The Fresh Investors: A Look Into the Rising Popularity of Healthy Fast Casual

By Amelia LevinIndustry & Research Editor

When a few salad concepts first debuted in the mid-2000s, the industry – and consumers — didn’t seem to latch onto them as readily as one might think, at least outside of the west coast. But so much has changed since then. With a new emphasis on health and wellness impacting all facets of our lives, wholesome food concepts focused on lighter, fresher fare have finally found their grounding nationwide. 

And the numbers don’t lie. Research firm Technomic, which lumps salad, greens and other health-focused concepts together, reported sales growth more than doubled for this category from 2010 to 2014 (10.4% to 24.1%). Concepts in this category have also expanded; the number of units among top health-focused brands grew from 23,324 units nationwide in 2013 to 25,506 units in 2014, an increase of 11.2%. There were only 314 salad concept locations nationwide in 2009. Now there are 633, and that number continues to grow, according to Technomic. 

Just last month, salad chain Sweetgreen – which has had investments from acclaimed restaurateur Danny Meyer and celebrity chef Daniel Boulud — secured $35 million in additional funding for further unit and technological expansion. Private equity firm Catterton Partners recently backed Protein Bar, and there are a crop of new or rapidly expanding players that are making this “good for you” space a hot one: Tender Greens, Greenleaf Gourmet Chopshop, City Greens, and Freshii. 

Thanks to new franchise partners and an “entrepreneurial spirit that’s alive and well,” Freshii plans to double its stores across the country and internationally in the next year, from about 200 locations to 400, according to Adam Corrin, head of franchise and business development for the chain and brother to Founder Matthew Corrin. These will be spread out across 50 U.S. cities and 15 countries around the world since the first location opened in Toronto in 2005. The company has five corporate-owned locations where execs conduct testing before rolling out new changes to the franchisees. 

“The health-fast-casual category is a new one that we will continue to see emerge and evolve over the next five to 10 years,” says Corrin. “Ten years ago, the idea of healthy was a salad with spinach and maybe something with brown rice. Now we’re seeing the use of kale and quinoa and other healthy greens and grains, as well as the use of avocados, nuts, and Greek yogurt in place of cream, butter, and mayonnaise. Healthy food is no longer a trend – it’s here to stay. People realize this is the way of the future and they [entrepreneurs, franchisees, investors, etc.] want to be a part of it.” 

Fresh & Seasonal 

With the local-sustainable-seasonal food movement continuing to take hold among high-end restaurants, that style of fresh cooking and eating has finally trickled down – in full force – to the fast-casual segment. 

“Customers in general are eating healthier, but they have also raised their expectations,” says Jon Rollo, Chef/Owner of Greenleaf Gourmet Chopshop, a 5-unit, chef-driven concept in Los Angeles and Southern California launched in 2008, but currently growing nationwide. “Healthy used to just mean organic or low calorie or fat free, but now healthy is about wholesome, fresh food and less about restrictions. Customers are also more aware about how their produce and food is grown – just because it’s not organic doesn’t mean it’s a bad product.” 

Just in the last couple years, Rollo says Greenleaf has increased its traction in the marketplace, so much so that the chain plans to grow organically – pun, not intended – by about two to three locations every year for the next couple years. “The Catch 22 with investors is you can grow quickly, but you have to relinquish some control,” says Rollo, a former high-end restaurant chef, who prefers to maintain full control over his food. 

At City Greens, a 2- soon-to-be 3-unit New Orleans-based concept launched in 2012, co-owner Abhi Bhansali says it’s all about “honest” eating.

“Today, when we eat out or shop at a grocery store, the trend is towards more natural eating,” Bhansali says. “Consumers not only want to know where the food comes from, who made it, and how it was made, but they also want to support the food systems and farm communities in the regions in which they live. In a way, we are seeking out an eventual return to our roots, when people ate what Mother Nature deemed available at that time of year in that specific place. It’s a difficult ideal, but one we all work towards.” 

Bhansali and City Greens co-founders Ben Kazenmaier and Michael Birtel build four seasonal menus per year, leaning on local farms and local suppliers to source fresh produce and proteins. The group has even built its own City Greens Farm with 20,000 square feet of hydroponic greenhouses to grow greens and microgreens, and to show customers they mean what they say about “knowing the source of the food.” The City Greens folks grow so much, they even provide excess to some of the best restaurants in New Orleans, and they plan to expand the farm to nearly 55,000 square feet next year. 

From California to Everywhere 

After incubating in California and the west coast, this healthy fast-casual segment has spread throughout the country, thanks to both consumer changes in eating patterns, and to increasing investor dollars. One exception is Freshii, which saw success earlier on in 2005, when the first location launched in Toronto. 

The chain, however, still looks to California for emerging healthy food trends, the juice phenomenon being one a few years back, says Corrin. “To keep up with evolving trends, about five times a year we introduce new menu items as LTOs, our most recent ones being a kimchi bowl with edamame, mushrooms and brown rice, and a large sushi roll that’s like a burrito but using nori paper rather than tortillas,” he says. 

Part of this nationwide segment expansion could be because healthy eating transcends customer demographics. City Greens sees all types of customers, from busy professionals, athletes, mothers, teenagers, college students, and families, and the same goes for Freshii and Greenleaf, Corrin and Rollo say. 

“As new people and new ideas flocked to New Orleans after Katrina, we noticed tastes and trends shift – there were more yoga and pilates studios and a demand for a healthier, cleaner lifestyle and better-for-you food options,” says Bhansali, who found the opportunity for City Greens because of one main dilemma: to eat healthy in New Orleans, you had to sit and wait for it. There was no convenient, quick option that didn’t sacrifice the healthfulness of the food. He plans to expand beyond Louisiana in the near future. 

Expanded Dayparts 

Recognizing this diversity in customer types and in taste preferences, Freshii keeps its menu options broad to appeal to different people across different dayparts. “We have everything from salads to quinoa bowls, to burritos, smoothies and frozen yogurt, and everything has unique flavors, from Mexican to Asian and others,” says Corrin. “We are trying to eliminate the veto vote so that groups can come in and find something to order, and so we can see the same customers multiple times a week.” While lunch has consistently remained strong, dinner has grown significantly because more customers want to continue eating healthy all day long. 

Greeleaf Chopshop has also focused on a broad menu, offering salads, sandwiches, pizzas, vegetable-forward entrees, fresh-pressed juices, and even pastries and desserts to cater to customers from a.m. to p.m. Some locations have full liquor bars for Happy Hour and weekend service where bartenders will incorporate fresh herbs and fruits into their creations. While Greenleaf remains fast casual throughout its main dining area, it offers full-service dining at the bar during limited times throughout the week. 

Customization & Service 

Like other fast-casual concepts, from burgers to pizza, customization in the healthy category remains key – perhaps even more so. 

“Our guests are so in tune with their day-to-day dietary needs that they know what works and what doesn’t with their bodies,” says Corrin. “We allow guests to be their own personal chefs and create menus specifically tailored to their needs, whether they are gluten-free or Paleo or have allergies and other dietary restrictions.” 

In the order line, customers can check off menu options on notecards secured to clipboards with pencils. You choose your “core,” which might be a salad or wrap, burrito bowl or soup, then the protein (chicken, tofu, tuna, steak, turkey), then the toppings (veggies, chickpeas, etc.), then the sauce or dressing. 

City Greens also has a (smaller) build-your-own format section, and salads, wraps and juices can easily be customized. Also, all wraps can be made into salads, and vice versa. 

Ordering this way has not only attracted Millennial customers, it has helped build family business because everyone can order what they want, Corrin says, and Bhansali and Rollo agree. 

But as much as the food rules, friendly service characterizes these health concepts, too. “As much as wraps, salads and pressed juices are our product, the people serving it are as important as the greens we’re putting in people’s bowls,” Bhansali said in an episode of On Foodable Weekly. Bhansali looks for team members that will fit with the organization to create a community culture, rather than just show the required experience. 

“We are in one of the most exciting sectors of fast casual,” he says. “This growing segment of healthy fast-casual chains is making fresh, natural food not just popular, but preferred. And the collection of businesses around the country — with its collective sense of purpose and place — is changing the way people eat. That is the most rewarding of all.”