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Matthew Corrin (Rachel Idzerda for the globe and mail)
Matthew Corrin (Rachel Idzerda for the globe and mail)

The Lunch

Freshii's founder aims to kill fast-food rivals with kale Add to ...

The impulses that drive New Year’s resolutions are Matthew Corrin’s bread and butter – figuratively speaking. There is no bread or butter in sight.

Stabbing his fork into a kale salad at the Freshii headquarters in Toronto’s upscale Rosedale neighbourhood, the chain’s founder reminisces about opening his first location. Ten years ago this month, at the height of resolution season, Freshii was launched (under its original name, Lettuce Eatery) in downtown Toronto’s TD Centre. And Mr. Corrin made a bet that there was a market for healthy fast food – a demand that would continue to grow.

Now at roughly 150 locations and counting in eight countries, Mr. Corrin is attempting to bring a marketer’s touch to eating your vegetables.

“In New York, every corner has a deli, and every deli has a fresh food component to it, in a very non-branded, lacklustre way,” he says, recalling the city he called home when Freshii first launched. “We wanted to create a brand around produce.”

At the time, Mr. Corrin had no restaurant experience. After graduating from the University of Western Ontario, he moved to New York with his then-girlfriend (now wife) Kate. She attended the Fashion Institute of Technology, and he landed a summer internship at the Late Show with David Letterman, followed by almost three years in the PR and media department at Oscar de la Renta. (He refers to his time at “Oscar” on a first-name basis.)

With Kate’s visa coming due, the couple decided to return to Canada. Mr. Corrin had always had an interest in health, working out, and wellness, he explains, and wanted to work for himself doing something in that area. They moved to Toronto, and he shifted his focus from style to salad, wraps, rice bowls and other lighter lunch fare.

Food is a kind of fashion, with its own trends. And the latest trends do not augur well for the fast food incumbents, in particular one monolith with a capital M.

In October, McDonald’s Corp. reported a 30-per-cent drop in profit in its third quarter. President and chief executive officer Don Thompson acknowledged at the time that the chain had not responded adequately to consumers’ desire for natural foods and the ability to customize their meals.

If recent financial results signal a generational change, Mr. Corrin wants to be among those who profit from it. Unerringly self-assured, he requires little provocation to become combative about the fast food giants he’s hoping are not too big to fail.

“They are dying a slow death. It will take a long time before they go away completely, but they are failing in a serious way,” he says of the fast food giants. Of course, McDonald’s has been attempting to offer more healthy options, such as salads, or apple slices in Happy Meals. But in Mr. Corrin’s view, these panaceas are a mismatch with the company’s brand.

“Nobody trusts them to do healthy food. … Their breaded chicken salad is healthier, but not healthy. [McDonald’s offers fried or grilled chicken options on its salads.] And it’s not the quality that we’re doing. And there’s no customization. Our generation, we want to control exactly what goes in,” says the 33-year-old who originally hails from Winnipeg.

Marketing through customization is nothing new. Subway built its sandwich business on the concept, and it has been more than 40 years since a comely server in a Burger King commercial crooned “have it your way.” But the concept is becoming more important: Those who study the habits of younger consumers have noted that the desire for personalization is much higher among millennials, who are beginning to wield significant financial influence.

Coca-Cola Co. has in recent years rolled out its “Freestyle” machines in locations such as restaurants and movie theatres, allowing people to choose from hundreds of its soda brands, and mix flavours. McDonald’s has been testing a “build your own burger” program in California.

But while they are attempting to catch up on the personalization trend, these brands are still struggling with health perceptions.

“They’re building a great, crave-able, cheap meal,” Mr. Corrin says of McDonald’s. “It’s affordable so it helps people who have low income or want to splurge, it helps them, I guess, to eat. But it doesn’t help them eat well.”

Eating well isn’t cheap. Profit margins – already notoriously slim in the restaurant industry – are more difficult to manage with fresh produce, which can spoil. Freshii aims to manage its inventory so that nothing is thrown away; the best-managed locations have to discard 10 to 20 per cent of their ingredients to maintain quality. When a location hits 30 or 40 per cent of its stock going unsold, it has to adjust very quickly.

Besides that, fresh food is simply more expensive, meaning that a chain such as Freshii is unable to offer the price points that the giants such as McDonald’s can. Its fixed-ingredient menu salads, bowls, burritos and wraps range from $6.50 to $9.50. Custom items start at $5.99 for wraps and burritos, and $6.99 for salads and soups, but the addition of premium ingredients, such as avocado (99 cents), kale ($1), tofu ($1.49), or shrimp ($2.49) pushes up the price. So does choosing more than six veggie toppings, and sauces, such as sriracha and peanut .

Mr. Corrin eats them all. Like a diplomatic dad, he refuses to comment on his favourites. He eats a different item from the restaurant every day as a quality-control measure; once he has cycled through the entire menu, he starts again.

Mr. Corrin, who counts running and skiing among his hobbies, believes that as consumers become more health-conscious, they are also willing to pay more for healthy options.

“We want to be an affordable luxury. Like Starbucks is an affordable luxury.”

Research suggests this is possible. People aged 18 to 34 have ramped up their visits to “fast casual” chains such as Chipotle, that have slightly higher prices, since 2006, according to an RBC Dominion Securities report published in April. Meanwhile, the report found, traffic to fast food restaurants, such as Wendy’s and McDonald’s, has fallen 5 per cent even among lower-income millennials; among those with high incomes, traffic fell 21 per cent.

The report found that “the Millennial age cohort is willing to pay up for meals that they perceive to have higher food value and more personal relevance to them.”

Mr. Corrin observes: “In every market, there are segments that crave and desire healthy food.”

That’s true outside of Canada as well. The company’s second-largest market after Toronto is Chicago, and the Dubai location is among its most profitable.

Mr. Corrin wants to build a global brand based in Canada, which is a relative rarity. Lululemon Athletica Inc., Heys luggage and Canada Goose have managed it, but it is not common.

The United States, in particular, can be a difficult nut to crack: Danier Leather, Canadian Tire, and Shopper’s Drug Mart are all examples that have attempted to do business south of the border and were forced to retreat. Tim Hortons, which recently was acquired by Brazil-based Burger King owners 3G Capital, has been making slow progress building its presence in the U.S.

When Freshii began its U.S. expansion in 2007, Mr. Corrin, his pregnant wife and their dog relocated to Chicago so he could oversee things. The company still maintains an office there.

“Everybody said to me: ‘You’ll fail. In the U.S., Canadian companies just fail. That’s what they do,’” he recalls. “I’m like: ‘First of all, I’m like an American-attitude CEO, who just happens to be based in Toronto, which happens to be the most American city in the country, so f–– you. And by the way, I’m going to move to the U.S. so if there is a cultural nuance that I’m missing, I’ll see it.’”

That confidence extends to everything Mr. Corrin does. A consummate salesperson, his speaking style is direct, and he occasionally chops at the table with the side of his hand for emphasis. Eye contact is rigorous.

Now, Freshii has a growing presence in the U.S. and increasingly, around the world. Beyond North America, the brand can be found in the United Arab Emirates, Colombia, Guatemala, Switzerland, Austria, and Sweden. Freshii will nearly double its locations this year, with 130 new stores planned. Anyone can apply to be a franchisee, and are picked based on potential in that market and the calibre of the local partner; someone from the company scouts all potential locations. Stores are currently under construction in Panama, Germany, Saudi Arabia, and Kuwait.

That means, like other global franchises, Freshii has to account for a variety of tastes and food trends.

“We don’t do pork in the Middle East. We do more spice in Central America and South America,” Mr. Corrin says. “And some ingredients differ – for example, quinoa in Stockholm. That’s been a generic grain for the last two decades in Sweden. That’s like our white rice. So we’re like, what’s next? We’re doing bulgur and a barley grain. Things like that.”

All new menu items and promotions come out of this Toronto location, which doubles as a test kitchen, training facility for new franchisees, and company headquarters. The latest promotion, which was in testing when we sat down for lunch in late November, is a juice cleanse. Launched this week, it is designed to capitalize on New Year’s resolutions.

At the offices in the back, employees stand at a communal desk and the trim and polished CEO does chin-ups on a black metal stand in the corner every day.

Mr. Corrin’s next plan for growth is an impending partnership with unnamed U.S. retailers. Details are not yet public. While growth continues, Mr. Corrin is working on building the scale that more influential fast food brands have.

“Our mission is, we want people to live healthier lives, and ultimately longer lives by offering healthy fast food in a convenient and affordable way. You can’t do that with 10 stores. You can’t do that with 100 stores. You need tens of thousands of stores to actually reach people,” he says. “… If we reach our mission, Toronto is defining what healthy is going to be, around the world.”

***

Matthew Corrin

Age: 33

Hometown: Winnipeg

Education: B.A. in Media, Information and Technoculture at the University of Western Ontario

Family: Lives in Toronto with his wife Kate and daughters ages 6 and 3 -- affectionately referred to as CEOs-in-training – and a schnoodle

Hobbies: Skiing, running. He took up running in Central Park while living in New York, and his current favourite route takes him to Toronto’s Brickworks.

Question he likes to ask people: “What’s your vice?”

His own answer to that question: “I probably drink too much scotch.”

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Freshii, a snapshot

3 per cent: the portion of sales that franchisees are required to spend on marketing and advertising, much of it focused on public relations and local advertising around each location.

Other brand building: Mr. Corrin is a Dragon on “Next Gen Den,” CBC’s new online-only “Dragon’s Den” spinoff, launching soon. Mr. Corrin sees it as a way to promote the brand to potential franchisees who identify with the show’s entrepreneurial focus.

60 days: the amount of time given to experiments with new products and promotions at the Toronto headquarters’ Freshii location.

The latest tests: chili, and a juice cleanse.

Next test: serving organic beer and wine.

$30,000: the company’s franchise fee.

$250,000: rough cost of opening a new store, depending on size and location.

Countries: Canada, U.S., United Arab Emirates, Colombia, Guatemala, Switzerland, Austria, Sweden

Countries with Freshii locations under construction: Panama, Germany, Saudi Arabia, Kuwait

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On building a brand from Canada: “It took me a while to figure out that Toronto is one of the best cities in the world, bar none. I’ve got big personal goals, and I have no doubt that I will reach them from Toronto. It’s harder to get on the cover of Forbes or Fortune magazine from Canada. It’s easier to do it from the U.S. But it’s still not impossible. … We’re going to be truly an exception to very few rules.”

On installing trendy brands’ coffee counters in Freshii locations, for added cool factor:

“It’s a great complementary mix, because they’re busy when we’re not and we’re busy when they’re not. This hipster coffee culture is so anti-chain, so we don’t like to go exclusive; we like to do one-off partnerships. So we’ve got a few with Crema Coffee, and a few with White Squirrel. In Boston we’ve got something different. In Vancouver we’ve got something different. It’s a great shared space. Hipster coffee places make us hipper.”

On the architecture required for new locations in Saudi Arabia:

“Two doors: one for men, one for women. Shared kitchen, but then a mirror image of the restaurant, side-by-side, with a wall in between. Men sit in one, and women don’t go out by themselves, so it’s ‘Families’ and ‘Singles’ -- ‘Singles’ are men, ‘Families,’ women can go with their husbands and kids. Separate cash registers. No alcohol, totally dry. Ridiculous amounts of coffee. ... In Riyadh, there’s no music allowed [the Freshii HQ location has music playing constantly] so you walk into a coffee bar and it’s pin-drop silent.”

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