The Anarchist's Cookbook

Mackey's conclusion is both simple and revolutionary. And if his past record is any guide, it may ultimately change the lives not only of every American but of hundreds of millions of farm animals. Before being consumed by humans, animals should at least be allowed, in his words, "to live out their fundamental animal nature." The ducks that so concerned Ornelas are a perfect example.

Whole Foods has been buying ducks from Grimaud Farms in California for nine years. Grimaud is known as a small, high-quality raiser of ducks. That means no antibiotics, no steroids, and feed that is free of animal by-products. Still, says Mackey, the ducks raised by Grimaud spend their lives in barns. They don't have access to the outdoors. Their bills are trimmed so they don't peck one another. Most stunning to Mackey, "they are not allowed to swim. Ever. Ducks who never get to swim."

Right this minute, at one of its California farms, Grimaud is designing swimming areas for its ducks.

http://images.fastcompany.com/magazine/84/wholefoods_duck.gif) no-repeat top center; padding-top: 45px;">John Mackey started out with a small health-food store that he opened with his then-girlfriend, Renee Lawson Hardy, in a three-story building on 8th and Rio Grande in Austin in 1978. There was the store on the first floor, a health-food restaurant on the second, a bed on the third. "We didn't even have a shower," says Mackey. "Renee and I would take showers in the Hobart dishwasher in the restaurant, you know, using the spray hose."

It has always been easy to underestimate Mackey, who says that he first discovered vegetarian food when he joined a vegetarian group house in college. "I thought I would meet some really cool women there," he says. "And I did." His business acumen, his instinct for the market, and his astonishing competitiveness were well camouflaged back then. They still are today.

Now 50, Mackey still has an undisciplined head of hair, and he typically wears shorts and hiking boots to work. Before the adjournment of every business meeting at Whole Foods, including the ones that Mackey conducts, participants do a round of "appreciations," saying something nice about the people in the meeting.

Mackey flies commercial and likes to rent the cheapest car. A half-dozen times a year, his two senior operating executives -- A.C. Gallo and Walter Robb, each of whom runs half the country for Whole Foods, from Boston and San Francisco, respectively -- come to Austin and stay at Mackey's house. They make their own beds, and talk shop at 6:45 a.m. over soy yogurt and fruit. Mackey "is hardly a manager at all," says a former executive who reported to him for years. "He's an anarchist."

Maybe so. But there is nothing undisciplined about Whole Foods' performance. The company cleared $188 million in profits in the last two years. Food Lion, with seven times as many stores as Whole Foods and five times the revenue, made $150 million in the same period. Safeway lost $1 billion.

As for consistency, Whole Foods has five-year performance numbers that are little short of incredible. In the last five years, grocery sales in the United States have grown a total of 13%, or 2.5% a year compounded. Here, in reverse order, are the year-over-year sales increases at Whole Foods, starting with last year: 17%, 21%, 21%, 23%, and 14%. For Whole Foods, the five-year total growth in U.S. grocery sales would have been a bad single-year performance.

Even more revealing than the overall sales growth, though, is Whole Foods' comparable-store sales growth. Comparable-store sales are a measure of how well similar stores that are already open do year over year. You can grow by frantically opening stores (see, for instance, Gap), or you can grow by attracting more and more customers and selling more and more stuff in existing stores. Again, in reverse order, here are Whole Foods' comparable-store sales increases, starting with last year: 8.6%, 10%, 9.2%, 8.6%, and 7.7%. A typical Whole Foods store that did $15 million in business in 1999 did $21.4 million in 2003 -- $6 million in added sales that it mostly took away from the likes of Safeway, Kroger, Albertson's, and Food Lion.

Whole Foods has even tromped the nation's largest grocer, Wal-Mart. In each of the last four years, Whole Foods beat Wal-Mart in both overall and comparable-store sales growth. In the last two years, as the nation slogged through the downturn, Whole Foods' comparable-store sales have grown at nearly twice the pace of Wal-Mart's.