how to run a successful organic restaurant

7/29/2019 How to Run a Successful Organic Restaurant

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How to Run a Successful OrganicRestaurant

Organic restaurants are popping up all over. Here are 8 things for you to consider ifyou want to start one.

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The popularity of organic foods and the restaurants that serve them has skyrocketed in

recent years. A once niche market is now a burgeoning billion-dollar industry. Though

demand is growing, running an organic restaurant is not easy. Organic foods areintrinsically more expensive than processed foods, driving up a restaurateur's costs. Organic

foods are also often in short supply. Still it is possible to succeed in the marketplace if

several rules are taken under consideration. This guide will explain how to survive and

ultimately succeed in the organic restaurant business.

1. Prepare for growth and higher start-up costs.

Though the prolonged economic downturn continues to dampen consumer confidence in all

industries, the organic foods trade currently remains relatively optimistic. According to

the Organic Trade Organization (OTA), organic food sales increased by 5.1 percent in 2009

as compared to conventional food sales, which only saw a 1.6 percent increase. With that

said, managing an organic restaurant requires a successful implementation of two

objectives--flexibility and perception control.

In an industry that has seen incredible growth over the last two decades (the OTA reports
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organic food and beverage sales were at $1 billion in 1990 and $20 billion as recent as

2007), there are some questions as to whether escalation can continue at that pace. Those

who own and invest in an organic restaurant must understand the risks involved and be

prepared to take losses in some years.

The old paradigm of a long-haired, social activist vegetarian has given way to a new

stereotype: The superior over-achiever. In order to maintain a consistent customer base,

restaurant owners must work vehemently to dispel any myths of elitism.

Industry trade firm restaurantowners.com lists the average price of start-up costs for a new

place at $451,000. Of course that's just an average and doesn't take in to consideration any

specific details such as size, location and cuisine. For an organic restaurant the same

variables apply but you will have to add on additional 10 percent to 20 percent according to

Sarma Melngailis, proprietor and co-founder ofPure Food & Wine, a renowned gourmet

and raw foods restaurant in New York City. She cites big-ticket purchases like high quality

water filtration systems and compostable takeaway materials as reasons for the jump in

price.

However, there is some upside for prices once an organic establishment is off the ground.

Restaurants that serve organic meat and poultry still face price concerns but vegetarian

places often benefit from their inherent advantage. "We luck out on our insurance

premiums by not having oven or stoves," Melngailis explains. "Because we're a raw place

there are no fires hazards and, unless someone cuts themselves with a knife, insurance-wise

we're good."

Dig Deeper: How to Start a Restaurant

2. Expect price fluctuations.

Managing an organic establishment requires a high level of ingenuityyou'll have to use

everything that you know about restaurants and quickly become an expert on consumer

marketing. "The more organic the food, the more we have to raise our costs and the more

creative you have to become. It's very hard to convince people that a plate of tofu or carrot

rissotto should be more than a steak," says Amanda Cohen, owner and head chef ofDirt

Candy, New York City's premier vegetarian restaurants. "For example, lemons are always

expensive because we don't grow them in the city. On top of that if you buy organic lemons

there are only so few places that grow them and they are usually much further away and of

course grown seasonally. Sometimes we'll order a case of lemons that aren't organic and

they're 30 dollars and when we order organic its 60 dollars. Those are real costs we have to
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factor."

Dig Deeper: Norm Brodsky on Solving the Pricing Riddle

3. Embrace menu changes.

Organic restaurants have to go to great lengths to maintain a consistent menu, especially in

a tough economy. Keep it the same as long as possible says Jana Keith-Jennings, Pure Food

& Wine executive pastry chef, but do not be afraid to make hard choices. "When the price of

maple syrup went up, I had to cut down our use of it. We've adjusted a lot of our recipes

because of that. You have to remain confident that you can still make good food even if you

don't have your usual ingredients," she explains.

As not to disappoint or confuse customers, chefs are reticent to constantly change their

menus, but in this business elasticity is paramount. "Things get really exorbitant when they

get out of season," Cohen explains. "In a few weeks when tomatoes aren't as plentiful and

the price goes up too high we will just take them off the menu. That's one of the things we

struggle with is changing our menu. We know that in three weeks peas aren't going to be

fresh anymore so we will have to change the soup. Otherwise the quality won't be as good

and I'll really start losing money." The guarantee of available products in this industry

simply does not exist and chefs have to prepare for change whenever it presents itself.

However, she does advise against making too many exceptions, stating that a common-sense approach to even cost cutting must be heeded. Cutting back on expensive ingredients

in favor of cheaper ones will only work sometimes. "We don't use refined sugars in our

food, but sometimes we have to use agave," Cohen says. "Agave always stays in liquid form

so if I want to make a crisp cookie I have to use maple. In order to retain quality you have to

be prepared to change whole recipes entirely."

Dig Deeper: Business Restaurant Tips from Food & Wines' 2010 Best New Chefs

4. Know your customers.

"If you want to be successful you have to step out of making typical vegetarian foods. Only

half of our customers are vegetarian. I think that vegetarian restaurants that just cater to

vegetarians is not a recipe for success," says Cohen. "We appeal to carnivores and

omnivores, because more so than any other kind of consumers, vegetarians don't always

stay vegetarian. You'll want to make sure that even if they change their diets they still want
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to come back."

It's also important to know the differences in food categories. For instance, anything

considered "raw" must be cooked at a temperature of 116 degree or less. While a food item

like a sauce or pie must have at least 70 percent strictly organic ingredients to garner the"made with organic ingredients" (and 95 percent to be considered wholly organic) label

according to the USDA. Knowing the different specificities will validate your restaurant

amongst people who take the organic title seriously.

5. Convince the non-believers.

Comedian Bill Maher often refers to the natural food retail giant Whole Foods as "whole

paycheck" due to its expensive prices. His reference reflects a general perception that is

often a reality for many people. The Organic Food Associationcites the price of organic

versus conventional can be anywhere from 15 to 100 percent higher. With that price

difference, organic food can feel more like a luxury than a necessity. The Food and Drug

Administration (FDA) defines organic in the procedures that farmers grow and process

food. Because these terms are more stringent than conventional farming the practices are

much more labor intensive. Additionally, shunning the use of products like pesticides and

synthetic growth hormones often results in lower product yield, which leads to smaller

amounts of food that farmers can bring to market. The consequence of this supply and

demand paradigm is the inevitable price hike of organic foods.

A 2009 study by the National Restaurant Association (NRA) cites that 76 percent of adults

are trying to eat healthier at restaurants than they were just two years ago. That study was

determined over several demographics signaling an overall shift in the dietary

consciousness of Americans. The NRA completed another recent study in which

sustainability, local sourcing and nutrition are cited as some of the most popular culinary

themes.

Additionally, in wake of the recent egg recall, the OTA reports an increase in the sale and

demand of organic eggs. Seemingly people are getting the message, the problem is whetherthe prices can remain static. There is an understanding amongst sectors of the public that

organic prices will always be higher but there is a breaking point. As organic food prices

continue to ascend, people may shy away from the marketplace.

"In the beginning a lot of people didn't understand this kind of food and still there are

concerns. People say things like they don't understand why it was so expensive, you just
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serve vegetables," says Melngailis. "People don't know that when you use all organic

ingredients that it's not here, it's not grown locally. So when we have to import something

from Italy, these foods are hard to find and highly perishable and that makes it that much

more expensive. Not to mention the process of how we cook takes a long time."

Price concerns are a true decision-making factor for anyone who aspires to work in this

industry. There are organic restaurants like Sprout'sin Chicago and Nora'sin Washington

D.C where a dinner for two can reach triple digits with ease. Sprouts offers their cuisine at a

price fixed amount of $60 while Nora's offers appetizers for as much as $15 dollars and

entrees in the $29-$35 range. Of course, not every organic place will have those prices (like

organic fast-food restaurants). There are several variables to consider but on average

customers can expect a price difference to be anywhere from 10 to 30 percent higher than at

conventional places.

Dig Deeper: How to Find New Customers and Increase Sales

6. Avoid vegan stereotypes.

Melngailis knows how to shake up the monotony sometimes prevalent in the organic

restaurant world by mixing staff personalities. She mentions that in some places she has

seen, everybody has a similar make-up, and that creates an elitist attitude. When that notion

permeates through a workplace, it discourages potential customers, as people are generally

sensitive to spend money in an eatery where they feel they are being judged. "A lot of thestaff members here are not vegetarian and I did that on purpose," she says. "It's better for

the restaurant to have different mentalities present. It creates a more open vibe, which helps

business because we want to reach a more open audience."

Melngailis cautions organic restaurant owners from allowing their establishments to sink

into what she calls "pretentious" behavior. "We stay away from the whole 'perfect, we're so

environmental, this is what we do to be sustainable' thing," she says. "There's too much of

that. There's a place that I know of and they make great food but they have a sign in the

window that says if you wear fur you're not welcome. That's really bold and aggressive.That's the stereotypical angry Vegan." Potential restaurateurs can talk politics or volunteer

for PETA in their spare time. At your restaurant, serving customers should be first and

foremost in your mind.

Dig Deeper: How to Diversify Your Customer Base
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7. Value supplier relationships.

Organic farms are at a premium and playing hardball may not be the wisest option. Due to

the finite nature inherent in organic farming giving ultimatums and deadlines may not bring

your business any closer to acquiring the products you need. Both the restaurant owner and

the farmer have expectations they are working to fulfill and it is patience that is key here.

This is not to say that the organic food industry doesn't have the same market demands as

any other industry. Exceptions are sometimes part of this business, especially during

difficult economic times. "Sometimes we pass the price on a little to the customer. We try

not to push the prices up too much but we don't want to compromise our standards and we

want to use the best quality products and ingredients," Keith-Jennings says.

The best way to overcome the demands of an uneven market, Keith-Jennings says, is by

sticking by the people you trust the most. "Everybody wants to work together but it's

frustrating when you can't compete in the market. With this current downturn, we've lost

vendors because we couldn't afford their products. We generally try and stay committed to

the farmers we've been with for years. And they stay committed with us. Sometimes they are

more lenient in letting us stretch the bill out a little longer."

Dig Deeper: Choosing Suppliers

8. Think long-term.

While initial news of a raw foods restaurant helped save marketing money by creating its

own word of mouth buzz, Melngailis knew she needed a long-term strategy. Under her

umbrella organizationOne Lucky Duck, she manages an online organic lifestyle boutique

where she sells many of the items on her Pure Food & Wine menu. "When people go back to

Arizona or London or wherever they're from they can find our stuff online and that's how we

tie the businesses together and continue to grow. That way people don't have to come here

and have this isolated experience and leave and not have a way to find this kind of food

again."
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