Occasionally, when I interview restaurant executives about their brands’ place in the competitive landscape, they surprise me by saying they welcome a little competition, even from opponents with the means to outgun them.
Several smoothie brands, for example, have told me that McDonald’s introduction of Real Fruit Smoothies actually benefited them because it expanded the market for their signature product. Sure, McDonald’s grabbed significant market share for those beverages seemingly overnight. But because the quick-service giant also introduced a new wave of consumers to the drinks, smoothie specialists themselves benefited from the added exposure by seeing their sales increase, as well.
With that in mind, I found myself appreciating the thinking behind two recent investment strategies announced by fast-casual chain Freshii and industry veteran Brad Blum — both of which initially seemed a little counterintuitive to me but now make sense as a way to broaden industry segments in which their concepts can expand.
Earlier this month, Chicago-based Freshii launched a partnership with Toronto-based investment firm Kinetic Café called Fresh Startups. Its purpose is to fund new businesses that align with Freshii’s corporate mission of making a healthful lifestyle more affordable and attainable.
In May, Blum partnered with John Vincent, the co-founder of the 12-unit health-focused chain Leon, to form Five to Seven, an investment firm seeking to raise $50 million to spread the restaurateurs’ five principles of “Good Food” throughout the world.
While Freshii likely will not be funding any competing restaurants with the Fresh Startups seed money, it will invest in other like-minded businesses as a way to serve customers outside the restaurants’ four walls and help keep the Freshii brand top of mind.
As chief executive Matthew Corrin explained, if a health-focused startup — like a nutrition-information app or online ordering service for bundling healthful meals — becomes successful, it’s good for Freshii’s franchisees since many newly enabled healthful eaters would have Freshii in mind.
Blum, the former head of Olive Garden, Burger King and Romano’s Macaroni Grill, is looking to invest in new restaurants with his Five to Seven partnership with Vincent, including his own fast-casual concept, Dogmatic, as well as the U.K.-based chain Leon. But much of Five to Seven’s capital also would go toward building up restaurant brands that meet the firm’s criteria, including a commitment to good-tasting food that is good for customers and good for the planet.
The market for brands like Dogmatic and Leon might get crowded, but Blum believes the partners’ strategy improves his brands’ chances for success, all while doing good for the planet.
Freshii’s Corrin also embraces that view.
“In the world of healthful fast food, the cause and mission for all of us is 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.”