Venture Capital Is Hungry for the Food Business

The food business is “ripe for disruption,” according to Steve Case, who cofounded America Online 30 years ago.  Case, who recently started his Washington-based venture capital firm Revolution, has made several high-profile bests on food: Sweetgreen, OrderUp, and Revolution Foods, a school-lunch company serving 1.5 million student meals per week.

“There are opportunities to improve the way things are done at every level: How food is produced, exported, processed, consumed,” Case said in an interview this week. “Our focus … is on investing in people and ideas that can change the world, and it’s harder to imagine anything that changes the world as much as food.”  To Case, the opportunity is, like in tech, in scalability: “It’s one thing to create one product in one particular restaurant,” Case said. “It’s another thing to roll it out to 5,000 restaurants, where the chefs are 16-year-old kids who have worked there for a few hours.”

Case thinks that the low barriers to entry and potentially high profit margins are partially why so many successful food companies have rested on their laurels, and this is where tech will come in to disrupt–especially given that eaters are embracing dining out more often and using apps for payment.  Sweetgreen, one of Case’s investments, is a salad shop that receives more than 20% of its orders through the chain’s mobile app.

“We’re in the first days, the early innings of this food revolution,” he said. “Nothing’s more important than what you put in your mouth three, four, five times a day.”

To read more, click here.

Soaring Beef Prices Drive Demand for Goat and Lamb

Goat is the most widely consumed meat everywhere except America.  The States have a poor perception of the farm animals, but that, fortunately, is changing, thanks to a rise in cattle prices.

Kevin Good, senior analyst at CattleFax, explained that beef costs are rising due to cattle herds being decimated after multiple years of drought that drove of feed prices.  Cattle farmers are rebuilding their herds, but the process takes up to three years, so prices are likely to stay high until 2016 or 2017.

For chefs, this means turning to alternatives, and goat is an exciting meat right now.  Stephanie Izard, chef of Girl and the Goat, won a James Beard Award for her cooking, which was basically dedicated to the animal.  Her menu includes goat liver mousse, goat carpaccio, and confit goat belly, to name a few items.  Similarly, Scott Conant, James Beard Award winner and founder of Scarpetta, has championed goat for years on his menu.

And this is a boon for guests and grocery shoppers.  Goat is lower in fat than chicken, but higher in protein than beef.  Lamb, which is already more widely consumed in the States than goat, is also seeing a rise in demand.  Multi-unit concepts are embracing the meat and using it in place of burgers.

To read more, click here.

Beer Brands to List Calories

Four of the world’s largest brewers have agreed to add calorie counts to packaging in Europe, and the US could be next.  Anheuser-Busch InBevSA, SABMiller PLC, Heineken NV and Carlsberg A/S are all members of the Brewers of Europe, a trade body representing beer makers across the continent.  The trade group recently voted to begin listing calorie counts as early as this week.

The decision comes as alcohol producers are facing increased pressure to follow the food industry by providing more detail on nutritional labels.  The pressure on the food industry comes from a growing trend, especially among developed markets, for healthier choices in meals and foods.  In 2014, 71% of Americans polled said “healthfulness” was a consideration when buying foods and beverages according to the International Food Information Council Foundation.

The brewers’ trade group is following on the heals of Diageo, the world’s largest alcoholic beverage company, which will begin printing per-serving calorie counts on products including Smirnoff and Guiness, and may be in stores in the next two months.

To read more, click here.

James Beard Award Chef and Restaurant Finalists Announced

After months of deliberation, the James Beard Foundation has finally honed in on the selection of finalists for this years’ Chef and Restaurant awards.  The awards will be held May 4 in Chicago–the first time outside NYC in 24 years! Here is a quick review of the local talent that made the cut:

  • Batard, nominated for Best New Restaurant
  • Jim Lahey, nominated for Outstanding Baker
  • Maison Premiere, nominated for Outstanding Bar Program
  • Michael Anthony, Gramercy Tavern, nominated for Outstanding Chef
  • Ghaya Oliveira, Daniel, nominated for Outstanding Pastry Chef
  • Christina Tosi, Momofuku, nominated for Outstanding Pastry Chef
  • Momofuku Noodle Bar, Per Se, and The Spotted Pig nominated for Outstanding Restaurant
  • Marea, nominated for for Outstanding Service

To see the complete list, click here.

Recipe for Rice with Fewer Calories

Scientists at the College of Chemical Sciences in Sri Lanka have developed a recipe for rice that greatly reduces the amount of digestible calories.  Rice is the most-widely consumed source of calories in the world, and in many cuisines, it is consumed with every meal of the deal.  The problem, however, is that as rice has gotten cheaper to produce but not any healthier to consume: a single cup of the cooked grain has about 200 calories–mostly in starch form.  These starches convert to fat in the body when not burned off shortly after consumption.

Thus, the interest in slowly-digestible and resistant starches is growing, and that’s where undergraduate student Sudhair James’ research comes in.  “If you can reduce the digestible starch in something like steamed rice, you can reduce the calories,” said Dr. Pushparajah Thavarajah, a professor who is supervising the research. “The impact could be huge.”  Rice is usually converted into glucose in the gut, and then glycogen soon after.  This glycogen builds up when we don’t exercise enough to expend the energy consumed.  However, some “resistant” starches take too long for the body to process into glucose or glycogen, so we don’t process as many calories.

The Sri Lanka team has developed a recipe that converts regular white rice into a starch more similar to a resistant starch: “What we did is cook the rice as you normally do, but when the water is boiling, before adding the raw rice, we added coconut oil—about 3 percent of the weight of the rice you’re going to cook,” said Sudhair James, who presented his preliminary research at National Meeting & Exposition of the American Chemical Society (ACS) on Monday. “After it was ready, we let it cool in the refrigerator for about 12 hours. That’s it.”

To read more about the research, click here.

Per Se Alums Open Fine-Casual Hawaiian

Chef Chung Chow, Jin Ahn, and Gerald San Jose all met while working for Thomas Keller at the New York City fine dining institution, Per Se.  However, they’re no longer dabbling in French or American classics.  The trio has moved on to open a Noreetuh: a 42-seat, upscale-casual restaurant in the Eat Village focused on Japanese, Korean, and Filipino cuisines and where those three meet–Hawaiian.

Jin Ahn has assembled an impressive wine list with an emphasis on Burgundy and Bordeaux, but has kept the selection largely under $150.  Chow’s cooking reflects his upbringing in Hawaii and Japan with such dishes as pork croquettes, garlic shrimp over sticky rice, and crispy mochi waffles.  The menu is priced between $5 and $22, reinforcing the current trend of the return of casual dining, albeit with a fine-dining tweak.

To read more about Noreetuh, click here.

Le District to Partially Open This Week

The giant French market, bakery, cafe, and restaurant, also known as the French Eataly, is set to be partially open this week in the Brookfield Place in Battery Park City.  Over the weekend, the Cafe District opened up to the public serving pastries, espresso, and candy.

Much to the delight of Francophiles around the city, this is also the first US location of the Paris-based candy store, La Cure Gourmande, which is now open inside the Cafe District.  Guests will have to wait until Wednesday, however, to get a taste of chef Jordi Valles’ brasserie cooking at Beauborg.  The final portion of the project, a 28-seat tasting menu restaurant called L’Appart will not open until May.

Le District has slowly been releasing details about the project to excite guests.  In case you missed any of the previous reports, here are the highlights:

The space is divided into four districts: cafe, restaurant, garden, and market.  While separate physically, guests will be able to interact with the spaces with some degree of cohesion; for example, guests can purchase a steak at the butcher and have it cooked on the grill before leaving.  Also, the salad bar will switch over to a chocolate mousse bar at 4:00p.m.  Inside the market, there’s a wine bar, rotisserie, fishmonger, bakery, and cheese shop.  In addition to the 30,000 square feet inside, Le District will also have 7,000 square feet of outdoor space, with 250 seats overlooking the Hudson.

To read more about Le District, click here.

Growing Your Enterprise: What’s Next?

In our business, it’s safe to say we see our fair share of new concepts – a great idea that’s ready to be put into action. In some cases, the concept is totally original and in others, it’s a twist on classic. We’ve discussed the ins and outs of conceptualizing your foodservice enterprise from almost every angle. We know the importance of defining your product offering, conducting market research, and financially planning for profitability.

But what if, unlike a new concept, you’re already in business? Let’s say you have a great product or a single retail location that’s doing gangbusters. What’s next? The next step for any business owner is always met with some trepidation, as the subsequent move isn’t always clear. As a foodservice provider, there are a number of different routes to consider. In last month’s insight, we reviewed the importance of the four P’s – Product, Profit, People, and Process. The same theories apply here but maybe in a different manner.

A retail location is often the natural stepping-stone for any food business. It’s great in terms of showcasing your brand identity, providing guests with an in-store experience, and organic marketing through location and foot traffic. But a retail store is also heavy on start-up capital costs and operating expenses with less wiggle room in terms of profit margin. Perhaps your product can be delivered to consumers in another manner? This is where a deep dive into the business fundamentals should happen.

Taking a close look at the product offering is essential. Does the product need to be made on-site and is it best consumed right away? Can it be produced in larger quantities and packaged for delivery? Depending on your answers here, it could make senst to consider adding wholesale accounts in some form or delivering directly to consumer via online ordering.

Understanding your process and people in terms of operations and production is also vital. It could be that you need specialized equipment to produce your product or it could be incredibly labor intensive. Can production happen across all stores or is a commissary location necessary? What do logistics look like in terms of delivery and shipping long distances? Your organizational structure is also important here when looking at how many avenues of growth to pursue. We can’s stress enough how important it is to think through every aspect in terms of the “how” things are going to get done.

At the end of day, your business has to be profitable and have the capital means to support these different growth prospects. Access to proper funding, tight budgeting and financial controls are key. So when its time to think about the next phase for your enterprise – remember its always great to be a big thinker, but any growth plan needs a solid foundation to start.

Growing Interest in Specialty Bread

With the rise of gluten free dining and carb-eschewing diets like Paleo, bread has been getting beaten up lately.  Now that bread is seen more as an indulgence, consumers are treating the sandwich staple with more revere, and expecting better options.  Jana Mann, senior director of menu research firm Datassential, noted that consumers are drawn to breads that evoke freshness, speciality or ethnicity, or seem in some way to be premium products.

Baking bread in house in nothing new, but larger chains are getting into the swing of things by product smaller, easier breads like pretzels and focaccia in house.  “Pretzel” was the fastest growing bread descriptor on menus in 2014 and for good reason.  Ms. Mann notes that pretzels have an approachable but also ethnic heritage, and can work in both sweet and savory applications.  Wendy’s recently launched a Pretzel Bacon Cheeseburger as a limited-time offer, but it was so popular that the brand returned the item to the menu permanently.

Datassential’s Mann notes that like pretzels, other ethnic breads such as bao buns, Indian naan, and Mexican telera rolls can be used to add a slightly exotic feel to familiar foods.  “Consumers can’t eat two things they don’t know, but pairing something unfamiliar with something familiar grounds it,” she said.  It’s not much different from adding unfamiliar or unconventional toppings to pizza, she added.

To read more, click here.

Grocers Bet on David and Not Goliath

Well-known national food conglomerates are seeing smaller, scrappier brands eating away at their revenues. Across the country, demand for natural and organic products from smaller and upstart producers is on the rise. Consumers are asking for more, and grocers are doing whatever they can to give it to them.

Amy’s Kitchen, for example, was founded in 1988 and now has over $225 million in sales—which are up 24% since 2009. Meanwhile, Banquet, a ConAgra brand, which had sales of $636 million last year, has seen a 17.5% decrease since 2009. Amy’s isn’t the only success story:

Kroger Co., the largest conventional grocery chain, mentored an upstart pancake mix company from Colorado last year helping with package size, marketing strategy, and flavors. The brand, FlapJacked, is now in more than 500 stores nationwide. “Our customers are increasingly telling us that buying local or buying from boutique producers is something they want, and we are working even harder to provide it,” said a Kroger spokesman.

Kind granola bars and Chobani greek yogurt have seen explosive growth in the last few years, and this trend is expanding, but not without hiccups. Granola and granola bars brand 18Rabbits hit a speedbump when the company tried to use an outside manufacturer that ended up being unable to deliver. “Since we didn’t have our own production capabilities, that almost killed us as a company,” said Alison Bailey Vercruysse, founder and chief executive of 18Rabbits.

Similarly, Amy’s just recalled 74,000 cases of lasagna, enchiladas, and other meals due to a potential listeria problem with its spinach supplier. This isn’t far from Kraft’s recent woes in recalling its Mac n Cheese for possible metal contaminants.

The reputation is what counts above all, and those companies with the small-time feel are currently winning race through the aisles.  To read more, please click here.