Fast Organic Food

Discussion
Jan 10, 2008

By George Anderson

Fast food is taking on a decidedly healthier and pricier persona with the growing number of cafes and restaurants popping up around the country that are serving sandwiches, salads and others foods with organic ingredients.

“We’re eating more organic food than ever before, and it’s growing,” Harry Balzer, vice president of the NPD Group, told the San Diego Union-Tribune. “In the food business, you don’t have many things that are growing.”

Eateries, according to Mr. Balzer, are looking to cash in on the $14 billion and growing organic food market. Until now, most of that business has been done at retail but operators are finding that consumers are willing to pay the price to have organic dishes served to them.

According to Mintel International, there has been a 363 percent increase in the number of organic items on restaurant menus over the past two years.

Restaurants with names including Lean & Green, Organic to Go, Lettüs Organic Café and O’Naturals are looking to offer consumers an organic alternative to standard fast food fare.

Conventional fast feeders and quick service restaurant (QSR) operators are also looking at the organic opportunity. Panera Bread and Chipotle Mexican Grill are two that have introduced organic menu items to their patrons.

Organic to Go founder Jason Brown told the Union-Tribune that price remains a major factor in consumer purchasing decisions. That’s why his company sources from large farms owned by manufacturers such as Con-Agra and Dean Foods.

“If you don’t do it on a large scale, it’s difficult to make the price point fair,” he said. “An office worker who needs a ham and cheese sandwich has a budget, and it needs to be in the $6 or $7 range.”

Discussion Questions: Do you see a market opportunity for a company to do in foodservice what Whole Foods has done at retail? What do you see as the challenges to success for fast organic food operators? Do you see the major fast food or quick service chains making a full-scale push into organics?

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19 Comments on "Fast Organic Food"


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Art Turock
Guest
Art Turock
14 years 4 months ago

Let’s not forget Subway with its slogan “Chose Well” and spokesperson/pitchman Jared, who lost so much weight. Here’s a franchise that has grown rapidly by combining health benefits with speed. They emphasize fresh vegetables in their toppings, customized items assembled by their sandwich artists so the customer controls the healthfulness of their meal (hold the mayo, hold the cheese). They also provide detailed calories counts comparing their foods with McDonald’s and other fast food restaurants.

Beth Ely
Guest
Beth Ely
14 years 4 months ago

Back in the mid ’80s, there was a fast food chain called D’Lites that touted their menu as being more healthy than other fast food…they had whole-grain buns on their burgers and offered grilled chicken, rather than fried, and had salads, etc. (Herschel Walker was involved–either as an investor or, at least, he owned our local franchise.) Whether they were really more healthful, who knows? As starving college students, we ate there quite often, and probably thought it was very “mature” to eat at such a healthful establishment!

Regardless, it tanked. But maybe it was just an idea that was ahead of its time. Today, I’d love more healthful alternatives in fast food, on those days when I only have a few minutes to run out and drive-thru. I think it’s an idea whose time has come…again.

David Livingston
Guest
14 years 4 months ago

I see this as a great opportunity. Just look at how well the hot food bars are doing in Whole Foods. The line at lunch time is pretty deep at the store I go to. I’ve seen conventional supermarkets install an organic salad bar.

Some of the newer, more upscale fast food restaurants seem to be hinting they want to move in that direction. It might be easier just to put the word “organic” on the menu in a few spots and see how well it is received.

David Biernbaum
Guest
14 years 4 months ago

The market opportunity for a company to do in foodservice what Whole Foods has done at retail is still untapped, and the opportunity is simply waiting for the right company and the right brand to put it together and pull it off–just the right way. Fast food is a reality in our busy, fast-moving culture even for consumers that are required, or desire, to eat healthy–fast.

Max Goldberg
Guest
14 years 4 months ago

An important question is whether the “organic revolution” will stick. Is it a fad or a long-term eating decision? Some QSRs will offer organics, test price points and see how consumers respond. Others will stick with healthier fare and maintain lower price points. The same could be said for foodservice companies.

Joel Warady
Guest
Joel Warady
14 years 4 months ago

Organic foods are not a fad, but they might remain a niche category. But healthy eating continues to grow and including organic foods into as a sub-category of healthy eating seems to make sense. With that in mind, there will be a continued interest in growing the healthy eating category, both in food service as well as in fast-casual chains.

The other great opportunity that this offers is the fact that healthy eating options tend to be less price-sensitive, and can result in higher margins for the business.

Joel Rubinson
Guest
14 years 4 months ago

As a trend becomes apparent, it is an irresistible force. I’m sure that many will try to “get on trend.”

I imagine that there are different segments of consumers with respect to the hegemony that organic and health and wellness have in directing their choices. Hardcore folks will not set foot into a McD anytime soon (but over time, maybe). Those who have a more “compensatory” approach will go to more mainstream restaurants and appreciate/take advantage of new offers on the menu board.

Edward Herrera
Guest
Edward Herrera
14 years 4 months ago

In the fast food arena, cost and convenience are so important that only a small trickle of organic will start finding its way in. Maybe salads, dairy products, or kids items to start.

Casual restaurants have an opportunity to offer more of the whole grains, organics, and fit life style menu options. I think you have to have all 3 to make an impact on buying decisions in casual restaurants.

Upscale restaurants have an opportunity to build a theme around organics. The cost is not an issue and their customers tend to be up on trends.

Overall, it depends on the scientific community touting organics as truly beneficial to its customers. Information and agendas can become biased, so good luck answering this question.

Ed Dennis
Guest
Ed Dennis
14 years 4 months ago

Do you remember DeLights? There was a concept that jumped onto the low calorie bandwagon in the QSR Hamburger category. Loaded their stores up with “more healthy” everything–even served light beer!

They did very well for a time until they got noticed by McDonald’s, Burger King and Wendy’s. The consumer base just wasn’t there. Not enough population walking the walk to support all three.

Tons of water under the bridge since then. Many of DeLight’s products moved to Wendy’s, McDonald’s and/or Burger King.

I think that a Whole Foods concept in the QSR segment would never get off the ground because competition from the big three would eat them alive before they could get off the ground. The very best product development/R&D in the world is at McDonald’s. It’s hard to imagine anyone getting a significant jump on them.

Mark Burr
Guest
14 years 4 months ago

Is it about the buck or is it about healthy? Personally, I haven’t seen a standard definition of organic, let alone healthy. People can be sold anything trendy but will it become a question of credibility? Those in it for the long term might ask that question. Those looking to ride the wave need not.

Now, about that $7 ham sandwich–does it come with a starched linen napkin? It may be growing, but its still somewhat a niche or limited share. To reach the average office worker you’re going to need to do much better than a $7 sandwich. But then again, I never imagined paying $1.86 for a plain cup of coffee and worrying about whether or not it was coming from fair trade.

Bonny Baldwin
Guest
Bonny Baldwin
14 years 4 months ago

I’d love to see Starbucks go a little bit further in the healthy and/or organic fast food direction. I say further, because some locations I’ve been to sell prepacked sandwiches and snacks now, and they’re much tastier and healthier than fast food.

Bernice Hurst
Guest
14 years 4 months ago
Organic fast food that contains a lot of fat, salt or sugar, albeit organic fat, salt and sugar is not necessarily more healthy. And if people eat a lot of it because they think that organic equates to healthy, that isn’t going to do them a whole lot of good either. Conversely, eating fresh food that is unadulterated with chemicals and is not tooooo highly processed can be healthy even if the ingredients aren’t organic. The flagship Wholefoods in London has some very enticing prepared food to eat in or take away, as does Fortnum & Mason and Waitrose’s new food hall in Oxford St. Only some of the products and ingredients are organic but the fact that they are produced on-site, from fresh ingredients and in relatively small quantities gives me, at least, a degree of confidence that they are healthier than packaged alternatives even if they are organic. My conclusion? Yes, there is an opportunity to do organic fast food well but there is also an opportunity to do it badly.
Robert Straub
Guest
Robert Straub
14 years 4 months ago

This is already being done in the Northwest–Burgerville has been sourcing locally for everything on the menu with great success for years, and many people who were originally on the organic bandwagon have now moved on to the buy local movement.

What’s the sense of organic if it has a huge carbon foot print from traveling thousands of miles to get onto your table?

Joy V. Joseph
Guest
Joy V. Joseph
14 years 4 months ago

Several independent outfits are already out there. Given the fact that organic food is typically more expensive than regular food, I would expect only metropolitan or affluent areas to be able to support an ‘organic restaurant chain’. Given the high cost of real estate in such areas it might be a high risk-reward ratio venture. It might be safer to establish a franchise that offers existing outfits the opportunity to carry a brand name banner that has the combined resources to advertise and market efficiently.

Lee Peterson
Guest
14 years 4 months ago

Simply put, it’s the opportunity of a lifetime.

This should be discussed not only in terms of “organic” food…it’s really all about “healthy” food, especially if Whole Foods is going to be the emulator in the conversation. Organic is not the only option, and perhaps not the most mainstream.

Since we work on restaurants every day, it’s our opinion that the real “catch” to growing a healthier foodservice model is speed of service. The American consumer is wired for speed and will not tolerate or pay for too much extra time built into the process of getting lunch (as an example). And, as we all know, speed of service drives through-put, and through-put drives profits so, it’s a triple edged sword. But…solve that and you’ll be the first on the block with “healthy fast food”…then you’re talking about something huge.

Julie Parrish
Guest
Julie Parrish
14 years 4 months ago
A chain local to me, Burgerville, has had tremendous success with positioning itself as being a fast food but using local partners. While they don’t have a lot in the way of organic on the menu, the push is to reduce the footprint of the restaurant by buying from local/sustainable suppliers. The NW is fortunate to produce over 300 kinds of produce/food items, but even then, finding enough product in the pipe to remain consistent is a challenge. Burgerville has had to take it one or two products at a time and it’s been a slow road for their 39 units. So to find enough supply in the chain for a restaurant to be along the lines of Whole Foods and be offered regionally or across the country is going to be challenging. Much of the organic food out there isn’t in food-service size packs…it’s pretty micro. And then product consistency in some of those larger packs isn’t always there. That said, it’s a growing niche and if someone can put a concept out there,… Read more »
Mark Lilien
Guest
14 years 4 months ago

If McDonald’s can sell decent coffee, then McDonalds’s can sell organic food. It’s only a matter of time. When they see the competitive threat, they’ll adapt. McDonald’s only improved the coffee because they saw the profits at Starbucks and Dunkin’ Donuts. Organic’s biggest obstacle: coffee has the best gross margin imaginable, but most organics can’t meet that dream.

Odonna Mathews
Guest
Odonna Mathews
14 years 3 months ago

If Wal-Mart can offer organic foods, why can’t McDonald’s or others offer organic fast foods? It makes sense to experiment with some organic offerings in foodservice and evaluate the consumer response. Quick, convenient, healthful, and organic. Sounds like a winner to me.

James Sleighter
Guest
James Sleighter
14 years 5 days ago
After concluding four years of research, which included numerous surveys on MySpace, Facebook, and face to face interviews, I have found that the biggest obstacle to organic and healthy fast food is mistrust by the American people. In today’s economy, only two segments of the industry are doing well. Those who offer the dollar menu which, as Grandpa used to say and still holds true, “You get what you pay for.” No educated person could ever believe there are health benefits from the dollar menu. The other is the organic and healthy foods segment. Organic to Go and Pacific Northwest are both up over 40% in the first quarter of 2008. More and more, organic and healthy fast food restaurants are opening daily. And over 80% are doing well. But are they really healthy for you? The problem is the American people are becoming more educated and concerned with their purchasing decisions, and their health. Some of the best planned concepts that have been launched with good intentions, have now sacrificed themselves to corporate greed… Read more »
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