When the downtown Seattle location of PCC Community Markets opened in January, it was hailed as another sign of the city’s comeback from the turmoil of the pandemic.
But the member-owned co-op itself is still feeling the financial pain of COVID-19, judging by its latest financial report.
PCC saw sales and membership increase last year, but profit fell so sharply that members’ annual dividend payments were cut by 86%.
PCC blamed the poor results on COVID-related expenses, notably Seattle’s $4-an-hour hazard-pay requirement for food retailers. That policy, which the city enacted in early 2021, “consumed almost all the co-op’s net income for the year,” PCC President and CEO Krish Srinivasan told members in a letter Monday.
The co-op faced other challenges in the pandemic’s second year.
Although 2021 revenues were up nearly 4%, to $398 million, that growth fell short of co-op projections and paled against the 26% increase in 2020. The slower growth came even as PCC saw 13% more members, to more than 102,000.
PCC officials said slower sales growth reflected shifts in consumer spending last year as COVID restrictions lifted. With more restaurants open, for example, many consumers were dining out more and cooking less than they had at the height of the pandemic, creating a drag on grocery sales.
Compared to 2020, when business was booming for PCC and other grocery stores, 2021 “wasn’t the same situation,” said PCC spokesperson Kristen Woody.
That tracks broadly with the grocery industry as a whole, which saw sales increase by nearly 4%, to $803 billion, in 2021, according to Statista.
Seattle’s hazard-pay policy drew heavy criticism from grocery trade groups. At the time, PCC officials said the law would disproportionately affect the co-op and other smaller groceries, which lack national or regional operations to offset a local labor expense.
Srinivasan’s letter to members echoed those concerns. “As a small and independent cooperative grocer with a dedicated presence only in the greater Seattle area, our business is not capable of absorbing costs of this magnitude without significant consequence,” he wrote of the hazard-pay policy, which the City Council recently declined to end.
Half of PCC’s 16 locations are in Seattle.
PCC’s opposition to hazard pay irked some members and employees and may have helped two employees win seats on the PCC board of trustees last May.
Nearly a year on, members are finally feeling the hazard pay’s financial effects in the form of smaller dividend payments — although for many members, the impact is likely to be largely symbolic.
In 2020, the average member got a dividend of just under $47. PCC wouldn’t disclose the 2021 figure, but a quick calculation suggests it was around $6. One member who had spent around $9,000 in both 2020 and 2021 saw his dividend payment fall from nearly $170 to less than $20 for 2021.