Belfast Co-op recently announced it is dropping its senior discount at the end of March. The news has been criticized by some shoppers, but management argues it's long overdue, and necessary for the long-term health of the business.

In a letter to members, the Co-op's board of directors said the decision came partly as a result of a $94,000 shortfall last year, or about 1.1 percent of sales, while giving out more than $280,000 in discounts. As a result, the board voted not to pay any dividends to its owner members.

General Manager Doug Johnson said a shortfall isn't atypical — the profit margin for groceries is tight, he said, and in the last decade or so, year-end totals have swung a percent to either side of breaking even.

The reason discounts are outpacing profits, he said, dates to the late 1990s when the Co-op switched from discounts at the register to a year-end patronage dividend model.

"They adopted that model but they kept giving out discounts for years after that," Johnson said. "So we kind of have that trickle effect of many years of giving away profits before we made them."

Additionally, he said, the Co-op spent a number of years not reinvesting enough of its annual proceeds in its building and staff training. That's improved since about 2016, he said, but the Co-op is not out of the woods, and given the low-margin nature of the business, it might never be.

Currently, about 1,500 of the Co-op's 4,400 members are eligible for the senior discount, which entitles them to a 10-percent discount on one transaction — a cart full of groceries, say — each week.

In addition to the senior discount, the Co-op has two other discount programs. The CORE (Cooperative Ownership Reaching Everyone) program offers a 15-percent discount to low-income members, who qualify for state assistance. During quarterly owner appreciation weeks, all members get 10 percent off.

The board chose to drop the senior discount in part knowing that low-income seniors could qualify for the CORE program, Johnson said. The board also voted to reduce the CORE discount to 10 percent.

Since the announcement, Shannon Grimes, president of the Co-op's board of directors, said the board has heard from some outspoken opponents and is trying to get a sense for whether their complaints are representative. On the flip side, she said, some members who were eligible for the discount but didn't need or were embarrassed to collect it have supported the change.

After years of annual financial reviews, in which an accountant would go over the books, the board in December ordered the Co-op's first full audit. Grimes said the list of recommendations the board got back was short by the auditor's account when compared with other co-ops after a first audit, which she took as a good sign.

Johnson said Co-op is making progress in other areas. The business has made strides toward paying its 74 full- and part-time workers better — depending upon model used, 52 percent to 100 percent of full-time entry level staff make a livable wage, he said — an is aiming to bring down the cost of staffing as a percentage of total sales to align more closely with industry standards.

"Our mantra is less people getting paid better working harder," he said. "We put a premium on trying to make this the most attractive place we can for people to work."

Beyond wages for workers, he said, roughly $3 million of the $8.6 million of revenue to Co-op last year went to local producers, and the Co-op provides a variety of public services in the community. He shied away from the word "sacrifice" but said he hopes members affected by the changes are willing to look at the big picture, for the long-term viability of the Co-op.

"Part of the idea of a cooperative is everybody working together," he said. "That's how we can all survive and we can all thrive. We want this co-op to be here in 40 years to keep doing the things we can do."

The Belfast Co-op holds its annual meeting of owners Sunday, March 10, from 2 to 5 p.m. at United Farmers Market of Maine, 18 Spring St., Belfast.