Whole Foods Learns That Admitting To Overcharging Customers Can Hurt Sales

Since Whole Foods first became a household name, it’s been the butt of jokes — like the oft-repeated “Whole Paycheck” nickname — about the high prices it charges. Yet customers continued to come. It wasn’t until the grocery chain recently admitted to “unintentionally” overcharging on certain items that shoppers began looking elsewhere.

The company released its latest quarterly earnings report yesterday and said that while sales at established stores were up slightly, the 1.3% quarterly increase was its weakest increase since the early days of the Great Recession.

It didn’t help that the final week of the quarter coincided with a public acknowledgement from co-CEOs John Mackey and Walter Robb that the store had been overcharging customers for some prepackaged fresh food items. Investigators in New York City had turned up evidence of some 800 violations at Whole Foods stores since 2010, with overcharges ranging from $.80 to nearly $15.

“By any measure, it had a significant impact on our sales,” admitted Robb during the earnings call. “If trust is broken, it has to be rebuilt a step at a time.”

One analyst told the Wall Street Journal that investors “are starting to lose faith in the management team” as the company’s “growth rate has slowed massively… yet they are still opening more stores.”