From the general manager
Lawrence Store Renovation Continues
Rita York Hennecke, General Manager
Happy Summer co-op owners and shoppers! It seems like ages ago that we updated the café, classroom, break room, restrooms and registers at our Lawrence store. We are gearing up for the final phase of our renovations, which includes an expansion of our refrigeration system. These updates support the growth of our high-performing categories such as produce, frozen foods, dairy, bakery, specialty cheese and deli grab-and-go meal solutions. By analyzing sales and product data, customer feedback, cost of goods, labor and operating costs as well as considering external factors like the pandemic and inflation, we identify both successful programs and those that are struggling. The co-op must remain agile as a business and respond to that data to secure the long-term health of our stores.
This analysis has led to one conclusion: after 11 quarters of decreasing profitability of our hot bar, it is not financially sustainable to continue its operation. After July 12, the co-op will no longer offer a buffet-style lunch and dinner menu. Breakfast burritos, hot soups, salad bar, grab-and-go meal solutions, made-to-order sandwiches and roast chickens will continue to be available.
We recognize this will be very disappointing to many customers who have enjoyed our hot bar.
As a co-op, we have a responsibility to be open and transparent about the decisions that impact our shared enterprise with our community owners. Some of the challenges of a hot bar program are not new, but in combination their impact is amplified.
Increased cost of goods: The short lifespan and high food waste of offering hot, buffet-style food has always been a challenge. The cost of food and wholesale ingredients surged an average of 29% since 2020. We raised the price of our hot bar in 2022, and while we did consider increasing the price again to a level that would support financial health, that would decrease the number of customers and make it even harder to keep it full and fresh.
Increased cost of labor: In 2019, starting wage at the co-op was $11/hour, compared to $15.16/hour today — a 37.8% increase. While the number of labor hours in our kitchen is nearly the same as it was in 2020, livable wage has been adjusted twice since then. Caring for community is built into the cooperative principles and that begins with the people who work here. The Merc Co+op is committed to paying a livable wage including benefits like paid time off, affordable health insurance, and a staff discount.
Profitability: The deli has not met its margin goal since 2021, when the hot bar was closed due to the onset of the pandemic. At that time, the department’s focus shifted to more packaged, grab-and-go options. Our hot bar program is 5 times less profitable than our grab-and-go offerings.
What’s next?
We’re redirecting our efforts into our successful programs.
Shoppers tell us that we need better consistency with product availability and quality. By discontinuing hot bar operations, our dedicated deli staff will be better able to keep our shelves stocked with high quality foods like house-made sandwiches, enchiladas, hot breakfast burritos, hot roasted chickens, salads and other items to make mealtime easy for folks and families.
There will be no job losses with this change; all deli staff will remain employed with the co-op.
We are focusing on:
Olive bar — adding a small Mediterranean bar featuring high-quality offerings.
Sushi, made fresh daily — more options are coming soon from our current partner.
More grab-and-go offerings, packaged salads, sandwiches and snack boxes.
Building a more robust catering program, including Take + Bake family sized options and box lunches
Several of our prepared food programs remain the same:
Breakfast burritos and sandwiches: available from 7 a.m. – 11 a.m. daily.
Daily soup selection: available 11 a.m. – 7 p.m. daily
Salad bar: available 9 a.m. – 7 p.m daily
Made-to-order sandwiches: available 10 a.m. – 7 p.m. daily
We are not alone in this struggle to make hot, prepared foods programs profitable. No other grocery store in Lawrence continued to operate a hot bar after closing it in 2020. As a member of National Co-op Grocers, other co-ops in our network share their performance data to strengthen the network overall. Very few co-ops report profitable hot bar programs, except those who have charged significantly more for their hot bar or shifted from serving hot foods into meal solutions.
The Merc Co+op is celebrating 50 years of increasing access to good local food. This milestone in our history provides us an opportunity to reflect on the different versions of our co-op through the years — from our beginnings in 1974 when volunteers distributed bulk goods on Tennessee Street in Lawrence, to operating two stores and cooperating with over 9,600 invested owners today. We have grown and adapted to better serve our owners, shoppers and neighbors many times over. As a cooperative business, that’s why we exist: to serve the needs of our community. Safeguarding the stores’ future for the next 50 years requires making tough choices that the management team takes seriously, as invested co-op owners ourselves. We remain committed to providing high quality, consistent products for our shoppers. We will continue to provide updates about the final phase of the renovation project as more details are available. If you have any questions, feel free to reach out to me.
