Organic meets fast food in latest green trend

Handout image of Boulder, Colorado-based VG Burgers.

CHICAGO (Reuters.com) - Professional snowboarder Tim Gargiulo is about as all-American as you can get - he's entrepreneurial, prone to overworking, and passionate about fast food, especially popular favorites like burgers, fries and shakes.

But the fledgling restaurateur won't eat - or serve - anything that's not made from organic, plant-based ingredients such as grains, beans, vegetables and nuts. His burgers are formed from soy flour and wheat gluten; he blends "milkshakes" from hemp; even his fountain drinks are sweetened with agave syrup.

"It's a cleaner way to eat," says the 34-year-old founder of Boulder, Colorado-based VG Burgers, noting that most of his consumers don't even consider themselves to be vegetarians. "A lot of people just want to come in and eat something that doesn't make them feel like taking a nap afterwards."

Gargiulo's venture, which is slated to open its second store next year and begin selling franchises after that, represents the latest niche in the organic food market: fast food. U.S. sales of organic food and beverages are set to reach $23.6 billion in 2008, up from roughly $20 billion last year and just $1 billion in 1990, according to the Greenfield, Massachusetts-based Organic Trade Association, an industry group.

NPD Group, which tracks national U.S. food consumption trends, says 26 percent of all Americans eat at least one product with an organic claim every two weeks.

"People are going to be interested in this issue and if you supply them with product, I'm sure they're going to take a look," says NPD Vice President Harry Balzer, noting that there are more consumers are eating organically these days than dieting.

Until recently, most of the demand for ready-to-eat organic meals was met by specialty groceries such as natural foods giant Whole Foods Market Inc. Organic restaurants had a presence, but existed primarily as full-service operations in the form of stand-alone cafes or upscale eateries such as Berkeley, California's renowned Chez Panisse.

"Demand was there in the retail sector," says Gargiulo, who plans to use the presence of Whole Foods stores as a gauge for potential markets able to support VG Burgers locations. "Whole Foods seems to be a good guiding light for my concept."

Veterans of the natural foods industry appear interested in the notion of building an organic chain. Gargiulo's advisory board includes Steve Demos, founder of soymilk producer White Wave Inc., and executives from Sambazon, the company built around products made from the acai berry, heralded for its antioxidant properties. VG Burgers also has financial support from a green investor group in Boulder.

Other organic fast-food chain concepts are cropping up throughout the country, ranging from pizzerias to burger joints using grass-fed, free-range beef.

Fort Lauderdale, Florida-based Pizza Fusion, which makes organic pizzas, has seven franchised stores and expects to operate 15 by year-end, including some offering organic wine and beer. Founded in 2006, the company is trying to piggyback on markets saturated with upscale, educated consumers concerned about their health.

"We almost look like a maternity ward during the day because there are so many expectant mothers worried about what they're putting in their bodies," says Vaughn Lazar, who co-founded the chain in 2006 with a friend from college. "We saw that there was a community that would support organic food."

Pizza Fusion's 16-member corporate staff now includes a procurement officer whose job is to manage the sourcing for organic produce, meats, and dairy and buying locally whenever possible.

"We have to show where every ingredient is from," says Lazar, whose restaurants recently received organic certification from the USDA. "It's always traced right back to the farm. It sends a clear message to the consumer."

There are other messages, too, that educated and environmentally-conscious consumers expect to see from chains charging a premium of 20 percent or more over non-organic rivals. Perhaps foremost is a commitment to sustainability.

Pizza Fusion, for instance, delivers its pizza in hybrid vehicles; VG Burger has a "zero waste" policy and uses biodegradable packaging made from materials like corn and sugar pulp.

Elevation Burger, an Arlington, Virginia-based start-up chain offering organic burgers and fries, uses environmentally sustainable finishes such as bamboo flooring and compressed sorghum tabletops; it donates waste olive oil from its French fries for conversion into bio-diesel fuel.

"We're differentiating ourselves from a corporate perspective," says Elevation Burger founder Hans Hess. "All of our franchisees have embraced this idea."

(Deborah Cohen covers small business for Reuters.com. She can be reached at smallbusinessbigissues@yahoo.com).