By Leslie Patton, Bloomberg
April 3, 2019
Seattle entrepreneur Neal Zeavy was looking for a new business a few years ago and came up with an original idea: an organic burger chain.
Nic’s opened in suburban Chicago at Rolling Meadows in 2017, serving a classic fast food menu of burgers, fries, chicken nuggets, and soft serve ice cream. Everything is organic: the pickles, the seasonings, even the ranch sauce. If the larva is not exactly healthy, it appeals to diners who want to feed their families with foods guaranteed to be toxin-free by the United States Department of Agriculture.
âWe’re not going to pretend you’re going to lose weight by eating cheeseburgers and fries even though they’re all organic,â Zeavy says. “It’s mostly knowing that you don’t eat all the other bullshit.” Business was strong enough for him and his partner to open two more sites, with a fourth scheduled to go live this year in Evanston, Ill..
Organically grown foods are commonplace in the United States, and everything from peaches to chocolate bars carries the familiar USDA green label. Last year, sales of organic food and beverages reached nearly $ 45 billion, a 5.5% jump from 2017, according to the Nutrition Business Journal. This is faster than conventional food sales, which have stagnated or declined over the past three years.
âConsumer demand for organic foods continues to grow very rapidly,â says Catherine Greene, USDA agricultural economist. As millennial parents nurture this desire, Gen Z will be “even more interested,” she says.
And yet, very few large restaurant chains make a point of using organic ingredients. Even Chipotle Mexican Grill Inc., which prides itself on quality meat and products from sustainable farms, makes no mention of organic in its marketing or menus. The 23.7 million pounds of rice, beans, tortillas and other organic ingredients the chain bought last year is only a small fraction – Chipotle won’t say how much – of the total. This is because it is difficult to obtain organic products on a regular basis.
Recently, Zeavy’s operation was plunged into chaos when Costco Wholesale Corp. said she was out of organic vegan patties and wouldn’t be getting any for another month. A few weeks later, Nic’s ran out of organic blueberry pie filling for yogurt parfaits, and managers couldn’t just run to the supermarket to buy some. The chain sells around 50 vegan burgers a day, and the parfaits help attract breakfast patrons. âWe were losing sleep,â Zeavy recalls.
In both cases, Sysco Corp. came to the rescue. North America’s largest food distributor is adding vegan burgers such as California-based Don Lee Farms to its lineup, and also has Lucky Leaf Fruit Topping.
Sysco did not return a request for comment, but Don Lee Farms chief development officer Danny Goodman said many restaurant companies are playing it safe by selling legacy brands: Morningstar Farms veggie burgers from Kellogg Co. , for example. âThey’re the bottleneck,â Goodman says. “They have to start bringing in something new and different, but it’s a slow process.”
The USDA also requires annual biological inspections, which take around four hours and require a lot of paperwork and manpower. Quality Assurance International inspectors may attend at any time without notice. Each ingredient must be organic; if even one isn’t, they can close the joint.
Zeavy is fearless. Prior to founding Nic’s, he had spent several years running charity raffles for people like Ronald McDonald House, raising some $ 100 million by donating a house and lower prizes (no one ever won a house but the winners have received money). Zeavy, who still manages the raffles, has a variety of businesses, including a commercial real estate company. He was looking for a tenant for a vacant restaurant he owned outside of Chicago and decided to open an organic burger chain instead.
Nic’s has adapted to young families who are willing to spend a little more money on a burger and fries. Zeavy estimates that the organic label costs the company around $ 100,000 per year (which is expected to be cut in half this year) and is passing the expenses on to customers. An organic grilled chicken sandwich costs $ 1 more than the traditional variety from a nearby McDonald’s. And a Nic cheeseburger is about four times the price of the version sold at the Golden Arches.
Last year, Nic’s generated average per-store sales of $ 500,000, although Zeavy predicts that will double to $ 1 million in 2020. He expects to have 20 stores in three years and 50 in four. It is an aggressive target by industry standards, especially for a niche brand.
Meanwhile, in an effort to attract a larger market, Zeavy recently added a menu item that is the antithesis of fast food: vegan lentil and chickpea soup. He says it sells well.
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