There is no doubt, however, the economy has had an effect on the chains. “The macro economics are a challenge, so we’re seeing some slowdown when people are having less business meetings or not flying as much so our airport sales might be down a little bit,” Brown says. He rejects the idea that the crumbling economy affects his company’s success overall, naming the Georgetown University and University of Washington locations as stores that are constantly gaining new customers.
But the economy plays into the success and failure of all aspects of the foodservice business, and no one can deny that energy and food prices are high and that more Americans are tightening their belts in hopes of weathering the economic storm. Even organic industry favorite Chipotle’s CEO, Steve Ells, released a daunting statement recently warning investors of the company’s slowing success before its third quarter results went public this fall. “Our preliminary view of the third quarter reflects a further deceleration in comparable restaurant sales combined with continued increases in food costs,” he said. “We attribute current trends to the same macro economic pressures that have affected other restaurant companies.”
McCabe admits the financial pressures are affecting consumers, just not organic consumers as much. “I think once people have made their decision that this is an important part of their life, they’ll change in other areas,” he says. “They’ll drive less, they’ll go out to dinner cumulatively more but go out to the movies less. I think what they’re putting in their bodies hasn’t changed a bit.”
To some extent McCabe’s observation is correct. A study by the organic marketing firm Mango Sprouts found that 96 percent of New England organic consumers were “taking actions to stretch their food dollars” but were still placing a priority on buying organic. But the statistic could be particularly high because those surveyed were already organic users.
According to Demeritt, these are “core” users and they’re unlikely to quit organics any time soon, no matter the economic climate. “There’s going to be a small group that continues to spend a lot of money and a much larger group of consumers who only spend money on certain products in certain categories,” she says. “For mainstream consumers, yes, there are some organic categories that are important, but that’s probably going to be enough for them and they’re going to move on.”
Among those core users at Hess’ Elevation Burger are health-conscious moms. “They want to feed their kids something that’s healthier,” he says. “I think it’s exciting for them to see a concept like ours that really takes the health aspect seriously by using olive oil for our fries and organic, grass-fed beef for our burgers.”
While enthusiasts might still be flooding the stores of organic chains, research shows the buying habits of mid-level users are slowly falling behind those in the core group. For example, core users intensified their overall organic usage in all categories by 21 percentage points in the last two years while mid-level consumers decreased their usage 9 percentage points. Some might point to the strength in the core group’s spending power as the key to continued growth for organics; however, there is a smaller percentage of regular users now (19 percent) than there was in 2006 (23 percent). “Many purchasing organics are picking those categories that resonate strongly to cues of freshness or health (such as organic fruits, vegetables, meats, poultry, or milk) and are no longer considering what they view as more frivolous purchases (such as organic cookies),” the report says.
Michael Racanati, founder of Really Cool Foods, a natural and organic prepared meal distributor, sees this picky purchasing at play. “In the prepared foods world, poultry is any interesting area, certainly the antibiotic-free, hormone-free chicken, some of the vegetables, and foods that are made with organic vegetables are interesting to the consumer right now,” he says, “but I don’ think the consumer is willing right now to pay the significant premium that organic still commands across the board.”
The savvy purchasing consumers are practicing in the organic market is one way price and perceived value play into the future of organic food and beverages. All three quick-serve execs QSR spoke with shot down the idea that organic offerings could ever match the price points at traditional fast-food chains. “Are we ever going to be selling a 99-cent hamburger? No,” Brown says. “But as we like to say, ‘Have you ever thought about what goes into a 99-cent hamburger?’ The more consumers get educated about that, it informs their food selection.”