Organic To Go Outlines Strategy for Future Growth

2008-07-10 — Seattle-based Organic To Go, the U.S.'s only USDA certified fast-casual concept, outlined its strategy for future growth and expansion during the Oppenheimer 8th Annual Consumer Growth Conference held on July 9th in Boston.

With the organic market growing over 18 percent annually in the past 10 years, Jason Brown, Organic To Go's founding CEO, is eager to increase the size of his concept. To that end, he has developed a "three-pronged strategy" to market Organic To Go. The plan is composed of retail cafes, catering and delivery services, and selling salads and sandwiches wholesale at universities, airports, and hospitals.

When entering a new market, Organic To Go first creates a "hub and spoke commissary kitchen," which allows for efficiency and consistency. The company then builds out from this key location, bringing in fresh food on a nightly basis to the hub, preparing it, and then delivering it to the surrounding Organic To Go locations. Custom orders are also available at the cafes.

Brown's branded business targets locations that contain workplaces and educated people. Thus, he plans to expand Organic To Go not only in places where locations already exist, but also in new markets that have a high density of people who go to work. "Education drives organic consumption," he explained to the conference's audience.

Corporate catering accounts for 40 percent of Organic To Go's overall business. The brand ventured east this year, opening locations in Washington, D.C., and made a total of seven location acquisitions this year. The concept has locations in Washington state, Los Angeles, Orange County, and San Diego, California, and Rosslyn, Virginia.

On the non-traditional end, Organic To Go operates 120 branded grab-and-go locations, 14 university units, 11 branded partnerships, and one café at the San Diego airport. Building a presence at more airports is also high on Brown's to-do list.

Also high on that list is developing a successful delivery service. Brown places a lot of emphasis on the importance of timely deliveries. Organic To Go invests heavily in drivers and customer service. For example, when delivering to an office, drivers will offer to set up the food and remove any trash in order to recycle it. An invoice for the order is provided in a clean, stain-free envelope that also includes a thank you note and a Newman's Own chocolate bar. "[We include the chocolate bar] because oftentimes the person who places the order doesn't get to eat the food," Brown explained.

These tactics have led to a strong delivery service, with sales up 48 percent in 2008 versus 2007. Sixty-five percent of delivery customers bought more than five times from Organic To Go in the same year, illustrating a core repeat business. The rest of the "prongs" are faring well, too, with retail café sales up 54 percent this year and wholesale sales up 80 percent.

Brown credits the success of Organic To Go, which experienced revenue growth of over 60 percent in 2007, to the company's establishments of a "category leading branded position in a rapidly growing segment within the foodservice industry, a seasoned management team and dedicated industry experts on the board of directors, commitment to accelerated revenue and EBITDA growth, and the hub and spoke commissary kitchen model."

Future goals of Organic To Go include "expanding cafes, catering, and branded wholesale in existing markets" and "[exploring] brand expansion through licensing relationships," Brown said.

Brown believes the potential market of Organic To Go will only grow. "You don't have to come in wearing Birkenstocks" to eat organic, he joked. —Mary Fletcher King