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Fiscal Year 2010 Operating and Capital Budgets

Fiscal Year 2011 will be an exciting and operationally challenging year for the Cooperative. The main focus is on opening Willy West in November. However, our Willy East location will face its own challenges in planning for and accommodating impacts to its sales and operations both when Willy West opens and when Williamson Street road construction occurs next summer. The budget prepared by management, reviewed by the Finance Committee, and approved by the Board on June 15, 2010, appropriates capital and operational spending to meet these needs.

Approved FY11 Operating Budget
Total Sales. The FY11 sales projection includes increased sales due to the opening of Willy West, attrition of sales at Willy East due to the new store, and an additional decrease in sales at Willy East due to the planned Williamson Street road construction. The sales projections for combined operations after the opening of Willy West are provided by our June 2009 market research report from Dakota Worldwide Inc. At the time the operating budget was prepared Willy West was slated to open at the beginning of October. The opening is now more accurately projected to be the second week of November. The negative impact on sales due to road construction is based on input from City of Madison staff.

Gross Margin. Gross margin refers to the percent of sales that is left after subtracting the cost of goods sold, which then allows us to fund all store operations. Our gross margin expectations (35.7% of sales) are similar to our actual performance for the past eight quarters.

Personnel. Personnel expenses are budgeted to be 26.4% of sales, which is greater than historical levels due to: 1. budgeting for higher initial labor at Willy West; 2. adjusting to sales impacts during road construction; 3. growing the number of staff members faster than projected sales; and 4. continuing increases in benefit expenses.

Profitability. Higher personnel expense, increased depreciation expense (due to the opening of Willy West), and new store pre-opening expenses means that the Co-op is projecting a net loss for FY2011. A net loss for the first couple of years following expansion was projected and planned for at the time the expansion project was approved by the Board in March.

Approved FY11 Capital Budget
The FY11 approved capital budget total is $2,476,360. Items included in the capital budget typically involve significant investments to support strategic initiatives (sales growth and/or operational efficiency), equipment replacement, or facility improvement.

The capital budget this year focuses on opening Willy West, purchasing equipment to enable our Kitchen to keep pace with additional production demands, and improving Willy East’s facilities and equipment. The total cost to open Willy West is $3.45M. See the Approved Willy West Expansion Budget table for the some additional details on this expenditure. Since some of the expenditures occurred in FY2010, the budgeted expansion expenses does not tie directly to the FY2011 budget. However, I provide the expansion budget as part of this article since it is a significant and unique expenditure for the Cooperative.

There are other significant planned expenditures to improve facilities and equipment at Willy East. The specific project plans for the parking lot project can be found here: 8-13-10.pdf. A broader discussion of this project can be found here:

While the new store and the Willy East parking lot and façade improvements will be by far the most expansive and impactful expenditures that Owners will notice in the coming fiscal year, other important expenditures are planned and are summarized in the Approved FY11 Capital Budget table.


If you have any questions regarding the FY2011 budget, feel free to email me at .


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