Friday, October 12, 2007

Keystone Co-Op: New Feature!

posted by chicago pop



In preparation for the upcoming annual meeting of the Hyde Park Co-Op this Sunday, we thought it would be appropriate to roll out our latest feature: Keystone Co-Op! Offering you comic relief in the form of occasional reports on just how bad it really, really is. Even some of the Board members can't believe it, and neither will you!

After going round and round in various discussions about the abysmal state of neighborhood grocery shopping, we found ourselves coming up against the same few statements: the Coop earns $1 million a year, the only problem is the dumb quarter-century lease we signed on 47th Street (which costs $90,000 a month); the produce is lame (because the Co-Op's key vendor canceled some produce shipments); the service is less than stellar (a whooooole separate story, folks); and the prices are high (they don't have buying power so they pay more, and charge you more). Opinions as to why all of this is so are many, of course, and passions run high; and we're not even including all the juicy tidbits we've come across.

But what is really going on inside this organization? Well, the truth is, nobody really knows, and the lack of transparency is a point of contention even within the organization. But, with the help of some professional financial analysis of the Co-Op's business performance, from a source we'll call DEEP THROAT, and a stack of the Co-Op's publicly accessible Evergreen newsletters, we're here to help cut through the spin of exactly how this business loses so much money.

Here's just a taste of this season's hit comedy sketches:

  • The buzz from management is that the Co-Op earns $1,000,000 in net income a year. In fact, it's $809,299. More importantly, the Co-Op's cash flow for fiscal 2006 is only $296,000. This is the actual money they have to pay their bills -- which is why they can't -- and it's the figure that analysts look at to assess the health of a business entity. It's harder to manipulate than net income.
  • The Co-Op has 3 or 4 people who are supposed to scan for discrepancies in accounting and receipts. None of them noticed when a senior cashier at the former 53rd St. store was processing refunds of $250 to $350 to herself -- basically emptying the cash register -- each day she worked. The Co-Op has not revealed the total amount embezzled.
  • When the Co-Op installed a new, "state of the art" front-end system in October, 2006, it marked the first time in over 3 years that all 12 of the cash registers were operational in the 55th Street store.
  • Because "the ownership database is so corrupted," Co-Op management and the Board have no idea what percentage of members are active shoppers, and what percentage of shoppers are members.
And, because you should always save the best for last, the following:
  • The "original disks for the accounting software were destroyed during a cleaning operation." Did someone put them in the dishwasher?
So there's our teaser. Stick around. There will be more!

13 comments:

Elizabeth Fama said...

I'm a total noob about accounting, but wouldn't an interesting number be the total revenue, just to get a sense of how many dollars per capita Hyde Parkers are willing to spend at the Co-Op?

For instance, each person in my family ate $2,500 in groceries just from Peapod last year. Granted, we love to cook, and because of food allergies we eat almost every single meal at home.

But let's say that the average Hyde Parker is on a tighter budget than us (and eats at restaurants more often than we do), so that they spent half as much on groceries per capita as we did last year. With 30,000 Hyde Parkers, the total revenue at the Co-Op could conceivably be around $38 million. (Did I do my math right? And is Wikipedia right that there are 30,000 Hyde Parkers?)

If we open up the population to Kenwood and Woodlawn, the potential numbers would be even higher.

chicago pop said...

Total Co-Op revenue 2006: just over $28 million. More on that still to come.

Peter Rossi said...

this is a great post. The facts speak for themselves:

the Co-op is totally broken.

I repeat- who would buy fish from a fish department that stinks?

Who would buy rotting produce?

Who would stand in line and be treated rudely by inefficient clerks?

Only those who have to because they don't have access to transportation!

So the Co-op makes it's "profit" (that is purely an accounting fiction) on the backs of those who can't shop elsewhere.

We should take the 840K that the University has spotted the Co-op and buy computers for Co-op shoppers so they can order cheaper and fresher food from Peapod.

A bus to Jewel or DFF on Roosevelt road would also cost a lot less than 840K. In fact, we could hire a bus for 30-40K per year, which would mean that the back rent owed by the Co-op would pay for over 24 years of bus service to stores that are cleaner, cheaper, and have greater variety!

Bulldoze the Co-op and put in a bus to Roosevelt Road and a Peapod computer Kiosk. Hank Webber hear me now!

Famac said...

I can't believe anyone would sign a lease for 25 years. How did management convince the Board to do this?

Looking at that profit margin of 3.6% you can see why the grocery business is kill or be killed. One mistake and you are walking the plank.

But maybe I'm not thinking this through.

Famac said...

My simple solution to all of the Co-Op's problems:

Demolish the Co-Op mall and develop some high-end homes on that lot. Really nice homes that will attract faculty back to the neighborhood. Maybe even a High rise/townhome approach like Cornell Commons.

Move the Co-Op back to the 47th Street location. Have a U of C bus make a regular stop there that returns to the Quadrangle.

Now, that was easy.

curtsy said...

I'm not sure which suggestion is more delirious -- Ms. Des Jardins' Harper Court as Torpedo Factory artists colony, PR's suggestion that "'We' (who?) should take the 840K that the University has spotted the Co-op and buy computers for Co-op shoppers so they can order cheaper and fresher food from Peapod" AND buses (how would that work exactly?), or famac's proposal to bulldoze the Co-Op Mall (adios Bon Jour, Toys etc., Petite Folie, Wesley's, What the Traveler Saw, HomeMade Pizza, Walgreens, and HP's highly profitable Big Box retailer Office Depot) to develop "high-end" homes to lure back faculty. (Seems to me like HP is already crawling with faculty.)

I'll refrain from yet another reference to Emily Litella (since it seems they get "moderated"), but it appears as though my five year-old is not the only one in the neighborhood experiencing fever dreams.

Peter Rossi said...

curtsy-
the Peapod Computer Kiosk and the bus service was a joke!! sort of like the service at the Coop or the quality of the produce

Although the JCC does run a bus to Whole Foods for seniors! NO JOKE

Peter Rossi said...

curtsy---

we do not make personal remarks or insults on this blog. We do make fun of the arguments that some folks make. If you would like to make fun of ideas, that is fine, but insulting professors or anyone else (hp is "crawling" with them) is not in the spirit of this blog.

Another example -- we made fun of Ms. Des Jardins ideas about doing a torpedo factory and said may be she was dreaming a bit. We pointed out the problems with this analogy. But we did not accuse her of being addled with fever which you have just said about famac and myself.

If you want to do this, go elsewhere.

Famac said...

Curtsy said: "but it appears as though my five year-old is not the only one in the neighborhood experiencing fever dreams."

Are you still shopping at the Co-Op?

curtsy said...

Yes, in fact, we do (along with stocking our larder with periodic trips to Costco and Trader Joe's in addition to regularly shopping at Hyde Park Produce.) It was quite convenient yesterday when my wife needed to step out briefly to pick up a few things -- pork chops for dinner, bananas, apples, apple sauce, squash, cabbage, red peppers, day-old bread, and coffee. It was a quick and convenient outing (a walk across the street, actually), which was important as one of our sons has been running a fever for four days and his mother didn't want to spend the afternoon hunting for provisions.

See, that worked.

curtsy said...

I WAS NOT suggesting that professors were like vermin when I stated that HP was "crawling" with profs. It's not like I said the place is lousy with 'em! No insult was intended. Some of my best friends are professors!

As for my remarks regarding "fever dreams", gee Luis, my bad.

Elizabeth Fama said...

Curtsy,

Still, if there were a different grocery store in that same location, your wife's outing would have been just as convenient, but might have been more pleasant in terms of service, slightly cheaper, and with fresher ingredients.

That's what I'd like to see happen.

Elizabeth Fama said...

Oh, Curtsy! I meant to say that I hope your son feels better today.