Freshii is counting on growing consumer appetite for healthy food to power an ambitious growth plan that would see the restaurant chain more than triple the number of franchised locations within three years.
The Toronto-based eatery, which specializes in customizable salads, wraps, bowls and smoothies, is aiming to have as many as 840 locations worldwide by the end of 2019. It had 244 restaurants throughout North America, South America and Europe as of Sept. 25.
CEO Matthew Corrin said his company is poised to capitalize as more people embrace the trend towards improving health and wellness, which can include everything from lunching on quinoa bowls to wearing ethical yoga gear.
“Look, I can have a burger with the best of them, but there is a time and place for a splurge,” said the 35-year-old Tuesday following the company’s debut on the Toronto Stock Exchange.
“The reality is that you need to be _ more often than not, more days than not, more meals than not _ you need to be picking better-for-you ingredients, healthier foods to keep you energized and not put you in a food coma. That’s how I think about it. I think one of the reasons why people have historically picked unhealthy fast food is that it’s the path of least resistance, and it’s the most affordable option out there.”
The company’s initial public offering was priced at $11.50 a share, raising total gross proceeds of $125 million. Shares were trading late Tuesday at $12.40, up 90 cents or 7.83 per cent.
Corrin, who founded the company and opened its first location in Toronto in 2005, said he believes Freshii’s appeal of fast and fresh food is universal, pointing to the more than 4,000 franchise applications it receives each year. Store sizes range from 250 square feet to 2,500 square-foot, stand-alone locations.
He said Freshii (TSX:FRII) is most popular among consumers typically between the ages of 18 to 34, who want quick, healthy, custom-food options at a reasonable price and want to back a brand that supports philanthropic endeavours. The company donates a meal to a child in need through the charity Free The Children when specific meals are purchased.
According to retail consultancy NPD Group, Canadians spent $50 billion eating out at restaurants in 2016, with $322 million of that at fast-casual restaurants like Freshii, Five Guys and Panera Bread.
Although it is still considered a small segment of the overall market, Robert Carter, NPD’s executive director of foodservice, said it’s one the fastest growing areas.
The number of people visiting fast-casual restaurants, defined as places where food is prepared fresh on the spot, customizable and more expensive than fast-food outlets, grew by 10 per cent last year compared to a year earlier, according to NDP Group data.
To achieve its growth, Freshii will have to expand its menu to entice more customers who wouldn’t typically eat at its restaurants and encourage loyal customers to return more often, Carter said.
“If you want to grow in today’s market, you have to give customers multiple reasons to come in,” he said.
It’s a feat that may prove to be difficult as Freshii competes with other restaurant chains that have expanded into healthier food options, such as McDonald’s, Wendy’s and Tim Hortons.
But Corrin believes Freshii’s staying power is that it’s the “next-gen” of healthy eating.
“We think there’s going to be Wendy’s and Burger King for every McDonald’s and we’re McDonald’s,” he said. “That’s the way we view it. We started first and we plan on staying first for a very long time.”