Originally published in Island Ad-Vantages, January 23, 2014
Employees of Burnt Cove Market, V&S Variety and Pharmacy and The Galley form cooperative, plan to purchase businesses
Many of the members of the Island Employee Cooperative, an employee cooperative that will purchase Burnt Cove Market, The Galley, V&S Variety and V&S Pharmacy. Sitting front row from left to right: Bethany Turner, Robert Weed, Candace Oliver, Brandie Berry, Ashley Weed, Laurie Campbell, Laurie Larrabee, Christy McManus, Michelle Hutchinson. Standing from left to right: Lori Betts, David Cassidy Sr. (obscured), Sara Robbins, Sandra Hutchinson, Jo Larrabee, Shauna Schmidt, Corey Cassidy, Deanna Oliver, Susan Hutchinson, Olive Holland, Chat Hunt, Leon Eaton, Norma Morey, Perla Villamil. Back row left to right: Alan White, Howard Hutchinson, Leslie Weed, Elaine Parke, Willie Morey Sr.
by Jessica Brophy
When Vern and Sandra Seile began discussing retirement, it made the employees of their four businesses—Burnt Cove Market, V&S Variety, V&S Pharmacy and The Galley—nervous.
“There’s little doubt that an outside buyer would likely have consolidated some operations, cut back on offerings and cut jobs,” said employee Deanna Oliver. “The profits of these businesses would have left the Island.”
Vern Seile said there had been a buyer interested in the businesses, but when it didn’t work out, he and Sandra started thinking about alternatives. Vern Seile purchased Burnt Cove Market in 1971, The Galley in 1972 and opened V&S Variety in 1990.
One idea that came up was the idea of the employees themselves buying the business and forming a cooperative. Seile said he was familiar with the Independent Retailers Shared Services Cooperative, a purchasing cooperative of independent grocery, hardware and other retailers.
“We wanted to retire and wanted the stores to continue to serve the Island for many years to come,” said Seile.
The idea took a while to formulate, in part because there are three businesses and 60 employees, making the combined businesses one of the largest employers on the Island. Working with the IRSSC and the Cooperative Development Institute, which provides technical assistance to cooperative businesses of all kinds, the plans moved forward.
Ten employees formed a steering committee to do the nuts-and-bolts work of developing an initial ownership structure, incorporating the cooperative corporation, drafting bylaws and more. The employees on the steering committee come from all three businesses, and collectively average more than 20 years apiece of working for the businesses, ranging from two years to 41.
After exploratory work was complete, the committee presented the plan to the rest of the employees. Of the 60 employees, 45 have so far agreed to join the Island Employee Cooperative.
The cooperative works by pledging an initial investment, to be paid over time through payroll deductions. The investment will provide each employee with the ability to vote on cooperative decisions, to elect members to the board of directors, and entitles the employee to a patronage dividend. This dividend is a share of the profits from the businesses.
“The employees will have ownership, and a good incentive to work hard and to make the business more successful,” said Seile.
There is still work to be done to complete the transition, said IRSSC Executive Director Mark Sprackland in a press release. The IEC will be applying for financing through CEI, an organization specializing in community development lending.
The goal is to have the transaction completed in March. A board of directors will be elected from the employees to direct operations for the businesses.
Rob Brown, a development specialist with Cooperative Development Institute, said he hopes this could serve as a model for other business owners who want to retire and don’t know what to do with their businesses.
“The Seiles have built an impressive enterprise over many decades and they are ready to retire,” said Brown. “It would have been very hard to turn it over to a buyer who may not have had the same level of commitment to the community and to the employees. That’s why this deal is such a win-win-win. They get to enjoy a comfortable retirement while knowing that the ownership will stay local and their employees will have an opportunity to build wealth through ownership.”
What this means for customers
When asked what differences customers will notice, steering committee member Susan Hutchinson said simply: none.
“If they do notice a difference, it will hopefully be improvement,” said Howard Hutchinson, who is also on the steering committee.
The businesses’ commitment to meeting the needs of Islanders will not change, said Alan White, Meat Manager and an employee of 33 years. “We will do everything we can to make the stores affordable,” said White.
“We want to keep it local,” said Hutchinson.
The employees are counting on the support of the community in return. “Now when you shop here, you’ll be supporting all of us,” said steering committee member Les Weed. “These businesses have been run successfully for 40 years, and we hope to continue that moving forward.”
“I’m excited that the business will carry on, and that it will stay island-controlled,” said Seile. “This way employees keep their job, and we can keep the services we provide here because we think they’re necessary and essential.”
The Seiles will be staying on to help the transition. Sandra Seile said when the time does come to retire—which she looks forward to—she will miss the people she’s worked with for 25 years. While the couple have plans to enjoy warmer weather during the colder months, they have no plans to leave the area at this time.