New crop of all-natural, organic concepts plants seeds for growth

NATIONAL REPORT The smattering of all-natural grab-and-go places in the big coastal cities is swelling into a wave as consumers' growing preference for organics and additive-free food draws more expansion-minded entrants, including several with a heritage of success in Europe.

While homegrown upstarts like the Michael Milken-backed Eaturna or Organic to Go decide how to use their newfound funding, Tesco, the United Kingdom’s cross between Wal-Mart and Whole Foods, is planning a jump to this side of the pond in the fall. Reputedly the world’s fourth-largest retailer, Tesco plans to spin off an all-natural-foods carryout brand specifically for the United States, called Fresh & Easy. Initial targets reportedly include Los Angeles, with seven stores planned. One news report said that 100 of the outlets are already slated for the western United States.

The grab-and-go places would be the latest growth avenue for 3,200-store Tesco. Investors in the company are said to include Berkshire Hathaway’s Geico insurance unit, of talking gecko and outraged cavemen fame.

Regardless of how Fresh & Easy fares, British expatriates with a yen for an additive-free lunch may soon be able to buy it from another familiar source. Pret A Manger, the London-based grab-and-go sandwich chain with a U.S. beachhead in New York City, is talking about an American expansion push again, after stepping back from a growth drive years ago to fine-tune the concept. In April, the company said it was planning a stock offering on the London exchange specifically to fund growth in the United States. Since then, American representatives have confirmed that management is in talks with several European private-equity firms that are interested in buying the concern. About one-third of it currently is owned by McDonald’s Corp.

An institution in London, Pret has struggled to gain its footing on this side of the Atlantic. It entered the New York market in 2000 with intentions of developing 40 stores. Only 16 actually opened, and six of those would eventually close. The 10 surviving stores were projected to generate $18.3 million in 2006 sales.

The New York shops feature sandwiches, salads and other lunch fare prepared without antibiotics or preservatives. Organic ingredients are used “when we can,” according to one of the chain’s slogans. Everything is prepared fresh and date-stamped, with the food discarded if it doesn’t sell within a time frame set by the store. All the items are one-size-fits-all; the brand has bet that consumers would forgo customization in exchange for speed of service.

The New York units are open for breakfast and lunch but close in the evenings, when the local office trade dashes home or to happy hour after work.

 

Meals labeled as organic or natural are available from a variety of sources in New York, including grocers Whole Foods and Trader Joe’s. One of the newest is Freefoods, the outlet opened a few weeks ago by local chef Matthew Kenney and investor Peter Schatzberg. The all-organic menu includes smoothies, sandwiches and soups.

A well-known name is also connected with Eaturna. Its principals include Michael Milken, the one-time junk-bond king who has found a second career as a selective investor and adviser. His fledgling food venture is a retail outlet with an abundance of prepared meals, all made with antibiotic- and hormone-free ingredients. Only a prototype, in Los Angeles International Airport, is currently open, but travel-facility concessionaire HMSHost Corp. recently disclosed that it intends to open 10 Eaturnas in airports during the next two years. The announcement did not indicate how many units Eaturna intends to open on its own or through other partners.

Meanwhile, Organic To Go is using the $6.7 million it generated through a private placement in June to extend its lead over many of the newcomers. With 65 units open, the chain claims to be the first grab-and-go chain to be certified as an organic retailer by the U.S. Department of Agriculture.

All of Organic To Go’s stores are in California and its home state of Washington. It recently pushed farther south with the acquisition of a two-unit sandwich chain in San Diego — where the local Pat & Oscar’s chain, an early proponent of upscale carryout meals, recently added organic items to its menu for the first time.