CINCINNATI -- Less than six months after it opened its doors for business, the Clifton Market co-op has run into cash flow problems, and some of its 1,700 share owners are alarmed about whether the grocery will continue to operate.
A recent note from the market's board sent out before last Saturday's annual meeting urged share owners to increase their weekly spending by at least $50, purchase another ownership share for $200 or make a loan to the co-op.
The note explained that the market needs "your immediate help. Our weekly sales have been well below our long-term projections. This has led to very tight cash flow."
"We have 6,000-7,000 people shopping here now every week, and we're shooting for 15,000, and we want people to increase the basket size (how much they're spending)," said Marilyn Hyland, a board member and one of the people who became a driving force behind the effort to create the market.
Hyland and her son, Adam, who is the president of the market board, both acknowledged that board members had to field some tough questions last Saturday when the co-op held its annual meeting at the Esquire Theater, which is almost directly across the street from the market at 319 Ludlow Ave. in the Clifton gaslight district.
Former board member Dr. Rama Kasturi, who said she was bumped off the slate of board candidates shortly before Saturday's annual share owners meeting, characterized that meeting as "contentious and challenging."
"The audience was not very forgiving about the lack of financial details and they were angry that their time had been wasted," said Kasturi, adding that no financial information was provided at the meeting.
She said the board president agreed to hold another meeting, as demanded by shareholders, as soon as possible to provide them with a complete accounting of the market's financial condition. Because the store had opened in the latter part of January, Saturday's event would have been the first opportunity for shareholders to learn how the grocery was performing at the cash register.
Kasturi, a biophysical chemist who taught at UC until 2013, had been a member of the board since May 2014. She said she and her husband have invested $34,000 in the market.
Dawn Fosnaugh purchased two shares of the market. One is hers, the other she purchased for her 16 year-old son for his birthday. She wanted him to have a community connection to Clifton, where he grew up, because they now live on the West Side in Monfort Heights.
Fosnaugh said she still shops at the market fairly frequently, but she is concerned because she said she has had few good experiences at the store.
“I found six items," Fosnaugh said. "Six. That didn’t have prices on them and I had to go get somebody to price the items.”
She walked out of the shareholders meeting on June 24 because she said it was “a waste of my time.” She said she couldn’t tell who the board members were, and that it was clear shareowners were not going to get any financial information out of that meeting.
Fosnaugh said she is worried about finances.
“Are they making it?" she wonders. "Are they going to be open in two months?”
Fosnaugh supports the store, doesn’t want it to close and believes it will eventually succeed. She wants the board to market the store to a broader customer base, and make it clear to the public that you don’t have to be an owner to shop there.
Fundraising has extended far beyond what Hyland describes as the "share owners."
The market recently received an $8,000 loan from the Clifton Town Meeting, the officially recognized neighborhood organization for Clifton, and also received a $25,000 loan late last year from Clifton United Methodist Church. The congregation of Immanuel Presbyterian Church matched that loan through a program called "We Have Faith in the Community," Hyland said.
In mid-July, the market plans to stage a kind of six-month anniversary celebration that is designed to drum up some fresh enthusiasm for the market, Hyland said.
Until it closed its doors in 2011, the building had housed Keller's IGA -- a beloved neighborhood institution for UC faculty and students -- since 1939. The building had been used as a grocery since 1929, when it opened as an A&P, one of the country's first coast-to-coast (Atlantic and Pacific) retail chains.
Adam Hyland and Marilyn Hyland, who heads a marketing firm called the Marilyn Hyland Agency, acknowledged that the market, which opened Jan. 22, faces some financial challenges. However, they dismissed the notion that the problems are so severe that they threaten the marker's continued existence.
"It's a matter of cash flow and getting people in the door. It's a startup, and the expenses have been higher than the income for a period of time," said Adam Hyland, who added that it's not unusual for startup businesses to face some financial difficulties when they first open for business. "I'm optimistic that things will come together," he added.
Marilyn Hyland said the store needs to raise an additional $300,000 in order to be "in really good shape." But, she said, she is optimistic.
"This is going to work. It just takes hard work and dedication," said Marilyn Hyland, who said she handles marketing for the business but -- at this point -- has not been compensated for that work.
Several people who are familiar with the market's history and how it operates today declined to comment for the record.
For the most part, they said they support the idea of having a locally owned grocery store in the neighborhood, but they also wondered whether spending millions of dollars to renovate the building was a sound business decision in light of the fact that Cincinnati-based Kroger planned to open a splashy new store in the University Plaza shopping center about a mile away.
It's never easy to be in the grocery business when Kroger is nearby. Based on annual revenue that topped $115 billion for its last fiscal year, Kroger ranks 17th on the Fortune 500 list of major U.S. corporations and is one of the largest grocery chains in the world.
Like Clifton Market, the new Kroger store was designed to appeal to UC faculty and students. That store opened in March about six weeks after Clifton Market debuted.
Several people who commented also said they were reluctant to say anything publicly that might drive a wedge between the owners and operators of the market and other nearby businesses that would be affected if the market fails.
"It's not just a hot potato, it's a nuclear subject in the neighborhood," said one person who declined to be quoted by name.
The market and a supplier that it no longer works with are immersed in a dispute over the cost of goods that were purchased earlier this year, said Marilyn Hyland, who declined to reveal the name of the company and said the issue is being handled by the market's attorneys.
She said the market believes that the price for the supplies should have been about $70,000 while the other company contends they are owed more than $100,000. "We said we'll pay it, but we just want to get it worked out," Marilyn Hyland said.
One of the problems with the supplier was that early on its barcodes did not coincide with other posted prices at the store, Marilyn Hyland said.
"When you read about grocery stores, you know that every penny is important," she said about an industry where the margins are exceedingly thin.
The relaunch of the market next month will include a more "robust" marketing effort, "more competitive and newly aligned prices," better presentation of the products, sampling in departments throughout the store and overall "a better in-store experience," Marilyn Hyland said.
She said, for example, that the store has not emphasized enough that many of the grocery items -- chicken salad, for example -- are made from scratch in the store.
"I hope it's successful, and I have heard that it's struggling, but I hope that it's successful because so many people have put so much money and time into it," said Lydia Stec, owner of a shop called Lydia's On Ludlow and the president of the Clifton Business and Professional Association.
At a time when more and more shoppers want products delivered to their doorstep, Clifton Market is trying to keep pace.
Since mid-May, shoppers can order online and have their groceries delivered anywhere within the I-275 loop -- including Kentucky -- for a $10 charge. Those delivery orders have been averaging about $113, Marilyn Hyland said.
A second convenience option allows shoppers to order online and pick up their purchase at a loading dock at the rear of the store within the hour. The charge for that service is $2.
The market represents an investment of about $6 million, which includes the $1.6 million purchase of the building, renovation costs and stocking the shelves, Marilyn Hyland said.