It costs more, the menu offerings aren’t consistent among locations and it’s not readily available in all markets. At first glance, it’s the antithesis of everything the quick-serve industry prides itself on being. But over the past 10 years customers have become increasingly interested in organic food, actively trading up from classic fast-food chains to organic concepts, causing more operators to attempt to tap into organic’s popularity.
There’s no doubt the statistics from the organic food and beverage segment are astounding—it grew from a $1 billion market in 1990 to an estimated $23.6 billion market in 2008, according to the Organic Trade Association. To reach the level of undeniable popularity it’s experiencing today, the organic segment has experienced 17–21 percent annual growth over the past decade. Whatever way it’s sliced, the organic market seems to be a no-risk cash cow for restaurateurs looking to attract loyal customers. That is until researchers began closely examining the recent and expected performance of the segment.
That’s what retail research organization The Hartman Group did in its July study, “The Many Faces of Organic: 2008.” For 11 years the company has been studying and publishing analyses of the organic market and doing so pretty accurately. In 1997, Hartman correctly predicted the future dominance of corporations in the organic segment, specifically their takeovers of smaller pioneering brands and the overall explosion of the organic market. Today, it might be right again. This time, however, the prediction is not as rosy.
“We’re seeing a saturation in terms of people who are going to enter the market,” says Laurie Demeritt, president and COO of The Hartman Group. While the saturation of the segment might not be the Achilles’ heel of the organic market, it is the first time it’s experienced anything close to a slowdown or plateau.
When The Hartman Group began studying the market, growth was two-fold: the number of people using organics and the number of people increasing the frequency of their organic use were both growing. “We saw daily, weekly, and monthly use increase as well,” Demeritt says. “From 2006 to 2008, it’s really leveled off in all of those ways.” According to the most recent study, aggregate consumer use of organics dropped four percentage points from 73 percent to 69 in 2008.
The Hartman Group isn’t alone in its findings. Packaged Facts released a study in September that reported similar results. The study concluded that organic food and beverages experienced a double-digit growth rate—until this year. For the five-year period between now and 2013, however, the market research firm predicts only single-digit growth, calling the segment “no longer recession-proof.”
While the numbers point to a potential leveling-off of organic’s traditionally astounding growth, operators of organic concepts are seeing little effects at the store level. The CEOs from the three organic quick-serves QSR spoke to rejected the idea that organics were falling out of favor. “We’re up 20 percent over last year,” says Hans Hess, founder and owner of emerging organic burger concept Elevation Burger. Similar confidence came from Mac McCabe, CEO of O’Naturals, a six-unit organic concept headquartered in Portland, Maine, and from Jason Brown, the CEO of Organic to Go, one of the larger national organic chains with 33 cafés. Brown, says that he has “not by any means” experienced a slowing interest in his concept and that customers are “absolutely” just as interested in his offerings as they were the day the chain opened.