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F.D.A. Warns Whole Foods on Failure to Address Food Safety Problems

A Whole Foods store in Brooklyn. Inspectors found food safety issues this year at a Whole Foods plant in Massachusetts.Credit...Dolly Faibyshev for The New York Times

Prepared foods are an increasingly important part of the grocery business, delivering fat margins at a time when sales of traditional packaged foods are lackluster. But the strategy also comes with serious risks.

In the clearest example yet, the Food and Drug Administration this month sent a stern warning letter to Whole Foods Market, a longtime champion of fresh and healthy foods, saying that the company had failed to address a long list of food safety issues at its food processing plant outside of Boston.

Among the problems cited: condensation dripping from the ceiling near food; an ammonium-based sanitizer used on a work surface near the preparation of a salad; and a failure to separate dirty dishes from ready-to-eat-salads.

The letter from the F.D.A. is just the latest headache to afflict Whole Foods. Over the last couple of years, the company has struggled with slower growth as competitors have gotten better at copying what it did to distinguish itself in the grocery market. Other wounds have been self-inflicted, like last year, when the New York City Department of Consumer Affairs called it out for mispricing some merchandise based on weight.

Prepared foods, which have almost double the profit margins of packaged foods sold on grocery shelves, have remained a bright spot at the company — at least for now. Such foods accounted for almost 20 percent of its sales in 2014, ringing up $2.7 billion in revenue.

But the letter from the F.D.A. is the second black eye for health issues at the plant outside of Boston, known as its North Atlantic Kitchen, and could put some of those sales in peril.

Phil Lempert, an expert on grocery store operations and marketing, said that the food safety crisis at Chipotle Mexican Grill late last year should have been a wake-up call for Whole Foods and anyone else in the business of preparing fresh foods for sale.

“For Whole Foods to be in this predicament, frankly, there really is no excuse,” Mr. Lempert said. “Because Wall Street has put it under such pressure to expand growth, I think Whole Foods has gotten sloppy — there’s no reason anyone should have water dripping into foods.”

Last fall, Whole Foods voluntarily recalled batches of Curry Chicken Salad and Classic Deli Pasta Salad after a sample prepared at the North Atlantic Kitchen tested positive for Listeria monocytogenes, a pathogenic strain of the bacterium. The plant is one of three preparation kitchens that help stock its stores in the Northeast, mid-Atlantic and South. (Most of the company’s foods are prepared at the stores themselves.)

In February, the inspectors spent five days at the plant and then shared their findings with Whole Foods, which responded within 15 business days. The company told the F.D.A. that it had retrained employees to address most of the issues the agency raised.

That response, however, failed to satisfy the F.D.A. “We do not consider your response acceptable because you failed to provide documentation for our review, which demonstrates that all your noted corrective actions have been effectively implemented,” the agency wrote in its June 8 warning letter.

Whole Foods said the letter came as a surprise. The company said it had taken steps to correct the problems and would meet on Thursday with the F.D.A. to discuss what the issues are and how to address them.

“What’s confusing to us is the fact that the letter identifies issues we’ve already corrected,” said Ken Meyer, the company’s executive vice president for operations.

“We worked with a third-party consultant and our own global food safety team,” he said, “to address their concerns and assumed we were in good standing with them until this letter arrived on Friday.”

Whole Foods now has about two weeks to provide evidence to the F.D.A. that steps it has taken bring the company into compliance. Otherwise, the company might have to pay the agency to reinspect the facility.

Groceries have long offered prepared foods like rotisserie chickens and broccoli salad. But as business has declined in the center store, companies have upped their game, adding sophisticated meals that consumers can take home or eat in the store.

Research this year from the Food Marketing Institute and Technomic found that sales of prepared foods in groceries increased 10.4 percent from 2006 to 2014, making the prepared foods department one of the highest performers in the food business.

While only 8 percent of the supermarkets responding to that survey reported sales growth of more than 5 percent, more than two-thirds of them said they had growth at that level or higher in their prepared food businesses.

The risk for grocery companies is that preparing food receives a higher level of scrutiny from regulators than selling food made and packaged by others. A bad inspection in one location, or reports of food illnesses, can damage an entire brand. Shares in Whole Foods fell nearly 5 percent on Wednesday.

Last year, Costco recalled celery sticks and turkey dinners, King Sooper recalled curried chicken salad and Raley’s recalled its Asian Blue Cheese, Potato and Bacon salad after E. coli was found in celery supplied to all by a single supplier.

Still, perhaps no company has been more aggressive about integrating prepared foods than Whole Foods. The company has long put bars and restaurants into its stores — a new store in Hawaii will have about 200 seats for shoppers to sit and enjoy a meal and a drink.

“Whole Foods is one of the pioneers in providing restaurant quality meals to consumers,” said Joe Pawlak, managing principal at Technomic.

Now, stores like ShopRite and Safeway are opening so-called groceraunts, too. The oyster bar at one of the Mariano’s groceries in Chicago has become a place for a Friday night date, and a ShopRite in Morris Plains, N.J., added a 4,000-square-foot atrium where people can enjoy a meal.

Supermarkets tried moving into the food preparation business in the 1990s, Mr. Pawlak said, but offered too broad a menu and ended up throwing a lot of food away.

“Now what’s happened over the last five or six years, they’ve hired food service professionals who understand restaurants and how items move on a menu,” he said. “That’s taken the quality up to where I can get just as good a meal at the grocery store as I can in many sit-down restaurants — and for a lot better value.”

An F.D.A. spokeswoman said the agency could not comment on whether its inspection of grocery food preparation operations was increasing. A Yahoo News analysis of the F.D.A.’s food safety recalls in 2015 found that prepared foods accounted for more recalls than any other food category.

A version of this article appears in print on  , Section B, Page 2 of the New York edition with the headline: F.D.A. Cites Whole Foods for Failure to Address Food Safety Problems. Order Reprints | Today’s Paper | Subscribe

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