The quarterly open board meeting of the New Deal Café on August 28 was attended by a crowd that filled much of the available seating in the Café’s back room. It was a lively group, not slow to voice its opinions or to ask questions.
Much of the meeting revolved around the possibility that the Greenbelt Co-op Supermarket (Co-op) would no longer operate the food and beverage service at the New Deal Café (NDC) as it has done since the summer of 2021. NDC, also a cooperative, last week issued an invitation to other vendors to apply to take over the operation. Reached for comment after the meeting, Co-op Manager Dan Gillotte said, “We’d been discussing since early summer that NDC should proactively be planning for a potential vendor change. (The) NDC board made clear to me (and the) Co-op board and management that they very much wanted us to continue but we all felt it prudent for them to begin a process for a potential vendor search.”
To understand the financial position, it is necessary to consider the agreement made between the NDC and the Co-op. Co-op Treasurer Bill Jones explained that the Co-op was responsible for the operation of the Café as a business – meaning the Co-op would manage food and beverage service, pay the rent and staff, maintain the building and generally keep the place going – much like it does at the grocery store itself. Profits would be shared with NDC in an agreed upon ratio. But, a share of zero is zero. When the original NDC and Co-op contract expired in June this year, it was extended to December 2023 with the proviso that NDC would pick up the rent.
As Gillotte explained later, “The Co-op board and management would like to keep the operation going as we think it’s of great benefit to the Center but we need to reckon with the financial aspects of the project. Co-op can’t lose money any longer on the NDC project and we need to begin to recoup some loss with profitability. So far, we’ve had two positive quarters but only a bit above break-even. If Co-op were continuing to pay the rent (as we did for the first 20+ months) we would have lost money in those two quarters.”
Losses Pile Up
In 2021, Covid was still in full swing, hitting restaurant revenue much harder than either NDC or Co-op anticipated. Both Jones and Gillotte explained that over the last two years, Co-op has lost approximately $200,000 solely on the Café operations. As a result, reiterated Treasurer Dorian Winterfeld, NDC got no shared profit during that time (though they also didn’t have to share the loss) and is eking out grants and other support to stay afloat. In June this year, the Co-op negotiated for NDC to pay the $4K+ rent.
Upside Down
Already spending more than it was taking in, the NDC’s June-onward additional rent expense plus the cost for licenses and performance fees is now rapidly whittling away its already limited funds (about $40K in cash reserves) to the point that without an infusion of new money, it will have no cash remaining by early 2024. NDC also has about $165K in long-term debt most of which can be paid off slowly, so this is not pressing. NDC’s board has high hopes of a $30K grant applied from city American Rescue Plan Act (ARPA) funds due to be announced in September and to be disbursed late in 2023.
Revenue
Winterfeld’s oft-repeated mantra was that NDC needed to sell more, but as several audience members pointed out, Winterfeld and the board had presented no plan for how this might be accomplished. President Michael Hartman pointed hopefully at the new NDC tote bag. Winterfeld did not present a financial statement as such, but greeted positively a suggestion from NDC member Lore Rosenthal that perhaps month-by-month tracking might be useful in seeing if targets were being met and where the expenses could be better managed. A similar suggestion of a budget and monthly reporting was greeted by him as perhaps a good idea.
This is far from the first time the NDC’s vendor arrangements have hit trouble. Preceding vendors in recent years who left for one reason or another have included a vegan vendor, a Middle-Eastern themed vendor and NDC’s attempts to run the restaurant itself.
What to Do?
In the absence of a plan presented by the board, two ideas seemed to resonate with the audience. One was that NDC had to operate more like an effective business if it is to survive. The other, not entirely unrelated, is that it had to operate more like an effective charity and raise money and pursue grants systematically to survive. Ideas from the audience included considering cover charges, tickets for events, sponsored dinners and sustained giving programs. This last, suggested by former board member Peter May, seemed to result in a committee formed on the spot, ready to go.
Tide Turning?
Gillotte reported that the financial issues, though certainly not solved, were at least looking a little more positive and he felt that profitability was attainable with the current arrangement within the next several months. He cited increased staffing stability and some economies in staffing (a major cost area) all of which were contributing to a steadier revenue level. Responding to menu suggestions from Meg Haney, board president of Friends of New Deal Café Arts, Gillotte explained that changing the menu was difficult when staffing was unstable because of training that had to be repeated each time new staff came on. With increasing staff stability at what Gillotte repeatedly described as “livable wages” new menu items could be more easily implemented.
Patterns of Sale
Gillotte and Katy Gaughan, an active NDC member and drum circle event leader, both spoke of the level of sales. Gillotte noted that surprisingly few items are ordered in the last few hours of the evening, even on weekends. Gaughan demonstrated balletically how the basic level of revenue went up considerably when there was programming going on – but rose even more dramatically when there was a festival-type event. She said that to be profitable, the Café had to sustain a customer level that was more like the average for an event or festival.
One enterprising attendee surveyed the front room area where chess and card games were in progress. Reporting back, he said that at around 7 p.m., prime dinner time, all the tables were full of players, but only a few tables actually had food or drink with the cards and chessboards. There was no room for diners.
Programming
Arts Director Caitlin Gompf reported on the numerous successful events: both regular music programming and festival-type activities. As in previous years, the Café had received accolades from regional organizations. She also noted that the events were also highly correlated with sales. The crowd expressed its support of and delight in the programming with spontaneous applause and it was clearly the most successful and optimistic item on the agenda.
Children’s Area
A small children’s area recently set up in the front room area came under discussion and the consensus was to keep it in place for the time being.