“We see people coming in and picking lettuce off the wall and eating it, it’s quite interesting for us to see that interaction with the produce and eating it as they’re waiting to place their order,” says co-founder and managing director Luke Baylis.

“You go to a typical fast-food court and it’s over-engineered, so this is sort of an oasis in a food court where people can come in and see and understand the connection with the farm and the produce and understand how much detail goes into the sourcing of the product and the menu creation.”

So far the garden walls are only at the Darling Park store in Sydney and Highpoint in Melbourne but they will be rolled out across select stores, as part of a $10 million-plus refurbishment strategy.

Vertical gardens have been all the rage in urban design for some time now but using them for in-store communication is a newer development. Baylis says the idea is that it provides a visual prompt about health and freshness to people browsing a food court but adds that the greens grown on premises are also incorporated into the product.

The new and refurbished stores can also make cold-pressed juices and offer 28-hour slow-cooked meats, which Baylis says have health benefits.

FOOD FOR PURPOSE

It is part of a bigger “food for purpose” strategy for the mid-market chain that builds on the existing proposition of healthy eating, but adds an ethical layer as well.

This includes a long-term plan to improve food procurement practices. Baylis says the fresh produce is all Australian, but the company is aiming for greater local sourcing and higher ethical standards for its meats, with full transparency to customers about its journey.

The food procurement practices of US companies such as Mexican fast-food chain Chipotle and organic supermarket Whole Foods have provided guiding examples.

“We’re moving to free-range chicken and ethical meats, we’re buying from local farms, we’re using local tradespeople, we’re doing all these things that engage the community and are fully aligned with our purpose and ethos,” Baylis says. “It’s a great internal challenge for us because every decision we make in the business can be challenged around this higher purpose.”

SumoSalad customers are very engaged and ask lots of questions, which in turn spurs the company to do better, Baylis says. He says the key philosophy is transparency and the company has always provided lots of information about nutrition and the source of the food.

However, ingredients such as free-range meat are more expensive and some of that cost is absorbed by the business.

“It’s not all about money for us, money is not our key motivator, we’d prefer to invest in a high quality product and we find it still makes good commercial returns because people are prepared to pay a little more,” Baylis says.

“I’ve got a young family and I always buy the highest quality ingredients when I’m feeding my kids and my wife and I don’t want to put something out that I’m not proud of. We believe that the world has to go this way to be sustainable and people are becoming more educated about it and disagree about the way animals are treated and don’t want to see genetically modified crops to improve yields and we believe in that as well.”

Baylis says his business partners, the wealthy Maloney family, are on board with that strategy and ethos as well. He does his board meetings with chairman Mark Maloney while jogging on soft sand and says Mark is one of SumoSalad’s biggest customers.

INVESTMENT AND EXPANSION

In 2012, SumoSalad sold a 60 per cent stake to private investment company, Tulla Group, which is owned by BRW Rich 200 member Kevin Maloney and his family. Baylis owns the other 40 per cent.

The chain, which is at 106 stores globally, is now generating total-system revenue of $90 million. The brand is in every state and territory except Tasmania and is starting to populate regional areas as well as cities, with Mildura in Victoria, Wagga Wagga in NSW and a new store in Esperance, Western Australia so far.

With the Maloney money, SumoSalad is expanding to 400-plus stores within Australia, with new stores costing $350,000-$400,000 each, including the franchisee’s investment. The refurbishment program for existing stores is an average cost of $100,000 per outlet, paid by corporate.

SumoSalad is a franchise business but 10-15 per cent of the network are corporate stores “as a training and testing ground”.

There are also plans to expand to North and South America, as BRW reported last year.

Baylis founded the business in 2003 with his friend James Miller, who died unexpectedly last year. Miller had left SumoSalad earlier to pursue other ventures.

Baylis worked in the United States for four years during the technology boom and returned to Australia 45kg overweight and determined to get fit again. He founded SumoSalad with Miller after realising there were no healthy options and nutrition has always been core to the SumoSalad proposition, with nutritionists on staff and a lot of investment in research.

“The market conditions changed in our favour with eating habits changing and a lot of focus on gourmet food,” Baylis says. “Part of is that we don’t have a clear competitor so there’s been a lot of franchisee interest.”

INCREASED COMPETITION AND TRENDS

However, the market has also become a lot more crowded.

“Even McDonald’s and KFC are trying to take the [healthy eating] segment but the good news for us is they’re not doing it with any credibility,” Baylis says.

He concedes that there are elements that are faddish, such as marketing things such as quinoa and amaranth as “superfoods”.

“Buzz words come and go and ingredients are in vogue one day and out of vogue the next, that always happens but I think the general philosophy of eating healthy is here to stay,” Baylis says. “At the moment now there’s a big buzz around paleo, the caveman diet, and tomorrow there’ll be a different trend but with our product we’re able to cater for all of these trends that come and go but without being totally tied to it.”

In fact, one of the newest entrants into the healthy eating space is the Paleo Café franchise chain founded by Marlies and Jai Hobbs. The company is now at 11 stores and is currently seeking an investor to put in between $500,000 and $1 million to fund US expansion.

Paleo Café has recently engaged the former global franchise development manager of Gloria Jeans to prepare the brand for master franchising in New Zealand, to be followed by the US, Canada and the EU.

Social researcher Rebecca Huntley wrote recently about how healthy eating is on the minds of average Australians. Her research shows that diets cutting out sugar and gluten are no longer just an inner-city obsession but mainstream across Australia.

Related to the trends about healthy eating and ethics, is the emergence of the artisanal market. People are prepared to queue for the ice cream at Gelato Messina, while US chain Wendy’s is closing franchise outlets.

Huntley has written recently about this as well, in her piece “We are all hipsters now: the trends behind the rise of craft beer and fancy bread”.

FOOD PROVENANCE

Californian chef Alice Waters was a pioneer of the food provenance movement through her Berkeley restaurant Chez Panisse. The restaurant has a kitchen garden and has sourced seasonal, ethical and organic food from a network of local food suppliers since it opened in 1971.

The concept has caught on in fine restaurants around the world. Another famous example is London’s River Cafe’s vegetable patch, created soon after the restaurant opened in 1987.

These days it is very much a trend in Australia as well. For example, Quay chef Peter Gilmore uses a lot of produce grown on his organic farm in the Blue Mountains, while Billy Kwong chef Kylie Kwong makes a point of sourcing sustainable produce, including edible insects and pasture-fed wallaby.

The rise of farmers’ markets is another example of the trend, with government statistics showing 160-plus weekly or monthly farmers’ markets across Australia, serving almost 50,000 customers.

Does your business turn over more than $10 million a year? It could be in the running for a BRW/GE Capital Mid-Market award.  Head to www.brw.com.au/mid-market to find out more. You'll also find a range of useful articles for mid-market businesses.

Source: BRW.com.au