Health Fix

Will health-themed chains make their mark?

By Allison Perlik, Senior Editor -- Restaurants & Institutions, 4/1/2004

Amid the buzz surrounding better nutrition, a small but vibrant collection of health-focused restaurant chains is springing up across the country. Their collective hope: that after several well-documented false starts, consumers concerned with better nutrition will not only talk the talk but walk the walk—right inside their concepts' doors.

If diners are indeed practicing what they preach, more questions follow: Are enough of them interested in this niche to sustain long-term success, and if so, will their devotion last?

"The key for any restaurant company is to generate enough sales and earnings to justify further development. By pigeonholing your concept only to foods that are believed to be nutritionally reasonable, I think you lose out on the top end and potentially restrict bottom-line earnings," says Robert Derrington, restaurant analyst with Morgan Keegan in Nashville, Tenn.

At Evos, free-range beef burgers served with air-baked fries are a menu staple. Franchisees can open mall-based, in-line or freestanding units.

Taking a more optimistic tack, however, Derrington also notes that a key challenge to health-minded concepts has changed for the better: "In the past consumers really weren't focused on health as a major issue in their daily lives. That's [no longer true]."

Feedback from Reed Research Group/R&I's Obesity in America 2004 survey also offers a ray of hope to operators of emerging chains such as Falmouth, Maine-based O'Naturals; Tampa, Fla.-based Evos and Atlanta-based Doc Green's Gourmet Salads. Two key obstacles that historically inhibited broad-based success are waning: More than 85% of consumers disagreed with the statement, "My family won't eat healthy foods if I purchase them," while nearly three-quarters said they do not believe that healthful foods don't taste as good as regular offerings.

While only time will tell if these changing attitudes toward healthful eating will be enough to fuel future growth, Ray Nevin, president of three-unit chain Healthy Bites Grill in Deerfield Beach, Fla., looks ahead with an optimism that reflects the general attitude of his competitors in the "healthy alternative" niche.

"Our menu supports a very traditional customer. That'll be the key to success in the future. We worked hard to develop a menu that we like to say is the food you crave without the guilt," he says. "We're not expecting customers to eat tofu and bean sprouts. We've giving them very traditional items that are just better choices."

Difference of Opinion
While health-food store staples such as soy and tofu still have their places on menus, today's nutrition-centered concepts are broadening the definition of what it means to eat healthfully. Some chains, including O'Naturals and Chef Lauren Bell's Herb'n Farm, which has an exclusive licensing agreement with Sodexho USA, focus on organic offerings free of chemicals, preservatives and other additives. Others, among them Doc Green's, Evos and Charlotte, N.C.-based Just Fresh Bakery, Café & Market, emphasize balanced selections of fresh products including lean meats, fruits, vegetables and other options prepared with little or no processing.

Hot Shots

Doc Green's plans to sell customers whole casseroles to go for convenient at-home meals.

Rather than calling names or numbers, Healthy Bites Grill takes a cue from casual dining by using lighted pagers to alert diners orders are ready. New stores also will offer bulk snacks such as trail mix and sesame sticks by the pound.

Lo Fat Know Fat sites include retail areas that sell nutritional supplements, accounting for 40% of the concept's sales.

Not open for weekday breakfasts, O'Naturals offers a Sunday brunch menu of flatbread egg sandwiches, smoked trout, salmon, yogurt, granola, baked goods and more.

To accommodate its target audience—students in college towns from Tempe, Ariz., to Rochester, N.Y.—most The Pita Pit stores are open until 3 a.m. weeknights and 4 a.m. on weekends.

Across menus, proteins extend beyond typical beef and chicken options. Choices include bison meat; free-range beef raised without growth hormones and antibiotics; fish such as salmon, mahi mahi and trout; and a host of turkey products: burgers, sausage, even hot dogs. Sides include such items as air-baked fries and sweet-potato fries, herb-roasted heirloom potatoes, sesame green beans, brown rice and roasted peppers.

For most chains in the category, wider-than-typical arrays of vegetarian and vegan options are a common—and expected—feature. And although some concepts, including Newton, Mass.-based Lo Fat Know Fat Hi Protein Grille & Cafe, call out menu items that fit specific diets, the general goal is to appeal to nutrition-minded customers regardless of their chosen dietary regimens.

"Our concept is 'something healthy for everyone,'" says Lo Fat Know Fat founder George Naddaff, known for launching Boston Chicken (now the McDonald's-owned Boston Market) in 1988. If the current fad diets fade away, he says, "then we will be on the cutting edge of what's next."

Information, Please
Part of gearing service toward health-conscious customers means satisfying appetites not only for tasty meals but also for knowledge about what's on the plate. Most healthful-alternative chains provide nutritional information on site in pamphlets or on posted signs and menu boards. Many also provide such information on interactive Web sites.

"I consider that our No. 1 marketing tool," says Lauren Bell, CEO of Mill Valley, Calif.-based Wild Sage Foods and founder of fast-casual concept Herb'n Farm, which opened its first licensed location with Sodexho at Colorado College in Colorado Springs last year.

The Pita Pit, a 101-unit Kingston, Ontario-based chain whose tagline is "Fresh Thinking, Healthy Eating," is testing a touchscreen monitor that allows diners to customize meals and print out nutritional analysis. Treats Frozen Desserts, a three-unit chain in Chicago, posts nutritional information on signs near cash registers and offers it in take-home pamphlets.

Because customers with food allergies and/or intolerances are likely to be drawn to health-focused restaurants, some chains take steps to accommodate this growing market. The severity of peanut allergies led Doc Green's to discontinue the use of peanut oil, while Treats Frozen Desserts employs two separate machines for mixing nut and non-nut ice cream-style desserts. Herb'n Farm's menu uses special icons to call out dairy-free, wheat-free and vegan items, and other concepts maintain ingredient lists for reference upon request.

What's in a Name?

Fast-casual service typically is the format of choice for health-minded chains such as O'Naturals, where organic flatbread sandwiches are a signature item.

"The reason [healthful concepts] have not worked in the past is that when people think 'health food' they do not think tasty food," says Dennis Lombardi, executive vice president of Chicago-based Technomic Inc., an industry consultancy and research firm.

While proprietors of today's health-themed chains say they believe their menus have overcome this hurdle, opinions are mixed as to whether billing a chain as healthful invokes negative connotations. "We have the term 'healthy' in the description of our concept ... and we've found success," says Dino Lambridis, co-founder of Evos, which positions itself as a provider of healthy fast food. "I can't tell you we'll be using the word 'healthy' five or 10 years from now ... [but] currently we are comfortable with it."

Healthy Bites Grill's Nevin says that while guest feedback said the name was "almost a turnoff" until customers tried the products for themselves, a name change is not being considered. "We had to communicate a little bit better in our marketing that we are a healthier alternative, not a health-food restaurant," he says.

Others concepts espouse different philosophies. Larry Reinstein, CEO of Needham, Mass.-based fast-casual concept Fresh City, chooses to emphasize freshness and variety at his 12-unit chain. "A lot of chains coming out now are into being health-food restaurants and that may work for them. That's not the position we want," he says.