Whole Foods president: new 365 chain ‘another tool’ for grocer

Whole Foods Market is opening its first ever 365 store in Silver Lake on May 25 -- a more affordable grocery chain that could lead the company into new cities and neighborhoods.

Patrick Bradley, Whole Foods’ president of the southern Pacific region, which includes the Southern California, said his team has been looking at real estate in cities like Riverside.

They’re “places where traditionally we wouldn’t go into,” Bradley said Friday during a tour of the Whole Foods store in downtown Los Angeles, which opened in November. “We’re going to go into cities where we’re not going into now.”

The smaller format of 365 -- averaging 30,000-square-feet, compared to Whole Foods at 45,000-square-feet -- also expands opportunities in places where finding a good space is challenging, Bradley said.

365 plans to open up shop in North Hollywood, a neighborhood that the grocery company has long been interested in for a Whole Foods store. Finding a storefront for 365, however, was much easier, Bradley said.

“It opens our canvas,” he said. “We needed another option to do different size stores.”

365 not only opens new markets for Whole Foods, but also could appeal to new shoppers that normally wouldn’t shop at the chain known for both high quality and high prices, analysts said. That could be a boon for Whole Foods, which has struggled recently as traditional supermarkets have expanded their own selections of organic and natural produce.

The Austin, Texas, company has posted three straight quarters of sales declines at stores open at least a year. In its second quarter ended April 10, Whole Foods reported flat sales compared with a year earlier.

Bradley said Whole Foods has “significantly” dropped its own prices, especially in produce, to stay competitive. The drops in comparable store sales, he said, also can be attributed to new Whole Foods stores that steal sales from existing stores (which usually rebound within a year, he said).

“The last few years we’ve been cannibalizing quite a bit,” Bradley said. “That’s our comp challenge right now.”

Competition, especially in Southern California, is nothing new, he added. That just spurs Whole Foods toward more innovation.

That includes partnering with grocery delivery start-up Instacart at many of its stores so shoppers can get food delivered to their doorstep instead of braving the crowds. Whole Foods is also testing kiosks where customers can order to-go meals, as well as enabling shoppers to pay throughout the stores.

One Whole Foods in Irvine is bringing on Mendocino Farms, which will have its own space inside the store. Bradley said that the sandwich maker had to tweak some of its ingredients to meet Whole Foods’ quality standards.

In downtown Los Angeles, Whole Foods has already partnered with local chef Roy Choi to open an outpost of his rice bowl joint Chego, which is tucked into the prepared foods section.

Ultimately, downtown’s thriving community of residents and workers could support a second Whole Foods store, Bradley said.

shan.li@latimes.com

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