Hadley Malcolm

USA TODAY

Soon, Los Angeles residents will be able to shop at Whole Foods without the bill eating up their whole paycheck.

The first Whole Foods 365 store, a budget-friendly version of Whole Foods aimed at Millennials, is set to open May 25 in the Silver Lake neighborhood, the company said Thursday. The opening will come roughly a year after Whole Foods first announced the new store concept, seen as an attempt to re-establish the brand amid increased competition in the organic market by appealing to customers who can't afford the company's pricey groceries.

To do that, Whole Foods 365 stores will be positioned as part grocery store, part food hall — they'll sell food under the less expensive Whole Foods 365 Everyday Value brand and partner with other companies to build out additional retail options such as restaurants and coffee bars within the store. The Silver Lake store will have an outpost of byChloe, a trendy vegan fast-casual restaurant based in New York that sells plant-based hamburgers and Hostess-style cupcakes.

Millennial-focused Whole Foods 365 shops could include tattoo parlors

The store will also host Allegro Coffee Company, which is owned by Whole Foods and will sell organic coffee and craft beer, and teaBOT, self-serve kiosks where customers can customize cups of loose-leaf tea. The idea is to not only entice customers through the door, but get them to stay a while, says Jeff Turnas, president of the 365 stores. Stores will also feature a more streamlined layout and a rewards program that will offer everything from coupons to "personalized nutrition insights," according to the company's website.

A prolonged shopping experience, a cheaper groceries, may be just what Whole Foods needs as it attempts to compete in a crowded market that has seen discounters like Walmart and more mainstream grocery stores like Kroger start to stock stores with more organic goods. Plus, it's hoping for a more strategic position against the onslaught of fresh meal delivery and dinner kits capturing shoppers' dollars.

"For Whole Foods, management is fighting an uphill battle, as its once dominant position in the high-end food-at-home market is challenged by these start-ups, but also by traditional grocers like Kroger," said Scott Mushkin, consumer staples analyst with Wolfe Research, in a recent research note.

To appeal to shoppers gravitating toward options like meal delivery, the 365 stores will partner with grocery delivery app Instacart, which full-line Whole Foods stores already work with. And retail partners will vary by store as Whole Foods aims to localize each operation. The company created buzz earlier this year when it suggested that the 365 stores might partner with tattoo parlors.

So far, that doesn't appear to be happening, but two more 365 stores will open in Bellevue, Wa., and Portland, Ore., later this year. Retail partners for those stores haven't been announced yet.

Follow Hadley Malcolm on Twitter @hadleypdxdc.