When the first branches of Whole Foods’ new 365 Supermarket open later this year, shoppers will see more than just lower prices. The millennial-oriented chain is being positioned as a cheaper alternative to its older sibling, and Whole Foods is trying an unusual technique to attract shoppers: filling their new locations with tattoo shops, vegan restaurants, and hipster-y florists.
The chain is rolling out a project called Friends of 365, which is described in marketing materials as a "super cool hang" that also happens to grow businesses:
We're looking for innovative businesses like yours to set up shop inside our 365 stores (okay, in some cases, outside on the patio). By combining our strengths and yours—plus a whole horde of like-minded shoppers—we'll create that all-important synergy that grows businesses. We'll also have a super cool hang.
These businesses will essentially operate standalone stores within Whole Foods' 365 supermarkets. According to Whole Foods, these stores can be restaurants; vendors of things like body-care products, clothing, housewares, or pet supplies; or service providers such as barbershops, tattoo parlors, and bike shops.
As of press time, two partners have been announced for the first supermarket, in Los Angeles’s Silver Lake neighborhood: a branch of local mini-chain Allegro Coffee Roasters (which has a pre-existing business relationship with Whole Foods), and a branch of New York-based vegan restaurant By Chloe. The choices appear to be very deliberate for the store’s demographics: the location just off the Silver Lake reservoir is surrounded by coffee shops and veggie-friendly options; Moby’s vegan restaurant, Little Pine, is approximately 12 blocks from the new supermarket.
In the first 365, at least, the selection of partners is a demographic signifier. Whole Foods encountered bizarro-world pushback when choosing Silver Lake for their first 365 branch when local residents filed a petition against the store opening. The petition did not criticize Whole Foods opening in Silver Lake—rather, it was defensive about it opening a budget-oriented spin-off rather than a full-fledged Whole Foods in a neighborhood "actually comprised almost exclusively of financially secure people in their mid 30s and above and many accomplished professionals with young families."
For By Chloe, opening in 365 and essentially serving as a pilot partner for the Friends Program has two direct benefits. It allows them to both test their formula (a quick-service vegan menu) for future expansions, and to introduce themselves to an audience beyond the customer base at their current location on New York’s Bleecker Street.
According to Samantha Wasser, a co-partner at By Chloe’s and the creative director at the restaurant’s parent company, ESquared Hospitality, the 1,200-square foot-restaurant will have approximately 20 seats, a separate street entrance from 365, and a passageway connecting it to the supermarket. It will be a permanent tenant rather than a pop-up restaurant, and the restaurant’s employees will not be on the supermarket’s payroll.
However, Wasser demurred when I asked her to clarify the exact relationship between By Chloe and Whole Foods. She categorized it as a "partnership," noting that the supermarket had input over aspects of their facade, and that the Los Angeles branch of the restaurant might use produce from Whole Foods for special items.
"We’re trying to stay as close to the By Chloe brand as possible, while being the first West Coast location," Wasser told Fast Company. "We want other people on the other side of the country to see it, and there will be similar design elements. The menu is similar, although some of our market specials will probably be driven by California produce."
It also uses the Friends program to test out an expansion of the By Chloe brand. By Chloe was named by the National Restaurant Association, a prominent trade group, as one of their "breakout brands" of 2016; ESquared also operates the successful BLT Steak family of restaurants. Alongside the Los Angeles supermarket location, two additional New York branches and a vegan dessert cafe are also planned for opening in 2016.
Test marketing restaurants for expansion isn’t an unprecedented function for a Whole Foods, either. About 20 minutes’ drive from the new 365 supermarket, celebrity chef Roy Choi operates a branch of his Chego restaurant catering to office workers inside Whole Foods’ downtown Los Angeles location. Speculation is also swelling around another local restaurant chain in Los Angeles, Mendocino Farms, in which Whole Foods recently purchased a minority stake.
And it works for 365 as well. Restaurants like By Chloe, and the non-food retailers Whole Foods has been courting, are an easy way for the supermarket chain to attract customers. In every market Whole Foods is currently planning a 365 location in—as of press time, Los Angeles, Seattle, Houston, Portland, Austin, Cincinnati, and San Francisco—the supermarkets face competition from robust local grocers, Aldi, and from Whole Foods itself. For 365, tattoo shops and vegan restaurants inside supermarkets just equals good business.