Spending more than 20 years marketing for major grocery brands, including Marie Callender's, Jimmy Dean and Sara Lee, showed Paul Chaudury that health and wellness when it comes to food offerings is not a passing fad. In fact, most leading food companies — Kraft, Kellogg's, Pepsi, General Mills, etc., — get more than 50 percent of their sales from health and wellness products. This number, however, is less than 5 percent in the restaurant industry, but it's only a matter of time before restaurants catch up with retailers, said Chaudury, who is ahead of the curve with his healthy fast casual concept, Fresh D'Lite Grill. He opened the restaurant — which serves only meals with fewer than 550 calories — in 2010, in the west suburb of Chicago and plans to open more units throughout Illinois. (Click here to see photos of Fresh D'Lite.)
Other fast casuals, including Corner Bakery and Panera Bread, promote low-calorie menu items, but Fresh D'Lite may be the first to offer them exclusively. Another one is PHresh Kitchen, which doesn't yet have an open unit, but is planning to franchise from the ground up.
About 36 percent of fast casual consumers ordered low-calorie or healthful options more often than they did a year ago, according to Darren Tristano of Technomic.
"FCRs are generally very well positioned for health and wellness," he said.
It's an opinion that Chaudury and Tim Murphy, CEO of PHresh Kitchen, share.
|Paul Chaudury and his family open Fresh D'Lite|
"After leaving Sara Lee, I was motivated to bring the learning from grocery to the restaurant industry with a goal to create a discontinuity or changes in the way we explore dine-out options," he said. "The key insight was that the top 10 new products in grocery stores every year were always with health and wellness messages."
Murphy, a marathon runner and former CFO for an Applebee's franchise and also for Sonny's Real Pit Bar-B-Q, wanted to create a brand that satisfies the need for healthier products, while keeping overhead costs low. His fast casual model using a commissary allows him to expedite and create consistency with the food and products.
"I just did not want another restaurant, but an investment tool that can be rapidly rolled out in a win-win environment," said Murphy, who is in the seed round of capital raising and plans to have six units open in Orlando, Fla., before franchising next year.
He predicts he'll have 1,000 open in the next five years.
"We can build the units in two to three weeks, and we are working on providing the locations for the franchisees to operate — unlike most franchisors," Murphy said. "So we say that the franchisee can be trained and into revenue within 45 to 75 days versus the typical restaurant that takes usually six to 24 months."
It's all about the marketing
Chaudury, who has experience in mass appeal flavor creation, marketing and procurement of lowest-cost raw material, believes his menu filled with low fat and low sodium versions of comfort food, including Angus burgers, pizzas and pastas along with many signature dishes, will resonate with all types of consumers. He admits, however, that marketing a healthy — yet tasty — concept can be tricky.
"We learned that customers in general are not seeking healthy messages since it contradicts the fun of dining out," Chaudury said. "However, they often ask for calories since it has become a popular trend. Many have learned that calories impact size and not taste."
Meals at Fresh are under 550 because of the absence of typical heavier ingredients like butter, cream, frying oil and batter, but that doesn't mean taste or size is compromised.
"All of the meals are filling, and our on-going surveys show over 90 percent customers are satisfied with the size," Chaudury said.
The restaurant's advertising model is to bring customers inside with appetizing food visuals along with "freshly grilled" messages communicating taste. The menu shows calorie counts in small print.
"Some consumers who are seeking this kind of information notice it. The rest ignore health messages. We avoid showing or talking about low fat and sodium," he said. "We provide this information when they ask for them. They are pleasantly surprised how good our food taste even with the healthy numbers. "
Another marketing trend that Chaudury uses is communicating "feel good" messages with buzz words, such as "antibiotic-free," "organic" and "local farmers," etc.
"We communicate these messages inside the restaurant because they don't create negative taste perception," he said. "The net learning is 'taste' still rules. Calories are important, but we have to play it safe making sure customers are completely satisfied with the portion size. "
The marketing is the secret recipe, agreed Murphy, who stressed the importance of offering great-tasting food. He modeled his concept after Seasons 52, a Darden-owned casual dining restaurant that has found success in marketing healthy, yet delicious food.
"We have intentionally built the model on low-calorie, yet quality tasting products, that have healthful benefits," he said. "All of our seasonings for our recipes came from Chef Pauls in New Orleans. Our recipes were created by one of the best chefs, who opened EPCOT Center at Disney as executive chef, and SVP for Levy Restaurants and Red Lobster. Think flatbreads, salads, wraps with about 15 different flavor profiles (menus), and the added grab-and-go hot and cold products like Starbucks."
Keeping overhead low will be key to PHresh Kitchen's success, which is why Murphy based the concept around smaller modular units, which means lower entry costs and more location options than competitors, he said. The concept also reduces risk with high-volume contracted replicated locations, swift ramp-up of revenue, flexible, multiple menus and real-time cloud-based systems.
Murphy's plan is to lead the healthy fast casual food segment by providing one of the food industry's highest sales/investment ratios, with a projected system sales of $533 million and franchisor revenue to $139 million by year five on 1,000 units.
Chaudury is also dedicated to keeping costs down, and relies on a simplified operation requiring minimum ingredients to feed a variety menu.
"A fast casual format in the low end of complexity such as Chipotle is followed as a model," he said. "A handful of employees can support several hundred customers a day. The raw material cost is not critical because the taste is from the expertise in culinary recipes rather than expensive ingredients."
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Cover photos: Courtesy of Fresh D'Lite.