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Taking Stock

Can City Market keep growing and fulfill its social mission?


Published July 20, 2005 at 10:03 p.m.

It's been more than three years since Burlington's Onion River Co-op moved into its 16,000-square-foot location on South Winooski Avenue. Since its humble beginnings as a small food-buying cooperative in the Old North End, the store has grown into an $18 million-a-year enterprise. With 162 employees and a weekly payroll of more than $61,000, City Market is now the third-largest single-store food cooperative in the United States.

But on a recent afternoon, a cluster of unhappy employees is standing outside City Market distributing flyers and talking to shoppers. The weather is sweltering, but that's not the only reason these workers are steamed. All members of the United Electrical Union Local 203, they are some of the two-dozen or so co-op employees who briefly walked off the job a few days earlier. The one-hour "wildcat" strike on July 1 was to protest what the union calls unfair labor practices and bad-faith bargaining tactics by the store's general manager, Earl Bell.

Tacked to a nearby telephone pole is a flyer with a photo of Bell and the words, "Missing: If you see this man, send him back to the negotiating table." The workers who posted the flyers say they were incensed that while the union's bargaining team was trying to hammer out an 11th-hour deal with management before their contract expired, Bell was on vacation with his family at Disneyworld.

With 35 years of experience in the grocery business, Bell came to City Market in February 2004 from a small supermarket chain in south-central Pennsylvania. He's been involved in labor-management disputes before, so the theatrics of this one in Burlington were nothing new. In his defense, Bell maintains that his Florida vacation was planned six months earlier around his family's schedule and cost him $2500. Moreover, he never expected a simple wage dispute to take several months to resolve. And throughout the negotiations he was in constant contact with his bargaining team by phone and email.

Fortunately, a strike was averted. On July 6, both sides agreed to a modest pay raise for all union employees. Under the deal, which the rank-and-file members approved by a narrow margin, all workers got at least a 15-cent-per-hour raise, with an additional 5 cents per hour for anyone who has been at the store a year or more. The minimum pay for City Market employees was increased from $7.55 to $8 per hour, and the average raise was 28 cents per hour, according to the union.

As Vermont labor struggles go, this one was no epic battle. But even after the deal was reached, bitter feelings remained on both sides. Some workers say the fight was less about a 15-cent pay raise than it was about respect and their growing dissatisfaction with Bell's management style. City Market wears its mission on its sleeve: a socially responsible business that puts community first. But when it comes to the store's internal operations, some employees suggest, the co-op is losing its "cooperative" spirit and becoming more like a corporate supermarket.

"We've done a lot to turn this store around as workers, getting product out there to customers," says Frank Cossaboom, a City Market stocker and president of UE Local 203. "And we feel like we deserve something for that, more than what we've been offered."

But management was disappointed that the workers made this fight so personal. "It's an adversarial relationship, and I think more so than it needs to be," says Human Resources Director Meredith O'Neill. "We have to live with each other afterwards."

Those on the management side also say it's unfair to suggest the co-op is not a responsible, civic-minded employer, especially considering its wages and generous benefits package.

One thing is obvious: City Market is going through some growing pains. And not for the first time. Long before a single bag of organic arugula was rung up at its registers, a rancorous debate raged in the Queen City over whether residents would be better served by a conventional supermarket, such as Shaw's, at that location. And in the years since City Market opened, management has tried to dispel its reputation as a "Tofu Palace" that caters primarily to vegetarians and the affluent. In truth, the store's second-best-selling item is Coca-Cola, right behind frozen blueberries -- a testament to the co-op's often confusing identity.

It may be unrealistic to expect that City Market can be all things to all people. As Marketing and Community Relations Manager Jodi Harrington puts it, the store "dances to many different fiddlers" at once: the members whose dues bankrolled its construction; the 75 percent of shoppers who are not co-op members; the city, which owns the building; the unionized workforce; the board of directors; and the bottom line. The question is, can City Market keep all those disparate interests happy, stay competitive, and continue to grow, while still staying true to its social mission?

During the recent labor dispute, the union claimed that City Market has undergone a nearly 100-percent employee turnover in the last year. Management puts the figure closer to 48 percent. Mary Manghis has been with the co-op longer than almost anyone. She began as a part-time cashier at the old Archibald Street location. Now a produce buyer, Manghis says she's seen a lot of changes over the years, but some aspects of the job have stayed the same. Most City Market employees, she says, are "incredibly dedicated and still have that old cooperative way of thinking." Manghis believes the store does a good job of supporting organic growers, buying from Vermont vendors and keeping money circulating in the local economy.

But she has also seen employee morale suffer since Bell arrived. "I feel that the internal workings of the co-op have changed to follow the model of a corporate grocery business," Manghis says. As a result, "a lot of people" have left their jobs because it's no longer the work environment they signed up for, she suggests.

"I think we all came to work at the co-op because we believe in working for something different," Manghis adds, "and to have that turn into the same old thing is a disappointment."

Donna LaRose has been with the Onion River Co-op nearly as long as Manghis has, starting almost seven years ago at the storefront on North Winooski Avenue. LaRose says she took the job because she believes in the values co-ops stand for. Today, she wonders if those values are disappearing.

"I think there's been a real change in the culture," says LaRose, who is also union vice president of UE Local 203. She admits some of those changes were due to the speed at which City Market has grown. But LaRose asserts that other changes reflect the corporate mindset of the store's general manager, whom many workers felt "wasn't the right fit" for the co-op.

Shortly after his arrival, Bell implemented some changes that didn't go over well with his employees. For example, he hired managers from outside the store without first posting those jobs for existing employees. Then he ended a longstanding policy that allowed employees to take home bruised or damaged items that were considered unsaleable -- Bell told the produce department to compost them instead. The new policy rubbed people the wrong way, LaRose says, not just because food was going to waste but also because the change was made without soliciting employees' feedback.

More recently, workers were told they must enter and leave the store through the front door rather than the back, which is less convenient for them. Bell also installed a new time-clock system and required all employees to clock in and out for their paid breaks. These changes may sound trivial to outsiders, LaRose concedes, but they reflect a real departure from the way the co-op used to operate.

LaRose says she was personally disappointed by the recent wage offer made by management. Not long ago she realized that after seven years of full-time employment, she, her husband -- also a City Market employee -- and their child still qualify for public assistance.

"Basically, the taxpayers are assisting us to live, which to me was a big eye opener and really disheartening," LaRose says. "I feel like I invested my time and helped build this store. All I want to do is raise my one child without public assistance. My mother worked in a grocery store and she managed to do it."

Some local progressives who usually support union causes have stayed quietly on the sidelines during this battle. One observer commented recently that the flyers with Bell's picture on them were a cheap shot, since in the year and a half since his arrival the general manager has added 21 new jobs and pulled the store back from the brink of financial insolvency. And some longtime co-op members grumble that City Market employees don't realize how good they have it.

That opinion is even shared by some of the store's unionized workers. Kelly Horan is a customer-service coordinator at City Market and a member of the collective bargaining unit. While she respects the union's desire to get higher pay for its members, Horan calls the recent one-hour walkout "a little yelling fit" that created "the worst PR City Market has ever had."

Much of Horan's day is spent fielding complaints from City Market customers. Some people called her to express their support for the union and the workers, she says, but far more typical comments are that the shelves aren't stocked, the floors are dirty or the prices are too high.

"I love my job and I'm ready to help people understand the mission of the market," Horan says. "But we have a responsibility as a business first. Because if we don't exist as a business, we can't help anybody else out on a social level.

"And if you want to stand up and say, 'My workplace is unfair,'" Horan adds, "do it at a place that's not paying for your glasses."

Earl Bell is the first to admit he's no politician and isn't interested in telling people what they want to hear. And to some employees of City Market, that's a refreshing change. When he was hired last year, the store was woefully mismanaged and $485,000 in the red. Within Bell's first year, City Market posted a $100,000 profit. He's predicting it will earn a $289,000 profit next year.

Getting to this point hasn't been easy, Bell admits. "The culture was the toughest. The people didn't trust me, I had to make the hard decisions and I wasn't the best-liked person," he says. "But when I laid my head down every night, all I could think about was, how can I keep the co-op afloat and keep everyone working?"

Bell says he's concerned about keeping his employees happy, but his biggest priority right now is ensuring that City Market remains financially viable. "I have a great, utmost respect for our employees, but let's get real," he says. "We live in a real world and there's only so much that our organization can really do and still be sustainable . . . If you cannot sustain yourself, giving someone a dollar more an hour isn't going to make a difference."

One challenge Bell has faced is trying to merge the business principles of an efficient, modern supermarket with the lofty goals of a food cooperative. For example, City Market's wages are about 24 percent of gross sales, an unheard-of figure in the world of corporate supermarkets. Bell says it's usually more like 11 to 14 percent. But the first wage offer the union made would cost the store another half-million dollars a year.

Moreover, in a conventional supermarket, about 75 percent of the staff is part-time. At City Market, that ratio is reversed: About three-quarters of the staff are full-time. As a result, most City Market workers get full benefits at no cost.

What many people in the community didn't realize during the recent labor dispute, says Human Resources Director Meredith O'Neill, is that despite double-digit annual increases in health-care premiums, worker benefits weren't even on the table. City Market is locked into its current benefits contract until 2007. And while the union complained that not enough City Market employees are earning a livable wage, O'Neill points out that those calculations don't always factor in the co-op's generous benefits.

That package includes four weeks paid time off, free medical, dental and vision coverage, short- and long-term disability and a 100 percent match on a 401K retirement plan. Any employee who works 20 hours per week or more is eligible for those benefits.

In fact, under the contract that was just negotiated, 64 of the 130 union employees now earn more than $10 per hour; 21 of them earn more than $12 per hour, which is considered a livable wage in Burlington for a single person with no dependents.

Bell says he's not focused solely on the bottom line. "For us, it's also about getting the word out that this isn't a country-club place anymore," Bell says. "If I have my way about it, this is going to be a store for the people of this community."

To meet that goal, the general manager says he's trying to dispel the belief held by many co-op employees that there is "good food and bad food."

"This is a store about choice," Bell adds. "We carry organic apples and we also carry conventional apples. We lay no judgment on which is better and which is not. That's your personal preference."

Many longtime co-op members and employees were dismayed when City Market began filling its shelves with mainstream items such as Coke and Kraft macaroni-and-cheese. But Bell explains that carrying those items is important to remain competitive with the larger supermarkets and to attract more low- and moderate-income shoppers, many of whom do their grocery shopping at convenience stores.

Garry Schaedel is president of the Onion River Co-Op's Board of Directors. "Some say 'You're no longer 100-percent organic.' Yes, you're right. We aren't and we admit that," Schaedel says. "We're something else, but that something else is pretty darned good."

City Market will never find a balance between traditional and organic foods that satisfies everyone, Schaedel adds, nor will it ever be able to beat larger supermarkets' prices. "But we're doing other things. They're not providing free meals to seniors every week."

Schaedel is referring to an unconventional form of community outreach Bell implemented: a free weekly lunch program for elderly and low-income residents at Burlington's high-rise apartment buildings. City Market caterers serve hot meals at one of the four residences every Thursday. Currently, the co-op is serving about 128 people per month through the program.

The idea, Bell explains, is to reach out to potential new customers, many of whom are unfamiliar with, don't understand or are intimidated by the idea of shopping at a food cooperative. And this is not just a pet project; it's a contractual obligation. The store's lease agreement with the city requires, among other things, that City Market meet the needs of a broad cross-section of Burlington's population, especially its low-income, elderly and disabled residents.

Reportedly, the effort is having an effect. Food-stamp sales at City Market have risen 20 percent since the store opened. Currently, about 10 percent of all food stamps used in Chittenden County are spent at City Market.

The city's lease agreement also requires the co-op to provide significant financial support -- a minimum of $90,000 over 10 years -- to the Chittenden Emergency Food Shelf. In its first three years, the store wasn't providing that cash support because it wasn't showing a profit. But Bell vows that fulfilling that obligation is one of his top priorities.

Wanda Hines, director of the Chittenden Emergency Food Shelf, says Bell has taken their relationship with City Market to a whole new level. The first time he visited the Food Shelf warehouse, she recalls, "Earl said to me repeatedly, 'We can do better, but we can do better together. I can help you.'"

About a month ago, Bell negotiated a deal that allows the Food Shelf to buy its dry goods through the co-op's wholesaler. That agreement has already saved the Food Shelf thousands of dollars, and provides it with access to higher-quality and more nutritious foods. Bell also implemented the "Send Hunger Packing" program, whereby City Market shoppers can donate money to the Food Shelf at the cash register. Hines estimates that program will generate another $18,000 to $20,000 per year. "It's a win-win situation for us and for City Market," she adds. "And a lot of it has to do with [the fact that] there's a new man in town."

Bell says he's interested in fulfilling the store's other missions, such as offering more jobs to single moms, senior citizens and new immigrants. He'd also like to tap into the skills of his current employees and offer other services to the community, such as job training and computer classes. But none of these goals can be achieved, he says, if City Market cannot stay competitive in an increasingly consolidated supermarket environment where profit margins are decreasing and fixed costs, like diesel fuel, electricity and health insurance, are going up for everyone.

"There are $1 billion in grocery sales in Chittenden County every year, and the Shaw's and Hannafords and Price Choppers get the bulk of that business," Bell says. "I'm very proud of the fact that of all the people who depend upon this store, we have 1159 vendors, 859 of them right here in Vermont . . . Seventy-four cents of every dollar that go to our registers stay in the great state of Vermont. I could never lay claim to that in a regular supermarket environment."