UPDATE: Potential 3rd St. Location No Longer Viable
At the most recent meeting of the MFC Board of Directors on June 21, 2022, the board voted to no longer pursue the development of a second Co-op store at the Third St. Marketplace. This vote occurred at my request following a final update I gave them regarding the status of the project costs and MFC financial resources.
After eight months of planning and preparation it became clear that the project, while yet a viable business expansion, was no longer cost effective from construction and equipment procurement standpoint. The following is a summary of the variable aspects that led to the halt of the project. No single item below determined the project’s end, but the combination thereof made the decision clear.
· Construction costs were higher than anticipated.
· Equipment costs were higher than anticipated.
· We were not awarded a $200K Healthy Food Financing Initiative grant that would have help pay for hard costs associated with the project.
· External delays in the planning process as well as in equipment manufacturing and shipping added additional costs.
· The project would require more debt and more cash investment than originally planned.
· The general economic outlook is no longer conducive to development, meaning financial risk is greater during a probable recession combined with unrelenting inflation.
All the above items were brought to the board by me after careful consideration of the situation. I stopped short of a formal recommendation to the board that we halt the project, but I agree with their decision. When we began planning last fall, the economic outlook was different than it is today. However, the fact is, the project necessitates spending significantly more cash than initially anticipated. In the end, the project essentially became a 1:1 ratio of investment to expected revenue. Our original projection was for a .6:1 ratio.
We are grateful for the patience and collaborative position of the Third St. Marketplace developer, who provided enthusiastic support of our effort. In the end, the project simply didn’t “pencil out”.
Alternatively, we may now consider new investment and updates to our main store as well as some additional investment into the Marquette Baking Company. Our opportunities to provide additional access to healthy food for our community remain. We look forward to continued growth in the application of the cooperative business model to meet the needs of our community.
General Manager, MFC