Growth | September 2015 | By Nicole Duncan

Still Fresh at 10

Freshii crossed the decade mark this year, showing that the healthy fast-casual movement might be here to stay.
Fast casual healthy eating brand grows with fresh and nutritious food.
Beyond turning a profit, founder and CEO Matthew Corrin sees Freshii fulfilling a higher purpose in bringing healthy, affordable food to the masses. nation wong

Eleven years ago, Matthew Corrin could be found ducking into GNC stores to order smoothies on a regular basis. Even in a city as metropolitan as New York City, it was the only place he could find a healthy snack.

A lot has changed in the past decade.

In 2005, the then-23-year-old Corrin founded the healthy fast-casual concept Freshii, which celebrates its 10th anniversary this year. Based in Toronto but with half of its business in the U.S., Freshii not only weathered a shaky economic climate in the last decade, but it also managed to grow.

Amid the plethora of health-focused brands that have launched in recent years, the concept has been able to scale aggressively, especially recently; Freshii started 2015 with more than 100 locations worldwide, and Corrin expects it to break the 200 mark before year’s end. It’s an impressive and somewhat surprising feat given that the menu centers on premium ingredients, including fresh produce and antibiotic- and hormone-free animal proteins.

But Freshii’s offerings are in step with today’s consumers. According to the National Restaurant Association (NRA), three out of four consumers report that they are more likely to visit a restaurant that offers healthy options. The research also

indicates that eight out of 10 have noticed that restaurants are offering more of these options than they did only two years ago.

“Salads were largely what healthy was defined as 10 years ago,” Corrin says. “What’s happened over the last decade is the definition has totally evolved on what healthy is and what it can be.” He adds that the customization associated with salads is still very much top of mind in making meals more nutritious, but now customization has extended to other foods, such as wraps, bowls, and soups.

Entrées at Freshii can be made with tofu, falafel, chicken, steak, or gourmet tuna. Customers can also swap in kale or quinoa for other bases like brown rice, or they can order a burrito or wrap made with a “green wrap” instead of the standard tortilla. Even the dressings capitalize on healthier ingredients; the Asian sesame dressing uses real ginger and the ranch dressing uses Greek yogurt instead of mayonnaise.

Corrin says that one of the most significant changes in restaurant menu innovation has been the shift toward spices instead of fat, butters, and cream. This shift is due at least in part to people becoming significantly more open to exotic flavors and nutritious foods.

“A decade or longer ago, if you marked something as ‘healthy’ on the menu, or ‘healthful’ or anything like that, it was not always received very well. It was expected to be boring and bland. But that really has changed,” says Annika Stensson, director of research communications for the NRA. “Chefs and restaurant operators have really stepped up to the plate.”

With more adventurous palates than years past, consumers have also come to expect that they will not have to go to specialty restaurants to find nutritious options, Stensson adds.

Chris Muller, a professor at Boston University’s School of Hospitality Administration, thinks Freshii’s success rests not in its innovation, but rather in its alignment with bigger trends. Muller has studied the restaurant and hospitality industry for more than 30 years, and he says that the healthy niche, which remained elusive to quick service for so long, is finally catching on.

“What’s novel here is that [Corrin] is selling it as a generational change. He’s certainly leveraging the green idea and leveraging this idea that all of these things are very healthy,” Muller says. “It’s a perfectly genius marketing campaign. He’s positioned himself in a space that McDonald’s, Burger King, [and] Wendy’s could not ever enter.”

Anita Jones-Mueller, president and founder of Healthy Dining Finder, a restaurant nutrition consultancy, also sees the healthy niche gaining momentum. Whether tracking calories, avoiding gluten, or adhering to a vegan diet, consumers are more vigilant with their personal needs, she says. First Lady Michelle Obama brought children and family health into the spotlight with her Let’s Move! initiative, which encouraged wellness programs among schools, healthcare providers, and employers. Jones-Mueller says technology has also fostered greater awareness, since mobile devices put nutritional information at consumers’ fingertips.

Although consumers are seeking fresher, more natural foods when dining out, they still crave variety.

“A person can only eat a salad for lunch so many days in a row before you really want something different texture-wise or flavor-wise,” Stensson says.

Freshii was originally named Lettuce Eatery before Corrin realized the moniker would suggest the brand specialized in salads and was not an authority on quinoa bowls, oatmeal, frozen yogurt, or fresh-pressed juice. Freshii is highly diversified, with no single category comprising more than 20 percent of the company’s sales.

“Not only are there healthy trends, but there are also healthy fads,” Corrin says. Foodservice might be moving toward healthier options overall, but specific crazes will still fade over time. “We’re not going to be sitting there with fro-yo when nobody wants fro-yo anymore, just like Zara is not going to be sitting there with overalls when nobody wears overalls anymore.”

Corrin, who worked for fashion designer Oscar de la Renta before starting Freshii, compares his brand to the affordable fashion retailer. Like Zara, he says, Freshii searches the world for trends and inspiration before curating the best selection at an affordable price.

But sourcing fresh foods and antibiotic-free meats at a high volume can present challenges that traditional fast-food brands haven’t historically faced. For example, Muller warns that changes in climate could affect the supply of organic produce and premium meats in the future. “It’s a high-margin opportunity until the cost of organic goods goes through the roof,” he says.

Stensson also says that a concept that focuses on fresh, unprocessed ingredients would require more deliveries than a brand that uses pre-chopped salads or greens.

To ensure quality and consistency, Freshii establishes a unique supply chain within each of the 13 countries where it operates. The company works with different distribution centers, and, depending on the season, sources locally whenever possible. Corrin says that within each market, Freshii is available to source local produce at least half the year.

Improving the supply line is a constantly evolving process for Freshii, and Corrin points to its sauces and dressings as an example. When the franchise began to grow, the brand outsourced its sauces and dressings, which were originally made in-house. Corrin says he wasn’t particularly proud of those renditions, especially since not all of the ingredients listed were recognizable. As the health trend accelerated, Freshii was able to source higher-quality (and pricier) premade dressings, but they were still made out of house. The final transition occurred last year when Freshii hired in-house chef and nutritionist Andie Shapira. Now all the dressings are made daily in the stores, with only about three to four ingredients in each.

What helps offset commodity prices is the low overhead and operational cost. With a menu largely composed of raw foods, Freshii does not require much equipment or culinary skill to execute.

“It’s a relatively simple operation. There’s no grease, there’s no hood, there are no fryers, there’s no flame, there are no real recipes,” says Freshii master franchise partner David Grossman. “We don’t hire chefs, and it’s a relatively inexpensive startup cost.” It costs about $250,000 to start a Freshii, compared with roughly $1 million or more to start a Panera, he says.


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