New Frontiers selling SLO store and three others to Whole Foods

Deal is expected to close within a few weeks

kleslie@thetribunenews.comMarch 31, 2014 

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New Frontiers Natural Marketplace in San Luis Obispo will soon operate under a different, yet recognizable, name: Whole Foods Market.

The Texas-based natural and organic food retailer has bought four New Frontiers stores — the San Luis Obispo location off Los Osos Valley Road, as well as three locations in Flagstaff, Prescott and Sedona, Ariz., the companies announced Monday.

Terms were not disclosed.

When the transition occurs in as soon as three months, shoppers will for the most part find the same products, but with a few changes — more gourmet foods, a value line and possibly beer and wine, officials said.

New Frontiers President Jonathan King said the deal had been in the works for several years — though at one time the companies were considering a merger, not a sale.

That changed when King decided the Arizona locations were too separated from New Frontiers’ home base in Solvang. The San Luis Obispo location “sweetened the deal” for Whole Foods, he said, because “it is a beautiful, well-performing store.”

Whole Foods Executive Marketing Coordinator Marci Frumkin agreed the San Luis Obispo location was one of the big draws for the purchase.

“We think San Luis Obispo is a great city, and it’s been on our radar for several years,” Frumkin said. “It’s a college town that seems to have a focus on healthy living, so it made sense for us. … When (King) approached us about possibly taking over several stores, we were very excited about San Luis Obispo.”

New Frontiers’ financial performance wasn’t a factor in the decision to sell, King said, noting that annual revenue in 2013 exceeded $65 million, an increase from the previous year. He declined to disclose profits.

King will now expand his company’s Solvang store, the only remaining New Frontiers location, as well as grow its organic farm business there. He said he would consider opening another location in the San Luis Obispo County area in the future, but for the time being is happy with his decision.

“I think our customers will be very well cared for,” King said. “I think Whole Foods will be able to take those stores to new heights.”

It could take three to six months for the stores to fully transition to Whole Foods, said Dave Gonzalez, executive coordinator for operations at Whole Foods Market.

Gonzalez, who was visiting the local store Monday, said the company will slowly transition the store. No major reconstruction or expansion is planned for the 33,000-square-foot space at this time, he said.

“They’ve been very successful here; they’ve run a great store,” Gonzalez said. “The last thing we want to do is screw it up.”

Whole Foods has offered positions to all 200 of New Frontiers’ San Luis Obispo employees, and is seeking input from them on what can be improved at the location, Gonzalez said.

“We want to get to know our team members because they’re the ones in the trenches every day, so they are the ones who are going to tell us what needs to happen,” he said.

Though the employees will not change, some of the products may.

Whole Foods typically has an alcohol section offering beers and wines — something New Frontiers has not offered in the past.

It also has a larger gourmet foods offering, and a value line that will help to lower prices in the store, Gonzalez said. (Prices in the San Luis Obispo store may get lower in general, Gonzalez and Frumkin both said, due to the company’s “larger purchasing power.”)

Whole Foods will continue to sell local produce and products, and has added a “local forager” position to meet with county farmers to build the store’s local offerings, Gonzalez said. In general, though, much of the same produce and products customers are used to will still be available, Gonzalez said.

“We’re going to look at what makes sense to keep and what doesn’t make sense to keep,” he said. “We go based on the community and what their needs and wants are.”

New Frontiers customers weren’t fazed by the announcement Monday, with many saying they would continue to patronize the store when it switches to Whole Foods.

“I have a Whole Foods back in my hometown that I really like,” said Amanda Peterson, a Cal Poly student from Sacramento. “I don’t know much about the differences between the two, but I definitely will still shop here. Shopping organically is a priority for me.”

“I’m from Minnesota and Whole Foods is what we have there,” said Libby Parker of San Luis Obispo. “I actually don’t shop at either of them very often because it’s very expensive, but I do like both of their lunches. So I will still come here.”

Whole Foods Market has 373 stores in the United States, Canada and the United Kingdom —with more than 80,000 employees — and reported nearly $13 billion in annual revenue in 2013, according to the company website.

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