Did Somebody Say McHealthy? Fast-Food Alums Try New Concept

Move Over, Wendy's. Stephanie's Is Coming With Assist From Former Arches Execs Roberts, Donahue

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NEW YORK (AdAge.com) -- Goodbye Big Mac; hello roasted-
chicken wrap.

That's the idea behind a new healthful, fast-casual dining concept set to be launched by a duo of former McDonald's executives, Mike Roberts and Mike Donahue, and backed by entrepreneur Steve Sidwell. The brand -- which doesn't have a final name but is going by the working moniker "Stephanie's" -- is slated to open doors in early 2011 with hopes of ballooning to as many as 250 locations in five years' time. 

Based on information about the team's preliminary plans obtained by Advertising Age, Stephanie's plans to serve up healthy items like apple-cinnamon steel-cut oats and pita pockets for breakfast, and smoked-chicken sweet-pea soup and pork-and-sweet-potato kabobs for lunch and dinner at a price point of $8 to $12.

To differentiate itself from other fast-casual chains and give it a more environmentally-friendly feel, Stephanie's is contemplating some out-of-the-box ideas for its locations, including herb gardens on the roof, grass parking lots, fresh flowers on tables and biodegradable cutlery. The company is said to be exploring plans for retail products too, for consumers to pick up in the frozen aisle at stores such as Whole Foods, and possibly even home delivery -- via electric cars -- of their offerings.

The concept was presented by Mr. Sidwell, an entrepreneur who has had success raising funds and is considered the brand's founder, to Messrs. Roberts and Donahue, who run a Chicago-based business consultancy called Westside Holdings. Stephanie is the name of Mr. Sidwell's daughter.

Together they've reached out in the past few months to shops such as Publicis Groupe's Saatchi & Saatchi Wellness, Interpublic Group of Cos.' Gotham and at least one major Chicago agency for advertising help, according to people familiar with the matter. (The discussions with Saatchi Wellness are particularly telling since that unit tends to work with health-care companies and pharma brands. Its main agency has worked with both Burger King and Wendy's in the past.)

Asked to comment, Mr. Donahue wouldn't offer many specifics, saying the plans are still in the exploratory phase. He said the 250 number was lofty, and that there's "no tangible goals other than to do one really good location, get the taste profile right and the affordability right" and then see if and how quickly the concept can scale. As to the whereabouts of that first location, it remains to be seen.

He diplomatically declined to identify possible competitors in the space -- "We don't want to get into a food fight with anybody;  there's plenty of room out there for everyone" -- said that their aim is to create a lifestyle brand that is trusted and loved in the food arena the way that Apple, Nike and Starbucks are in their niches.

'We want it to be a respite'
"We want to take that approach, and whatever our name will be, create and fill an unmet need," Mr. Donahue said, and "we think the biggest unmet customer need is great-tasting, delicious, affordable food that is also good for you." He added: "We want the whole feel and environment to be socially responsible; we want it to be a respite."

Stephanie's is trying to establish itself in the hottest spot of the restaurant segment right now -- "fast casual," which is so dubbed for its combination of speed of service and the casual-dining atmosphere.

According to Chicago-based Technomic, fast-casual chains far outpaced traditional fast-food restaurants in 2009. Sales in the fast-casual category grew 4%, while quick-service restaurants fell 0.4%. All told, 2009 was the restaurant industry's worst year in a generation.

Darren Tristano, exec VP of Technomic, noted that Stephanie's draws on a number of key trends.

"There are still many who believe there's a gap in terms of healthy offerings," he said. "They see the trends toward food with integrity, and for those who want to be organic, fresh and healthy, there's a pretty big gap in terms of the number of restaurants that serve that niche."

However, Mr. Tristano said, "I call it a niche because I believe that's what it is. The vast majority of consumers are looking for better-tasting and higher-calorie. We don't think that's what we want, but that's what we buy and consume." Mr. Tristano added that consumers are more likely to be calorie-conscious at the grocery store, when they can peruse product labels.

"If anybody can make it happen, it's these guys," said Gary Stibel, founder and CEO at the New England Consulting Group. Still, for those consumers who learn of the team's history, it might seem odd that a couple of former fast-food peddlers are now trying to sell low-calorie food to consumers.

Retired McDonald's veterans launch a high-end burger joint of their own
The one-time architect of McDonald's Corp.'s Arch Deluxe is launching a new, high-end burger chain, Crain's Chicago Business reports. Edward Rensi, who led McDonald's U.S. business in the 1990s, and Tom Dentice, a former McDonald's executive vice-president, are aiming to tap into the fast-growing trend toward pricier hamburgers.
Mr. Roberts served as president-chief operating officer at the Golden Arches when the company added salads with Paul Newman dressings, parfaits and nutrition information to its packaging. Just last year he was the vice chairman of the Chicago 2016 Olympic Committee, responsible for overseeing all marketing and communications activities for the bid from the board level. Mr. Donahue is the former chief communications and external relations officer for McDonald's USA, and launched the first social-responsibility department for McDonald's.

The executives were also present at McDonald's while it was the subject of the Morgan Spurlock documentary "Super Size Me," and subsequently became a target of obesity and nutrition lawsuits.

McDonald's spokesman Walt Riker declined to comment for this story. "Our policy is that we don't comment on the activities of former employees," he wrote in an email.

The Stephanie's execs aren't the only McDonald's alumni to pursue better-for-you businesses after leaving the fast-feeder's executive ranks. Ed Rensi, a former CEO of McDonald's USA, is an investor with Spin Fresh, which has developed a high-tech fryer that uses centrifugal force to remove excess oil from foods.

While experts say that the concept is sound and the experience of Messrs. Roberts and Donahue are a major asset, a quest to get big fast could be problematic. "Even the best of concepts gets better if you take it slow," said Mr. Stibel. "Getting to 250 is not a problem; getting there that quickly is questionable."

'Significant stretch'
Technomic's Mr. Tristano called a goal of 250 restaurants by 2016 "a significant stretch." He cited Ufood Grill, a healthy concept that became successful in Boston, as a cautionary tale. Ufood opened three restaurants in Chicago that have all closed. And while the recession may have been a factor, he noted that other chains have been successful, like Buffalo Wild Wings. Mr. Tristano also pointed to Seasons 52, a chain offering a full menu of options all under 500 calories.

"The real key to success is having healthy food that tastes good, which is difficult," he said. "It's the general feeling that consumers today want healthy alternatives but not necessarily healthier restaurants."

Mr. Siebel maintains the idea of healthy fast-casual is questionable for Americans. "People go there to eat and have a good time, not to restrict themselves and save calories," he said. "There's a pocket veto in restaurant dining; most people dine with others, and there will always be someone who wants to eat less healthy. If you ask Americans if they want to eat more healthy the answer is yes, but then see what they do -- there's a reason why the rate of obesity continues to climb in this country."

"Our thought is combining a good team of people -- that we're still putting together -- is what's going to make the difference," said Mr. Donahue. "The unique selling proposition is that we've done it on a scale before and now we're going to it really methodically, and it's got to be the taste and the customer experience first."

He added: "If it was easy, it would be done by now."  

 
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