and is too adverse to risk at a time when there is nothing for the Co-op but risk. (In a letter to the Herald he says the board needs financial and business skills and must not only level finances but maximize the appeal of the remaining stores.) Lowenthal said getting that store leased so there can be positive cash flow is necessary to making everything else possible and wants to make financial statements easier to understand. Steward says we have to understand the growing competition as increasingly affluent residents have increasing alternative options and demands. Withrow said we have to increase membership by making the 55th store a more attractive place to shop.
TopIn May 2005, Noah Berlatsky
blames part of the Co-op's problems on the Hyde Park Herald being soft in it
coverage--the Evergreen tells more.
Wendy Allen Ayres says that
Co-op is starved for stock, a problem it could fix if customers raised sales
by 7-8 percent or it could quickly lease the 47th store. She said in June that
the Co-op management continues longstanding failure to supply the board basic
information and the board does not become as actively involved as it could.
Leon Despres, whose firm has provided legal services for the Board since its founding in 1932, speaks out Note: In analyses above it is said that Despres' firm was involved in blocking maneuvers that would have blocked the acquisition or the board that backed it. (Former 5th Ward Alderman Leon Despres is a founding and continuing member of the Conference.)
Leon Despres weighs in on Co-op 47th St. "calamity"
Hyde Park Herald, May 18, 2005. By Jeremy Adragna
Former 5th Ward Ald. Leon Despres had some harsh words for the Hyde Park Cooperative Society in a recent interview with the Herald, a topic he left untouched in his recently released book, "Challenging the Daley Machine: A Chicago Alderman's Memoir."
Despres said that he has watched the Co-op change... But as for its current economic state, Despres called the Co-op "a calamity." His firm has provided legal service since the Co-op began operating in 1932, but lately has been critical of the society's expansion into North Kenwood seven years ago. "The turning point came when the co-op over-expanded," Despres said. "Forty-seventh Street became a drain. I didn't handle the 47th Street acquisition and I have forgotten who did. They needed someone who was an expert in big store leases. I didn't raise my voice against the expansion, I just saw it with apprehension. But I hoped it would work out. It didn't work out."
"It's just a calamity," Despres said, "We just hope we can pull out."
Cache 2. Introduction and material mid 2005 to mid 2006
Introduction. The Hyde Park Co-op has been a presence and symbol in the neighborhood since the late 1930s and a major economic presence (some say monopoly) for several decades, especially since it built a major store in the Hyde Park Shopping Center in the early 1960s during Urban Renewal. In recent times, it expanded by buying Mr. G's Finer Foods in Kimbark Plaza and by building a new store at 47th near Lake Park, a developing residential area. Neither has broken even. The expansion, other leasing arrangements, and loans under less than favorable circumstances created a heavy burden the Co-op has had difficulties managing. Managerial difficulties, high prices, perceived staff quality and attitude problems and poor economic times, competition from megastores only a few minutes away by car, as well as dependence upon powerful suppliers and creditors, compounded the problems. Ultimately, the store was both too large for the size of its customer base and unable to get enough customers through the door and buying enough to cover the huge losses in the hundreds of thousands a month. In autumn, 2004 the board decided to shutter the 47th store. Some members feel the board was less than open with all involved- or as knowledgeable as it should have been. It apparently did not know the monthly continued lease hit would be as high as $150,000 with the store shut.
"We have been digging ourselves out of a hole that was monumental. We need to prepare ourselves to do battle against competition. It's coming. No question about it."
- Carl Waggoner, General Manager, Hyde Park Cooperative Society/Co-op MarketsThere will be loss of investment by Hyde Parkers, loss of jobs, and other disruption for many even if owner Certified lets the space quickly (doubtless to be run downscaled and with concessions denied the Co-op). In fact it may stay empty--Certified does not let to non Certified retail and only Treasure Island fits that bill, and the store is inherently the wrong size for the various players and the store's market.
A bridge between Hyde Park-Kenwood and North Kenwood-Oakland may be irretrievably lost--both a meeting-place bridge and that of a joint-community membership-based organization and community investor/contributor. The Herald called for a concerted effort to find an alternative, which would have to include more working cap9ital, relief by creditors and suppliers, and a smaller store. Top
The bottom line in general
In 1999 the Co-op in effect took out a loan that with cumulative interest over some 30 years amounts to about $60 million according to figures in an early 2005 Evergreen. (The original principal must have been over $30 million in order to be called a lease in Illinois). The Co-op will owe an unbreakable $1.8+ million a year for the next 23 years for the 47th Store. It seems unlikely that if the store is rented the Co-op can negotiate more than a fraction of that $2 million from the subtenant. Thus, the Co-op as a whole is vulnerable to bankruptcy at some time over the next few years. Board and management feel that it is crucial to get the 47th store leased out by August--in June progress was reported with letters of intent signed. In the first 10 months of the current fiscal year the coop lost $1.4 million and ended the 2004-05 year 3.3 million in the red. 47th lost 1.9m (including the $140,000 monthly rent still owed), 43rd lost 117,000, and 55th made $758,000.
2005 loss was $3.3 million, due mostly to failure to lease the 47th space. Cash flow is expected to get worse in May through August 2006. A needed $1.6 million loan cannot be obtained until 47th has been leased.
From the May 2005 board meeting: New cash registers approved despite fiscal crunch
The Co-op will install new cash registers with an inventory computes system despite being short of cash. (This move was deferred in April.) Members figure the money alone spent to train cashiers at 53rd will later pay off in not needing upgrade patches rented monthly to keep the old registers going.
Treasurer Sandy Wilson said matters will get "dramatically worse" in 2-3 months if the 47th store isn't rented, according to the Herald. No one would say bankruptcy is around the corner.
At the August 22 2005 board meeting, some board members wanted to talk about bankruptcy, which was considered in a forecast document prepared by management. But the board wanted to push the matter aside. The Co-op ended its fiscal year $2.4 million in the red with the vacant 47th St. store costing 3.2 million. Bankruptcy was said to actually have benefits. The repercussion at the September meeting is that alternate Wendy Allen Ayres was suspended from the Board for two months.
There appeared to be disagreement between the Co-op treasurer and Jo Reizner of landlord UC Real Estate as to whether the UC would take over the 53rd store and/or seek a new tenant for it and whether the Co-op was formally seeking such a takeover. In September speculation that lease of the major portion will be Marshall's. Unknown: will Marshall's (or) pay the Co-op enough to fill the deep monthly gap caused by the unbreakable lease to Certified for 47th?
In September the Board strengthened or revived committees, under leadership of James Withrow. Operations and Finance were divided. Operations will review sales figures and problems. Finance will scrutinize the monthly results and review office procedures and internal control. Marketing was charged to review pricing and set a strategy. Member Empowerment will review rewards work to increase membership. Committees will meet in the former video rental and are open to the public. We are securing correct schedules. A different committee meets each Monday evening of the month- Membership Empowerment, Marketing, Operations, and Finance.
Withrow said "The committee structure will serve to inform our members and empower our members; We're hopeful that this can open up a more transparent way we do things as well as a grassroots effort to bubble up information and ideas to the board."
Committee schedule:
Marketing- first Mondays. (working on mission, subcommittee oversees Evergreen)
Empowerment- second Mondays. (assessing membership issues, fees and discounts, recruitment)
Finance- third Mondays? (prioritized spending plan, "wise spending" focus)Late October- more committee shuffling, reports
At the Operations Committee. Department sales figures and trends are being scrutinized. Members suggestions are being tabulated and studied. Relations with vendors were said to be improved, but a lot of shelves were still empty due to cash and tough terms. New front-end computers are about to be installed at 534d.
The Empowerment Committee wants to reconnect with members, concentrating on best fees and discounts, on outreach and on voice.
At the Board, James Withrow is working on a "Vision Outline" that would divide the board into 4 working groups according to interests and experience--Marketing, Operations, Empowerment, and Finance. These would also bring in Co-op members. Empowerment would become the voice of the members. One of Marketing's duties is oversight of the Evergreen and draft and review th Vision outline (mission statement?) Sandy Wilson will chair Operations and Mike Lowenthal Finance. Withrow hopes the "letter writers" can be persuaded to step forward and work on the committees, while the committees in turn exercise oversight with the General Manager. He also said, "The news has sounded much worse than it is. There are problems. But we have a lot of things we can be more open about." He noted the Co-op started as a buying club in 1932 but has become a community institution.
Herald Report on April 2005 meeting: greatly differing indicators, prognoses and strategies; holdback by board on capital spending and a request to skip rent due to red ink.
[The Board voted in April to no longer publish minutes until approved by the Board at the next meeting.......
and to bar publication of customer complaints in the Evergreen! Instead, they will be prominently displayed at the stores, according to a clarification approved at the May meeting.]Hyde Park Herald, April 4, 2005. By Jeremy Adragna
The Hyde Park Cooperative Society is holding back on plans to update its computer systems after facing what board treasurer Sandy Wilson described as "a sea of red ink." Co-op markets has seen an upswing from the same period last year of 7.5 percent between its two stores, and board members seemed optimistic.
Despite the boost, the Cooperative Society Board decided to hold back plans made in January to revamp its front end and inventory computer systems until a lease is signed for at least 50 percent of the 47th Street store, w which has been vacant for nearly four months. Each month the 42,00 square-foot store remains vacant, it cost the Co-op $150,000 in rent and fees. With no renter insight, the board projects over $500,000 will be lost by October.
Board member indicated they may attempt to reclassify the 47th Street store as vacant to save on taxes and in May plan to auction off some unused equipment. "We would be better off to see if we could get some money," said Board Member Sue Freehling. "If we're not going to lease out the 47th Street store--and there doesn't seem to be any certainty of that--we need to increase the sales at 55th Street."
Wilson quizzed General Manager Carl Waggoner on what he intended to do about the need for cash. Waggoner reported he had requested the University of Chicago through its subsidiary Lakefront Properties LLC to allow the Co-op to skip rent payments to help the chain get back on its feet. "What I basically asked them for was an abatement for a period of time to help us with the installation of equipment from 47th street and also the front end changes at both stores," Waggoner said.
U. of C. Director of Real Estate Jo Reizner said the talks are in earlier stages. "Whatever they show us we'll look at," she said.
What seemed hot on the minds of board members was the possibility the 47th Street store would be rented and its effect brightening the Co-op's financial future. "We're banking on the 47th Street lease to turn us around," Waggoner said. "Until that time we will continue to struggle."
The board also approved a resolution to no longer publish an account of th monthly board meetings in the Evergreen until approved the following month. The board also voted to eliminate publishing customer complaints in the Evergreen.
Progress reported on the key leasing of 47th--but silence reigned and by April '06 it's in doubt
In mid June 2005 the Co-op signed three letters of intent, seemingly marking movement toward the crucial leasing of the 47th 42,000 sq. ft. store, without which, most believe, nothing else can go forward, and must be done before about October (date cited by Waggoner) if the Society is to avoid a slide that could lead to eventual bankruptcy (not said by Waggoner and if the fact is true the consequences are still in the future). A new twist was that the Co-op may be committed to a build-out renovation for the new 47th tenant. The Co-op is said to be seeking loans. In addition, an arrangement was made with LaSalle Bank so the 47th refrigeration equipment could be retrofitted into the 53rd store (done) and 55th store (in progress). Negotiations continued with the University over possible rent rebate.
In Spring 2006 a shadow was cast by decision of Marshall's parent company to open an A.J. Wright store at 47th and Bishop, maybe making Lake Park too close a location for another store. Also, Wrights generally take about three-fifths the floor space of the 47th Co-op while Marshall's take three-quarters.
Leasing of the 47th space is the responsibility of the Co-op Real Estate Committee, consisting of Treasurer Sandy Wilson and member Michael Lowenthal and Jim Poueymirou.
Some alternative deals are under consideration under real estate agent Laurie Goodfriend.
2005 loss was $3.3 million, due mostly to failure to lease the 47th space. Cash flow is expected to get worse in May through August 2006. A needed $1.6 million loan cannot be obtained until 47th has been leased.
Waggoner wants 53rd store more like Trader Joe's, specialty stores--but other indicators show it will be sold
In May 2006 the Co-op Real Estate Committee was meeting informally with Larry D'Amico of Hyde Park Produce to explore feasibility and conditions of Hyde Park Produce taking over the 53rd store, subject to approval by Kimbark Plaza and the University of Chicago.
Waggoner told the Oct. 20 finance committee meeting that he wants to full service voids in Hyde Park at the 53rd store, according to the Herald. Various changes have already been introduced, such as racks of specialty olives, mustards, vinegars--altogether a 30 percent increase in specialties. He says that people are looking for different foods to try and prepare, and healthier foods. The store will make up for not beating Trader Joe's prices on many items by offering a lot that you can't buy at the latter and look into matching the wine prices.
Two businesses have expressed strong interest in buying out the Co-op lease to the 53rd store and the on October 31 2005 the Co-op gave landlord U of C a letter of permission to negotiate with potential retailers. Jo Reizner of UC Real Estate Operations told the Herald, "We have been waiting for this authorization for a long time. We can move forward now." She has been meeting with Larry D'Amico of Hyde Park Produce (1312 E. 53rd) and an another unnamed retailer about the space. D'Amico seems to have a large popular following. Co-op board president Claudia Fegan said the store has been losing money and having trouble keeping items in stock, and the Co-op needs to concentrate on its core store. However, they will operate the store to the best of their ability until there is a viable offer, Fegan said. More below.
Returning to the topic of the 2nd-preceding paragraph, Co-op supporters keep honing in on the Trader Joe's analogy. Both Hans Morsbach and John Loftus have pointed out winning aspects of Trader Joe's stores that the Co-op should adopt. These include imaginative changing interior, great prices, exceptionally friendly service, seldom long waits, clean and bright aisles, contemporary upbeat environment.
On the other hand, Sidney Sherman had nothing but kudos for the Board after the November 2005 Annual Meeting.
_____________________
Ongoing news
The Co-op board voted in late June to accept the bid offer of Larry D'Amico, Hyde Park Produce to take over the lease of the 53rd Store. The Kimbark Plaza board still has to hear and approve, but is likely to approve, especially with backing from first leaseholder the University of Chicago. Hyde Park Co-op will remodel its tripled space; the Co-op will drop a burden that would amount to $200,000 in loses this year. Still, some employees said the store was coming around; and General Manager Carl Waggoner said really hard work was done to bring the store up, but not enough customers came in and saw it. President Claudia Fegan praised the Co-op real estate committee for its agility in closing the deal, in comments to the Herald. Reductions in staff or management are expected to be minimal.
The October Book Sale will continue, according to May 2006 board vote. Concern on the one side was that the sale drains too much time and resources at a difficult time, and on the other hand that good publicity and community involvement would be replaced by resentment. One quarter of proceeds go to participating groups and the rest to the Co-op.
At the November 2005 annual meeting, Treasurer Sandy Wilson reported the past fiscal year's loss as $3.3 million. GM Carl Waggoner reported the Co-op is in final negotiations on signing a lease for the 47th St. store. "As a result of not having a lease signed, we've worn on the good will of our vendors and neighbors....Our first priority is to pay off our vendors s owe can keep items on the shelves." There will be no dividend and any wanting to cash out will have to wait months. Some members said they want the Co-op to dump the 53rd store. The vote on sustaining the 2-month suspension of Wendy Allen-Ayers was 43 to uphold, 27 to overturn and 44 abstentions.
The Finance Committee was reported by the Herald in early December to be re-evaluating how it will handle Co-op losses through priority spending, as mandated to the committee at the Nov. 28 board meeting. Mike Lowenthal, Sec. and FC Chair, gave paying employees and vendors top billing, then capital expenditure and shareholder redemption. Fifth is other existing debt.
The Board considered at its July 25 meeting reviving committees non-board members can sit on. This is one of several topics for the board retreat in September. The annual picnic and mailed annual statements are cancelled and the Evergreen reduced in efforts to save the on $5-$15,000 costs that are killing the enterprise which ended its fiscal year $1.5 million in the red. It's also seeking a rent cut or rebate from the University.
General Manager Carl Waggoner reported in the Evergreen that sales have been up about 8 1/2 percent over the previous year. A little of this was due to a 5% members discount in July; effects on profitability were not yet clear. The auction of equipment and fixtures from 47th St. will go toe required payments to LaSalle Bank, the installer of new equipment at 55th, and other payables. There have been some equipment and facilities upgrades in the stores, more will have to await improvement in the financial situation. An ongoing problem is reluctance of many suppliers to stock the store. This results in both product outages and lots of time spent on timely payables. New board members helped document financial records for the appeal to the University (landlord) for assistance. Members are asked whether they prefer discounts or a dividend. The annual statement will not be mailed, the annual picnic is cancelled and there will not be a dividend (a report will be in the November Evergreen.) The Suggestion Box has made a partial return.
See 2nd article down on weekly sales per square foot results.
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HPKCC board takes on the Co-op at December 2005 board meeting
The HPKCC board engaged in far-ranging discussion and q and a on the state, condition, and future o the Co-op. A board member who is also on the Co-op Board and one who is a Co-op employee were able to dispel some misconceptions while pointing to steps being taken that can return the Co-op to being a thriving, serving institution that Hyde Parkers are proud of. Among the steps to be expected or possible:
- Signing of a lease for the 47th store early in 2006, a lease that will cover the hundred thousand a month lease and give both credibility and financial leverage with vendors need to fill the shelves and restore customer and member confidence. This will give breathing room to solve the money component of the Co-op's problem. Another help on this front will be resolution of the configuration of the 55th lower level--there are interested parties such as the Credit Union and Post Office, both seeking expansion; and another is should there be a "viable" offer for the the 53rd St. store lease, entering negotiation.
(Did you know, Certified is the vendor for two-thirds of what is sold on Co-op shelves? Did you know that the 55th store is actually profitable, its sales per square foot are above average, and that Co-op labor unit costs are actually somewhat better than the grocer business average?)- Steps are being taken to make the employee's job easier and the customer's experience easier--from a new person in charge of employees to new charge/accounts-in systems and new cash register systems at 53rd.
- Member open and based committees receive, develop and organize new ideas and present them to the board in a way the board is likely to understand and act upon. A different committee meets each Monday evening of the month- Membership Development, Marketing, Operations, and Finance.
In summary, Withrow said, "We have lingering vendor issue. Our financial picture will improve in the next six months" and the 55th store remains very profitable. He hoped more Co-op members will attend the committee meetings.
As of mid December, the new register-computers were not yet up and running at 53rd St. due in part to problems extracting data from the old equipment. The new should be running soon, reducing standing -in- line time as serving to train 55th St. cashiers for when the main store's registers are converted early in 2006. (Their hands were finally forced in August 2006 when a power outage fried the 55th computer scanners--new had arrived as of Labor Day.)
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And just what is the state on the 53rd Street store? Can one depend on what Co-op leaders say?
Despite earlier reports, Deborah Mahoney, Co-op attorney, confirmed in January 2006 to the Chicago Maroon that "The Co-op and UC Real Estate are actively looking to sell the lease for this location, although no purchase price has been agreed upon." The Maroon reported that Mahoney specifically denied that Hyde Park Produce is trying to buy the lease, Mahoney being quoted, "There are no prospective tenants at this time." Indeed, this source has learned quite definitively that as of March 2006 the Co-op board is quite determined to keep the 53rd store and make it the best it can be.
Officials hope that the new cash register/inventory system will be operational soon at 53rd, which is being used to test and train--and in hopes it would boost poor sales there. It should speed checkout lines, improve monitoring of inventory, and avoid problems that compromise customer and store security and privacy.
Meanwhile, weekly store sales at 53rd, according to the Evergreen, are $7.05 rather than the median of $8.40 and top performing stores $9.10 That in the 55th store has a robust $10.02.
Closure of this store would cause significant inconvenience for many in the vicinity.
HP Produce eyes 53rd Street Co-op Express. Herald, Feb. 1, 2006. by Erin Meyer
Providing produce to Hyde Parkers has been a family affair for D'Amico for more than 50 years. But the family-owned Hyde Park Produce has outgrown its small storefront at 1312 E. 53rd St., according to Larry D'Amico. The store owner hopes to buy out the Hyde Park Cooperative Society lease at Co-op Express and move into 1226 E. 53rd St.
"My customers are squeezed in here, " said D'Amico, a third generation Italian-American with two children and a passion for produce. "D'Amico has worked in every level of the fruit and vegetable market, from wholesale to retail. He started running Hyde Park Produce in 1996, three months after a Teamsters Union strike forced him out of work. He was hauling produce to Chicago area grocers at the time. "I love this business," he said. "But Hyde Park has grown a lot since then and we need to grow with the community."
The 10,000 square-foot Co-op Express location is almost three times the size of Hyde Park Produce and would provide the family store with much needed room. The Co-op also has 10 to 12 employees on the clock at the 53rd Street on any given day while D'Amico has only four full-time employees. "Everyone chips in,...boys, cousins...."
Some of D'Amico's patrons are looking forward to a larger version of Hyde Park Produce. "[The store is a] homegrown business," said Hyde Parker T.J. Cohen [It} deserves a chance to serve the community that currently appreciates having him."
The University of Chicago owns the Kimbark Plaza property. Joe Reizner, vice president of real estate operations for U. of C., contacted D'Amico in December to discuss the possibility of moving into the Co-op Express space. Negotiations are still preliminary, according to Reizner. "We need to see a business plan and Larry needs to show us how the store will be viable," she said.
If Reizner and D'Amico reach an agreement, the Kimbark Plaza Board of Directors and the Hyde Park Cooperative Society will have to sign off on the deal.
"For the right price we would have to consider and offer," said Co-op Board President Claudia Fegan. D'Amico said he is fairly confident the deal will go through. "We want to keep the business in Hyde Park," he said. "The community needs it"
May 2006 Co-op hires Whole Foods former chef Sidney Simmons
Simmons is a South Sider who knows Hyde Park and the Co-op since youth and a Kenwood Academy graduate. He said he could not contribute creatively at Whole Foods without going through big-time bureaucracy, a problem he doesn't foresee at the Co-op. This hire seems to be partly a recognition that grab-n-go and other specialty but quick services are growing fast, and partly an effort to counter unflattering comparisons of the Co-op and Whole Foods--and hold onto customers that think they have to go downtown to shop. Simmons plans to introduce restaurant quality foods, new concepts and themed fare such as Asian or barbecue and to rev up education programs.
Patrick Burke in the April 14 2006 said the Co-op only hurts. It is a phony at "organic" foods, sells overpriced non fresh food. The checkout is Paleozoic and it doesn't inform patrons it doesn't take American Express and a number of other credit cards. We would do better with a non-local chain.