The Board of Directors had their regular meeting Monday night, 2/25/06. The tone of the meeting was definitely more cooperative and civil than one month ago. Unfortunately, it appears that the Jaffee Report is never going to see the light of day from this Board. And, it appears that Briar Patch still has essentially adopted a “circle our wagons approach,” and presumes that admitting that there is a crisis over board squabbling and financial issues will cause harm to Briar Patch, rather than adopting a stance that reaching out to the general Briar Patch community and owning their problems and asking for help would be a more positive way to go.
Paul Harten, the Manager, delivered am updated Finance Report, instead of the Finance Manager, Mark Warner. The biggest revelation is that Paul said that there was an error in their previous Finance Report of October/November 2007 when they stated that the net loss for the year was anticipated to be $500,000. At the meeting he stated that the projected operating loss should have read $804,000, and that the actual operating loss for 2007 was between $827,000 and $877,000. One has to wonder why neither the Financial Manager, the General Manager, or any Broad or Finance Committee member did not pick up this error for several months!
Interestingly enough, the capital expenditures were 3.25 Million Dollars in 2007 on a building that Briar Patch does not own, and further has not turned out to be “Green” in terms of utility costs. “The building will be extremely energy efficient....” according to Paul Harten back in October/November of 2006. Yet, now we are told by the Finance Director that, “the utilities and related upkeep costs on the new facility have been almost $10,000 per month higher than estimated.”
While Briar Patch keeps stating that sales need only go up a little more (Paul stated that the break even point for Briar Patch is 1.1Million Dollars of sales per month). Reality is that sales have averaged 1 Million Dollars per month between July 1, 2007 through December 31, 2007. Yet, the losses during that period of time were approximately $482,000. Paul did state that they have cut labor costs by about $1,000 per week, which would be $4,300 a month, or 2/10ths of one percent of their apparent $220,000 a month average in labor costs.
When queried of what the contingency plan of action was in the event that sales do not turn around and that the general economic downturn effects sales, what I saw was a blank look on Paul’s face.
My observation is that BP has a closed system currently. The newsletter is filled with recipes for cooking rather than recipes for change and innovation. Instead of inviting comments and suggestions, the newsletter and public statements are very one-sided, all is ok, these losses were projected, and to voice questions in public, is seen as attacks against the institution. In short, BP is not conducting itself in a democratic manner.
In response, with the help of Anna Haynes, Michael Brackney and Greg Zaller, a website/blog, called friendsofbriarpatch.org, has been set up. Your General Manager and Finance Manager have been expressly invited to correct any misinformation, or get out their point of view. To date neither has availed themselves of that opportunity. Hopefully this website will develop into a forum for free and open discussion of the issues facing BP. Comments will only be monitored for civility, and towards that end, persons posting comments will be asked to sign their names. Exceptions will be made for employees who fear possible retaliation.
Another possible use will be to use it as a forum for persons running for the upcoming election, who can post a “position paper” or “platform,” and then members can post comments to that, pose questions to the candidates, etc.. In short, create a truly democratic, uncensored and open dialogue. And maybe someday, BP’s own website can be transformed into an open forum. I hope for that.
Thursday, February 28, 2008
Tuesday, February 26, 2008
Elk Grove Case Study
FYI: Lessons from the recent failure of a coop in Elk Grove, Sacramento -
http://www.cooperativegrocer.coop/articles/index.php?id=769
http://www.cooperativegrocer.coop/articles/index.php?id=769
Tuesday, February 19, 2008
letter to editor from Ken Odom and Richard Burton
This is a letter to the Union submitted shortly after the Bd meeting which has not been published.
The Board of Directors of Briar Patch held a standing room only, overflow crowd meeting on Monday, January 28th. They went through a dozen or so committee reports, and spent over 4 hours in bickering between the majority on the Board and its two minority members. Their general and finance managers attended and spoke at length. Not one of them mentioned the elephant in the living room. The Briar Patch is hemorrhaging at the rate of $25,000 to $70,000 per month, having lost over $760,000 in the ten months since their move. Neither the Board, nor its managers, has a plan that they discussed publicly.
Clearly the Board is wracked by dissension and an inability to grapple with this crisis, at least at this meeting. The majority is refusing to release to the members (who ultimately pay for everything) a report prepared by an outside consultant, Paul Jaffe, as to the dynamics on the Board, and making suggestions and comments as to what needs to be done to start to heal this dysfunction. The majority's excuse to bar release is that the report contains inaccuracies and some misquotes. There is not a report ever submitted to court, or a newspaper article that would ever see the light of day under that claim. Trust us, the report appears fair, thorough and balanced, and does not paint any Board member as a saint. This coupled with the refusal of the majority of the Board to authorize full access to the financial reports, or a current audit, to the minority Board members, has left many in the community untrusting of this Board. The Board must be willing to look at itself and work to look at what is not working and look to the community for help on fixing the problems. This is what a CO-OP is all about.
There must be a clear picture presented to all Board members, employees, shareholders and the public as to the true financial conditions of Briar Patch. There must be a return to the founding principles of openness and honesty in all of its dealings that have allowed Briar Patch to grow into the organization it is today. Briar Patch has to return to the sound financial and ethical standards upon which it was founded. We cannot allow it to continue to hemorrhage like this.
All avenues must be explored to reduce costs and increase sales. We need to come together with a plan to reduce the deficit that the store is currently running. The Briar Patch Board must work with all parties if the store is to be sustainable.
The Board must seek help from employees, the community, and management to help in that effort to foster team work and put the Briar Patch back on the right path.
There must be immediate action in order to save this unique asset to the community, which began with $500.00 total pledged by five people in 1980. The vision was to make available healthy food at low cost to people in the community who were encouraged to devote volunteer labor to the endeavor in exchange for a 15% discount on the food.
One immediate step that the Board of Briar Patch needs to take is to spread the word to the members that the CO-OP is actively encouraging volunteers.
We feel that the Board needs to call on the Briar Patch community to actively engage in re-examining the founders' goals of providing affordable, healthy food to the community, encouraging volunteers, and be a voice in the community promoting locally grown where possible, and sustainable food, and a place which makes itself a focal point for community.
Richard Burton (265-8888) and Ken Odom (743-3605)
(Richard was a long-time volunteer attorney for Briar Patch, and Ken Odom is a Financial Broker by trade)
The Board of Directors of Briar Patch held a standing room only, overflow crowd meeting on Monday, January 28th. They went through a dozen or so committee reports, and spent over 4 hours in bickering between the majority on the Board and its two minority members. Their general and finance managers attended and spoke at length. Not one of them mentioned the elephant in the living room. The Briar Patch is hemorrhaging at the rate of $25,000 to $70,000 per month, having lost over $760,000 in the ten months since their move. Neither the Board, nor its managers, has a plan that they discussed publicly.
Clearly the Board is wracked by dissension and an inability to grapple with this crisis, at least at this meeting. The majority is refusing to release to the members (who ultimately pay for everything) a report prepared by an outside consultant, Paul Jaffe, as to the dynamics on the Board, and making suggestions and comments as to what needs to be done to start to heal this dysfunction. The majority's excuse to bar release is that the report contains inaccuracies and some misquotes. There is not a report ever submitted to court, or a newspaper article that would ever see the light of day under that claim. Trust us, the report appears fair, thorough and balanced, and does not paint any Board member as a saint. This coupled with the refusal of the majority of the Board to authorize full access to the financial reports, or a current audit, to the minority Board members, has left many in the community untrusting of this Board. The Board must be willing to look at itself and work to look at what is not working and look to the community for help on fixing the problems. This is what a CO-OP is all about.
There must be a clear picture presented to all Board members, employees, shareholders and the public as to the true financial conditions of Briar Patch. There must be a return to the founding principles of openness and honesty in all of its dealings that have allowed Briar Patch to grow into the organization it is today. Briar Patch has to return to the sound financial and ethical standards upon which it was founded. We cannot allow it to continue to hemorrhage like this.
All avenues must be explored to reduce costs and increase sales. We need to come together with a plan to reduce the deficit that the store is currently running. The Briar Patch Board must work with all parties if the store is to be sustainable.
The Board must seek help from employees, the community, and management to help in that effort to foster team work and put the Briar Patch back on the right path.
There must be immediate action in order to save this unique asset to the community, which began with $500.00 total pledged by five people in 1980. The vision was to make available healthy food at low cost to people in the community who were encouraged to devote volunteer labor to the endeavor in exchange for a 15% discount on the food.
One immediate step that the Board of Briar Patch needs to take is to spread the word to the members that the CO-OP is actively encouraging volunteers.
We feel that the Board needs to call on the Briar Patch community to actively engage in re-examining the founders' goals of providing affordable, healthy food to the community, encouraging volunteers, and be a voice in the community promoting locally grown where possible, and sustainable food, and a place which makes itself a focal point for community.
Richard Burton (265-8888) and Ken Odom (743-3605)
(Richard was a long-time volunteer attorney for Briar Patch, and Ken Odom is a Financial Broker by trade)
Monday, February 18, 2008
Briar Patch Finances
(This is the personal opinion of Richard C Burton)
Here's what we know based upon reviewing BP's published records for 2007-08,and interviews with persons knowledgeable with their former finances; BP has lost $850,000+ in 2007, and we are being told by their financial manager that such losses were anticipated ,so don't worry. Yet in their Oct/Nov 07 publication BP projected a loss for the year of $500,000! BP appears to blame the loss on not enough sales, and claims a 2% drop may have been due to negative publicity in the press.They had lost $345,000 in the first 6 months of 2007, so in reality the loss is getting more and can not be attributed to start up costs!
At the Brunswick store, under the tutelage of the then finance manager Warren Zimmerman, they had been able to turn around a situation where they were originally so far behind in bills(aprox $100,000) that Mountain People's Warehouse was insisting on cash, plus $1000 per order.Thanks to a loan from Michael Funk, that was resolved, and over the years BP-Brunswick started earing $100,000 per year, and prior to the move had amassed nearly $1,000,000 in savings! BP now is nearly $4,000,000 in debt, its losing money at the rate of between $25,000-$70,000 per month, and it is clearly no longer significantly cheaper than any other health food store. It has gone from a small,easily accessible grocery store, to a large combination grocery/restaurant store, in a location not handy for many. Many people have noticed how the deli appears to be overstaffed , especially in the evenings, and full time employees now have health, dental, and vision coverage, plus massage and chiropractic! In addition, employees get 15% off regular purchases, and 30% off deli food .
The markup on most food items at the old store was approximately 38%, and the cost of labor was kept to between 21-22%. Their current financial manager claims that the markup has not changed, and from their published financial data the cost of labor is now between 26-28%.(a 25% increase).Given the current high cost of food at BP(which often is as much or more than Calif Organics) its hard to believe that the markup has not changed, or that the buyers are not being very innovative in light of a changed market. At Brunswick, competition in the health food arena was much lighter. Now Raley's and Safeway have their own house brands of organic foods, and SPD too has a good selection of organic foods at competitive prices.
BP has moved away from low-medium cost healthy foods to the higher end-witness steak and ahi tuna being featured at BP recently for $16-$20 per pound! And the deli/restaurant....a notoriously risky business, one which BP knew nothing about, is undoubedly contributing to the financial problems, although BP cleverly doesn't break out the losses by department. It is a high end food bar, with potentially the ability to have losses due to spoilage, etc- and one wonders how they can break even giving employees a 30% discount, unless it is carefully monitored so as to sell off food before it spoils.
Another concern; how can BP be experiencing utility costs of $10,000 more per month than anticipated, when this was built as a "green store". Apparently the heating/air is not functioning properly, some sensors aren't working properly, and apparently BP is not insisting that the original contractor/manufacturer fix the problem, but has instead, disconnected part of the system, and has turned to another contractor. What?! Why the heck would they not insist that the original installer/contractor, or the manufacturer fix the problem right??
As a starting point, BP needs to totally open up their books to their fellow board members, without restriction. Secondly, their finance manage needs to report directly to the Board, and not to their general manager. Thirdly, they immediately need to bring in an outside consultant savvy of running a deli/grocery combo,and give that person walking orders that nothing is sacrosanct, and get beyond their bickering to getting on top of a floundering ship!
My personal opinion,not necessarily that of others. Richard C Burton
Here's what we know based upon reviewing BP's published records for 2007-08,and interviews with persons knowledgeable with their former finances; BP has lost $850,000+ in 2007, and we are being told by their financial manager that such losses were anticipated ,so don't worry. Yet in their Oct/Nov 07 publication BP projected a loss for the year of $500,000! BP appears to blame the loss on not enough sales, and claims a 2% drop may have been due to negative publicity in the press.They had lost $345,000 in the first 6 months of 2007, so in reality the loss is getting more and can not be attributed to start up costs!
At the Brunswick store, under the tutelage of the then finance manager Warren Zimmerman, they had been able to turn around a situation where they were originally so far behind in bills(aprox $100,000) that Mountain People's Warehouse was insisting on cash, plus $1000 per order.Thanks to a loan from Michael Funk, that was resolved, and over the years BP-Brunswick started earing $100,000 per year, and prior to the move had amassed nearly $1,000,000 in savings! BP now is nearly $4,000,000 in debt, its losing money at the rate of between $25,000-$70,000 per month, and it is clearly no longer significantly cheaper than any other health food store. It has gone from a small,easily accessible grocery store, to a large combination grocery/restaurant store, in a location not handy for many. Many people have noticed how the deli appears to be overstaffed , especially in the evenings, and full time employees now have health, dental, and vision coverage, plus massage and chiropractic! In addition, employees get 15% off regular purchases, and 30% off deli food .
The markup on most food items at the old store was approximately 38%, and the cost of labor was kept to between 21-22%. Their current financial manager claims that the markup has not changed, and from their published financial data the cost of labor is now between 26-28%.(a 25% increase).Given the current high cost of food at BP(which often is as much or more than Calif Organics) its hard to believe that the markup has not changed, or that the buyers are not being very innovative in light of a changed market. At Brunswick, competition in the health food arena was much lighter. Now Raley's and Safeway have their own house brands of organic foods, and SPD too has a good selection of organic foods at competitive prices.
BP has moved away from low-medium cost healthy foods to the higher end-witness steak and ahi tuna being featured at BP recently for $16-$20 per pound! And the deli/restaurant....a notoriously risky business, one which BP knew nothing about, is undoubedly contributing to the financial problems, although BP cleverly doesn't break out the losses by department. It is a high end food bar, with potentially the ability to have losses due to spoilage, etc- and one wonders how they can break even giving employees a 30% discount, unless it is carefully monitored so as to sell off food before it spoils.
Another concern; how can BP be experiencing utility costs of $10,000 more per month than anticipated, when this was built as a "green store". Apparently the heating/air is not functioning properly, some sensors aren't working properly, and apparently BP is not insisting that the original contractor/manufacturer fix the problem, but has instead, disconnected part of the system, and has turned to another contractor. What?! Why the heck would they not insist that the original installer/contractor, or the manufacturer fix the problem right??
As a starting point, BP needs to totally open up their books to their fellow board members, without restriction. Secondly, their finance manage needs to report directly to the Board, and not to their general manager. Thirdly, they immediately need to bring in an outside consultant savvy of running a deli/grocery combo,and give that person walking orders that nothing is sacrosanct, and get beyond their bickering to getting on top of a floundering ship!
My personal opinion,not necessarily that of others. Richard C Burton
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