The Cold, Hard Truth About Running A Healthy Restaurant

Written by Gina Hamadey

Right now, someone you know is fantasizing about launching a health-food restaurant or business. (Three friends — separately — have recently confessed their dream to start an organic baby-food delivery service.) Perhaps you are nurturing a genius idea involving vegan Jell-O, or Paleo doughnuts, or macrobiotic sushi.

And why not? A peek on Instagram shows countless fashionable juice makers or vegan food caterers, all living a healthful life full of flattering natural light.

Fast-casual healthy restaurants are succeeding and proliferating: It seems you can’t walk a Manhattan block without passing one (The Little Beet, Sweetgreen, Dimes, By Chloe).

In Chicago, Farmer's Fridge — a vending machine serving salads in mason jars — has expanded to 13 kiosks since opening in 2013, and plans on launching in Los Angeles soon.

Even the South is eating healthfully: Nashville's massively popular vegetable-forward restaurant and grocer the Turnip Truck is expanding to a 13,000-square-foot location.

So is it a stupid idea to follow your heart and change the world, one Paleo doughnut at a time?

Upscale restaurants are skewing healthy, too, and not just on the coasts: Houston’s white-hot Oxheart has a six-course vegetarian tasting menu that includes a mung-bean pancake and a poached cucumber. At Boston’s Erbaluce, chef Charles Draghi uses fruit and vegetable purees and juices to lighten up his Italian dishes.

Chefs are catering to an ever-growing market: This year’s Nielsen Global Health Report on Health and Wellness revealed that in North America, sales of healthy categories grew 7 percent over the last two years. In the same time period, sales of products with “natural” and “organic” claims have increased 24 percent and 28 percent, respectively.

Interest in cooking healthful foods has also soared: Sydney Schwarz, director of admissions at New York City’s Natural Gourmet Institute, says that in the past year, the healthy food cooking school has seen a 35 percent increase in interest, and a 10 percent rise in applications.

These students are likely asking the same question you might be thinking: How hard could it really be?

The 10 empty Organic Avenue storefronts around New York City — all shuttered abruptly in mid-October — tell a different story. One that’s all too familiar in New York City, where even an über popular raw-vegan destination restaurant, Pure Food and Wine, closed this summer.

It’s not just healthy restaurants in New York City that are taking a hit. Grocery-delivery service Good Eggs closed its Los Angeles, New Orleans, and Brooklyn operations in August. Anthony Leone, co-founder and CEO of fast-casual chain Energy Kitchen, closed up shop (13 spots in Florida, New York City, Long Island, New Jersey, and Virginia) just one year after telling Business Insider that he would open 1,000 locations by 2022. And this year the West Coast healthy convenience store Fresh & Easy went into bankruptcy, shutting down all of its 50-plus stores.

So is it a stupid idea to follow your heart and change the world, one Paleo doughnut at a time? Launching any business is tough, but are the cards stacked against you if your mission involves healthy food?

We talked to nearly a dozen chefs and business owners, in varying stages and degrees of success, and learned the harsh realities behind the avocado-and-grain-bowl veneer that is today’s healthy foods business.

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Real Food Costs More to Buy AND Sell

The biggest problem with running a health-food business, of course, is the added cost. It’s no secret that locally and organically grown produce costs more than what’s sold at McDonald’s. Beyond that, running a healthful and responsible business comes with all sorts of hidden fees.

First, there are the certifications. Lukas Volger, owner of Made by Lukas veggie burgers, is in the process of getting non-GMO certified. To receive the label, a product (in his case, a burger) has to be certified as containing ingredients with less than 1 percent genetic modification. “That stuff is expensive. Every certification is like being audited, so it’s time-consuming, too,” he admits. “But I know that my customers care about this kind of stuff.”

Defining your healthy brand isn’t always the most sound business decision.

Another challenge Volger hadn’t anticipated is shelf life. Grocery stores like products to have 120 days on the shelf. But adding preservatives is “antithetical to the point,” says Volger. “That’s my biggest hurdle.” So he’s raising money to research how to use high pressure to extend his product’s shelf life without adding preservatives (similar to the cold-pressed juice process). Cha-ching.

Susan Baldassano, director of student affairs at the Natural Gourmet Institute, has seen a lot of former students try to do everything the right way, using the best ingredients and the most socially conscious packaging. One former student tried and failed to sell a trail mix using family-farm ingredients; another made an all-organic granola, but no one was buying it at $12 a pound.

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Success: The Secret Sauce

The trick is to create a strong brand that fills a hole in the marketplace. Surely that’s easy as a health-food business, right? Actually, the opposite is true. “It’s much easier to create a mass product that doesn’t need explaining,” says Loren Brill, founder of Sweet Loren’s whole-ingredient cookie dough, sold nationally at Whole Foods.

“Everyone has their own version of what healthy is: Paleo, low cal, whole grain, low sugar. There are a million diets.”

So the burden is on the business owner to identify the brand as healthy — and also what that means — all in a snappy and modern way. Beyond that, “Millennials want it all,” says Brill, “transparency, natural, better-tasting, yet not too expensive. They are asking a lot.”

The trickiest part? Following that advice and defining your healthy brand isn’t always the most sound business decision. Star raw-food chef Matthew Kenney recalls that when his company was growing, two of his restaurants weren’t vegetarian, which bothered one of his partners, who was against serving animal products.

Those two restaurants, in Maine and in the Midwest, were among their most profitable, yet Kenney closed them. “I probably didn’t think it through, but I’m glad I made the decision,” Kenney says, even though revenue plummeted. “It helped create our identity. A brand needs to have a really specific agenda and ethos. You’re never going to please everyone, so be known for something.”

That’s the only way health-food companies are going to stand out in today’s ever-crowded field. Baldassano has worked at the Natural Gourmet Institute since 1987 and has seen the industry change.

If you're not in your customers' newsfeed, you're not top of mind for them.

Social media, Baldassano says, is a blessing and a curse in today's world. “In some ways, marketing your company is easier than ever because you can be hawking yourself 24/7,” she says. “But everybody’s out there with a good cookie. You have to be sending out your message all the time, and that becomes a full-time job.”

Just ask Taylor Jones, the creator of a simple, organic energy bar, Jonesbar: "Though we like to think our clean and simple packaging stands on its own, we need to constantly educate the customer to give them a reason to buy our bar. Otherwise they'll just choose what they already know," Jones explains. This pressure to define the brand on social media, in particular, weighs heavily on Jones: "If you're not in your customers' newsfeed, you're not top of mind for them."

Dr. Joel Kahn, founder of the 100 percent plant-based restaurant GreenSpace Cafe near Detroit, can relate, "We had our Instagram, Facebook, and Twitter accounts up and running about a year ago — long before our restaurant had even opened, and before the restaurant's official website went live." Though even that route has its roadblocks, "People kept asking 'when are you opening?'" Kahn continues.

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Growth Potential

Once you reach a level of success, like Franklin Becker at The Little Beet has achieved, there’s the question of how fast to expand. (The Little Beet is opening five more outposts in the next year, around New York, Chicago, and D.C.) New York City's Organic Avenue serves as a warning. “I think they grew too fast,” says Marissa Lippert, of Nourish Kitchen + Table in the West Village.

“You have to be connected to a space in a neighborhood. You have to have daily conversations with your customers.” Vegetarian cookbook author (and former executive chef of Angelica’s) Amy Chaplin agrees: “They expanded so fast, and then it’s hard to pay all that rent. It’s a lot of juice to sell.”

Matthew Kenney has his own theory. “They picked up expensive real estate, and nothing was prepped on site. It ended up being a 7-Eleven for juice, and most of what they sold was available at Whole Foods,” he says. “There were too many people making decisions based on growth and numbers. They missed the market."

Kenney speaks from experience, as he closed down his New York businesses to focus on his cooking schools and restaurants in Maine, California, and Thailand.

The health food industry is difficult, filled with countless hidden fees and hurdles. But interest has never been greater. “It’s really exciting to be a part of change in the food industry,” says Brill. “Food is going to look so different in the next five or ten years.”

Brill goes on to say, “Cleaner food is our future. If you are passionate, jump in. Source the best ingredients. That’s when we will see a shift in the mainstream. ” Becker of The Little Beet echoes the thought: “The more and more people start going this way, the more prices will have to correct themselves. I’m seeing it already.

“More regular grocery stores are offering local, organic, gluten-free aisles. Right now you pay a premium to eat better. But it shouldn’t be that way. As time goes on, we are going to see prices go down.” So either wait till then to launch that vegan sushi business, or take the plunge, scary and ill-advised though it may be, and be part of the solution.

Cover photo courtesy of Stocksy

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Ready to learn how to fight inflammation and address autoimmune disease through the power of food? Join our 5-Day Inflammation Video Summit with mindbodygreen’s top doctors.

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