Fast food has the image of being one of the least-healthy meals you can get. But in the last few years, organic fast food has become a rapidly-growing and surprisingly profitable industry. Here are the things you need to know about this dining revolution.
How the Stores Are Categorized
Like non-organic restaurants, organic fast food places broadly split into two categories. Single restaurants have one location and serve a particular geographic area. Some deliver, and some don’t. But organic fast-food franchises are rapidly expanding to new areas.
It’s too early to say which version will ultimately end up more popular. But franchises have one point in their favor: Serious backing from people involved with retail giants like Walmart and Costco. Between in-store locations and at-home delivery services, organic food is becoming easier than ever before for people to find and enjoy.
Wait, They’re Being Backed by Other Companies? How?
Large retailers are sponsoring organic fast food restaurants in several ways.
Walmart decided to allow grown, a small chain in Florida, the opportunity to open a branch inside one of their retail centers. As Walmart is proud to point out on their website, they serve over 260 million customers every single week. And operating a franchise inside their retail centers can provide a truly staggering amount of visibility.
There aren’t too many organic fast food locations in Walmart stores just yet. However, Walmart is one of the biggest retailers of organic food. The customer base is there, and it’s safe to assume they’re going to capitalize on it as best they can.
Meanwhile, former Costco executive Erica Welton is the driving force behind The Organic Coup. They had 11 locations in California at the time I wrote this piece and plans for quite a few more. As Welton explained to Business Insider, she noticed that people were buying more and more organic food. But they just didn’t have good options for eating on the go. One of her goals was to change that.
That said, not every franchise is supported by big names. For example, Nic’s Organic Fast Food currently has a location in the Rolling Meadows area of Illinois, with plans to expand nationally over the next few years.
The success of organic fast food isn’t tied to sponsorship from other companies. But the fact that the sponsorship exists means these restaurants could spread much further – and much faster – than many people expect. You should never underestimate the power of a major corporation that decides to go all-in and make things happen.
Where Are These Restaurants Located?
You can primarily find organic fast food restaurants in major urban centers (such as the Western and Eastern seaboards). You can also find them near farming communities that can locally provide most or all of the company’s ingredients. Some franchises only use local products, resulting in menus that vary from location to location.
The main reason for this is cost. Organic food is already expensive, and adding long-distance shipping costs could force prices to be raised beyond what people are willing to pay. Urban centers can take advantage of faster and easier shipping.
As more locations continue to open, the supply chain will follow. However, until prices come down (see below), it’s not likely that we’ll see too many locations outside of the more affluent parts of the country.
How Does The Cost Compare To Other Fast Foods?
Organic fast food is significantly more expensive than most other kinds of fast food. As of this writing, for example, grown had menu items reaching as high as $18. That’s a long way from the Dollar Menu at McDonald’s, or even from the build-your-own meals at places like Subway and MOD Pizza.
If organic fast food places continue to become a larger part of the market – and they probably will – prices are likely to come down. For now, however, beware of sticker shock if you’re going there to eat. Organic fast food is not friendly for a tight budget.
How Are People Reacting To These Restaurants?
Reactions vary, but organic fast food locations have been well-received so far. This is happening on two significant levels.
First, profit-wise, the franchises are making enough money to expand and open new locations. More than anything else, that shows customers are willing to pay the higher prices.
Culturally, however, organic fast food is even more of a success. We are accustomed to things being fast and easy. Just think about how much you can do in one minute on your smartphone. However, the quality of the food we eat has also been a growing concern. This is especially true after the reports of additives that are… less than healthy, let’s say, in many fast foods.
As pointed out in the earlier Business Insider article, some people love being able to go to a restaurant and order a meal without worrying what’s in it. If they don’t have to worry about how healthy the ingredients are, that’s one less item demanding their attention on a busy day.
How Organic Does A Company Have To Be To Be Called Organic Fast Food?
This varies. However, many organic fast food restaurants are committed to being entirely organic. And some take it a few steps further. For example, down in California, Amy’s Drive Thru has a store with separate vegetarian, vegan, and gluten-free areas. So it can prepare food for as many different diets as possible.
That sort of thing is probably going to be limited to larger locations. But so far, fully organic is more the rule than the exception.
A better question is how much this may change in the future. As a company grows, so do the demands for profit. It’s also quite possible that some shareholders will demand a “less organic” setup to reduce costs and improve stock prices. On the other hand, companies may insist on remaining fully organic for fear of turning away their audience.
We could talk about this for hours. But there’s no need to go that far. Instead, all you need to know is that it’s better to do your due diligence and research a company before you eat there.
Are These Stores Competing With Other Fast Food Locations?
In general… no. Everybody needs to eat. So all restaurants are competitive to a certain degree. But the target demographics of organic fast food restaurants and most other fast food locations (Burger King, etc.) are wildly different.
It’s better to think of organic fast food as competition for any franchise that markets itself as having healthy food. To put it another way, the question is how much people are willing to pay for healthy food. So far, the answer seems to be ‘quite a lot, if they can afford it.’
I don’t expect mid-price healthy locations to vanish anytime soon. Organic fast food is more expensive than many people can afford for a meal. And people who weren’t paying that much before probably aren’t going to start. It’s more likely that organic fast food will squeeze into the space between mid-priced fast food and high-priced formal restaurants. This will take some of the profits from both, and ultimately it will settle down.
Could New Legislation And Laws Impact This Industry?
Of course. Legislation can upend any industry overnight, and there are a few points worth considering here.
On the advertising end, legislators may change the way people can market a restaurant as being organic. The term could be limited to places that are entirely organic. Or it can be used by any location with at least one organic product.
Similarly, the label as it applies to food could change. Currently, the United States Department of Agriculture does not allow genetically modified organisms (GMOs) to be called “organic.” As we continue to plant and develop GMOs, though, the label might change. And organic restaurants will have to decide whether or not they’re going to sell those products.
On the judicial end, existing franchises may lobby for rules that will make it harder for the healthiest fast food burger to make its way to your plate – and regulations could be fought in court for years. In the end, however, it’s unlikely that legislation is going to halt the growth of this industry.
Is There Anything Else I Should Know About Organic Fast Food?
We’ve already discussed the most important information, but there’s one more point of data that’s worth considering: the pay scale. Many organic fast food restaurants pay their employees well above minimum wage. They can afford to do this because of their higher prices. This helps them attract more talent and be significantly more competitive than they might otherwise be.
Talent does make a difference, and so far, the investment in employees seems to be working. If organic fast food locations become sufficiently competitive, they may even raise the pay at cheaper locations as employers struggle to attract talent. That’s not likely to happen for at least several years, though.