It is lunchtime at Suma Wholefoods' distribution warehouse. While most workers across Britain are preparing to inhale an overpriced chain-store sandwich at their desks, the 140 staff of the West Yorkshire co-operative are filing in for a plate of good, old-fashioned hot food.

Today, there is pumpkin pie, cabbage, potatoes and carrots, followed by a fruit bake. For those in the business world who say there is no such thing as a free lunch, Suma is proof that this is just not true. Lunch, like breakfast, fruit snacks, tea and coffee is a perk of the job. Meanwhile, as with all the other tasks in the company, staff members take turns to cook and serve vegetarian food to their colleagues as well as wash up after them.

It is among the more sought-after jobs in the organisation, says Paul Collins, a 50-year-old former music-business executive who has worked for the company in various roles including marketing and warehouseman, for the past 10 years.

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"A pool of 20 of us take turns. Before I came here," Collins says, "I had never been much into cooking." But after registering an interest, he was sent to a vegetarian chef's school. "Now I can cook for 140 people, no problem."

If the dining arrangements seem extraordinarily democratic, the remuneration system makes John Lewis look like Goldman Sachs. All members at Suma, the UK's largest workers' co-operative, receive the same salary – £27,000 pro rata, although many choose to earn less by working part-time.

This year, staff voted themselves a 5 per cent pay increase. And because the wholesaler made nearly £1m profit on a £34m turnover last year, each employee is receiving a £4,750 bonus. Sales have doubled in the past decade, helped in part by a 15-fold rise in exports. All of this has been achieved without debt.

Paradoxically, it has not been the best of times for the Co-operative movement, with its beleaguered banking arm still reeling from the lurid debacle of its former chairman, the Rev Paul Flowers. Despite this, it is estimated that the UK's 500 worker co-operatives now enjoy a combined annual turnover of £10bn and community buyouts of pubs are booming.

The Treasury has recently eased the rules on mutual financing, and the Prime Minister has spoken of his admiration for the John Lewis way of doing business, although it is not a true co-op, and has urged workers to come together to help provide public services.

But Suma is about more than numbers. "We have a triple bottom line – that's people, planet and profit," Collins says. Put simply, Suma is an organisation that is run on ethical lines, which values its customers (mainly small independent retailers) and its members first, rather than faceless shareholders or a small number of rich owners.

This means that staff enjoy seven weeks of holiday a year (rising to 38 days over the next three years), 364-day sabbaticals and incredibly flexible working. There is unlimited paid overtime available and a generous final salary pension. Three-quarters of the profits go towards the aforementioned bonus. Little wonder that when the company advertised for new members recently, 600 people applied.

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But perhaps the most unusual thing is the fact that there is an entirely flat management structure. Richard Hizzard, 46, who works in sales and is also a qualified HGV driver, says that outsiders often find this hard to fathom. "People, when they start, come looking for a boss. They say, where is the director? But we are all self-managed and we inspire each other. We have had people who have been barristers, doctors," he says. "It is a strange concept, but clearly it works and the growth is phenomenal."

Matt Pinnell, 50, has been a member since 1986. "It was very much a hippie culture in those days. You are looking at the tail end of the 1980s – the early 1970s idealism had gone, but it was very much about being vegetarian and being right on," he says.

Suma emerged out of the alternative lifestyle politics of mid-1970s Leeds, a place where cereal flakes, dried fruits and brown rice were considered strange, if not dangerously subversive, foodstuffs by mainstream retailers.

Reg Shah-Tayler, the founder, had worked in wholefood shops in London and was seeking to tap into the emerging demand for healthy, vegetarian and vegan diets north of Watford. The problem was that all the produce had to be transported from the capital.

A buying network was set up at a terraced house in Hyde Park in Leeds. At the time, Shah-Tayler was working for Jonathan Silver who, with his close friend David Hockney, turned Salts Mill in Saltaire into a leading art gallery and helped start the regeneration of Dean Clough Mills in Halifax. Silver turned a blind eye to the unsanctioned wholefood deliveries being completed on his time.

In 1977, Shah-Tayler sold the business, complete with its randomly selected name, purloined from a closed-down back-street clothes shop, to seven employees – two of whom remain with the co-operative. The business continued to expand as the fashion for healthy eating grew – eventually relocating to Dean Clough and later the modern business park on the outskirts of Elland. Over the years, the product range has expanded to 7,000 items and the original battered old vans are now a fleet of 18 trucks.

Much has changed, but much remains the same, says Pinnell, a former Communist who works in the finance department. "The reason we have survived, compared with other co-operatives in the 1970s and 1980s, is because we make a profit and pay a decent wage. Small co-ops can be like small businesses, where you have people working 80 or 90-hour weeks, killing themselves and paying themselves very little. We decided that wasn't the way to go."

"I have spoken to a lot of business consultants who say, 'you could cut your costs and improve your efficiency'. We always listen to them and take a view on what they say, but often it comes down to that we simply don't want to work like that," he adds. He concedes that some might be put off by what appears to be a lack of prospects, but says members prefer a higher quality of life.

"Most people here lack the intense, ambitious, classic capitalist drive. They enjoy being part of this enterprise but they are not driven towards more promotion, more status or more money, although we are still a very profitable company," he says. With no line managers breathing down their necks, there is a disarming honesty among staff at Suma. Most admit that decision-making can be slow, but believe that because all employees can express a view, when a way forward is agreed it is normally the right one.

Strategic direction is provided at the members' general meeting, which convenes between four and six times a year. Decisions are taken on a majority basis, and although attendance is not compulsory, it is forbidden to miss two meetings in a row.

A management committee, elected by the members, puts the decisions into practice. Trained officers in specialist fields and co-ordinators oversee the day-to-day running, although no individual has any more authority than anyone else.

Long-standing members say that embittered factionalism is not a problem and that while they often come up against the same arguments – such as over performance management – they are often expressed by different groups over time.

Sophie Greenwood, 25, became a member last year. She is now working in the warehouse alongside her father, Tim Smith, 54, who has been at Suma for 10 years. "I like the flexibility and the multi-skilling," she says.

It is a view shared by Emma Robinson, 29, who works in marketing, warehouse and cooking. She is about to take a 10-month sabbatical working on an organic farm in Burma. "You forget on a day-to-day basis how odd we are," she says.

"There is a review system and the changing roles – everyone feeds back on everyone else and you really get a feel for how things are going. People say what they really think."

Thanfully for the workers on cooking duty today, lunch seems to have gone down a treat. After all, in a company where everyone gets a say and outspokeness is all, you don't a co-op of disgruntled diners on your hands. µ