Hold the Regret? Fast Food Seeks Virtuous Side

By JULIA MOSKINJULY 25, 2014

Photos

Grass-Fed Beef. Local Greens. Yes, It’s Fast Food.

The numbers were startling: Shares of Chipotle Mexican Grill shot up 12 percent on Tuesday after the company reported a nearly 26 percent spurt in its quarterly profit. For the fast-food industry, this was fresh evidence that the world of Big Macs and Doritos Locos Tacos has room for a menu with healthier-than-average food and higher-than-average prices. But it came as no surprise to a new generation of smaller fast-food chains that are coming up fast behind Chipotle and its peers, and taking its “food with integrity” mantra even further.

A handful of rapidly growing regional chains around the country — includingTender Greens, LYFE Kitchen, SweetGreen and Native Foods — offer enticements like grass-fed beef, organic produce, sustainable seafood and menus that change with the season. Most promise local ingredients; some are exclusively vegetarian or even vegan. A few impose calorie ceilings, and others adopt service touches like busboys and china plates.

And despite the higher costs and prices, all are thriving and planning national expansions, some directed by alumni of fine dining or of fast-food giants like McDonald’s.Their success marks a milestone: After decades of public hand-wringing about the empty calories and environmental impact of fast food, the farm-to-table notions that have revolutionized higher-end American restaurants have finally found a lucrative spot in the takeout line. The result already has a nickname: farm to counter. “This is not a passing fad,” said B. Hudson Riehle, the research director for the National Restaurant Association, who added that locally grown food and sustainability were the top two customer priorities reported this year in the group’s annual poll of American chefs. “It’s only going to get stronger.”

This month, Veggie Grill, a vegan chain with 25 stores on the West Coast that serve nachos and Buffalo wings made with meat substitutes, showed up at No. 7 on Restaurant Business magazine’s annual list of the 50 fastest-growing small chain restaurants  in the United States, with a reported $26.6 million in sales in 2013; the company says its revenues jumped 47.9 percent from the previous year.  At No. 10 was Tender Greens, which brought in more than $40 million in revenue last year from just 12 stores; that is over $3 million per restaurant — about 25 percent more than at Chipotle and Panera Bread, chains that are far better established. LYFE Kitchen, which is to open a New York City branch this fall, brought in more than $3 million in its first year at one store in Palo Alto, Calif.

These ambitious new chains make up only a sliver of the nation’s $683 billion restaurant industry. But all are within its swiftest-growing segment, “fast-casual,” a subset of fast food that includes places like Chipotle and Panera, whose offerings are marketed as a rung or two higher than those of Burger King or Taco Bell: fewer frozen and highly processed ingredients, more-comfortable seats, better coffee and (sometimes) healthier food.

Fast food is served with a halo of virtue nearly everywhere these days: Subway introduced wholesome-sounding “nine-grain” bread in 2009, and McDonald’s made itself the country’s largest buyer of apples when it started selling apple slices in  2004.Chipotle, the first chain to dive deeply into animal-welfare issues with its vow (since suspended from time to time) to serve only “naturally raised” antibiotic-free meat, recently posted controversial YouTube videos that demonize factory farming and boast of its relationship with small family farms. But in order to be green enough for today’s customers, and to justify charging $12 for salad, the newer chains promise an even more exalted level of nourishment.

By adapting to the seasons, by eliminating genetically modified ingredients and mainly by serving “real” food — the kind of salad a Whole Foods shopper might toss at home, or the grilled herb-dusted albacore tuna that the same person might order in a more expensive restaurant — these chains set a higher standard for fast food. That means no protein-powder shakes, turkey wraps and egg-white omelets, the staples of standard “healthy” chains, and more choices like the Cobb salad at Dig Inn, an eight-store chain in New York City that opened its first restaurant in 2011.

The substantial bowl of greens and grape tomatoes is tossed with blue cheese free of bovine growth hormones, local organic hard-boiled eggs, what the menu calls “naturally raised” bacon, freshly squeezed lemon juice, extra-virgin olive oil and yogurt (476 calories in all, for $9.19). “Good food doesn’t have to be expensive,” Adam Eskin, the chain’s founder, said. “It’s not calorically defined. It’s not about being vegan or vegetarian or pescatarian. It’s just knowing where your food comes from and exactly what’s in it.”

Some of these terms are little more than buzzwords and branding: “Naturally raised” is not a category recognized by the Agriculture Department, and it is debatable whether consumers should be concerned about the amount of growth hormone in a tablespoon of cheese. Still, posting the same prestigious ingredients usually seen on fine-dining menus on the wall of a fast-food chain is a bold move, and will soon become a challenge for the chains that plan to go national. “Local and seasonal works for us in California,” said Erik Oberholtzer, a founder of Tender Greens, a Chez-Panisse-meets-Chipotle concept that now has 14 stores in California; the company works with Scarborough Farms, a 400-acre, family-run farm in Oxnard, Calif., as an investor as well as a supplier. “I don’t know if it would be scalable.”

If anyone has experience in scalability, it is the founders of LYFE Kitchen. Mike Donahue and Mike Roberts left McDonald’s in 2006; Mr. Roberts had been the company’s global chief operating officer, and Mr. Donahue its chief communications officer in the United States. Between them, the two had spent nearly 50 years nurturing the world’s largest restaurant chain and responding to near-constant criticism of its agricultural, ethical and nutritional practices.  “Having worked at the scapegoat for everything that’s wrong with food in America, we know what issues consumers care about,” Mr. Donahue said.

In 2011, with more than 100 investors, they opened the first LYFE Kitchen; now they simply refer to McDonald’s as “the old place.”“At the old place, we had to learn everything about GMOs, recycling, animal welfare, calories, sodium, fat, social responsibility,” Mr. Donahue said. “We took all of that and poured it into the new place.”

LYFE Kitchen has a mission to go with its name (an acronym for Love Your Food Everyday) and motto (Eat Good. Feel Good. Do Good.). Each of its 10 restaurants, strategically distributed from California to Illinois, has a wall of fluffy herbs growing in the dining room, serves only grass-fed beef, uses china instead of plastic and keeps all entrees under 600 calories. “We want to be the place where the vegan can come for the portobello burger with almond-milk cheese, with the Neanderthal friend who just wants a really good cheeseburger,” Mr. Donahue said. “We want to beat the vegetarian veto, where one person gets to decide where the whole group is going to have lunch.”

Coming from the other end of the culinary spectrum, Mr. Oberholtzer arrived at a similar place. “Most of my career was centered on feeding what you might call the 1 percent,” said Mr. Oberholtzer, a chef who worked at Chez Panisse and Lark Creek Inn in the Bay Area and was executive chef at Shutters on the Beach, an upscale hotel in Santa Monica, Calif.

In 2006, he and two partners left Shutters and began putting their longstanding relationships with food producers to work at Tender Greens, which serves mainly vegetables (locally grown) in salads with meat (humanely raised) and seafood (sustainably fished). Mr. Riehle, of the restaurant association, said chains like Tender Greens were perfectly timed to compete for the substantial combined buying power of health-minded baby boomers and idealistic, tech-savvy younger diners. “The boomers are still strong but dwindling in numbers, and people between the ages of 18 and 34 are growing into their strength as consumers,” Mr. Riehle said. “A decade ago, I don’t think there was enough overall awareness of food issues to support this kind of enterprise.”

SweetGreen, which has 27 outlets in and around the cities of Boston, New York, Philadelphia and Washington, was started in 2007 by three Georgetown University seniors and is tightly connected to that younger demographic; its founders, Nicolas Jammet, Nathaniel Ru and Jonathan Neman, are all still under 30. (Mr. Jammet grew up in the kitchen, the son of André and Rita Jammet, who owned La Caravelle, the luxe New York restaurant that closed in 2004.)

Although Mr. Jammet said the target customer for their seasonal, local salads is an active, in-the-know type of any age (they use the term “conscious achiever”), SweetGreen has branded itself with events like SweetLife, an annual music and food festival; an active social media presence and a smart Instagram feed; and careful partnering with trendy urban brands like SoulCycle and Lululemon. And more than the other chains, SweetGreen uses its loyalty program and its mobile apps to track, predict and guide customers’ behavior. In addition to where they eat and what, customer profiles include gender, age, ZIP code and other data that provide clear, real-time feedback. “We’ve been bringing in a lot more men since we added these,” Mr. Jammet said, pointing to steaming canisters of organic wild rice, quinoa and farro. “Some of them still just don’t see salad as a meal.”