In the wake of an exodus of board members who were committed to broadening Deep Roots Market’s customer base and the recent departure of the cooperative grocery’s general manager, the board met Monday to appoint new members and elect new officers.
Facing financial uncertainty and contention about the cooperative grocery’s future direction, the board of directors of Deep Roots Market held a special meeting on Monday to fill vacancies and elect new officers.
The need for Monday’s special meeting was created by the resignation of five board members in late November, including Board President Dave Reed. The resignations, which accounted for a majority of the board, were made effective Dec. 31.
During the special meeting in the grocery cooperative’s community room on Monday, the four remaining members, including former General Manager Joel Landau, appointed three new members: Hope McLean, Daniel Woodham and Stefan Hauke. McLean and Woodham asked that their terms expire this spring. McLean, who previously worked as a bookkeeper and human resources manager for the co-op, said she wants to help the co-op during its transition. Woodham said he was requesting a limited appointment because he plans to move to the Northeast this spring. Hauke was not present for the meeting, although Landau said he had expressed interest in serving on the board.
After approving the new appointments, the newly constituted board elected Landau as president, McLean as treasurer and Woodham as secretary. Tia Cromartie was re-elected as vice president.
Before the meeting, the four returning board members decided by consensus to allow a reporter to observe the appointment of new directors and election of officers, but exercised its discretion as a member organization to ask the reporter to leave for the remainder of business on the agenda. Landau said prior to the meeting that the board had a lot of “urgent matters that we need to attend to.”
Last year, the co-op brought in a second distributor, Spartan Nash, in an effort to expand its offerings to appeal to a broader customer base as part of a vision of making the co-op a full-service grocery to serve downtown Greensboro. The move frustrated some member-owners who saw it as a betrayal of the co-op’s original mission of providing natural and organic food.
Stephen Johnson, a departing board member who is also the owner of the Elam Gardens urban farm and a cofounder of the Corner Farmers Market in Lindley Park, said the turnover on the board “is about two competing visions” of who the co-op serves.
“One vision is of DRM as a health-food store while we were attempting to reorient it as a grocery store that serves a wider group of folks with more diverse food and grocery needs (including conventional foods),” Johnson said in an email to Triad City Beat on Tuesday. “We felt that previous decisions about the move coupled with changes in the competitive markets in the organic grocery business, and a desire to be a different community of owners and shoppers required this change in orientation of Deep Roots. We experienced a lot of pushback from some staff and a vocal group of owners wedded to the older vision.
“We decided to resign for two main reasons,” Johnson continued. “First, we realized that none of us were experiencing joy at the thought of going to or working for Deep Roots, and as volunteers and co-op members this was not ideal. Second, we wanted the team with the older vision to be clearly in charge to implement their projects. As co-op members we hope they succeed.”
As an example of the pushback against the new vision, member-owner Michele Salinas wrote in an open letter to board members and others last year: “Many owners are alarmed that DR is not operating in a financially sustainable way, and no amount of junk food is going to walmart our way out of financial troubles. The only way DR can offset the fears is to ‘come straight’ with financial reports. No news is not good news and guarding information is counterproductive to sustainability, and certainly to the cooperative spirit.”
Jonathan Maj, one of the five directors who exited the board at the end of 2016, said downtown residents told board members they wanted to be able to shop at the store for more “everyday” items like batteries, laundry detergent and Tylenol.
“But due to the store’s performance over the past few years it was difficult to achieve the changes in the scope at least I personally had hoped for, because we had a lot of debt on our books and very little cash,” Maj said in a Facebook message on Monday. “So we did what I felt was the best we could with what we had to implement a new vision. The ongoing board will do what is best, which may mean a turn back to focus solely on organic/natural, which from my perspective just isn’t a valid business model in today’s economy. Folks want variety, and they want organic/natural at a price point no higher than 10-15 percent more than the ‘conventional’ price point.”
Compounding the co-op’s governance challenges, the store management is also in transition, with the general manager leaving last year.
Hauke, one of the new board members appointed on Monday, made his feelings known about the future direction of the co-op in a message posted on an open Google Groups message board for owner-members in early December.
“I personally find it highly questionable to go the other way and move away from Deep Roots’ heritage and strength by expanding into unhealthy, cheap industrial mass-produced food stuff,” he wrote. “These are low margin. These are not growing. And most importantly, these poison the people with artificial dyes, cancer-causing preservatives and cheap fillers. Deep Roots should not poison the community! It was naïve to believe that the co-op can compete with conventional stores on pricing. We can’t. Price-conscious people who want mass-produced staples will buy them at Walmart, a Dollar Store or a chain store, not at Deep Roots.”
Haucke also said in the message that he was troubled by the co-op’s 2015 financial numbers, which he described as “negative equity of $250,000” and “current assets, which are less than half of the current liabilities.”
Landau said in an interview after the new board’s organizational meeting that the co-op showed a profit in the third quarter of 2016. Landau said he has served as general manager three different times over a total of 18 years. He left the post most recently in the summer of 2013, following the co-op’s relocation in March of that year to the north end of downtown from the original store on Spring Garden Street near the Pomona neighborhood.
“Cash flow is very tight,” Landau said. “We’re very highly leveraged. We knew we had to take all this loan money to make the move. If we didn’t have all the loans, we would be fine.”
Landau said the new board didn’t discuss product offerings or other aspects of the vision for the co-op on Monday, and he said he couldn’t speculate where the new board members’ sympathies lie.
“We’ll start talking about it at the next board meeting on Jan. 30,” Landau said. “We want to see how things are selling and also talk to the ownership to see if we can get some kind of consensus around what our owners would like to do.”