Can a fast casual concept based on locally sourced meat and produce find the economies of scale necessary to franchise?
The owners of b.good, a Boston-based better burger company are betting it can.
And with the opening of a new store in Shrewsbury, Mass., childhood buddies Anthony Ackil and Jon Olinto have set sail on a plan to add 35 locations over the next five years. Click here to see a sideshow of photos of the concept.
Alarmed by what they saw people putting into their mouths, Ackil and Olinto set out nine years ago to create a fast casual concept that would turn a profit while not serving nutritionally spotty food.
They expressed their values in their company name — b.good — and today their nine Boston-area stores have carved out a niche by serving natural beef, locally grown vegetables and seasonal items such as ice cream made with locally sourced blueberries.
They don't quite ascribe to the "farm-to-table" description, Ackil said; they prefer the term "real food." But they are more than happy to talk to customers about the farms that produced the actual food they eat — it's part of their business plan. Their restaurants feature wallboards showing the specific farmers who've raised the beef and grown the produce served at each location.
Another part of their plan relates to their methodical approach, which is why they didn't rush the franchising aspect.
| From left: Jon Olinto and Anthony Ackil
Ackil says they wanted to take the time to closely study various facets of their business, down to measuring how many carrots a person can cut in 15 minutes or how to slice tomatoes for the best yield.
Though it may seem particularly difficult to standardize the distribution of food with a higher perish rate, Ackil said that's not the case.
"We have odd unit economics because we buy whole products," Ackil said. "When you buy whole cuts of meat or the whole potato, whole is always cheaper. The trick is to make the labor model as simple as possible."
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To that point, he says, the company reduced its menu by half over the years, eliminating things such as steak and turkey dinners, and now focuses solely on burgers, chicken and turkey sandwiches and fresh salads. Stores typically have two or three local seasonal items, such as blueberry ice cream or asparagus. The main labor revolves around grinding meat and slicing potatoes.
b.good buys its beef from Pineland Farms, a co-op of 270 sustainable farms located east of the Mississippi River and as far south as the Carolinas that includes Whole Foods as a client.
As b.good's distributor, Ackil explains, U.S. Foods coordinates with Pineland to pick up the beef for delivery to the burger stores, where the meat is ground.
The same arrangement holds true for other food groups such as potatoes. The chain also has a few of its own gardens. In fact, one is on the roof of a nine-story building in which one of its restaurants resides. It grows tomatoes, cilantro and collard greens. The b.good gardens grew about 1,000 pounds of tomatoes. (Watch below as Olinto and staff garden on the roof.)
Consumers demanding transparency
David Ordway, director of sales and marketing for Pineland, thinks b.good is on the crest of a wave. With countless news stories about the hazards of over-the-counter foods, particularly beef, he saud, the public is increasingly demanding more transparency.
For example, Sodexo Inc., which services numerous universities, recently added Pineland to its vendor lists after New England parents and students asked for more food options.
Is growth limited?
Some analysts, however, worry that costs — to the consumer and franchisee — will limit the growth of a restaurant following the b.good model.
The better ingredients dictate a higher price point, noted Technomic's Darren Tristano, which might be a barrier to consumers who've traded down from sit-down dining to fast casual.
And Tristano said the cost of entry for franchisees — $400,000 to $600,000, which should generate sales of about $1.15 million — seems high compared to competitors such as Five Guys, which requires $350,000 to $550,000 per store and produces about $1.2 million in annual sales.
Ackil said b.good's cost is slightly higher because of furniture, equipment and collateral material that helps tell their story.
"It's just a very important part of what the company is about," he said.
After years of handling matters as a duo, Ackil and Olinto have enlisted help for the franchising plan. They hired a director of operations with a background in franchising and restaurants, and brought in a consulting firm to handle things like manuals.
"It's important to have systems," he said.
John Imbergamo, a Denver restaurant consultant, notes there are a handful of fast casuals following the farm-to-table model, and he says Chipotle has made a mark with its "Food With Integrity" initiative to source locally. But he believes it will be generally difficult for fast casuals to embrace farm-to-table because of the quantities of food its restaurants require.
"It's tough to get enough product to supply a large chain with local or sustainable products," he said.
Tristano doesn't doubt the b.good concept's appeal, and he doesn't doubt that it will grow to a limited extent.
"Because of the high price point and heavy fast casual growth, I don't see them having wide, universal locations. I can see 100 to 150 restaurants, but it's not likely they'll do 100 like Five Guys did in 10 years. We're seeing saturation within the better burger segment."
Ackil says the company wants to grow gradually and isn't dependent on franchising. "We aren't trying to sell 100 units in a year," he says. "We have a base of company-owned stores that provide cash flow to support our business."
In any case, Tristano says he'll watch b.good with interest because its fortunes may signify a cultural shift and make it more likely that similar brands could catch on.
"As an analyst, I'm skeptical that there's huge growth potential for this type of brand in our current economic climate and and with so few affluent consumers," he says. "As a spectator, I am cheering for them."
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