How to Run a Successful Organic Restaurant
Organic restaurants are popping up all over. Here are 8 things for you to consider if you want to start one.
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 are intrinsically 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 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 of Pure 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 ingenuity—you'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 of Dirt 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 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 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.
Dig Deeper: How to Deliver Great Customer Service
5. Convince the non-believers.
