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Photograph by Traci Hukill
The Dish: Attendees at the March 7 soft opening of the new Westside New Leaf saw the food bar, bakery, cheese case and other features of a foodie wonderland. The store opens to the public March 11.

Food Fight

As New leaf and Whole Foods open brand new locations this week, the contest for the soul of the Santa Cruz shopper begins.

By Traci Hukill

Two days before the soft opening of New Leaf's flagship 21,000-square-foot store on the Westside, co-owner Rex Stewart looks surprisingly untroubled. Construction materials still litter the entryway, the whine of a drill pierces the air and in the kitchen along the back wall, the pizza guy is crouched inside the oven space with a caulk gun. But Stewart is an island of calm as he walks through it all, pointing out details of which he's particularly proud: the burnished cement floor etched with a nautical theme; the modernist lime-and-chartreuse tiles on the wall behind the bakery, remaindered from a local project and purchased at a fraction of the price; the stylized map of Santa Cruz's Westside that meanders along the east wall.

Stewart's calm might be the shellshocked variety. Overseeing a major construction project, much less one in a troubled economy, could traumatize anyone, and New Leaf has been on a wild ride in the last 12 months. This time last year, the company was in talks with Planet Organic Health Corp. over a $10 million purchase agreement that would have seen the hand-over of three Santa Cruz New Leaf stores, plus new stores on the Westside and in Half Moon Bay, to Canadian ownership. In May the deal fell through when Planet Organic couldn't raise the money.

Stewart and co-owner Scott Roseman decided to go ahead with the expansion anyway.

In August construction started on the Ingalls Street property. And in September--with the new Westside store, the Half Moon Bay store and the downtown New Leaf remodel all under way--funding failed. In a story worthy of a Jimmy Stewart movie, the Santa Cruz Community Credit Union came through with a good faith bridge loan, and in January three other small institutions--Santa Cruz County Bank, Liberty Bank and SVB Global--made up the rest of the funding gap.

So maybe it's the confidence of the survivor that has Stewart unflinching in the face of stiffer competition than New Leaf has ever faced before. One week after New Leaf's March 11 grand opening, Whole Foods throws open the doors on a 31,000-square-foot store with pizzeria, taqueria, bakery and salad and hot food bar on Soquel between Branciforte and Morrissey. Late this summer, Whole Foods opens a second store on 41st Avenue, four blocks from New Leaf's Capitola location. And down the street, Safeway is constructing a 60,000-square-foot lifestyle store on Mission Street.

Or maybe it's just confidence born of experience. Stewart's been around this block before. When Trader Joe's came to downtown Santa Cruz in 2004, New Leaf fans feared the worst. And the store did take a hit--but it bounced back again, says Stewart. That's what he expects to happen again.

"When I first started, there was no Trader Joe's, no Safeway lifestyle stores. It feels like every time someone builds a new store, they pass the hat," he says, laughing. "Everyone contributes, to a degree."

'Room for Everyone'
As it prepares to officially move into Santa Cruz on March 18, Austin-based Whole Foods is counting on Santa Cruzans adopting a similarly philosophical stance. From its tastefully small street sign to initiatives like a vendors fair in the parking lot this Sunday, Whole Foods is projecting an air of neighborly affability, insisting that it's not out to put anyone out of business and playing up its local bona fides. At a March 4 town hall meeting, regional president Dave Lannon met the first question--a pointed query from Jon Gaits of KRXA-Am (540) asking, "Why should we shop at your store when about 10 percent of the money will come back to us and 90 percent will go to Texas"--with the answer that, basically, there's room enough for everyone.

"I think the way customers shop is they don't do it all at one store. People shop at many different stores," Lannon said. As comments and questions from people clearly concerned about the fate of nearby Shoppers Corner and Staff of Life, as well as New Leaf, continued, Lannon mentioned the stores by name as places that new Whole Foods customers would continue to patronize--a view several audience members echoed. And he identified a common competitor: Safeway.

"I would encourage all customers shopping in conventional food stores to shop in natural food stores," he said. "That would go a long way toward success."

Although a handful of locals at the meeting seemed downright distrustful of the 275-store chain, many people were more concerned about the sustainability of Whole Foods' sourcing--suggesting that, if they found the answers satisfactory, they'd be perfectly happy to shop there. Lannon and other store representatives took the opportunity to drop the names of some local producers--including TLC Ranch, which will be furnishing eggs, and Pacific Crest Honey--as proof that they're as local as they come. General manager Dan Wolfe says the Santa Cruz store is committed to sourcing at least 30 percent of its produce from local farms.

News of this brings a slight smile to Rex Stewart's face and a response that's as close as he gets to fighting words. "We don't have a target percentage," he says. "We have a 25-year relationship with local farmers. Whatever's in season, whatever's organic--sometimes we have 60 percent organic in the store. It ebbs and flows with the season. It's more--organic." He laughs at his little joke.

In the end, Stewart says, it's about competing with yourself. "We're just doing the best we can do to be the best we can be," he says. "I don't worry about the competition that much. I'm aware of it, but I'm not worried about it."

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