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The Naturals

25 October 2006
The Naturals

Chains step up natural offerings as organic and artisan products capture more consumer favor.

This article first appeared in the 15 July 2006 issue of Restaurants & Institutions (R&I).

R&I is the USA's leading source of food and business-trend information and exclusive research on operators and restaurant patrons. Editorial coverage spans the entire foodservice industry, including chains, independent restaurants, hotels and institutions. To find out more about R&I, visit its website >>

By Kate Leahy, Associate Editor

Think green. Now think greenbacks.

That's the message articulated in a recent industry report by investment banking firm CIBC World Markets, and with reason. Organic and natural foods combined represent a $20 billion business, with sales growth between 17% and 21% each year since 1997, according to the Organic Trade Association. Chains that embrace better quality, organic, natural or artisan ingredients, the CIBC report argues, benefit from gaining favor with customers concerned with eating well.

The demand for natural and organic foods is a well-documented, chef- and consumer-driven trend that is nestling into a growing number of independent restaurants, college campuses and grocery stores. Though there are added challenges and expenses when using organic and natural products in a chain setting, concepts that make the commitment often reap real benefits, notably in consumer loyalty, higher price points and better-tasting menu items.

Meat Market
While natural foods are more often associated with vegetables and fruits than with beef, pork or chicken, it's protein where chains have made the most significant shift. "It's the main driver of the occasion," explains Ed Gleich, senior vice president of national marketing for Fort Lauderdale, Fla.-based Arby's.

Better-quality meat is preferred by some consumer demographics, even when prices rise. Denver-based Chipotle's switch from conventionally raised to naturally raised pork for its carnitas led to a menu price increase of $1, turning the lowest-price meat on the menu into the most expensive. To justify such price hikes to customers, Chipotle provided material in each store that explained the environmental benefits of natural pork. Following the change, carnitas sales increased, moving the protein from the least-popular item on the menu to the top seller.

Communications Director Chris Arnold attributes the popularity to superior flavor. "We pay more for these better meats but we're able to pass on those costs," he explains. The switch to natural chicken increased chicken menu prices, generally in the range of 25 cents to 35 cents.

Arnold notes that incorporating natural products into a menu is a gradual process. "You can't flip a switch and go all-natural because the supplies aren't there and the price premiums are too great," he says.

While all pork served at Chipotle is natural, 34% of the chain's beef and 45% of the chicken it menus nationwide is naturally raised. The company also wants to increase its use of organic beans, currently at 25%.

Expanding the supply chain is integral to moving forward, Arnold notes, but will only be possible if companies work with producers. "The most important thing a chain can do is commit to producers," he says. "We are creating opportunities for farmers and producers. But it has to be made economical for them."

Flavor motivates Panera Bread to source higher-quality chicken, says Julie Somers, spokeswoman for the Richmond Heights, Mo.-based chain. But bottom lines have also benefited from Panera's focus on quality. After the fast-casual cafe-bakery introduced natural chicken in 2004, it was rewarded with increased sales. Now the chain has added a kids menu with organic and natural products, a move it hopes will resonate with parents.

Arby's also started serving natural chicken last year, completing a company-wide rollout of the preservative-free protein in February. According to Gleich, natural chicken was a credible way for Arby's to differentiate itself from other quick-service concepts' chicken items. "We had a lot of help from the natural-foods industry educating our customers for us," he acknowledges.

And going natural meets growing consumer demand. Since Arby's rolled out its Chicken Naturals line, chicken items have sustained solid growth.

Artisan Elements
Natural and preservative-free breads provide an entry point into artisan products for Cary, N.C.-based Bear Rock Cafe. The company added sandwiches using organic, artisan bread to its menus in April. Using parbaked loaves finished and sliced on site, quality can carefully be monitored without generating much waste, an important aspect for a product with a short shelf life. Although it's the first organic product that Bear Rock has incorporated, it fits into the company's food-first focus. "The more wholesome and natural we can be with our foods, the better it is for our branding," says Deneen Nethercutt, vice president of marketing.

Local Motion
For Vancouver, Wash.-based Burgerville U.S.A., sourcing local, seasonal items has been an integral part of the company's identity. The chain introduced Oregon hazelnuts to the menu in 2002, followed by grass-fed Oregon beef in 2004. "Fresh, local, sustainable is our core stand," says Tara Wefers, marketing and communications director. The company also has taken its involvement in local foodstuffs a step further: In 2004, it became a member of Food Alliance, a national, nonprofit organization that promotes sustainable agriculture.

Burgerville's popular Smokey Blue Cheese Salad features an artisan blue cheese from a local creamery that cold-smokes the cheese overnight with hazelnut shells. The chain also highlights the Pacific Northwest on its menu with seasonal items, using ingredients such as Walla Walla onions for onion rings and local blackberries for milkshakes when they are at peak season.

"It's definitely something that makes Burgerville unique," Wefers says. "We look for something that highlights where we're from."

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