The Good Foods Coop, a fixture on Southland Drive for decades, is in financial trouble that might force it to move.
The cooperative grocery lost almost half a million dollars last year, three times the loss of the year before, and is expect to post a loss again this year, according to the annual owner report. The report specifically cited high rent at the Southland site as an issue.
“We value our Southland Drive location but must continue to evaluate our options for one or more sites that will best serve our owners and all of our customers,” said Bill Bickford, general manager, in an email. The coop board has not set a specific deadline for any next steps, he said.
“This coop has been faced with and met many challenges in its 46-year history, including operating in several locations as the business evolved,” he said.
Now the coop is facing market changes such as online ordering at larger retail grocers and home delivery, which are expected to be as much as 20 percent of the overall grocery market in a few years.
According to the report, the store is losing market share to competitors, including the new Whole Foods Market at The Summit at Fritz Farm as well as the expanded lineup of organic products at mainstream retailer Kroger.
Despite more than $9.8 million in sales in 2017, the co-op had a $473,572 net loss, the report said.
In a message to coop owners, Bickford said that “the coop is facing some serious financial challenges. Downward pressure on margins, upward pressure on wages and three years of declining sales have created a situation where the coop must consider a more significant change.”
That change is likely to involve moving.
“Ultimately, we need a store that is easier to shop and easier to work, and, unfortunately, that isn’t our current location,” Bickford wrote. “So we are left with a critical choice: We can have a coop on Southland Drive, or we can have a coop for our kids and grandkids. We probably cannot have both.”
Board chairman Joel DiGirolamo wrote that the future, “will obviously require a relocation to a more efficient structure that allows us to provided foundational services that are now emerging, such as online ordering, pickup and delivery.”
The report did not say where the coop might move to or when it might move.
Just two years ago, the coop was considering opening a second location elsewhere in the city. The potential move comes as the Southland corridor is becoming more vibrant, with a new HealthFirst Bluegrass facility, the re-opening of the expanded Marikka’s, and sidewalks coming later this year.
“We highly value our Southland location, it’s been tremendous for our community and we’d love to stay here but with a competitive environment we have to evaluate all the options,” Bickford said in an interview.
The board is considering a handful of sites but has no timetable for a decision, he said. “Real estate suitable for a grocery store is very limited,” he said.
One factor that has to be accommodated is the cafe. “We think the café is a critical part of our identity. We have many visitors, for lunch especially, every week. Wherever the coop may be, food service is a critical component of what we offer,” Bickford said. “We would seek to preserve that.”
In the last year, the Lexington grocery market has seen several major changes, including the closure of the Fresh Thyme grocery and the opening of a new, larger Whole Foods.
In an attempt to increase food traffic, Good Foods ran deeper deals and promotions, which cut into the store’s profits.
Other changes include increasing prepared food offerings in the Grab & Go section, which resulted in growth in the deli and the bakery sections but not enough to reverse the overall store sales decline.
“The biggest thing we need from owners is simply to shop with us,” Bickford wrote.
One misconception: That you have to be a coop member/owner to shop there. Bickford said that the store and the cafe are open to the public.
If you go
Good Foods Coop is hosting informational sessions with owners at 7 p.m. March 18 and April 22 and will hold its annual meeting April 29 from 3 to 5 p.m. at the store.