Will Whole Foods stay fresh using outside suppliers?
For some shoppers, part of what makes Whole Foods worth the price is its selection of fresh and prepared items. But Whole Foods is heading in the direction of giving up control of that part of the operation — sourcing from suppliers rather than company-owned kitchen facilities.
Whole Foods is closing down three of its kitchen facilities, according to The Boston Globe. One facility in Everett, MA, which provides food for 70 stores in its region, was found by health officials to have severe food safety violations including Listeria contamination. Whole Foods maintains the reason for the shutdown is business-related and geared towards operational streamlining. The company said it will be utilizing food preparation suppliers that will be make food based on Whole Foods’ recipes.
The two other kitchens closing down are in Landover, MD and Roswell, GA, The Globe reported. Whole Foods would not comment on how many stores these locations supplied.
Despite Whole Foods’ claim that the decision was driven purely by business concerns, meeting customer demand for fresh prepared meals safely has been a growing problem throughout the grocery industry. Foodborne illnesses at supermarkets doubled between 2014 and 2015, according to the Centers for Disease Control and Prevention (CDC).
The move to food suppliers is but one of the streamlining efforts that the embattled chain is making as it struggles against bad press and a host of mainstream grocery competitors moving into a niche that it once owned.
In November 2016, the grocer dropped its co-CEO Walter Robb leaving founder John Mackey alone at the helm.
In January, Fast Company reported that the company had shifted control of the buying process from local buyers to category managers at the national level. This has raised concerns that Whole Foods may lose its reputation for giving small local brands a shot at national shelf exposure.
In addition to these moves, Whole Foods may also be shaking up its brand vision. The company recently brought on ad agency MediaCom to manage its media presence, reported Ad Age.
As of late January 2017, Whole Foods’ stock was down by half from where it was in 2013, according to InvestorPlace.
- Whole Foods closing troubled Everett kitchen – The Boston Globe
- Should grocers back away from prepared meals? – RetailWire
- Will one CEO be better than two for Whole Foods? – RetailWire
- Will Whole Foods’ New Buying Strategy Make It Harder For Food Startups to Launch? – Fast Company
- Whole Foods Market Hires MediaCom for Media Planning, Buying – Advertising Age
- Whole Foods Market, Inc. (WFM) Won’t Survive Unless … – InvestorPlace
DISCUSSION QUESTIONS: Will using vendors rather than company-owned kitchens affect Whole Foods’ business? Will the chain still be able to meet customers’ quality and price demands using this model?