In 2017, City Market cleaned up an old industrial lot in Burlington’s South End and built a state-of-the-art grocery store. The 30,000-square-foot building on Flynn Avenue boasts a spacious café, teaching kitchen and first-of-its-kind refrigeration system — a big upgrade from the co-op’s aging downtown store.
Though the $20 million project was a heavy lift for the member-owned co-op, its leaders were confident the debt would be repaid within five years. By 2023, they hoped, members would again share in the co-op’s profits through an annual patronage refund check.
That vision hasn’t come to pass. Sales at the co-op have stagnated since the pandemic, and the business is losing money each year — close to $470,000 last fiscal year even after $56 million in net sales, the co-op’s annual report shows. Eight years after the South End store opened, there’s no profit to share.
Managers say they hope City Market will find sure footing by 2028, but an unpredictable economy and challenging downtown climate pose threats to that plan.
“We’re probably cautiously optimistic,” City Market general manager John Tashiro said of the co-op’s future. “We’re focusing on the change we can make and the things we can control and just reminding ourselves there is hope.”
The co-op is an iconic institution in Burlington, with a 52-year history and 12,200 members, many of whom have shopped there for decades. While City Market customers are sometimes caricatured as crunchy types in search of goat’s milk and bulk granola, the co-op has a much broader audience. Its downtown store is the only grocery in the city’s center, making it a pit stop for workers grabbing a quick lunch, college students seeking craft brews and elderly residents taking advantage of the co-op’s 5 percent senior discount.
Of course, City Market, with its emphasis on organic and local products, isn’t for everyone. There’s a reason the store is often referred to as “City Markup.” Shoppers can find Sweet Baby Ray’s barbecue sauce — first ingredient: corn syrup —alongside a sugar-free brand that costs twice as much for half the quantity.
A business with progressive values, City Market mostly runs on union labor, and co-op members elect its nine-member board of directors, who monitor its financial performance. Members, who generally pay $15 a year until they have paid $200 for a full share in the store, can get a discount on their groceries by volunteering at local nonprofits. Over the past decade, the co-op has donated close to $2 million to local charities and nonprofits through Rally for Change, a program that lets shoppers round up their bill to the nearest dollar.
City Market started as a buyers’ club in 1971, setting up shop in a long and narrow building on Archibald Street that’s now an apartment complex. (See sidebar on page 17.) The club became a co-op in 1973 and in 2002 moved to its current location on South Winooski Avenue.
Expanding to the South End was an opportunity to grow. The new store has 15,000 square feet of retail space, compared to the downtown location’s 12,000, and about 40 more parking spaces. Total net sales jumped $6.2 million in the store’s first year, exceeding expectations. In the fiscal year 2018 annual report to members, leaders struck a positive tone.
“While success is about more than numbers, we like to start there,” Tashiro wrote, noting the boost in sales and member counts. “It was truly a cooperative effort for which we are all very grateful!”
Then came the pandemic. To comply with social distancing requirements, the co-op stationed workers at the door to limit the number of customers allowed inside. At the same time, the employees’ union negotiated hazard pay bonuses that both compensated them as frontline workers and cut into the co-op’s quickly shrinking bottom line.
City Market lost $760,000 in fiscal year 2021, the most in a 10-year span, as membership dropped below 12,000. Member counts have started to rebound to pre-pandemic levels, but the co-op continues to operate in the red and draw on cash reserves to cover the deficit.
Construction has impeded sales at both City Market stores. In the South End, work on a portion of the long-awaited Champlain Parkway snarled traffic for more than a year starting in 2022, though, now complete, it has improved access to the store. Downtown, a massive rebuilding of Main Street is expected to last through late 2026.
The enduring drug crisis has posed other challenges for the downtown store in the form of brazen theft and repeated overdoses in the bathroom, which now requires a code to get in. Safety concerns forced the store to close its indoor café for a time earlier this year. On a recent Friday, a homeless person was passed out on a pile of blankets near the store’s entrance, unaware of the lunchtime customers who breezed by.
The co-op now employs five security managers, four more than when Tashiro was hired in 2015. Private companies, including Chocolate Thunder, provide backup as needed. Tashiro wouldn’t disclose how much the extra security has cost, but it’s likely significant. Hannaford, for instance, has spent thousands of dollars in recent years to station sheriff’s deputies at its supermarkets in Chittenden and Franklin counties.
“If the climate were a little bit different, I know we’d be spending a little bit less,” Tashiro said, “but safety has just been our highest priority.”
Even so, some shoppers have changed their habits.
“The last time I had lunch outside the downtown store with my oldest son, I saw a drug deal happening in front of us, in broad daylight,” Molly Bosley, a Bolton resident, told Seven Days outside the South End store last week. “Maybe I don’t feel like going back to that, you know?”
Cinephile and Burlington resident Paul Olsen, who was also at the South End store, said the closure of nearby Merrill’s Roxy Cinemas means he’s less likely to pop into the downtown market.
“Also, I’m a Trader Joe’s guy,” Olsen said with a shrug. “It just seems a little bit more affordable.”
As with many businesses, labor costs continue to put pressure on City Market’s budget. The employee contract signed last fall awarded a $2 hourly base pay increase to 200 union members, one of the higher raises in recent years. In February, the co-op eliminated six positions, four of them union jobs. Three of those workers found other jobs in the company, under a contract provision that gives them first dibs on vacant positions.
Tashiro said the move was a restructuring to “fit the business needs” and wasn’t driven by finances. But employees past and present interviewed by Seven Days don’t seem to share his view. Adam Ploof, who worked in City Market’s finance and IT departments for 18 years, said the cuts reflect the co-op’s management decisions.
“It’s not hard to draw a connection from poor budgeting to bad decisions around wages to having to lay people off,” said Ploof, who resigned last month. “There were objections on each of those steps that were ignored.”
Max Lambert, a former City Market grocery delivery driver, said he raised red flags when the co-op started using Instacart, a national delivery service, and not only because it could have put him out of a job. Most of Lambert’s clients were homebound seniors without smartphones or internet access, he said.
Lambert worries that City Market is scaling back on programs that set it apart from its competitors. Besides the delivery service and patronage refunds, the co-op also stopped offering cooking and other classes when it eliminated the outreach and education manager position in February.
Those programs were “great ways to show a community that you are there to take care of people,” said Lambert, who resigned from his job this month.
Tashiro says Instacart will attract more members, who are key to the co-op’s success. The service can deliver groceries to homes within an hour drive of the stores, compared to the in-house program’s 15-minute delivery radius. Customers who have trouble navigating the app can call a 24-hour hotline for help. As for the classes, City Market hopes to bring back a revamped program in August, he said.
“I am an owner, along with 12,000 other people, of a business that is working really, really hard to navigate some troubled waters.” Michael Healy
City Market leaders say they don’t have a magic formula to climb back into the black, though boosting membership — and thereby sales — is a piece of it. In lieu of the patronage refund, the co-op is offering a 20 percent discount to members who spend $50 or more on designated days this year. Sales jumped 30 percent during May’s discount days. One member spent a whopping $1,600 to earn about $320 off their bill, according to Cheray MacFarland, the co-op’s director of community and marketing.
Increasing sales is likely to remain a challenge, particularly downtown, where the drug crisis persists and so does construction. Earlier this month, contractors blocked off the co-op’s South Union Street entrance so they could begin renovations on the former Greater Burlington YMCA, where an apartment complex is planned. The work will encroach on the roadway for two years, though as of last week, customers could still exit onto South Union.
While City Market intends to more closely manage the cost of goods, President Donald Trump’s on-again, off-again trade wars could make it harder to control prices.
“We hope, ultimately, customers understand that we do the best we can with the information we have,” Tashiro said. “We might get criticized, but at least, hand on heart, we can say we really put in effort to understand, hear people out, do what we think is sustainable.”
Burlington resident Michael Healy, a consultant who works with food co-ops across the country, said the stores are held to higher standards than typical supermarkets because they’re rooted in a set of values. Co-ops are expected to give back to the community, pay livable wages and sell goods at reasonable prices, Healy said, all while surviving as a business. Healy, a City Market member, thinks his co-op is doing well, all things considered.
“Our board and manager have done a pretty good job of explaining, ‘Here’s what’s going on, and here’s where we are,'” Healy said. “I am an owner, along with 12,000 other people, of a business that is working really, really hard to navigate some troubled waters.”
On a recent Friday afternoon, City Market’s struggles were not detectable amid the steady stream of customers at the South End store. Workers, both blue- and white-collar, grabbed sandwiches from the deli while others refilled five-gallon jugs of the co-op’s ultrafiltered water. One 89-year-old member, who had ferried over from Essex, N.Y., was content with a bag of clementines.
Bosley, the Bolton mom, was preparing a picnic for herself and her younger son. Like many City Market shoppers, she remains loyal, despite the co-op’s challenges.
“I love all the options, all the choices. I always know there’s going to be really fresh, organic food,” Bosley said. “This is my happy place.”
The original print version of this article was headlined “Market Forces | After losing money for years, Burlington’s City Market faces more headwinds”
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This article appears in The Food Issue 2025.
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