Freshii has embarked on a new campaign to invest in startup companies that target health, fitness and food.
The Chicago-based fast-casual chain said this week that it has partnered with Toronto-based investment firm Kinetic Café to launch the Fresh Startups campaign. The program will fund new businesses with corporate missions that align with Freshii’s corporate cause to make it convenient and affordable for consumers to maintain a healthful lifestyle.
Freshii joins two other industry veterans who in early May founded Five to Seven, an investment fund seeking to raise $50 million over the next five years to spread five principles of “Good Food” to all seven continents. Five to Seven is the partnership of Brad Blum — former president of Olive Garden and former chief executive of Burger King and Romano’s Macaroni Grill — and John Vincent, co-founder of 12-unit Leon, a health-focused restaurant chain based in the United Kingdom.
As is the case for Five to Seven’s leaders, Freshii chief executive Matthew Corrin decided to begin investing in other like-minded businesses as an efficient way to serve customers outside the restaurants’ four walls, educate those guests and keep his brand top-of-mind among consumers.
“What we didn’t want to do was hire an in-house development group to start building stuff and ideate stuff,” Corrin said. “We thought it could be cool to do it through a more accelerated program with a deep vertical focus around health and wellness.”
In the few days since Freshii announced the partnership, more applications than anticipated have flooded in, he said. Freshii’s Fresh Startups campaign is accepting applications through Oct. 4.
“There are a lot of interesting concepts out there built on health and wellness that add value to our guests,” Corrin said. “If that makes them think of us more often, then that adds value to our franchise partners. … If one of these companies hit, there’s economic upside as well for the parent company.”
Five to Seven’s founders also said building up businesses that share the firms’ core values can be financially beneficial. Five to Seven’s investment model aims to make investments in businesses that over the long run return 5 percent on invested capital and produce 20-percent profit margins.
“The important thing for us is to prove that ‘good food’ can be commercially sustainable,” Vincent said. “Values-based businesses have to be financially successful.”
The five criteria
The firm’s five criteria for funding are “exceptionally good tasting, remarkably good for you, leaves you feeling good, good everyday value and good to the planet.”
The first restaurant projects in which Five to Seven is investing are the expansion of Leon in the United Kingdom and its eventual introduction to the United States, the expansion of London eatery Flatplanet to other major global cities, and the growth of Dogmatic, a fast-casual chain of high-end sausages Blum started in 2008.
“I would say there are certainly restaurants that are innovating and paying close attention to quality and address some, if not all, of these things,” Blum said. “But I’d also say there aren’t that many. With serious issues associated with obesity in the U.S., the U.K. and Europe, we think there’s a lot more that needs to be done in terms of over-portioning, the types of foods offered and the over-use of hydrogenated oils.”
He pointed to Denver-based Chipotle Mexican Grill as a restaurant moving many of Five to Seven’s principles forward through its use of free-range chicken and its preference for antibiotic-free meat. Blum’s upstart restaurant Dogmatic adheres to those practices as well, he said.
“There are a lot of emerging brands in a variety of areas doing good things,” he said. “We hope to be able to work with them, in addition to what we’re doing at our own brands.”
Corrin hopes that through its partnership with Kinetic Café, Freshii can invest in new businesses or service providers that help the restaurant’s guests live a more healthful lifestyle in an easier way, which ultimately creates a market for brands like Freshii.
“That could be anything from an app that helps [customers] build a week’s worth of meals at Freshii and know the nutrition content,” he said, “or helps them learn how to crowd-source and buy meals by the bundle to save money. Or, how could our restaurants serve more local produce and build a supply chain around that?”
Freshii adds value to the process for these new startups by giving the companies access to Freshii’s customers in 35 cities across the United States and seven other countries so that they can test their products, make tweaks and show proof of concept, he said.
“Think of all these amazing technology companies like GrubHub, Groupon or LevelUp, which have thousands of customers and hundreds of brands signed up,” Corrin said. “Five years ago, in their infancy, I’m sure it could’ve been interesting to give them a customer base for product testing. … [The products] are not going to be necessarily just in it for Freshii. This is to let them build their independent tech companies, which would be relevant to us certainly, but to others as well.”
If, as a result, Freshii is not the only restaurant brand to benefit from whatever new products or services arise from its investments, Corrin said that would be an even more beneficial outcome.
“In the world of healthful fast food, the cause and mission for all of us are to help people live longer and better,” he said. “So there shouldn’t be winners and losers — only more and more efforts in different ways.”
Corrin founded Freshii in Toronto in 2005 and has grown the brand to 80 franchised locations, with development agreements in place for another 100 locations.