WHERE THEY CAME FROM
In 1978, John Mackey and his then girlfriend Renee Lawson Hardy dropped out of college to open a vegetarian health-food store in Austin, Texas. Two years later, their SaferWay Natural Foods merged with Clarksville Natural Grocery to become Whole Foods Market. The company expanded steadily, purchasing and merging with health-food chains around the U.S. It went public in 1992, raising $23 million.

WHAT THEY SELL
You could define Whole Foods stores by what they don’t sell—foods with artificial colors, artificial sweeteners, preservatives, additives, and trans fats—but that’s far from the whole story.

Whole Foods’ large, well-lit supermarkets might be better described as “lifestyle stores.” Their atmosphere and signage are designed to make customers feel as though they are not just buying dinner, but also a healthier existence, a better environment, and an all-around nicer world. Stores are stocked with a wide selection of organic and natural products, from oranges to lipstick; rather than sparsely supplied salad bars, the markets offer huge and diverse prepared-foods sections. And there are abundant samples.

WHAT THEY GOT RIGHT
Whole Foods has made fare that was once the domain of Berkeley hippies and granola-crunching vegans mainstream, while simultaneously tapping in to an enormous market for upscale groceries that other retailers had missed. As a result, the company has thrived in the American marketplace, with same-store sales rising at rates of 8 to 15 percent per year since 2002 despite relatively high prices (one common nickname for Whole Foods is “Whole Paycheck”).

(The downside: Now everyone from corner groceries to behemoths like Wal-Mart is selling organic food. The competition, especially from Wal-Mart, is largely to blame for Whole Foods’ declining stock price, which fell 40 percent in 2006.)

Whole Foods’ corporate culture has led to a considerable amount of favorable press and has helped maintain the company’s positive public image. The chain provides free health-care coverage to employees and maintains an executive salary cap, currently at 19 times the pay of an average full-time employee. Mackey, the C.E.O., reduced his compensation to a mere dollar in early 2007, and because he values transparency, he has made it possible for any Whole Foods employee to find out the salary of any other Whole Foods employee, regardless of either employee’s position.

WHY THEY’RE CONTROVERSIAL
Though Whole Foods has been among Fortune’s 100 Best Companies to Work For every year since 1998, Mackey is vehemently antiunion and has frequently been accused of union busting.

Then there are the customers and health-food advocates who assert that Whole Foods sells foods labeled natural and organic that don’t meet rigorous enough or standardized criteria. And some believe that Whole Foods imports too much of its food when it could increase its reliance on local producers instead. For example, in The Omnivore’s Dilemma: A Natural History of Four Meals, Michael Pollan argues that importing organic asparagus from New Zealand is hardly good for the environment, given the fuel burned in transporting it to the United States. Mackey wrote an open letter in 2006 that refuted many of Pollan’s arguments and defended Whole Foods’ methods.

WHAT’S NEXT
The company’s stated goal is to reach $12 billion in sales in 2010 (in 2006 it had $5.6 billion). To that end Whole Foods is opening more stores—as of early 2007, the company had plans to open 72 locations in three countries.

As Wal-Mart and other competitors carry more organic products, Whole Foods will undoubtedly adopt some of Wal-Mart’s winning strategies—specifically, lower prices and larger stores. Those stores will probably sell a wider variety of products than existing ones do now, and many will feature cafés, health and wellness shops, wine-tasting lofts, espresso bars, and even cooking schools. —S.E. Kramer