Five business lessons from the increasingly popular world of healthy snack food
Tuesday, September 20, 2016/
If you’ve ever been forced to eat a donut at an airport or purchased a potato cake from a roadside servo out of desperation, you’ll understand the drive behind Australia’s snack food entrepreneurs. There’s a new breed of pop-up that blends health food with convenience to target nutrition-conscious Australians on the go – and the size of the snacking market is growing, with research from IbisWorld estimating the health snack food market will be worth $1.2 billion by 2017.
The business owners that have moved to fill the space tell SmartCompany they were working on business plans well before the phenomenon of food TV took off – and they have lessons for all entrepreneurs about how to start a business from scratch.
1. Notice what you’re missing
Many of the newest snack food offerings came about because the founders were frustrated by the lack of food available to them as a consumer. Founder of Sydney health store Quic, Alex Aslan, says he started his business after struggling to find anything other than chips and pre-packaged snacks, despite the high number convenience stores in the CBD.
“It’s so rare to find a convenience store that you can walk in and out of without feeling any guilt. There’s so many products out there that aren’t good for you,” he told SmartCompany.
Aslan responded by creating an Instagram-friendly shop space with grab-and-go fruit, snacks and organic baking supplies.
Healthy casual restaurant Oliver’s Real Foods was created through a similar hunger. Founder Jason Gunn became conscious of what he was eating in the early 2000s, but couldn’t find what he was looking for.
“We’re all completely sold on the idea of fast food, and for good reason – it’s actually a great idea. But everywhere I went it was the same old crap,” Gunn told SmartCompany.
After his sister-in-law challenged him to “do something about it”, Gunn says he got to work imagining the fast food system he wanted – and created the company blueprint from there.
2. Focus on the detail
Food is a necessity and the level of expertise among consumers demands a good knowledge of the landscape if you want your business to be seen as genuine.
“I refer it as the ‘food exposé’ genre – films like ‘That Sugar Film’ mean people are much more aware of what’s in their food,” says Queensland University of Technology PhD candidate Katherine Kirkwood, whose work has focused on reality cooking program Masterchef and the “everyday foodie” phenomenon.
“People know that foods that have been marketed to us for decades as healthy might not be,” Kirkwood told SmartCompany.
For business, this means understanding what the big players are offering and planning your response with as much detail as possible. While McDonald’s stores have been dabbling with salads since the early 2000s, Kirkwood says the move to a “fast casual” dining trend has allowed businesses to operate at a higher price point.
To make the most of this, Gunn says he planned Oliver’s offering in minute detail and has patiently stuck to the original blueprint of how and what his business would serve.
“Putting the concept together, the stuff that I wrote in that initial plan is stuff that 10 years later is coming together,” he says. This includes elements simply not offered by other fast-casual establishments, like a school lunch order program for the local community.
3. Consider influencers’ tastes
Food is highly shareable on social media and many artisan fast food operations have built their reputations on the back of lifestyle content makers. UK coffee chain Pret was one of the first models for ‘grab and go’ health food in a fast food setting – and Gunn says a trip to England prompted him to refine some of Oliver’s operations based on the chain.
In June Pret opened an all-vegetarian pop-up store in central London, prompting the local Instagram community to share pictures of the snacks on offer and spread word throughout the channels of its desired demographic.
“The rate of pudding/chocolate take up in our Veggie shop is more than five times a normal Pret!” the brand boasted, while social media starts tweeted and instagrammed their food to audiences of thousands. The store is now a permanent fixture in Soho, after better than expected store performance.
“We had expected sales in the shop to decline as a result of the pop-up. After the massive hype of the first few weeks, sales at Veggie Pret are still well up on where they were before the conversion,” said chief executive Clive Schlee, announcing the move.
— Niomi Smart (@niomismart) June 6, 2016
The likes of Quic and health food store About Life also leverage the power of social media, encouraging diners to spread the word about the snacks on offer.
Holy Guacamole! This combo couldn’t get any more perfect. Sweet potatoes are a great snack option packed with antioxidants to help prevent inflammation they are also high in potassium for heart health. Add a little guacamole and you’ve got one heck of an afternoon snack. Pop into our cafe and try our crunchy sweet potato fries today! ? Pinterest
A photo posted by About Life (@aboutlifenm) on
4. Make a strong choice about expansion
There are over 900 McDonald’s stores across Australia, while the two big major supermarkets are dotting capital cities with boutique shopping options that borrow from overseas operators like Tesco and Walmart in their lunch deal options. With so much fast dining on offer, the big business decision is where to put stores.
Oliver’s is sticking to the highways; after an opportunity to look at train stations and airports as potential locations for new stores, it was decided this would give the brand the best shot at long term growth. An aggressive expansion plan is underway between Cairns and Adelaide, expanding on existing stores along the Hume Highway between Melbourne and Sydney.
5. Decide on price and market
Making the most of trends also means understanding how much punters are willing to pay. The artisan food movement is translating into higher prices for speciality snacks and businesses should be tracking exactly how much their customers are willing to part with to ensure they don’t undershoot – or overshoot – the potential gains on offer.
“I think with things that do have names attached to them like ‘quality’, people are willing to pay,” says Kirkwood.
“If they’re genuine operators, these businesses shouldn’t have a problem.”
Gunn says that Oliver’s has a higher price point intentionally. “We don’t compete with others on a price basis – our food costs more, we’re a different price point, we’re an alternative,” he says.
Competition with the likes of McDonald’s is not the aim of the game – Gunn says traditional fast food sales actually go up when an Oliver’s is installed next to another store – because the focus is on leveraging how people travel in groups, and the different market segments that exist in the family car.
“My kids used to call it the UnHappy Meal, because they were never allowed them,” Gunn says. By offering a new category of food in road stop areas, the company plays on the needs of all demographics, giving a food alternative to grown-ups and the health conscious who might not otherwise be tempted to pull off the road for a bite to eat.
Kirkwood adds that Australians can have several food preferences and identities at once and businesses should understand that they need to cater to these different tones.
“We’re sold all these different types of food lifestyles – but we don’t eat exclusively out of those categories. It’s about how we mix and match – and it’s very interesting how we create and assemble [food],” she says.