Fast-casual ups the ante with fresh, healthful options: as QSR competitors roll out upgraded menu items, savvy operators differentiate themselves with a bigger emphasis on fresh ingredients and an unwavering commitment to quality

Nation's Restaurant News,  June 18, 2007  by Milford Prewitt

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The ambitious growth plans of La Verdad's founders seem out of proportion for an unknown fast-casual startup with only a single prototype.

The brainchild of an award-winning chef, a foie gras producer and a nightclub mogul, La Verdad is a two-month-old, fast-casual concept offering authentic Mexican cuisine. Located right outside of the Boston Red Sox's home stadium, Fenway Park, La Verdad intends to sell franchises only to accomplished chef-entrepreneurs who share with La Verdad's founders a passion for high-quality food prepared with an eye toward healthfulness.

For a newcomer to the fast-casual business, La Verdad has quickly caught on to one of the segment's primary marketing messages to consumers and potential partners: The category is raising the bar in offering affordable, higher-quality foods--often with a healthful bent.

Looking for a way to further distance their operations from the proliferation of premium and healthful options exploding on fast-food menus, fast-casual players increasingly emphasize such aspects as sourcing, cooking methods, ingredients and the caliber of their franchisees to uphold high food standards and push what they want to be perceived as more healthful agendas.

"We've always been committed to the health of our customers," says Matt Andrew, brand leader for the 350-unit Moe's Southwest Grill chain. "From the very beginning, the decision was made to never use MSG and use the freshest ingredients possible. Our units are designed and built without freezers, and we stay away from overly processed and handled foods."

Moe's, a division of Atlanta-based Raving Brands, in April entered an agreement to be acquired by Focus Brands, also in Atlanta. The deal is expected to close later this year.

According to a study by The NPD Group, a Port Washington, N.Y.-based global market research firm, the segment's focus on food is not lost on consumers. In the year ended November 2006, 46 percent of respondents rated as "excellent" the taste and flavor of foods at fast-casual restaurants, and 43 percent rated as "excellent" the quality of food served.

One reason that operators in the fast-casual category can pursue their healthful goals and tinker with a higher-quality menu mix is because the segment is highly fragmented. Broad geographic dispersal and different specialties within the fast-casual category mean that national chains, regional players, mom-and-pop enterprises and celebrity-chef-owned ventures rarely bump heads with exactly the same menus in the same market.

So unlike players in the burger segment, which several years ago suffered chronic same-store-sales declines because of overbuilt trade areas and discounting, individual fast-casual operators are able to better market to consumers the idea that they serve more upscale, unique and healthful fare.

Ed Frechette, director of marketing and advertising for Boston-based Au Bon Pain, which has 225 units and is one of the oldest members of the segment at 30 years old, says the chain has long operated with a nutritional advisory board and offered kiosks in its units so guests can check the nutritional content of menu items.

While he admits that the chain will not be trans-fat-free until this summer despite a three-year bid to purge the brand of the substance, Frechette says the French-inspired menu remains focused first on flavor.

"Taste and innovation are where we begin," he says. "We think we provide full disclosure so guests can see, good or bad, exactly what they are getting before they buy it. We think we've enjoyed a good relationship with our guests who value that kind of candor, especially when it comes to eating more healthy and considering healthier options."

Even the Washington, D.C.-based Center for Science in the Public Interest, a harsh critic of the nutritional value of many restaurant meals, pays a begrudging nod to the healthful agenda operators in the fast-casual segment say they pursue.

"There is no denying that many restaurants in that category are doing the right thing," says Jane Hurley, senior nutritionist for the CSPI. "They are using whole grains in the breads and pastas, and you a see a lot of innovative and healthy salads out there. We are also seeing more fresh fruit cups and great soups and salads loaded with fiber, and I'd definitely would recommend that grilled chicken salad at Panera Bread."

She cautions, however, that there are still a lot of minefields on fast-casual menus.

"You can get just as fat at Panera or Chipotle as you can at McDonald's," she says. "There are still a lot of 1,000-calorie burritos and 1,000-calorie ciabatta and panini sandwiches on the menus. You have to be careful about what you pick. "Still, you have to give them credit for moving in the right direction."

The crew behind the launch of La Verdad--Ken Oringer, the 2001 James Beard Best Chef in the Northeast and co-owner of the restaurant Clio and the recently opened KO Prime steakhouse in Boston; Michael Ginor, a James Beard Foundation 2001 Who's Who of Food and Beverage inductee and co-founder, co-owner and president of Hudson Valley Foie Gras and New York State Foie Gras; and entertainment entrepreneur Patrick Lyons--intend to make their commitment to nutritious but authentic food part of their franchising mission.