Rhapsody in Chow
Hip and health-conscious Whole Foods has set the table for success
AUSTIN--Enter Market Hall at the gargantuan new Whole Foods Market here, and mountains of colorful fruits and vegetables overflow their wooden crates in a high-definition display of organic bounty. A few aisles away at the Northside Trattoria, diners dip into Gorgonzola ravioli in garlic cream sauce and sip Chianti as if they were in Northern Italy. And around the bend at Fifth Street Seafood, fishmongers in yellow waders hawk the catch of the day ("Frehhhh-sh fish. Hee-ah!") as if it had just been reeled in off the coast of Austin.
But look a little closer, and those crates of sumptuous produce reveal false bottoms and specially constructed clear glass fronts that actually only create the appearance of such abundance. The Northside Trattoria gets its name not from a village in Italy but from a Texas suburb. And that right-off-the-boat feel of the fish market? Everyone knows Austin is landlocked.
If the 80,000-square-foot store, adjacent to the company's headquarters, has its share of playful artifice, there is nothing phony about the success of Whole Foods, which has rapidly become one of the hottest grocery chains in the country. Fueled by an increasing number of shoppers willing to pay a premium for healthful fare and a hip and entertaining store to buy it from, Whole Foods has grown from a single store run by hippies for hippies to a $3.9 billion company that caters to upscale foodies who would never dream of buying bulgur wheat in bulk.
Last quarter, the company racked up $1.1 billion in sales, an increase of 20 percent over the same period last year. Same-store sales, a critical indicator of success, were up a whopping 11.6 percent. (Most grocers, under pressure from Wal-Mart, are lucky to reach 5 percent.) And Whole Foods stock is up more than 25-fold since 1992, when the company went public. "By positioning its markets as a great place to take care of your family, Whole Foods has expanded its reach dramatically beyond the die-hard natural and organic consumer," says Jon Hauptman, a food industry consultant with Willard Bishop Consulting in Barrington, Ill. "People believe Whole Foods is helping them live a healthier life."
And not just in traditional suburban markets. With its huge array of prepared foods (150 different dishes a day), fancy cheeses (more than 600 varieties), and fresh produce (organic sea beans to purple artichokes), Whole Foods also is winning over urbanites in supermarket-starved cities like New York and San Francisco. Patrons eagerly pay $10.99 a pound for ready-to-eat rosemary chicken (free-range) and $3.49 a pound for organic peaches, rather than conventional prepared chicken at $6.99 a pound (with hormones) or pesticide-grown peaches at $1.99 a pound from a typical store. The Columbus Circle store, which opened in February 2004 on Manhattan's tony Upper West Side, for instance, moves enough spicy tuna hand rolls and carne asada to make it the highest-volume restaurant in the country. The three-level Whole Foods in Union Square could rival Grand Central Station for traffic at lunchtime. The markets also have become prized tenants in mixed-use developments, like condo complexes, that use them to lure buyers.
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