Copia lays off staff, cutting days open

2008-09-26T00:00:00Z Copia lays off staff, cutting days openBy JENNIFER HUFFMAN
Register Business Writer
Napa Valley Register
September 26, 2008 12:00 am  • 

Copia, downtown Napa’s beleaguered food, wine and arts center, has laid off 24 of its 80 full-time employees and introduced new seasonal operating hours.

Between Oct. 1 and May 31 the center will open only Friday, Saturday and Sunday.

June through September, Copia officials said they will open seven days a week.

Julia’s Kitchen and other retail operations remain open seven days a week year-round.

Additionally, Copia’s new CEO, Garry McGuire, announced plans to open a 40,000 to 50,000 square-foot Copia center in San Francisco.

The operation would include a TV studio, cooking school, wine classes, wine bar, and retail, all financed by private investors.

“The Napa campus will always be Copia’s headquarters,” he said, adding “We realized that not enough people come through our building in downtown Napa to make Copia profitable. We have to figure out ways to bring more of Copia to people outside of Napa Valley.”

The news may not be surprising.

“I think everyone knows Copia has struggled from the beginning,” said McGuire.

The center has been criticized for its lack of focus and mission.

An $80 million dollar bond proved difficult to pay down, and restricted use of space, he said. At one point, Copia faced IRS inquiries about improper use of the tax-exempt bond money.

Since it opened in 2001, Copia reportedly lost between $5 million to $15 million yearly. Copia’s 2007 annual report listed a deficit of $14 million. 

Recently the center made headlines after receiving a questionable $77 million loan by the Sacramento-based Infrastructure and Economic Development Bank, or I-Bank. The bank subsequently became ensnared in the subprime mortgage crisis.

Although Copia attendance rose slightly over last year, to 150,000 visitors, it’s not enough, McGuire said.

“To be profitable you’d need between 210,000 and 250,000 to come through the building,” he said.“Our previous model was to hope people would come to us. That’s a tough way to run a business. You have to be much more proactive.”

According to McGuire, Copia’s operating budget is $15 million a year — 70 percent of that in payroll. During the summer, the utilities alone run around $50,000, a month, he said.

A winter schedule could result in significant savings in overhead.

McGuire is considering all options. For example, Copia doesn’t have to own it’s Napa location, said McGuire.

“We have a tremendous amount of debt on the building, so if someone would take that on, we’d be willing to sell it,” he said. “We’d love to rent back from them as a tenant.”

However, “I think it’s unlikely that someone would be willing to pay $80 million for the building.”

“The $80 million dollar question is how can we unlock the potential of the building? That’s why we are looking at another facility that is unencumbered by debt,” said McGuire.

Rumors circulated that Copia would file for bankruptcy. Not true, said, McGuire. “Filing for bankruptcy is not something that management or board has in our plans at this time,” said McGuire.

Even with a seasonal schedule, weddings and other events will continue at Copia, he said.“We will be open seven days a week as a special event venue and by appointment.”

Meanwhile, “There are 16 million food and wine lovers in San Francisco and we’re getting very few of them in Napa,” said McGuire. A San Francisco Copia can drive visitors to both Napa and San Francisco.

Venture capital and private equity looking to invest in lifestyle brands like Copia will fund the new enterprise, he said. The space would be leased.

Since early 2008, guests entered Copia for free but paid individually for certain classes. The San Francisco Copia, scheduled to open in March 2009, will operate on the same model.

This isn’t the first time Copia has scaled back. In October 2006, the center laid off a third of a reported 85 employees and announced plans to sell southern acreage to refinance debt. 

The affected employees from the current round of reductions came from almost every department except food and wine education, said McGuire.

Napa Mayor Jill Techel said top city officials would be meeting Monday with McGuire and Joe Peatman, chair of the Copia board of trustees, to learn more about Copia’s downsizing.

Regarding the news that Copia would shrink to a three-day-a-week operation seasonally, “it makes no sense keeping your doors open if it’s costing you money,” she said.

“I think these announcements show that the leadership has embraced the changes that will bring them out of what have been some difficult times,” said Kate King, CEO of the Napa Chamber of Commerce. “We applaud their efforts to seek financial gains through aggressively reaching out to the San Francisco market.”

Copia Chair Joe Peatman referred calls to McGuire.

As the architect of change, McGuire realizes he’s in the hot seat.

“I knew what I was signing up for,” he said.“It’s a business with many challenges.”

But the fundamentals remain the same. “We all love food and enjoy wine,” McGuire said, adding the idea to create a center for people to celebrate food and wine was brilliant.

“Our challenge is that they never found us.”

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