ii. Wholefoods finances: the whole picture

Please click the above graphic that links to a PDF file to see a detailed visual representation of the financial problems at Wholefoods and their causes. It is not as scary to understand as it first looks. Please share it with your friends.

Wholefoods Finances:

The Whole Picture

Since its inception in 1977, Wholefoods Restaurant has been about people, not profit. Instead of striving for a large surplus at the end of each financial year to benefit a single owner or manager, Wholefoods has focused on considerably more worthwhile aims: healthy food at prices easily affordable to students, meaningful volunteer work for food, broad workplace participation in management, emphasis on organic produce and waste minimisation wherever possible. Any surplus at the end of the year goes back into the MSA to help support other areas of student welfare and advocacy.

Why has Wholefoods made a loss since 2008?

Since 2008, Wholefoods has made a loss. This financial loss has been used as a justification by successive MSC Executives to fundamentally alter the way that Wholefoods runs. The MSA Executive has effectively accused the Wholefoods Collective of financial mismanagement to justify imposing a corporate model for running Wholefoods, and undermining the legitimacy of the Wholefoods Collective.

The most recent Executive intervention into Wholefoods was the change to volunteering. The initial justification for cutting Wholefoods Volunteer meal tickets by 95% was that Wholefoods Volunteers were eating Wholefoods profits. Following complaints from Volunteers and the Wholefoods Collective, the Executive banned Wholefoods Volunteers from volunteering at all in the kitchen and the café.

MSA Executive explain/blame.

In 2007/08, the Executive blamed low prices for the financial loss. In 2009/10, the Executive blamed the cost of employing Wholefoods Coordinators. In 2011/12, the Executive has blamed Wholefoods Volunteers. Successive Executives have blamed everyone but themselves.

But what are the real reasons for why Wholefoods has struggled to reach the financial break-even point over the past 5 years?

For 30 of the 35 years of Wholefoods’ existence, Wholefoods usually made a small surplus or a small loss (not more than a few thousand dollars either way). The surpluses were given to the MSA at the end of every year, while the losses were covered by the MSA. This ensured that over the long-term, Wholefoods remained not-for-profit and broke even.

Between 2001 and 2003, Wholefoods appears at first glace to have made a small loss. However, during these years Wholefoods paid approximately $18,000 to MSA Central, for occupancy to the University, but this was never actually paid to the University. The Campus Centre (formerly the Union Building), the MSA and its departments (including Wholefoods) do not pay rent, since it, along with much of the University, was built by student money and public money. Therefore what appears to be losses of several thousand dollars during these years, were actually surpluses to the MSA of several thousand dollars.

2004-2006: Wholefoods surpluses: low prices, high staff and volunteer morale.

Between 2004-2006, Wholefoods made consistent surpluses, once as high as $21,000, largely due to a vibrant Wholefoods community, strong Collective, a space packed with students all day, low prices and thus large turnovers.

Some in the MSA now claim that Wholefoods only made these surpluses because Wholefoods staff were being under-paid. These allegations are false. Wholefoods staff were paid under the Monash University Enterprise Agreement (Trades and Services Staff – Catering and Retail, Cleaning and Caretaking, and Miscellaneous Services Staff) 2000. Prior to 2000, Wholefoods staff were paid under the previous University EBA. In 2010, Wholefoods staff were transferred to the Restaurant Industry Award (RIA). Under the Trades and Services Staff EBA, Wholefoods staff were ‘seasonal’, meaning that staff had the benefit of part-time conditions, such as sick leave, end of year loading, annual leave, job security, etc. Wholefoods staff traditionally often saved Wholefoods money by not using up these entitlements, but they were there. From 2010 onwards, staff have not had this option, as these conditions as ‘seasonals’ were replaced by a mandatory casual loading of 25% on top of the base wage rate, when the MSA transferred staff from ‘seasonal’ to ‘casual’ in 2010.

During 2006, the new Executive removed the right of the Wholefoods Collective to participate in negotiating the Wholefoods Budget. The Executive slashed the Wholefoods staffing budget, without consultation, by 20% in order to ‘lower costs’. The Wholefoods Collective fought this and managed to maintain control over the actual operations of Wholefoods regardless of the careless budget passed by MSC.

2007-2008: Wholefoods losses, increased prices, low staff and volunteer morale.

In 2007, the Executive took control of meal pricing from the Collective. They claimed that prices were too low. The Executive raised most prices by 20%, effectively turning many customers away. This price increase was implemented so that Monash Community Card holders could receive a discount of 20%. A campaign was organised to reverse this decision, but failed following incessant personal attacks on members of the Wholefoods Collective. The animosity between the MSC Executive and the Wholefoods Collective lead to staff, volunteer and Collective morale hitting an all-time low. In 2008, this low morale, higher prices and consequent fewer customers lead to the first real financial loss in many years.

2009-2011: Wholefoods losses, higher prices, loss of coordination and staffing control.

In late 2009, the Executive decided that a Wholefoods Coordinator Restructure would prevent Wholefoods making a loss. For just under a decade, Wholefoods had operated remarkably well, with between 2 and 6 student coordinators, job-sharing the coordination roles. The Kitchen Coordinator worked up to 15 hours per week, the Café up to 15, Volunteers up to 10, Functions up to 10, Publicity up to 5, and Grocery up to 5. In reality, many of these hours were worked as volunteer hours, with Coordinators not putting down every hour they worked. The Executive claimed that these costs were too high, and the ‘chain of command’ was non-existent. As a result, the Executive decided to replace the 6 student Coordinators with 1 full-time non-student manager.

During the summer break of 2009/2010, the Wholefoods Collective negotiated with the Executive and came to an agreement to merge the 6 roles into 3. In 2010, the Executive then broke their promise and replaced the 3 Coordinators left with 1 non-student manager. Another concern was that the new manager would actually be $15,000 more expensive than the previous 6 student Coordinators combined. This is because the new non-student manager position was poorly classified. The new manager was paid for 38 hours/ week, for the entire year, even though Wholefoods is closed for half of the year. To add to this, the sole non-student manager only worked for 38 hours per week, as opposed to the six student Coordinators who between them worked for 60 hours per week. Since the six student Coordinators were seasonal and filled out timesheets every week, in quieter weeks later on each semester, each Coordinator would generally be working half of their maximum hours. Due to the new non-student manager being paid as a permanent full-time manager, the manager was paid even when Wholefoods was closed. In other words, Wholefoods had its Coordinator hours cut from 60 to 38 hours per week, yet had its Coordination budget increased by roughly $15,000 more per year, by the Executive.

The 09/10 Coordinator restructure meant that many Coordination roles went unfulfilled, due to the fact that one person working 38 hours per week could literally not perform the roles of 6 students working up to 60 hours per week between them. The Volunteer scheme suffered because of this, because a stressed, overworked Restaurant Manager did not have the hours in every day to properly facilitate the training and recruitment of volunteers as effectively as the former Volunteers Coordinator could achieve. Similarly, functions revenue decreased, as did turnover in the kitchen and café. Not surprisingly, and in line with the warnings from the Wholefoods Collective, Wholefoods made a substantial loss in both 09 and 10. Predictably, as prices continued to rise, Wholefoods losses became steeper.

Summary:
2007/2008: loss of pricing,
2009/2010: loss of coordinators,
2011/2012: loss of volunteers.

 Since 2007, the Wholefoods Collective has been prevented from exercising control over food and drink prices, staffing, coordination, and cannot even access basic financial information about Wholefoods.

Since this is the case, does it not comprehensively prove that Executive interference and control over Wholefoods finances has been a failure? So why has the Executive continuously claimed that the Wholefoods Collective is to blame for the string of losses from 2008 to 2012, when the Wholefoods Collective has not had financial control?

If anything, the string of losses under Executive financial control and the string of Wholefoods surpluses under Wholefoods Collective control, demonstrate that it is the volunteers and staff – those who dedicate their creative souls to Wholefoods – who are the most effective financial ‘managers’ of Wholefoods.

2012: Wholefoods loss, no kitchen or café volunteers, increased staffing levels to cover losing volunteers, and even higher prices.

In 2012, when the Executive decided to ban Wholefoods Volunteers completely from the kitchen and café, extra staff were hired and rostered on to fill the gaps left by volunteers. In the café for example, staffing instantly doubled. While the current MSC Executive claims that they may allow volunteers in Wholefoods at some point in the future, they are insisting that they cannot be given a meal voucher per hour worked. In fact under the new system, volunteers can only receive one meal for every 20 hours worked. This will inevitably have a negative impact not only on student welfare, but also on the number of volunteers in Wholefoods. Prices have also increased. The price of a meal in Wholefoods is now roughly double the price that it was in 2006, when Wholefoods was last operated by the Wholefoods Collective without Executive interference. While food and other costs have increased significantly over this time, this is still a very significant rise in the cost-to-price ratio, which leaves Wholefoods a lot less competitive with other food outlets on campus, and thus has had a dramatic negative impact on customer numbers, turnover and thus net income.

Conclusion

Wholefoods is not just a place for great, cheap vegetarian food but it is a successful experiment in student participatory democracy and living proof that another world is possible. If you take away the participatory nature of Wholefoods and turn it into a upmarket corporate hipster cafe it will not function, as has been demonstrated with the string of losses since 2008. It will become just like every other food vendor on campus. People volunteer because they see the political and philosophical value in a student-run ethical restaurant.

Wholefoods has not only proclaimed but delivered on its guiding mantra “food for people not profit,” providing affordable, nutritious meals for generations of Monash students while maintaining an inspiring anti-hierarchical, cooperative workplace environment controlled directly by students. As such, it has been a Monash icon for the past 35 years. Yet now its hard earned status is under threat.

Published on May 23, 2012 at 1:17 pm  Comments Off on ii. Wholefoods finances: the whole picture  
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