by Rose Paul, Board President
I am excited to report that on April 6, the Board signed the purchase agreement for our Co-op to acquire Plainfield Hardware and General Store. Getting to this point has been a months-long effort of negotiations, grant writing, and shopping for a loan, and we have a lot of work ahead of us. But first, a word about the current status of our Co-op.
What’s up with the store right now?
I’m sure you’ve noticed that the shelves are understocked. This is a belt-tightening measure to get us through the very lean winter months. We have fallen in arrears with many vendors, so we are slowing the purchase of new inventory until we can build up our available cash and pay vendor bills. While financial projections done last summer predicted that our Co-op couldn’t last over the long term in its present location, this downturn is happening faster than anyone thought. High inflation over the past year seems to have compelled shoppers to search for lower prices on groceries, hurting our sales.
Low sales aren’t the only problem though. We have consistently missed our target profit margin on goods sold. To address this problem, the Co-op Board has hired Management Consultant James Morrell to re-train staff to ensure that every step in the process of selling goods is aimed at meeting our margin goals. The Board is funding James’ work privately, not with Co-op funds.
We are currently recruiting for a Store Manager and for a Maintenance Coordinator. The job descriptions are on the Co-op’s website, go to plainfieldcoop.com/careers. The new Store Manager will receive job coaching for success from consultant James Morrell. I want to thank our hard-working staff who have been stretching their job duties to keep our store running, and a special shout out to Anji Domino for her staff leadership. This is also a first opportunity to say thanks to Chris Thompson of Owl Hill Farm, who is the Co-op’s long time Maintenance Coordinator. Chris has been quietly, skillfully keeping our elderly building and its physical plant in good working order for years. Thank you, Chris, for your dedication to this vital piece of Co-op operations, and we’ll look for your fine organic produce at the Co-op and the Plainfield Farmers Market!
As fresh produce season ramps up, we hope that shoppers return to spend more of their food dollars on the Co-op’s locally sourced, low-food-miles produce, such as Blackbird Organics’ fresh spinach and Rinny Austin’s microgreens. Your money spent at the Co-op supports over 125 local farms and food producers, keeping your shopping dollars circulating locally. Fun fact: at last count, 50% of the Co-op’s goods came from local producers!
Relocation project update
Back to the future of the Co-op’s relocation. There is a very strong, positive financial forecast for the Co-op when we acquire and move to Plainfield Hardware and General Store. We’ll have double the grocery space compared to the current building, and we’ll still sell hardware, pet food, farm and garden supplies, and we’ll operate the grab-and-go deli and the seasonal greenhouse. We’ll be able to blend the customer base of both stores and we’re projected to double our grocery sales alone in the first year of operation at the new store. We will be able to buy more produce from local farms and offer a wider variety of groceries, at less cost, due to better volume pricing.
The financial projections for the Co-op’s future in the Plainfield Hardware location indicate strong positive cash flow with steadily increasing cash reserves, even as we pay the debt service on our loans. The Board truly believes this is the only path to keeping our Co-op vital and serving our community, and members last August agreed with a strong majority voting for the move.
We have signed a purchase agreement with Gaye and Rich Christiansen to purchase Plainfield Hardware. The closing date for the purchase of Plainfield Hardware is July 17. The Co-op will take some time to move our operations, so there will be a period of transition.
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Project finances
The total cost of the relocation project is $2.2 million. This includes the purchase price for the Real Estate, Equipment and Business. We are buying not just the building and land, but the contents of the building and indeed, Plainfield Hardware as a business. A real estate appraisal (paid for privately) was done to validate the cost of the real estate. The Co-op is purchasing a “turn-key” operation, allowing us to purchase the Hardware Store on July 17 and keep it open for business the next day. The Hardware Store’s trained staff wish to continue working there, a huge asset for the Co-op. The Christiansens are agreeing to provide coaching and advice for a period of time after the sale. Their experience will be invaluable while staff of both former stores adjust to the new store.
The Co-op will be purchasing all the existing inventory of the Hardware Store. The existing inventory in the store will be tallied by a third party over two days just before our closing date of July 17. The actual value of the inventory will be used to adjust the overall purchase price at the time of closing.
In addition to these tangible assets, there are transition and operating costs included in the overall project cost. These are a variety of things needed to make the transition successful. The total project cost includes paying off our existing line of credit with the Cooperative Fund of the Northeast so that we start fresh with one consolidated loan. It includes the cost of some new equipment, particularly two new produce display coolers. There is a loan origination fee, and extra cash to pay off any outstanding Co-op vendor invoices and to provide initial working capital in our new location.
There is funding for legal fees and various permit fees (examples: several state permits needed to sell liquor, operate the deli and the greenhouse). There is funding for management consulting support to ensure our new, blended staff team gets off to a good start. There is also a Year 1 expanded Marketing/Promotions budget, and the cost of one additional staffer. Finally, this includes the cost of cleaning and making the former Co-op building ready for its next occupancy.
This project will be paid for by a combination of loans (mostly), grants and donations. The sellers are providing a small proportion of the financing. The Co-op has applied for a $1.4 million business loan from the Cooperative Fund of the Northeast, the lender with whom we’ve had a line of credit for years. CFNE understands co-ops and is more flexible than traditional banks. We will know on April 12 whether we’ve been approved for our loan, and what conditions might be placed on the loan agreement.
Community Fundraising Campaign
One of those conditions is already known: the Co-op has to raise some funds locally, a mix of loans and donations. Anyone can make a loan to the Co-op, you don’t have to be a member, but you do have to be a Vermont resident. Our goal is to raise at least $300,000 from the local community by July 1, and a total of $570,000 by December 1. However, our lender might require that all $570,000 is raised before closing, which would delay the closing date. Donations will be managed by a third-party nonprofit so that donors can realize a tax break.
The Board is working with local fundraising consultant Emily Boedecker (funded by a grant from the Vermont Housing and Conservation Board) and assisted by Co-op member Andy Robinson, a national fundraising consultant who happens to live in Plainfield and is generously donating his time.
We are almost finished developing a fundraising packet to share with individual donors/lenders. This packet provides specific information about the relocation project and about making loans and gifts to the Co-op. These materials will be available on request to interested individuals.
In the near future, the Board and volunteers will be making calls to community members to schedule a time to visit and discuss the opportunity to help the Co-op succeed in this campaign. If you’d like to have a confidential conversation with a Board member, please contact us at board@plainfieldcoop.com If you can help us make connections to other community members or have ideas for innovative funding sources, we’d love to hear from you.
What about 153 Main Street?
The Board would like to convene community conversations about the future use of the Co-op building at 153 Main Street. Stay tuned for an announcement as we work out the details. We have time to work out a transition plan for the existing Co-op building, and community conversations will be important in shaping what happens. If you would like to help the Board in this planning, please let us know at board@plainfieldcoop.com
It is an exciting time for our Co-op as we begin the next 50 years of serving our members and our community. Transitions can be hard, but together, we can make this work!