As it seeks bigger presence on Capitol Hill, Central Co-op faces scrutiny over Tacoma closure

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Co-op members gather in Tacoma Sunday to watch a live tweeting of a “community conversation.” (Image: Friends of the Co-op)

As Central Co-op continues its effort to open a second Seattle grocery store above the Capitol Hill light rail station, some members from the cooperative’s recently closed Tacoma branch want to know when they will get their store back.

The Tacoma Central Co-op closed in July when the board of trustees said it could not come to terms with the property owner on a new lease. CEO Dan Arnett said financial issues were also at play and the grocery store would have closed in the first quarter of 2016 had the merger with Central not taken place.

Some Tacoma members say they were blindsided by the closure and have been left in the dark about the future of their co-op. A group of Tacoma members have since started holding weekly meetings to demand more transparency from the board. On Sunday, Friends of the Co-op founder Monique Smith said Tacoma members drew up a list of questions for the board, including questions about the co-op’s finances. They also want the board to commit to opening a store in Tacoma within two years.

“The Tacoma community was devastated because they had worked so hard to get the co-op in that location, to serve the 6th Ave community, and to get to the point of growth in profits,” Smith said. “Without involving the Tacoma community, without asking for fundraising help to keep the co-op alive, a board of 11 members, two of which represented Tacoma, decided to close the Tacoma location.”

During a board meeting Monday night in Seattle, members of the Friends group reiterated their call for the board to commit to reopening by 2019. Prior to the meeting, Arnett told CHS the co-op was actively working to find a new Tacoma location. “Our strategy is to find the right site and location as opposed to the quickest deal,” he said.

In a recent email to co-op members, Central Co-op board chair Dean DeCrease acknowledged that co-op management could have done more to keep Tacoma in the loop leading up to the closure.

“We clearly did not sufficiently inform and involve the Tacoma membership of the developments surrounding the closure of the 6th Avenue store,” said DeCrease in the statement. “I take personal responsibility for my failure in this regard and I will make sure this problem is overcome, with your help.”

Friends of the Co-op have been using #coop253 to document the board’s decisions and spread the word on their own activities. On Sunday around 20 people gathered in a Tacoma park to watch a live tweeting of a board meeting “community conversation.” The Friends group will hold another meeting Sunday night.

Central Co-op has been in operation on Capitol Hill for 40 years and last year signed a 20-year lease with another 20-year option. In 1999, Central Co-op moved into the newly constructed building at 16th and Madison. The co-op got its start more than 20 years earlier on 12th Ave where it operated until the late 90s move.

Central Co-op is a CHS advertiser.

Central is currently vying against Portland-based New Seasons to win the deal to be the anchor tenant in the commercial development underway around Capitol Hill Station. The campaign has earned support from Seattle City Council member Mike O’Brien.

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24 thoughts on “As it seeks bigger presence on Capitol Hill, Central Co-op faces scrutiny over Tacoma closure

  1. So what just happened here, folks? Some insiders in co-op management rushed through a deal for the Central Co-op to take on the debts of the Tacoma co-op, pay off a few of the big creditors, then close the store that would have closed anyway? Meaning that some Central Co-op insiders basically took money from all the Seattle owners to pay off a few well-connected creditors in Tacoma.

    There are no winners here among the common folk – not the members or staff of the Seattle or Tacoma stores – just the Tacoma creditors and perhaps the Seattle and Tacoma co-op management.

    Why are members here and Tacoma not calling them on this clearly shady BS?

    I love the staff and the products at the co-op, but the management is corrupt.

    • I don’t think that this was a backdoor deal to pay off Tacoma creditors, the potential blowback for that is huge with very little upside to Central Board/Management especially with the Station store competition. Just doesn’t add up.

      It does seem apparent that the merger was terribly mismanaged though, and that is Dan Arnett’s responsibility. I think they thought it would go much more smoothly and when things started going poorly he couldn’t handle it. I also think that they didn’t need to go so poorly in the first place. A lot of Tacoma’s indicators were trending upwards post merge despite losing liquor license for months.

      There’s no reason to assume bad faith, but the evidence of poor management is apparent. The mishandling of member and community relations has followed from that same source.
      I’m very hopeful that as this is coming to light the Board will be able to do something to repair the damage. I’m glad Seattle members are becoming more aware of the issues too. It’s our Co-Op and being an active member means holding those managing it for us accountable.

    • You can view the profit and loss statement for the Tacoma Food Co-Op 2015 here: https://docs.google.com/document/d/1cTxNTcEPFuGXmlme3qVS-BqbkuwKwsm9QmSpmkJt0Oc/edit?usp=sharing

      As you can see there is about a loss less than 2% of the gross which isn’t insurmountable. There is also ridiculously high labor, little money for marketing, and knowing the tight margin- why wasn’t there more action to involve the community or do a member donor campaign?

      At the board meeting yesterday I asked Dean DeCrease why wasn’t the community mobilized before the closure? When I was at a Co-Op in Toronto that was about to close, the Co-Op as for support from the community, and did a media campaign to keep it open. Dean responded that they were down to the wire and had no choice. My response back was 1.) When did you know that the Co-Op was going to close? (Which I didn’t get an answer for) 2.) And why wasn’t negotiations more a priority? Why did you let it get down to the wire? 3.) When did you start the process of negotiations for the lease? I was told negotiations for expansion into La Jara started before the merger, but I have documentation that says the negotiations for the lease started at the of June. And I haven’t seen anything from Central that would explain otherwise.

      Additionally if Tacoma Food Co-Op was in such a dire state, why didn’t Central do due diligence in understanding if this was a financially risk they were able to take? Why was there such a rush?

      This all being said, I AM hopeful that there will be improvement in relations with Central Seattle. The board acknowledged this merger was poorly managed. The board also echoed the desire for greater transparency and communication with the Tacoma community. I am looking forward to seeing the actions that support their words.

    • I was being generous in attributing this colossal F-up to corruption, because the other alternative is out-and-out incompetence.

      Here is some information I would like to see in the interest of transparency:

      – What are the names of the big Tacoma creditors who were made whole by this fiasco and who otherwise would have had to work to recover a fraction of their money had the Tacoma co-op closed down without intervention by the Seattle co-op?
      – What is the relationship between each of these large creditors and Dan Arnett and the rest of the board that steamrollered this deal?
      – How do the membership and staff hold a vote of no confidence and replace the current management team, including Dan Arnett? Incompetence at this level can’t be fixed without switching out personnel at the top.

      I think the co-op has products that no one else in the neighborhood has and actually has better prices for high-quality produce than the chains and that it would be very sad to see it fail due to corrupt and/or incompetent management. I’m very sorry that Tacoma has lost theirs.

    • Oh my gosh, we HAVE been trying to call them on this shady BS! However, I think something has been misunderstood here. There are no “big” investors. There were a bunch of founding co-op members that each put in $500 to found the original Tacoma Food Co-Op way before the co-op opened. THOSE debts were repaid.

      I believe the real issue is: 1) Central Co-Op regretted merging, because obviously, there are always unforeseen difficulties. And 2) they have outright admitted that they are basically only interested in opening that Light Rail station on Capitol Hill. That opportunity arose after the merger.
      t might take TWO YEARS or more to re-open the co-op? Who does business that way? Where are we supposed to shop in the meantime? When they promised to look for another location as soon as possible, I never even envisioned it’d take two years. And they won’t even promise that!

  2. Seattle idealism once again steamrolls over common sense. The Co-op is easily one of the most expensive markets in this city. While its business model is admirable, its produce organic, and its aisles chock full of artisinal offerings, what value does it offer your average shopper on a budget? This is another opportunity that will be lost to keep Capitol Hill accessible to working-class folks. We’ve heard it said many times that Seattle is becoming San Francisco, but having lived there for 10 years, Seattle’s pace to become a city exclusively for the wealthy is happening at a much faster pace. At least we can drown our sorrows in $8.00 organic, almond milk lattes.

    • I don’t think the coop is more expensive the WFM or PCC. And the coop basics program offers plenty of “basics” at very resonable prices. So i don’t think your, “organic food is expensive at the coop” criticism is very fair. It’s expensive everywhere, and yes, large chains like kroger and safeway can offer certain products at lower prices because of scale.

    • I agree with GregH. It’s on par with WF and PCC (maybe better). Sure, it’s going to be more than Safeway, but you’re over exaggerating it.

    • GregoryH & Scav01: The Co-op is too small and expensive, and as evidenced by Tacoma, may not have the business acumen to make a go of this coveted Capitol Hill space. I think we’re really limiting ourselves when we look to the usual options like the PCCs and others. There must be some innovative company that is pioneering new models for urban markets, and I don’t mean Amazon. Why not broaden the search and use this as a model for other neighborhoods? It’s such an essential part of a good community, so let’s get it right. Now who’s being a Seattle idealist?

  3. I wouldn’t call the co-op leadership corrupt, but the organization does have a history of less-than-truthful-and-transparent communication with members, a problem that long predates the current co-op leadership.

    The expansion to the 19th/Madison store was sold to members as a 2nd location, with promises to maintain the original location. Surprise! Once both stores were open, it was suddenly not feasible to maintain both stores, so the 12th Ave shop was closed.

    The Tacoma merger was sold to members of both co-ops as an expansion. Surprise! The Tacoma shop closes within a year without mobilizing that community to try to save it.

    The very kindest thing to say is that the co-op has tremendous difficulty properly evaluating the cost of expansion; a more cynical view is that they know full well the eventual outcomes of these moves but over-promise in order to secure the necessary membership votes.

    I do wonder how this will impact the co-op’s ability to secure the light rail shop. I would much rather see a local co-op there than a Portland chain, but Central Co-op has not demonstrated that they can effectively manage two stores (or three, should they keep their promise to reopen a store in Tacoma).

  4. First, a small correction. The meeting where people were outside following Twitter wasn’t a board meeting, it was a Community Conversation. The difference is that Bord meetings discuss business/policy and aren’t expected to have a large amount of members in attendance. Community Conversations are the flip side of that, and are about soliciting feedback and discussion with members.

    This actually makes it worse that so many were excluded from attending. The idea of it was right, but the operation of the event wasn’t satisfactory. Dan Arnet is responsible for those operations, and this fits a pattern of his actions not fitting with the message that Tacoma is being told by the board. Spouses shouldn’t have to decide which is allowed to enter, space should have been larger, people shouldn’t be banned with no recourse or explanation.

    I’d like to make it clear that Tacoma isn’t angry, and trying to damage the Co-Op. Everyone who has been trying to attend and engage is doing it out of a belief in the Co-Op model. It’s been unfortunate that much of that was met with suspicion and hostility. The Board has made it clear that they are trying to rectify that, but we’ll see if operations actually follows suit.

    If that occurs there is nothing I’d want more than to see Central expand to the Station, and then use that success to kick start re-opening in Tacoma.

  5. No doubt things were handled poorly down here. Our community is very sad to have lost such a good thing without any notice. As a founding member, clarity would at the least been nice. I didn’t even receive my letter about the meeting on the 18th until after the fact. Very sad.

  6. Perhaps it’s because I’m an evil capitalist, but I don’t understand how can you expect people to just hand over money in countless rounds of fundraising if the business is not providing enough sales of products or services to cover regular expenses.

    IMO, if it’s true the location was too expensive, it sounds like the right decision was made (at least from that aspect) to close the Tacoma store. Unless the people in charge don’t know what they’re doing, it would appear there were financial problems well before the merger that shouldn’t have been an overnight surprise.

    • You’re totally right that a Co-Op isn’t a charity. It’s important to note that the original reason stated for closing wasn’t that the rent was too high, or the location being unpopular/unprofitable. It was that they didn’t want to have a 5 year lease, and there were concerns about ability to expand services at that location.

      However, there seems to be no plan for alternatives in place, and the timeline for re-opening would be optimistic for 2 years, 3 is much more likely especially if the Station location needs to be started.

      If that’s the case then why wasn’t it possible to consider a 5 year deal? The 2015 profit and loss statements show the Tacoma Co-Op pre merger was in the red, but by less than 2% of gross sales. With the benefits of the merger that should have been something that could have been fixed. The message from Central management was that things were improving post merger despite screwing up the liquor license for months. Then they closed down out of nowhere with no plan to re-open. Only afterwards did the narrative become that the store wasn’t profitable enough.

      As a capitalist wouldn’t it make more sense to try and stabilize the Tacoma location while the Station location was setup, and then look to move/improve it with capital investments? I’ve seen nothing to show that Tacoma couldn’t have been sustainable with proper management without expanding it out. Focus should have been on increasing member base, integrating with new city, and partnering with local allies. Not trying to move out and get a deli space or more parking.

    • I’m getting the impression that the board has not shared it’s reasoning for closing the Tacoma store.

      I had client in the past that was a grocery wholesaler.The profit margin was razor thin even back in the late 90’s. Running a debt that’s 2% of “gross” sales is still in the hole and could be a huge number over 3-5 years if there is no improvement in sales or if any new expenses come up. I’m not saying that’s what it is. It could be anything including bad decisions.

  7. Sounds like they need to hire someone from PCC to show them how to run a co-op. These types of f-ups have been happening for years and years.

  8. These people came in under the guise of a “merger” and engaged in what was in fact, a hostile takeover.

    They lied about the rent issue, closed our co-op without warning, stole our inventory and then had police keep co-op members away from meetings.

    They are not to be trusted, they are dirty.

  9. Mostly echoing others:
    1. Liquor license suspended after merger, whose oversight and how much profit loss?
    2. Community conversation was a poorly planned and executed event that shut out as many voices as possible, with new limits and restrictions on attendance by the hour then minute. Many/most members did not receive notice until day of or after that it even occurred and for those that did, only a portion were privileged to participate. The parallel meeting that occurred was in response to being locked out by Central Coop’s hired security. In the meeting, they wanted to control the narrative, coop failing anyway, instead of apologies for lack of communication/transparency and acknowledging membership sold merger as a way to be in solidarity with Tacoma, lower prices and bring more features … Not imminent failure and the need to survive as it was brushed off as an “oh well too bad it didn’t work out” side note in this meeting. Dan was heard calling people in the meeting “crazy” and suggested to guards they call the police.
    3. As exemplified in former point, Tavoma council member notes surprise in rightly calling out the behaviors of central coop so “trumpian” in nature.
    4. Coop principles abandoned and this board/CEO/marketing lady abused and manipulated power and trust to their will.
    5. This coop struggled several years to get started, went for 4 and then abruptly closed without a days notice.

  10. Wow, honestly I’m a little surprised at the amount of anger over a grocery store closing, but I would definitely be really sad if the Cap Hill location suddenly closed. But unless they are all psychopaths, I gotta imagine the board and managers at Central were really sad too. Although even if this situation wasn’t handled great, I have a really, really hard time imagining the board or management of Safeway, QFC, Whole Foods, Met Market, or New Seasons holding an event with the community and customers after a store closure like they did. Also, is that part of Tacoma being gentrified? Maybe the landlord is going to sell the property to developers or something. Either way, sadness all around and condolences to all.