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How John Mackey Built a Billion Dollar Grocery Empire

Warren Cassell Jr.
|
July 29, 2016
john mackey, whole foods, entrepreneur, capitalism

At the age of 25, John Mackey borrowed $10,000 and, along with his then girlfriend, started a small food store that aimed to offer their community a healthier alternative for grocery shopping.

It launched on a rocky start, but the couple stayed focused and eventually lead the business into profitability.

Fast forward to more than 35 years to today. That grocery business, which ultimately became Whole Foods Market, is now one of the largest supermarket chains operating in the world. The company grossed well over $15.3 billion in sales and saw a net profit of a little more than $535 million last year alone. All under Mackey's unconventional leadership.

Whole Foods' remarkable growth story has made Mackey one of the wealthiest men in the world. With an estimated net worth of $100 million, Mackey is as benevolent as he is wealthy. He has pledged to donate most of his stock portfolio to charity and has donated millions of dollars to charities over the years. In addition, he has refused to take a salary of more than $1 a year since 2006.

Here is a overview of how John Mackey, a college dropout and self-described hippie, created one of America's most recognized and valuable brands.

Early Life and Schooling

Born in August 1953, Mackey grew up in Houston, Texas. He moved to Austin, the state's capital, to enroll at the local University of Texas. There he began to live a hippie lifestyle, and eventually moved into a vegetarian co-op around the age of 22. He was not a vegetarian at the time but he wanted to see what living on a plant-based diet was like as well as to meet new people.

Unlike the majority of students who go to college, Mackey did not have any interest in pursuing a degree program. Instead of following specific curriculum requirements, Mackey took a wide range of courses that were of interest to him. These were often religion- and philosophy-related classes. He did this for nearly six years, and believes that the time he took to learn about a wide range of subjects is one of the reasons why he is so successful today.

A Health Food Store Is Born

Mackey's experience in a vegetarian co-op helped to make him a more health conscious person. In fact, it is the reason why he converted to veganism. After years of living in a communal home, Mackey and Renee Lawson Hardy, his girlfriend at the time, decided to move out and get an apartment of their own.

As a way to make a living, the couple came up with the idea to start a health food store of their own. To start the business, Mackey borrowed $10,000 from his father and was also able to convince a group of family and friends to inject an additional $35,000 into the business. The store opened in 1978, and was named SaferWay, a play off of the grocery giant SafeWay. In the first year the business lost half of its initial capital. In a Whole Foods promotional video, Mackey joked about this saying "...[It was probably] because Renee and I did not have a clue what we were doing."

After another unsuccessful year of operations, Mackey returned to his investors for more money in order to keep the business afloat. He told them that he believed that the store needed to be bigger in order to become profitable. Looking in retrospect, Mackey said, "[The store] was just too small. We did not have a big enough store to put in a full selection of grocery products. I wanted to have a full grocery store where [people could] do all of their shopping."

The investors agreed and put in additional money for Mackey to merge with one of their competitors, Clarksville Natural Grocery. The name of the store became Whole Foods Market following the merger and it reopened with a team of 19 employees. The store's debut location was a little more than 10,000 square feet in size. This was a lot larger than the average health food store around that time. The expansion strategy paid off greatly and was a success from the first day.

Even More Expansion

By 1984 and under the Mackey's direction, Whole Foods began making a series of acquisitions as a way to expand the company's footprint across Texas and the rest of their country. They opened up Whole Foods locations in Dallas and Houston before branching out to the state of Louisiana in 1988. The next year they launched their debut store in California. The company went public in 1992 and used the majority of the capital it had raised to continue fueling its many mergers and acquisitions.

By 1999 Whole Foods had 100 stores operating across America. The company entered the Canadian market in 2002, and had established a handful of locations in the United Kingdom in 2004 after it had acquired the grocery chain Fresh & Wild. Today Whole Foods employs approximately 91,000 people and has more than 430 locations in the United States, the United Kingdom and Canada. As of July 25, 2016, the company had a total market capitalization of $11.28 billion.

The Bottom Line

John Mackey is one of America's richest men and he created his wealth by offering people healthy food alternatives for more than 35 years. His career in business started in his mid-20s when he started a small health food store along with his significant other. That store met some hurdles in its initial years of operating and as a way to stay afloat, Mackey merged his store with one of his competitors. The merger was a success and ever since Whole Foods has been expanding its presence through the United States and the rest of the world through various mergers and acquisitions.

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