Erewhon: The Social Club That Sells Groceries
The country’s most expensive grocer is a country club under the hood
Inspiration can be found everywhere.
For me, it came in the form of a Donald Glover GQ interview. He stated he wanted his creative studio, Gilga, to become the “Erewhon for culture”. Not knowing what that meant, those three words dragged me by the ankle into a sinkhole. On the other end? The most expensive grocery store in the country.
On its glossy surface, Erewhon is a “certified organic retailer” where you can “buy orange cauliflower that is more photogenic than you” and where “juice…costs almost as much as a Tesla” (Tinx). Erewhon is the only place that ensures the apple you purchase will be Plato’s ideal Form of it.
But it is not just another organic grocery store. This one rakes in $2500 per square foot, a 4x improvement over the industry average (Forbes). A grass-fed cash cow like this isn’t born from just selling the best groceries possible. It comes from transcending into something novel.
Inside the store, A-List celebrities can be found crowding the smoothie bar with paparazzi in tow. Outside, you’ll find valet parking, gleaming Range Rovers, and tables packed with the influencer class. At home, you can log into a loyalty program that emulates Amex Platinum’s. When you begin to look deeper you realize, aisle by aisle, that Erewhon is an entirely novel third place. Erewhon’s outrageous success has less to do with it being a luxury grocer and more to do with it being a social club built for the healthy, wealthy, and influential.
What to expect:
How did Erewhon turn out this way?
What is it today?
Does it make money?
How is it a social club?
Can it work elsewhere?
Before we go forward, let's go backward to 1966.
Tale of Two Couples
For a retailer so closely tied to influencer culture, celebrity sightings, and beautiful packaging, its origins are much more humble. In the 1960s, Japanese immigrants Michio and Aveline Kushi, early champions of the macrobiotic movement, opened a store on Newbury Street in Boston, MA. Erewhon was unique in that it was one of the first – and only – stores in the country where you could bulk buy grains and beans from bins. Even more importantly, it had the grand vision to offer local farmers a price guarantee if they didn’t use pesticides or herbicides in their produce. This one store’s actions jump-started the organic food movement we know today.
They parlayed their success to the surrounding neighborhoods of Cambridge, Hartford, and Brookline. By the 1970s, Erewhon expanded into becoming a wholesale distributor to natural food stores and co-ops nationwide along with importing Japanese groceries. Soon, Aveline moved cross country and opened the first West Coast location on Beverly Boulevard in Los Angeles, California.
The LA location, ultimately, was the only one that survived. While ownership of the store changed hands over the years, it kept to its core business of being the healthiest store around. In 2011, an LA couple, Tony and Josephine Antoci, were looking for their swan song. Tony recently sold a company to Sysco. After toying with the idea of bringing Dean & DeLuca to the West, they instead bought Erewhon’s solo location. Twelve years later, they successfully scaled the business to nine locations. Tony runs the business side of things. Josephine commands the curation that Erewhon is known for. She personally tries and approves every product that makes it onto Erewhon’s coveted shelves.
There is something warm and satisfying to see that the grocery store chain founded by a power couple living on in the hands of another after all these years. Now, let’s peruse what the Antocis turned the Kushi’s temple of health into.
The Emerging Erewhon Empire
Grocery
As of 2023, the grocery chain has nine locations and is planted in the trendiest LA neighborhoods like Beverly Hills, Santa Monica, and Calabasas. These aren’t your typical “green” or “organic” grocery stores. Erewhon is proud to call itself a “Certified Organic Retailer”. This means Erewhon gained a stamp from a USDA-certified reviewer that ensures that Erewhon’s entire supply chain consists of:
organic ingredients, those not sprayed with herbicides, pesticides, or using synthetic fertilizers and there is no mingling with non-organic ingredients
labels that are 100% truthful
sanitation procedures that prevent contamination or sacrifice organic integrity
On top of that, they even have their own “Erewhon Standard” that ensures all food is:
grass-fed/cage-free
sourced from places that support animal welfare
sourced from places that are regenerative
sourced from places that biodynamic
there during its natural season
The groceries you buy at Erewhon command a hefty premium, but they are the healthiest available on the market. In addition, they push for exclusive stock with their suppliers so what you find at Erewhon, you usually can’t find elsewhere. For context, here is what’s in my cart right now:
Erewhon Organic Biodynamic Pasture-Raised Eggs 1 Dozen: $13.99
Organic Pastures Raw Milk, Organic, Whole 64 oz: $11.99
Erewhon Organic Boneless Beef Ribeye Steak 12 oz: $27.99
Erewhon Organic Extra Virgin Olive Oil 750 ml: $24.00
Erewhon Roasted Chicken Bone Broth 32 oz: $21.00
…Maybe I’ll check out when Friday hits.
In-Store Beverage
They buttress their highest of quality groceries with a tonic and juice bar that uses in-store ingredients. These beverages are what is normally shown on social media. Half for their beauty and half for their prices. For example, this is the $20 “Bella Hadid’s Kinsicle Smoothie”, an official collab between the model, Kin, and Erewhon that includes ingredients like Lily of the Desert Aloe Vera Juice, Om Lion’s Mane Mushroom Powder and Coconut Cult Yogurt. Yum.
Prepared Foods
They have a prepared foods business, which allegedly makes up more than 40% of sales alone (Forbes). Their cafe has decadent items like Coconut Braised Lamb to simpler plant-based breakfast burritos. You can also get their food catered.
Merch
In 2018, marketing firm Pizzaslime made Erewhon sweatshirts, sold them for $300 each, and went viral. Celebrities like Jonah Hill and Sophie Turner were seen wearing them. What grocery store do you know has such a following that it inspires people to make high-end bootleg merch? This was the moment that Erewhon graduated from a trendy family-owned grocery store with celebrity clientele into a consumer brand that becomes a part of peoples’ personalities.
The enormous success of the bootleg brand pushed Erewhon and Alec Antoci, the son of the owners, to take matters into their own hands. In 2021, they launched their “Erewhon Standard Collection”. Similar to a Supreme drop, they made a single batch of a limited quantity. Of course, it sold out quickly. They continue with this drop format today. If you check out their merch right now, its “Culver City” line is live with $150 shirts🔥. Might have to cop.
Tech-Enabled Loyalty Program
Lastly, they have an app that houses their tiered loyalty program. The basic program is $100/year while the “Plus” is $200. The former isn’t too compelling, so we’ll focus on the latter. At an initial glance, the program offers straightforward perks like:
Earn $1 back in points for every $10 spent
One free tonic drink a month
Free delivery on orders $150+
Access to the “Lifestyle Collective”, a group of partners across the health, fitness, and hospitality industries. This is the unique aspect of their rewards program that I will go into more shortly.
Erewhon is Becoming the First Luxury Grocer
We can see that Erewhon isn’t just a fancy grocery store. Besides the bells and whistles, there is an overall x-factor that separates it from the rest of the premier grocers that we know. If you overlay the core principles of “The Luxury Strategy” by Jean-Noël Kapferer and Vincent Bastien onto Erewhon’s business, you will see it has deliberately positioned itself as America’s first luxury grocer.
But does all this fanfare actually pencil? Let’s do some public math.
Show Me the Money
If it doesn’t make dollars, it doesn’t make sense. Originally, I assumed that Erewhon was a hyphy grocery store that was not any more successful than your usual fare. Then, I came across a quote by Ken Fox of venture capital firm Stripes, who invested in Erewhon. For context, Stripes has invested across the food landscape with checks into Grubhub, Blue Apron, and Levain Bakery. They know a thing or two about what people like to eat. Ken said, “Every metric you would measure this business on is an outlier in a few different industries: specialty restaurants, traditional retail, and grocery. Any kind of four-wall experience you have, you would be hard-pressed to find store economics that look anything like Erewhon.” That got my attention. It isn’t just killing it at the grocery game, it is killing it, full stop.
Finances
Erewhon has been close-lipped about its financial performance. Forbes reports these figures as of 2019:
35%+ year-on-year growth since 2016
15%+ same-store sales growth
Each square foot made $2,500, making it more than four times as productive as most other grocery stores
I then mapped out its real estate holdings, with the exception of the Grove and Palisades locations. For those, I assumed they are the company’s stated ideal of 10,000 square feet each.
Putting it all together, here is what we are looking at:
At an initial glance, these figures seem high. But if you compare it to the ~$900M Whole Foods brings in per store on average (~$470B Total 2021 Revenue / 514 stores), it seems more reasonable. My estimations may even be too conservative here.
I couldn’t get any sort of cost or profit data together for a complete picture. However, Tony Antoci has often stressed the importance of profitability, “We opened our Calabasas store in 2014 and it was profitable in six months…If it’s not making money it’s not fun” (LA Times) and later said, “the goal has always been to grow slowly… We don’t believe in debt, and the business supports itself”. As opposed to other startups that raised from venture capital to expand their footprint quickly, Erewhon has taken a methodical approach with a focus on profitability. Couple that with Ken Fox’s glowing assessment of the business, we can assume that Erewhon’s groceries aren’t the only thing that’s green.
A Grocer with PMF?!
Both Ken Fox’s comments about strong metrics and Tony’s about quick profitability lead me to believe that weirdly enough, Erewhon has achieved product/market fit (PMF). PMF just means “I built the thing that customers want” (Michael Seibel). Put more tangibly, "The customers are buying the product just as fast as you can make it… Money from customers is piling up" (Marc Andreessen). Put even more tangibly, you are “suffering from success” (DJ Khaled).
A way this PMF manifests is via brand loyalty. During a 2018 interview with a handful of Erewhon executives, the former Marketing Director of Erewhon said, “Erewhon… [is] fortunate to have tremendous word of mouth. Friends are telling friends about what makes Erewhon special. We often see our customers touring people through the store, introducing them to their favorite products. For the most part, we don’t advertise” (Commercial Search). The only other time you give a tour for free is when you are showing off the amenity floor of the fancy apartment you moved into. This sense of customer pride is hard to find in any type of business, let alone a grocer. People have made Erewhon part of their lives.
How can Erewhon actually pull this off when grocery competition is such a dogfight? Why haven’t any of their competitors been able to do what they do? It’s because Erewhon keeps on making decisions that further cement it as a meeting place, not a grocery store.
Erewhon House
What constitutes a “social club” is vague. It's a place where people meet, generally around a common interest. While a book club that meets at your local library is technically a social club, it doesn’t really pass the smell test. When people say social club, they think of SoHo House, a “global private members social club”. It's moody lighting, cuties by the pool, and a fresh cocktail menu. All of these elements are to facilitate spontaneous run-ins and meet-cutes. Using SoHo House as an example, here are some of the markers of a social club:
Using the above as a framework, we can show that Erewhon has all of those things and more.
Common Interest
People frequent Erewhon for one of two reasons:
you either are healthy and/or wealthy and want the best groceries possible
you want to be near famous people
As far as a binding force for a social club, these common interests are powerful ones.
Rare
As mentioned above, the Antocis took a methodical approach to expansion. They only opened nine stores in twelve years when they could have grown faster. By doing this, Erewhon limited both the availability of its products and its physical access. If they became oversaturated, not only would they be subject to cannibalization, it just wouldn’t be as cool.
Erewhon also chose to expand solely to the most premier LA zip codes. This gave the brand a pole position to become a third place in key places – where the rich and famous reside.
Brand Standards
As opposed to most grocery stores that are based on utility, Erewhon designed its stores for atmosphere. A representative from the architecture firm used for the Santa Monica location said, “People crave human interaction. A place designed for engagement will draw more people in, encourage them to stay and urge them to visit again” (Commerical Search). Erewhon uses the physical store itself to attract customers the same way Apple did. It uses natural wood and natural light as a backdrop for its vibrant vegetables, rainbow beverages, and impeccable packaging. This is all intentional as Erewhon does not want to be where you just buy groceries, they want you to transcend, “shopping at Erewhon is intimate and sensory. You aren’t just ticking off items on a list, you are coming to Erewhon to be inspired.” Delicious.
In addition, each store is right-sized around 10,000 square feet to maintain a “mom-and-pop” shop feel. For comparison, an average Whole Foods is 4x the size of that. According to Yuval Chiprut, Erewhon’s Chief Development Officer, “If we don’t feel authentic to each community, we’re gonna fail”. This goes as far as ensuring each store’s playlist is curated by a local DJ. All the details add up to an unmistakable brand standard that ensures that when you are shopping at Erewhon, you know it.
Food and Beverage
For many of us, the bar is our third place. People crave conversing over a drink. In an age where drinking alcohol is becoming less popular, the demand for non-alcoholic bars is growing. Erewhon’s Tonic Bar serves as that third place for their target customer. Come by for a drink. Have an engaging conversation with the tonic experts. Meet someone new, who just like you, cares about their health. Perhaps you’re enjoying the conversation so much you decide to grab a bite at the Cafe. On your way out, you enjoy the sunshine in the outdoor area with a Bella Hadid smoothie in hand.
In terms of in-store experiences, Erewhon pushed past the free sample carts of Costco, Whole Foods and Trader Joes. Between the quality and rotating assortment, the Tonic Bar and Cafe offer customers an unparalleled and delightful experience. It gives people a reason to come in, to stay around, and to come back.
Amenities
A glaring differentiator to how Erewhon is positioning itself is its loyalty program, particularly, its “Lifestyle Collective”. This is a selection of partners across fitness, nutrition, and hospitality that members get unique access to.
For example, at Grand Wailea, “a retreat shaped by nature and inspired by culture” at a Waldorf Astoria Resort, members get $100/night in credit and complimentary room upgrades. At 9x by APN, a fitness studio, you get 2 free classes. This gives a sightline into Erewhon’s ambitions to be more than a grocer. Erewhon is encouraging an entire Erewhon-sponsored lifestyle connected to the grocery store. Erewhon’s brand halo can seamlessly move into these other spaces that serve as logical places for people to either bring their Erewhon smoothie to or places that encourage them to go get one after.
When comparing Erewhon against the standard set by SoHo House… that’s 5/5.
The Proof is in the Pandi
Putting it all together, Erewhon is looking less like a grocery store and more like a social club. What cemented it for me was what Eddie Huang, Fresh Off the Boat author, said about Erewhon, “the real draw of Erewhon is that it's a scene… You bump into everyone you matched on Raya or once met at Benny Blanco's house” (Vanity Fair). The idea of “bumping into” people is the entire premise of social clubs.
You may think I am reaching. All analysis aside, Erewhon actually became a social club during the pandemic. Turn back the clock to COVID times. Stay-at-home orders. You couldn’t go anywhere. You couldn’t meet anyone. The only exception to that rule was… grocery stores.
Erewhon became one of, if not the only, place in LA where one could see others and be seen. The young and beautiful could socialize on Erewhon’s outdoor seating area without breaking the law. Getting a smoothie or salad for lunch became a part of people’s routines. Erewhon became the third space where people could flirt. It was the only place one could pop out their phone and add something interesting to their story.
Erewhon saw the opening and did all it could to encourage traffic. It highlighted immunity-boosting tonics, opened early for the elderly, and even offered to shop for customers who didn’t have masks.
The pandemic allowed the grocery chain to evolve into what it was always meant to be.
Erewhon May Move East
Erewhon couldn’t have taken off anywhere but LA. The blend of health-conscious, wealthy, and influencer cultures made Erewhon what it is now. Farley Elliott, an editor at Eater said it best “...everything is so over-the-top [at Erewhon], but in an earnest way that makes it feel only possible in Los Angeles… the type of people that tend to be perceived as populating those Erewhons could only really happen in Los Angeles.” Exactly.
Erewhon has nine locations now with more planned throughout CA. However, Tony has said that they are open to coastal expansion, “We are looking at New York City; it’s definitely on the plate” (Curbed). But can it have the same level of success out East that it does in LA?
On paper, this move makes sense. NYC has the celebrity and influencer class that draws others in. (I run into the cast of Succession regularly). There are premier zip codes where people can spend the money on Erewhon’s luxury stock. I could easily see their glowing storefronts planted in SoHo or Chelsea. With NY-based investor Stripes on its cap table, they have a clear line to the connections they need to make such a move.
It’s a question of if Erewhon can get their flywheel running here. Erewhon’s magnetic, cult of personality success has as much to do with its atmosphere as it does with its groceries. Behind its healthy products what Erewhon has going for it is that it’s cool. It has star power. It is a place designed to meet or be seen by people who are healthy, wealthy, or famous. Erewhon promises run-ins with celebrities. Paparazzi in the aisles. Gleaming G-Wagons bumping the latest AI Drake. Based on those promises, Erewhon can further sell premium groceries and drinks to those who may not usually be interested. Combine those drivers with additional revenue streams like prepared food and a compelling loyalty program, now you’re really cooking. For Erewhon to pull in the kind of figures it does out West, it needs to replicate this flywheel. Erewhon will not only have to localize its supply chain but also package up what makes it a compelling third place. Erewhon needs to double down on the fact that it is a social club that happens to sell the best groceries in town.
Thanks for reading!
Safi
What should I look into next? Twitter: (@s_afiaziz)
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Sources:
How Erewhon Became L.A.’s Hottest Hangout
Inside Erewhon: Hollywood's Cult-Favorite Wellness Location
How Erewhon Became Everyone’s Favorite Grocery Store Hot Spot
Is Erewhon Attempting New York?
Erewhon expands to 10 stores with new locations in Culver City and Pasadena
Erewhon Market: An Organic Approach to Retail
How Erewhon Became America's Most Expensive Grocery Store
Organic Grocer Erewhon Eyes Expansion After Private Equity Deal
City of Pasadena Announces Erewhon Set to Open in Iconic I. Magnin & Borders Books Building
Erewhon Market opens new location in Studio City
Luxury grocer Erewhon allegedly failed to pay rent at new Studio City location: lawsuit
Erewhon Opens In Beverly Hills With Massive Crowds
A peek inside Erewhon’s newest location in Santa Monica
How Erewhon made luxury groceries a lifestyle: ‘We’re gonna get high off the good stuff!’
How Erewhon Became Everyone’s Favorite Grocery Store Hot Spot
This was excellent! It's got me thinking if there are any other physical locations we go to regularly that are/could be the "Erewhon for X". Equinox did gyms.. Opticians? Pet stores? Petrol stations?
Really fascinating post