Monday, September 12, 2016

How a Group of Farmer-Owner Restaurants Uses the Family Farm as a Business Model for Sustainability

It’s often assumed that it’s not possible to maintain high-level sustainability practices while still remaining profitable, especially in the restaurant business. But Farmers Restaurant Group (FRG), which operates a handful of popular restaurants in and around the nation’s capital, is doing just that.

The group is doing far more than just talking about the importance of sustainability practices. They are living and breathing them in everything they do, from the buildings they call home to the food they put on the table, to how they manage employees and their careers. For owners Dan Simons, Mike Vucurevich, and the 42,000 farmers that make up the North Dakota Farmers Union, sustainability is not a marketing ploy, it is a belief system.

 “We do what we believe. And it works. Sustainability means trusting that caring for the planet and caring for our people will result in healthy profits,” says owner Simons.

What do sustainable day-to-day operations look like in a growing multi-site restaurant business? FRG filters everything they do “Through the Eyes of the Founding Farmer.” This tagline is more than a catch phrase—it is a decision-making paradigm for the owners, managers, chefs, and support team. Because more than half of this company is actually owned directly or indirectly by family farmers, this is not a stretch. Many of the company’s founding principles come from farmers:

• The land and waterways we call home are essential;
• Ingredients and the people that provide them matter;
• Neighbors and communities are important for survival; and
• True success is measured over the long-haul, not in quarterly spreadsheets.

Many would see this novel approach as a risky way to run a for-profit restaurant company. But it is paying dividends for the restaurant group, as their flagship location of Founding Farmers has held the No. 1 most-booked spot on OpenTable for the last several years, along with having three of their restaurants on OpenTable’s most-booked in Washington D.C. list.

The outcomes are also seen in the company’s growth: with four restaurant locations, revenues currently over $50 million dollars per year, and more than 1,000 employees, the company plans to open three more restaurants over the next 18 months. The mission of the company and expectations of the investors and owners allows the company to operate like a B-Corporation. Without the typical pressure of quarterly earnings reporting, which can lead to short-term thinking, FRG has the latitude to consistently pursue socially and environmentally conscious programs.

An Environmental, Green-Centric Approach 

All of the company’s four locations are LEED Certified. The pursuit of LEED adds approximately $100,000 to the budget of each restaurant—relating to furniture, fixtures, equipment, and methods. The process starts with the architects and having two LEED-AP certified people on the internal team to ensure they meet the right criteria from the start of each restaurant. The latest D.C. restaurant under construction and slated to open late 2016, Farmers & Distillers, is being designed to meet LEED Gold standards, which their flagship restaurant achieved in 2008. This expense is viewed as an investment that results in not only lower utility bills, but as building blocks for customer loyalty and increasing sales. The dining experience highlights how the restaurants are built and furnished, motivating potential diners to support this green-centric approach. There is no requirement that a restaurant pursue this level of environmentally-thoughtful design and construction, but for FRG it is just another aspect of the farmer mentality.

The commitment to being green doesn’t end here. The restaurant currently in development in King of Prussia, Pa., will have solar panels on the roof, and the company continues to raise the bar with ongoing guidance and accountability via a third-party auditor, the Green Restaurant Association. As official CarbonFund.org partners, FRG offsets some of their greenhouse gas emissions with the purchase of carbon credits. The overall return on all of these green investments is compelling. Cash on cash returns range from 12 to 33 percent annually per location.

FRG uses their menu selections to participate in solving some of our world’s environmental problems. Since their first restaurant, they have been working on ways to serve sustainable fish; but more recently they are looking to serve invasive species of fish. For example, Blue Catfish have spread rapidly into the tributaries of the Chesapeake Bay after being introduced nearby for recreational purposes. At the rate they are growing and reproducing, it is likely they will have a negative impact on the ecology of the bay, including on the blue crab population. Commercial fishing industry can make a difference. Serving the fish in restaurants can help build demand and raise awareness to these environmental issues, locally and beyond.

The company also supports honey bee research in the biology department at the George Washington University (GWU) to better understand colony collapse disorder and explore other issues facing these hard working pollinators. In addition, FRG partners with Sweet Virginia, a non-profit organization that educates children about the critical role of honey bees in pollinating plants, fruits, and vegetables, and the overall positive impact they have on our environment. This honey bee awareness is also encouraged in the restaurants: at the Tyson, Va., location there is a seasonal sunflower installation honoring the bees; and at the Potomac, Md., and D.C. locations, there are bookshelves devoted to beekeeping wisdom.

High-Quality Ingredients from the Supply Chain 

The food and beverages at this collection of restaurants are a large part of what keep bringing their guests back for more. Almost everything that comes to the table is made fresh, in-house, down to the condiments. They bake their own bread (approximately 118,000 loaves per year), grind their own beef, press their own juices, and churn their own butter.

“We call it unbundling the industrial food chain,” says owner Dan Simons, “which is a large part of keeping our restaurants as socially-conscious as we can. We source pure ingredients in order to cook, mix, and bake our food and beverage items from scratch, in-house, every day, all while honoring American family farmers and their hard-earned bounty.”

The restaurants work to direct their purchasing dollars to American family farmers and suppliers that align with their values, seeking the freshest ingredients available. Where possible, they develop relationships with farmers, and even visit their land. For example, they have a mushroom farmer in Lancaster, Pa., and have been to the farm and used this experience in their menu development. They work with two primary butchers and distributors who advise the company how to source the best meat for the restaurants. The flour they use for their bread comes from the state-owned North Dakota Mill, and the profits go directly back to the people of North Dakota. They are partners with Cornell University’s Maple Program, who have taught them about making maple syrup and provide it for all of their very popular weekend brunches and weekday breakfasts. Of course, this cannot be the case with everything they buy, but it is a goal when possible.

While the source of food is critical, so is what happens when it arrives. In these restaurants, there are no walk-in freezers or storage closets filled with packages of preservative-laden food. They receive deliveries six days a week, sometimes more than once per day, and very often the food comes off of the trucks and moves directly into production and to the tables. Their kitchens turn their entire food inventory over every two-and-a-half days.

The company’s next steps include establishing an in-restaurant distillery (Founding Spirits will be a distillery attached to the restaurant, Farmers & Distillers) to create a direct supply chain by having relationships in the field, at the still, and in the bottle. Here they will source wheat from the president of the NDFU and N.D. resident, Mark Watne, who is a fourth generation farmer, and rye and barley from a Virginia farmer, Billy Dawson of Bay’s Best Feed. This level of relationship and vertical integration is the model they plan on pursuing with more and more products and epitomizes corporate responsibility and green methods management relating to food, beverage, company culture, and facility management.

 Community Work Adds Value 

Charity work is very common in the restaurant and hospitality industry that, according to the National Restaurant Association, makes some sort of charitable donation annually to the staggering tune of $3 billion. FRG believes in participating in and giving back to its communities. They support local youth athletics including KOA Sports, a non-profit league working to change kids lives through sports, and the local high school booster club; they participate in countless fundraising events to raise money for important community groups such as Share Our Strength, DC Central Kitchen, and St. Jude’s Research Hospital. For the past six years, they have also put their money into fostering sustainability mindsets in the young professionals at GWU. The company funds an annual scholarship at GWU to recognize students who demonstrate a commitment to sustainability and eco-friendly industry practices and to actively engage with the university community.

These initiatives, and the FRG sustainability business model, connect the company to its community and its neighborhoods, driving revenues through loyalty, as evidenced by a 95 percent “intent to return” metric, as measured by OpenTable diners. Even the investors share in their belief system. In fact, many of the company’s shareholders are drawn to invest because of the sustainability practices and their connections back to the community.

The Long View is More Sustainable

As for its own people, Simons and Vucurevich also have a holistic approach to everyone who works for the company. Even their management style is “Through the Eyes of the Founding Farmer.” The company has a working “Constitution” and encourages the career development of all employees. These restaurants are high-performing, fast-paced environments, but they also foster career growth and loyalty. “We treat our people like family. Why would we do it any other way?” says Simons. “We want our people to excel and be happy. It’s good for them and good for us. Our management experience directly aligns with the farmer mindset. It just makes sense and is more sustainable in the long run.”

A direct result of these tactics is seen in the caliber of the management, and specifically with management retention—with turnover below 15 percent annually, the company sees that management loyalty is directly connected to their management style, green focus of the restaurants, and ongoing commitment to education. Every quarter, the leaders of the company teach “school”: a time when where the managers receive classroom learning, do role playing, and discuss everything from leadership theory to time management. They also use these classes to teach the importance of sustainability at work and at home.

Tips on How to Operate Sustainably 

The principal owners of Farmers Restaurant Group, who also run a restaurant and hospitality consulting company—Vucurevich Simons Advisory Group—have some suggestions for how to develop sustainable habits. First, sustainability needs to be considered an investment. It isn’t necessarily ‘cheaper’ to be green – but it is socially and environmentally responsible, shouldn’t break the bank in the short term, and could actually save you money over time.

Areas to consider in your own business include:
• Investing in compostable ToGo-supplies. Pricing for these materials have become very competitive, and it’s only a matter of time before many cities, such as D.C., will start banning substances like styrofoam.
• Composting and recycling your trash. This may seem cumbersome and messy, but once it is set up, it doesn’t take much more for staff to put a glass bottle into one can versus another. Compost pick up is a special service, but it is the environmentally responsible choice in restaurants where there is a lot of waste.
• Committing to energy-efficient lighting and kitchen equipment, which over time should save money.
• Using an in-house water filtration system will prevent prevents thousands, if not more, of glass/plastic bottles from being used and can provide filtered water, flat and still, for all guests. FRG uses the Vivreau system.
• Supporting the local community, which builds relationships and, most importantly, loyalty.
• Being creative and evaluating everything. There are many opportunities to begin to unbundle the industrial food chain. Also develop relationships with suppliers to learn more about food sources. The economic impact of keeping money in the community and in the USA is clear.

-The editors

2 comments:

  1. And just as important, the food is amazing! i've been to these restaurants, www.wearefoundingfarmers.com in Washington DC....delish!

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  2. Good job! I loved it and continue your passion.

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