Food • John Mackey
How did he build one of the country’s hottest grocery chains? Naturally.
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DRESSED IN A KNIT SHIRT, shorts, and sandals, John Mackey blends in easily with the lunch crowd at the Clearwater Cafe, the restaurant on the second floor of the Whole Foods Market in downtown Austin. “Sorry I’m late,” he says as he pulls up a chair. “It’s been an interesting morning.” Like many of the cafe’s patrons and the grocery’s shoppers, the trim 43-year-old is a walking advertisement for the you-are-what-you-eat ethos. And, as a founder and the CEO of Whole Foods Markets, he has turned good eating into big business—Whole Foods is now the biggest natural foods supermarket chain in the United States, and it’s getting bigger. Mackey explains that a few minutes earlier, Whole Foods announced the acquisition of Fresh Fields, a 22-store national chain, for a hefty $135 million. The buyout further solidifies Whole Foods’ leadership position: 48 existing stores coast to coast, 14 more in the planning stages, including one under the Fifty-ninth Street Bridge in Manhattan, and more than 10,000 employees. With this purchase, sales are projected to exceed $1 billion in 1997 (indeed, several weeks after our meeting, Whole Foods announced that its net income had tripled in the fiscal third quarter, bumping up its stock price by about 15 percent). Just another interesting morning at the office. “I’m proud of what I’ve created,” Mackey says, “but I like being anonymous. I am almost totally unknown in the Austin business community—I don’t interact, I don’t go to parties, I don’t hobnob with politicians. For me, it’s just work, friends, physical play, and spirituality.”
Eighteen years ago Mackey put his New Age spirituality to work by running a health food store called Safer Way. In those days, the old West Austin and Clarksville neighborhoods were thick with small health food stores, most of which were marginally profitable. Mackey banded together with two other natural-food store owners and opened Whole Foods Market in 1980. The 12,500-square-foot store on Lamar dwarfed the competition and began to attract shoppers who didn’t know their tofu from their tostados. Augmenting the organic vegetables, dried beans, and whole grains were fresh fish and all-natural beef. Local bakeries supplied the breads; local salsamakers bottled the hot sauces. The selections of cheese, beer, wine, and coffee were far more extensive than those at conventional groceries. The detergents contained no phosphates. Even the dog food was nutritious.
Whole Foods was in the right place at the right time, and Mackey was the right person to guide it. He calls himself a “neocapitalist” because he believes the adversarial relationship between workers and management is unnecessary, and he practices what he preaches with a team member system of management. The teams of associates, as Whole Foods employees are called, are “empowered” to make decisions on their own, rather than getting approval from upper-level management. If the produce team, for example, exceeds a set goal, its members are rewarded with bonuses and stock options, and a team can terminate a member if that associate hurts the team’s performance. It is a management style that has been much copied around the country.
The store proved so popular that by 1985, two more stores had opened in Austin, soon followed by branches in Houston, Dallas, New Orleans, and Richardson. A key element of the company’s growth became buying out other chains, such as the Wellspring stores in North Carolina, Mrs. Gooch’s in Southern California, and the Bread and Circus chain in Boston. After the Bread and Circus buyout, Mackey was branded as a union buster when employees voted against union representation. In 1990 union picketers were present at the grand opening of the Berkeley, California, Whole Foods, which had been the location of the Berkeley Co-op.
Mackey doesn’t mind critics who label him a soft-headed granola brain for advocating love, trust, and cooperation as basic company tenets. But he does mind being called exploitative. “I’ve been called a New Age huckster and a con man, but that’s because a lot of people misunderstand us. People on the right misunderstand us because besides stockholders we have stakeholders—customers, team members, the community, and the environment. People on the left misunderstand us because one of our stakeholders is our stockholders, whom we make profits for. The Marxist interpretation of reality is that you can’t prosper unless you’re taking it away from someone else. Because I’ve made a lot of money at Whole Foods, many people on the left believe that invalidates everything I say.”
Whole Foods stores are still picketed when they open in pro-labor cities such as Madison, Wisconsin, but now it is the increasingly intense competition from conventional supermarket chains that preoccupies Mackey. “For a long time we thought we would just sell products they didn’t sell,” he says. “Now almost every supermarket in a major metropolitan area is selling organic produce. I like to think Whole Foods had something to do with that.” H.E.B. in particular took note. In 1993 the dominant chain of South Texas opened Central Market in Austin, a one-of-a-kind warehouse-size store that, like Whole Foods, offers a staggering selection of the organic and the exotic, but in a way that steers clear of the only-natural-is-good dogma of “Holy Foods.” Mackey’s response to Central Market was to close the original Lamar store and the two other Austin locations and open two larger stores last year, including the 38,000-square-foot downtown location, where the corporate headquarters are now located. The consolidation resulted in a 20 percent increase in sales.
Conventional realities must still be reckoned with—eating natural isn’t for everybody. It costs more to shop at Whole Foods, and some folks will never cotton to handing money over to a checkout person with nose rings and tattoos. To Mackey’s credit, though, his vision is clearer than ever. When an outbreak of cyclospora gave rise to fears about strawberries this summer, Whole Foods pulled the suspect fruit from its shelves. “A lot of people shop at Whole Foods because we have standards,” he says. “We don’t sell products with artificial ingredients or beef raised with antibiotics or growth hormones. We discontinued purchases of tuna caught in nets that endangered dolphins. We phased out herbal ecstasy—even though its main ingredient, ephedrine, is a natural herbal stimulant—because it was being abused. We feel like we have to set an example.
“People today have the education, and experience, to be more experimental with their food,” Mackey says as he finishes his plate of coconut shrimp and a glass of mango spice herbal tea. “The generation coming up is even further along. They might have grown up thinking vegetarianism, for instance, is normal, or at least not as weird as when I was a vegetarian for five years and my parents didn’t want me to eat dinner with them. For me, it was an act of rebellion.” That was then. Now he has made healthy food a way of life.