A Broken Budget with a Side of Fries
This article appeared in the Port Side‘s December 2012 print issue.
Originally established in 1926, the Coop Fountain and Store is one of the oldest institutions on Pomona College’s campus. Amid countless new developments and a myriad of expansions, this haven went from a store based on ephemerae to a well-supplied gift shop and student-run restaurant. Students, faculty and staff from the 5C community flock to this oasis in droves on a regular basis. People come just as often to hang out in the relaxed atmosphere as to buy the tasty fries and shake combo.
However, not all is well in paradise. The Coop is losing money at a near breakneck pace.
According to recent statistics, the Coop lost between $69,000-70,000 in the 2011-2012 school year alone. It is difficult to determine where all of this money is going without examining a few of the Fountain’s previous policies.
One of the main policies that changed in the past year is employees’ previous ability to eat at work and prepare food for themselves. Up until very recently, it was acceptable for workers to arrive at the Coop, clock in, and make themselves some food. Brenda Schmit realized this policy posed a major problem. Schmit has worked at Pomona for 19 years and was the first faculty member to be involved in the Coop’s operations.
“This behavior had become habitual,” Schmit said. “We began by cutting down to [a half-price discount], but [the employees] didn’t follow the rules. I would still find students sneaking food while on the clock. We needed to distance eating habits from work habits.”
Unfortunately, employee food consumption is not the only issue at the heart of the financial discrepancy.
The Coop Store, like the Fountain, is not immune to theft. There is only anecdotal data regarding theft because neither the Store nor the Fountain keep official records of electronic inventory, and financial information is only collected once a year. However, there have been multiple instances where groups of students enter the store, look around for a bit, then leaving in Pomona shirts without having bought anything. Maybe these students had the shirts when they entered the store, but it is hard for employees to know for certain.
To combat theft, the Coop has started training employees to “acknowledge” customers when they walk in, so that customers know they are being watched. In addition, all employees attended a shoplifting prevention and awareness meeting on Nov. 9 in hopes of mitigating further shoplifting attempts.
Keeping all of these issues in mind, how is such a small and independent store able to maintain a sustainable business model if they are hemorrhaging money at a rate exceeding the rising tuition? This has been a difficult issue for the Coop to reconcile and at the moment there does not seem to be a clear solution.
“Our goal has never been to make a million bucks,” Christopher Waugh, Director of Student Activities, said. “It’s been to come as close to breaking even as possible.”
From the moment the Coop Fountain opened, Pomona College recognized that the restaurant loses money every year. The Coop Store, is usually able to make enough money through t-shirt sales and the sales of other college paraphernalia to balance out the deficit. In fact, in many years the revenue from the Store has actually made up enough of the deficit created by the Fountain that the Coop made a profit overall. This was the case up until 2009.
Grace Stewart, Office Supervisor and Accounting Assistant at the Smith Campus Center, said that in the 2009-2010 school year, the Store made about $51,000 and the Fountain lost about $63,000. In 2010-2011, the Fountain lost $109,000 and the Store only made $48,000. During the 2011-2012 school year, the total loss was between $69,000 and $70,000.
“The trend is definitely getting worse,” Stewart said.
A major cause of this downward trend is the cut in funding by the college. In 2009, Pomona College stopped subsidizing the Student Wage Allotment provided to the Coop for many years. The Coop was forced to pay employees straight from the budget provided by Associated Students of Pomona College (ASPC). Not surprisingly, the Coop was soon faced with a negative dividend.
Stewart said that in the 2011-2012 school year, Coop wages amounted to around $250,000.
“We had to begin dipping into the cash reserves, which are diminishing,” Stewart said.
In light of these financial woes, Schmit and the Coop staff made operational changes to the Fountain including the perks enjoyed by student employees.
Schmit said that by replacing coffee creamers with milk, the Fountain saved over $1000 per semester, since customers used to steal the creamer cups on a regular basis. In addition, studies were conducted to determine the most optimal hours for the Coop to operate, leading to changes in hours for both the Store and the Fountain.
The Store hours were originally changed to be open late Friday through Sunday, closing relatively early on weekdays. However, traffic on Sundays at midnight was minimal, and people complained about a closed store on Tuesday at 11. The hours were changed once again in regards to the requests and trends of traffic, effectively maximizing profitability.
As an added bonus, the Store recently gained the ability to sell “grab-and-go” items through a remodel, allowing room for expanded merchandise. These include sandwiches, fruit, and other perishable foods made and packaged daily that busy customers can buy if they are headed somewhere and cannot wait for a full meal.
Finally, both the Fountain and the Store have adopted a model where they review financial records once every quarter, rather than once a year. This more frequent financial review allows for more dynamic feedback and affected change throughout time, as opposed to one shocking statistic at the conclusion of the year.
Not all solutions to account for the Coop’s financial discrepancies are favorable to students. The most common gripe heard is of the rising prices. Schmit was able to confirm that the Fountain has consecutively raised prices by 10 percent in the past two years. However, as the prices remain competitively priced with stores in the village, many students have not even noticed the change.
“There’s been some sentiment [among students] that the prices should be lower, but not very strong,” said Faye Wang PO’13, Vice President for Finance of ASPC.
Either students have not noticed the (admittedly minimal) changes in prices, or they possess enough foresight to ignore what Wang calls a “temporary increase.”
Overall, the three buzzwords that kept coming up in reference to the Coop’s changes were “Work Ethics, Accountability, and Professionalism.” This new model is directly related to the ideals of the Coop.
“We can pull in the reins to increase profit, that is for certain,” Schmit said. “For many of these students, this is their first job. Making sure they’re learning the outcomes of their jobs is our job.”
Schmit adds that 30 of their 55 employees are new this year, which means that management is always busy educating student staff. In short, the students must learn that their actions do have consequences, and that they can strive to better themselves through hard work and a professional attitude in the workplace. In this vein, the Coop has recently hired a new employee who has worked in the food service industry for many years.
Before her appointment at the Coop, Laura Berry worked for well-known companies such as Red Lobster and Panera. A new full-time member of the Coop staff, she is one of the very few non-student members employed within the system. With her professional experience and insider knowledge, the Coop will run as a tighter ship.
Regardless of their financial success, neither the ASPC nor the Coop seems to be in any immediate danger.
“It’s not really a debt,” Waugh said. “We’re paying out of the ASPC resources, which is certainly not sustainable at this rate. But we’re not in any trouble yet. We know what the trends are, and these are bound be slow years. We’ll recover.”
Still, the essence of the Coop rests in its unchanging position in daily student life. The desperately hungry kids who missed lunch and need to be gone in ninety seconds flat are a minority compared to the masses coming to hang out and study while they are softly serenaded by pop music and the ambient sounds of conversation. In the new sea of professionalism, a certain casual nature still permeates.
While the Coop’s story is constantly changing, there is definitely a bright future ahead.
Until then, Schmit is committed to transparency about the Coop’s financial woes.
“Why would we ever want to hide it? In order for us to recover, everyone needs to help.”