HEADQUARTERS: New York City, NY
YEAR FOUNDED: 2015
2016 REVENUE: $10 million
Editor's Note: Inc.'s 12th annual 30 Under 30 list features the young founders taking on some of the world's biggest challenges. Here, meet By Chloe.
For Chloe Coscarelli, becoming a vegan was far more than a lifestyle choice.
The chef and cookbook author parlayed a winning turn on Food Network's Cupcake Wars into a fast-casual vegan restaurant concept in 2015. The venture was co-founded with Samantha Wasser, the creative director at ESquared Hospitality, a company in New York City that owns and manages several restaurants including the BLT chain and Florentine. While the pair, who are both 29, have had their ups and downs, business at the companies' seven stores has been swift.
After opening its doors less than three years ago, Coscarelli's recipes, which include a drool-inducing "Guac Burger" and "Chlostess Cupcake" (like Hostess' famed chocolate cupcakes, but without any dairy), have found fans among vegans and non-vegans alike. The company fetched $10 million in revenue in 2016, and it's on track to book $30 million by the end of 2017.
"That was a real turning point for me," Coscarelli says, in reference to her stint on Cupcake Wars. "To see that if people just try [vegan food], their minds just open up so much." That was the idea behind By Chloe: create an inviting space full of Millennial flair (read: a touch of rustic charm, sprinkled with colorful accessories and air plants) with vegan recipes people actually want to try.
"Starting a restaurant seemed like a great way to really connect on the ground floor with the people that I was making food and recipes for," Coscarelli says. "I really wanted a concept where the food could be served fast and affordable."
Despite its early success, trouble has been brewing inside the Instagram-ready walls of By Chloe--offering a lesson for any would-be business owner looking to take on a partner. In June 2016, Coscarelli filed a lawsuit against Wasser and her father Jimmy Haber, the CEO of ESquared Hospitality. The lawsuit alleged that Haber threatened Coscarelli after she refused to change the terms of their partnership, specifically amendments to ownership and her control over future By Chloe restaurants, including the commissary spaces where ingredients came from. It also alleged that he and Wasser forced Coscarelli out of the company. ESquared never commented publicly on these allegations.
ESquared Hospitality severed all business ties with Coscarelli after an arbitrator in March determined she was being "grossly negligent," and could be removed from the company. Even so, Wasser insists By Chloe is on track. She notes the company recently opened four more locations in New York, bringing its tally in NYC, Boston, and Los Angeles to seven. The company has plans to open two more shops in New York, another in Boston, and its first in Providence, Rhode Island, this year.
The eatery's staff has also ballooned, growing from 35 at the close of 2015 to 315 as of April. "It's unfortunate, because the business has survived without [Coscarelli], but it would be so much better together," says Wasser. "Which is what was intended, and in my mind what I would have wanted to happen."
Sweet and sour.
The company's success is partially due to its ethos, which taps into a popular restaurant trend, says Aaron Allen, a food industry analyst at Aaron Allen & Associates, a consultancy in Orlando. "We are seeing the emergence of fast-casual 2.0," Allen says, explaining the popularity of establishments touting menus filled with nutritional foods and thoughtful ingredients. "It's a steady industry that has grown; there will be fewer McDonald's and more Sweet Greens or By Chloe concepts," Allen adds.
Despite the demand for what By Chloe is hawking, Allen has some concerns. He says the soured relationship can't be good for business, no matter how the company's legal troubles shake out. Splitting up with a co-founder is among the more difficult things to do in life. "It's probably more difficult than it is to go through a divorce and share custody of the kids," says Allen, who notes that a lot of restaurants have failed for that reason. He adds that the company's store expansion this early in its lifespan is also a "big concern."
"Bicoastal is difficult to execute at the size they are at currently," Allen says, warning it can be difficult to manage stores on opposite ends of the country. The challenge is only greater, he explains, if you're "trying to expand too quickly, trying to demonstrate a proof of concept and that its working in different markets."
Coscarelli and Wasser have no plans to slow down anytime soon. Coscarelli is working on her fourth vegan cookbook, to be released in the spring 2018. Wasser worked on the branding for The Sosta, an Italian restaurant expected to open in May, and the Middle Eastern eatery called Dez. Both are located in New York City and operated through ESquared Hospitality.
There are still several unknowns when it comes to the story of By Chloe, including whether or not Coscarelli will fight to get her name off the restaurants. As for the ruling itself, in most cases an arbitration cannot be appealed. But the chef isn't abandoning her vegan cooking. "I'm a creative person at heart, so spending the bulk of my time in the kitchen cooking and developing recipes for some exciting new projects has been really cathartic," Coscarelli says in a statement. "I'm putting the finishing touches on my fourth cookbook, which publishes next year, and can't wait to share more details about my other ventures very soon."
As for By Chloe, it's still full speed ahead. New locations come with additional menu items specific for that city. The new Boston location in Fenway Park, for instance, is expected to have red walls and maybe even a "Fenway Frank" to pay homage to the Sox.