Salad-centric concepts experiment with ways to grow
Brussels sprouts, baby kale, quinoa and beets are making restaurant-goers salivate and getting investors hot and bothered. In the age of the better burger wars, there is another battle going on as salad chains big and small race to go national.
Currently, there are just a few big franchise players in the salad and healthy eating segment. Atlanta-based Freshens counts 500 locations around the world. Canadian Freshii will have 200 locations worldwide by the end of 2015 followed by the 105-strong Saladworks out of Pennsylvania.
But then, there are a bevy of regional franchise players such as Salad Creations with 17 U.S. units along the East Coast, Just Salad with 20 units in the U.S. and Michigan-based Big Salad with eight units and another four under construction.
Those who say, “But it’s just salad!” might be surprised at the rich product mix found at the emerging salad chains today.
Then there are all the non-franchised players like Chop’t Creative Salad Co., Sweetgreen, Mad Greens and Tender Greens.
As the segment expands, investors are seeing green as well. Saladworks just got a $17 million private equity investment in a bankruptcy sale and Danny Meyer invested in Tender Greens in hopes of growing the brand. Big Salad founder and CEO John Bornoty said he gets inquiries from private equity investors “two or three times a month.”
“The world is going toward more of a healthy lifestyle. People know what they’re eating. If they eat poorly today, they’re going to eat more healthy tomorrow to balance out their life,” said Paul Steck, president and CEO at Saladworks.
The franchisor, which is still getting back on track after emerging from bankruptcy protection, said even through the process they “had to work hard not to make money.”
“In this case, I had two owners that couldn’t agree what day of the week it was,” said Steck about the dispute that led them to file for bankruptcy protection. He said he’s had franchisees lining up for the concept’s first discovery day since the proceedings.
They plan to continue growing their East Coast footprint.
“In the past, we were willing to hop, skip and jump around the country and open a store in Boston, open a store in Seattle, open up a store in Dallas. It really makes more sense to focus on the Eastern seaboard and grow organically,” said Steck. “It’s much cheaper to provide great support when the stores are closer in proximity.”
Bornoty said Big Salad is looking to grow organically as well, with a course plotted directly southward. “Texas is our next market,” said Bornoty. “We have a couple more in the works. And then we’re heading right down the Midwest. Take Michigan down to Texas, draw a line and we’re going right down the middle.”
Bornoty said they’ve found a lot of success in smaller markets where rents are lower. Customers are looking for healthy alternatives to QSR and fast-casual lunchtime competitors.
Freshii, on the other hand, is looking for explosive growth on top of partnerships with other brands, including a test in 14 Target retail stores.
“Freshii will operate 200 units by the end of 2015 in 80-plus cities and 15 countries,” said Nikki Ellis, a publicist for Freshii. “We will cross 400 units around the world in 2016.”
For everyone out there saying, “But it’s just salad!” these aren’t your standard healthy options. Salad-centric concepts offer dozens and dozens of topping options, and for customers petrified by the millions of combinations possible, every concept offers pre-designed or chef-inspired salads and most offer soups and healthier sandwich options.
As the segment evolves, restaurateurs continue experimenting with new menu items, limited-time offers and listening closely to customer desires while expanding margins.
“We’re rolling out some fruit smoothies; it’s something customers have been asking for that have much higher margins than our salads,” said Bornoty. “Salads are very, very low margin.”
‘What’s old is new’
Steck said vegetables that made most kids gag not long ago are now what they choose to eat as adults. “Those old vegetables are coming back into salads. Our Farmhouse Salad has roasted turkey tenderloin slices, goat cheese, kale, and roasted butternut squash served with an apple cider vinaigrette,” said Steck. “What’s old is new.”
Old is popular at many healthy concepts, with ancient grains like quinoa and bulgur catching on in a big way. “When Freshii first started it was brown rice and spinach,” said Ellis, describing their most popular item, the Pangoa bowl. “Now it’s all about quinoa.”
Ellis said chili, a hit LTO from last year, is back with a new flavor profile. “We also added Chili Salad this year, which is a bed of romaine topped with our chili,” said Ellis. “Side chili proved to be a great combo offering, so guests will see that on the menu in addition to our popular Vegan Chili bowl.”
The most popular items at all franchised salad chains are the custom options. It’s not just millennials who are looking for choice—everyone has their favorite salad toppings. And even if ranch and cheddar cheese are still some of the most popular toppings, consumers are clamoring for healthier options for lunch.
“From the food standpoint, there’s no denying we’re going healthy. There’s a big push for it,” said Bornoty. “I can’t believe how many kids we get in our restaurants who are naturally growing up to eat healthy.”