By ANDY KIRKALDY
VERGENNES — The owners of Vergennes grocery the Fat Hen, which offered locally grown and organic food, closed its doors on April 12. But an effort to re-create the business as a co-op could soon revive it as a downtown shopping option.
An overflow crowd of more than 100 came to the Green Street store to a preliminary meeting on Monday night, and a second gathering at the Vergennes Opera House is planned at 6 p.m. this coming Monday.
There, organizers plan to arrange an election of a co-op board of directors, as well as to discuss incorporation plans and make other decisions essential to moving forward quickly.
After she saw the numbers and enthusiasm at the Fat Hen this week, former store employee Cheryl Brownell, who is helping to organize the co-op movement, said she believes the effort will bear fruit.
“I’m pretty optimistic about it actually,” Brownell said. “I was thrilled with the turnout. I think it’s amazing Vergennes has so much support for a co-op.”
Heidi Markowski, the operator and majority owner of the Fat Hen, said on Tuesday that she shares that optimism.
“I’m very confident. After last night, I feel like the town won’t let the store be liquidated, and that they really value it,” Markowski said.
Markowski said she is operating under time pressure because of debt to the Chittenden Bank, and said that co-op backers combined enthusiasm with pragmatism at the Monday meeting.
“They understood the pressing nature of this, and said, ‘Let’s just meet next Monday night and vote for a board of directors,’” she said.
Markowski and her minority partners made the difficult decision to close the Fat Hen on April 11. Markowski said the store had grown steadily at a 10 to 15 percent annual rate since it opened in 2004, but that when the economy soured in October sales suddenly dropped by about 20 percent.
She had expected to lose money for her first few years, but was nearing the break-even point — grossing about $1 million and losing less than $40,000 in the 12 months leading up to October — when the recession hit.
“This kind of business takes at least four or five years to build, so you know you’re going to operating at a loss for at least the first four, which we were doing. But we were getting better and better ... We were very, very close,” Markowski said. “Even if it had stayed the same we would have been on a break-even path the fifth year.”
After the store closing, Markowski talked seriously with Burlington’s City Market and Healthy Living as well as one private purchaser. Healthy Living came close to a purchase, but ultimately backed off, said Eben Markowski, Heidi Markowski’s husband, because its management is busy with another recent expansion.
“They didn’t pass because it wasn’t a viable business. They actually have their hands pretty full,” he said.
Then came the talk of a co-op. There was a failed co-op venture in the 1990s on Main Street, an effort that Heidi Markowski said she researched before she decided to open her Green Street grocery.
She said the reasons for the earlier co-op’s failure had much to do with its 800-square-foot shop space and poor access, problems solved with the Fat Hen’s 2,400 square feet and grade-level entry.
“Before I started this store, that was definitely a question for me,” she said, one that was satisfactorily answered.
Another reason to think a co-op can succeed in the Fat Hen space is the price tag, according to the Markowskis. Heidi Markowski has held off liquidating her non-perishable merchandise, and said $100,000 for all assets and inventory is also enough to satisfy the Chittenden Bank. She estimated another $30,000 to $50,000 of operating capital would be enough to open up shop.
On Monday, organizers floated a fund-raising plan modeled on one used at Charlotte’s Old Brick Store, in which members could purchase $500 or $1,000 of store credit up front that the co-op could use, along with prepaid memberships, as operating capital.
The Markowskis said, for example, that if the new board chose to set its membership fee at $300 — the level at the Middlebury Natural Food Co-op — and 100 members prepaid that and $500 of groceries, $80,000 of debt-free funds would be raised.
Two prospective members on Monday also offered to loan the effort the difference between what could be raised in that fashion and what was needed in purchase and start-up capital, the Markowskis said.
Yet another advantage for a co-op would be that eventually, probably within a year, the effort would qualify to join the larger co-op movement and qualify for discount grocery purchasing, an advantage the Fat Hen did not enjoy. Heidi Markowski said the co-op and consumers would benefit.
“In a year, we would then hopefully be part of that organization ... and then we would be able to offer those discounts,” she said.
WOULD SEEK LOWER RENT
The Markowskis also expect a board to be able to negotiate a better deal on a lease than the $3,000 a month she had been paying.
“People have advised me that most commercial real estate is coming down, by 20 percent in some cases, to keep people in business,” she said. “That would be the first thing the board of the directors would turn to.”
Markowski also believes co-op ownership would inevitably translate to more support.
“Because the community owns it, it brings them to their store. They’re proud of their store,” she said.
Brownell is asking those interested in a Vergennes co-op to call her at 316-0609, Lynne Chabot at 877-6808, or Debbie Allen at 877-2923. She expects plenty of response, and hopes people can make it to the opera house on Monday because “stuff is happening fast.”
“I think there’s a great energy in Vergennes,” Brownell said. “It’s one of the reasons I live here. I think we can do a lot of things.”