Abstract

This case describes the novel business model devised by a sustainability minded leadership team managing a fast-casual restaurant in Montreal. The guiding principle at Foodchain is the pursuit of simplicity, in line with the concept of radical resource productivity. In developing a strategy based on leanness, the Foodchain founders questioned almost every axiom and assumption common to their industry, leading them to rethink how a restaurant operates. The case invites students to put themselves in the shoes of the managing director at Foodchain, and provides an opportunity to assess how a business in the service sector can pursue financial viability through innovation and sustainability.

Introduction

Jean-Franois Saine, founder of Foodchain, was peering through the restaurant's all-glass panels onto bustling McGill College Street in downtown Montreal. The flagship restaurant was the consummation of the Foodchain attempt to reinvent fast food. Today, the restaurant handled a busy lunch rush effortlessly. Jean-Franois was proud of his employees on the floor, who were hardworking and adaptive. Nevertheless, Jean-Franois could not help but think about how service could be streamlined and made yet simpler and more efficient.

During a brief break, Jean-Franois could feel the autumn chill creeping into the air. With the weather getting colder, he was anticipating a tough winter. In its second year, Foodchain had yet to turn a profit. Jean-Franois contemplated what avenues for growth to pursue, how to improve the restaurant's margins, and ultimately how to get through the next year. He knew that 60% of restaurants closed or changed hands within 3 years, and that if Foodchain were to be a successful business, it would soon need to stop losing money. He worked intense hours both on the floor and in the back office, often staying through the late hours of the night. Like many entrepreneurs passionate about their creation, Jean-Franois lived, breathed, and ate Foodchain.

Jean-Franois viewed running a restaurant essentially as operating two businesses: a retail front and a manufacturing back. Each a difficult endeavor on its own, the challenges in the restaurant multiply because inputs and outputs varied throughout the day and the season, and many of these products were impossible to store for any length of time. With his background in management consulting, Jean-Franois likened restaurants to "just-in-time manufacturing with a retail frontusing perishable items with a very fluctuating demand."

According to Jean-Franois, most restaurants develop their menu and their overall strategy based on what they think the consumer wants and is willing to pay for, they then figure out how to optimally source, prepare, and serve consumer preferences. Foodchain took a different approach, recognizing that one of their strengths was a very talented and versatile culinary team that could prepare delicious meals from a variety of quality ingredients. The team developed the Foodchain strategy by beginning with the supply chain, looking for quality ingredients that were available year round, and then built their menu from there.

The Foodchain Team

Jean-Franois Saine

Jean-Franois Saine was the co-founder of Foodchain, despite being an outsider to the restaurant industry. Prior to Foodchain, he had received BCom and MBA degrees, and had worked for 10 years in strategic management consulting. He believed his business background was immensely helpful for identifying opportunities to innovate and experiment in food preparation and delivery. He was the only member of the founding team to work full-time at the restaurant.

Charles-Antoine Crte and Cheryl Johnson

Charles-Antoine Crte and Cheryl Johnson were the culinary masterminds behind the Foodchain menu. Crte was born in the suburbs of Montreal, where he had long dreamed of becoming a chef. He started his career working in restaurants with prominent Montreal chefs, and later traveled to Toronto to work with the renowned British Canadian chef, David Lee. He then enrolled in the Institut de tourisme et d'htellerie du Qubec (Institute of Tourism and Hospitality of Quebec), where he completed his culinary studies. After his studies, Crte worked at Toqu!, the premier restaurant in Montreal. He then worked at El Bulli, a Spanish restaurant that was ranked the best in the world five times by San Pellegrino World's 50 Best Restaurants, as well as in Australia and France. In 2004, he came back to Toqu! to take the role of head chef. After more than a decade, Crte left Toqu! to found his own restaurant, Montral Plaza, with his friend and colleague of 15 years, Cheryl Johnson. The duo opened the restaurant in 2015 to great success. As two Toqu! alumni, Crte and Johnson created buzz about Montral Plaza, and the restaurant was ranked 6th best in Canada in 2018 by Canada's 100 Best.

Zbulon Perron

Zbulon Perron was the designer of the Foodchain retail space. Founded in 2008, Perron's interior design company, Atelier Zbulon Perron (Zbulon Perron Workshop), had grown to be one of the top designers in the city. Perron and his team had won several awards from the Concours Commerce Design Montral (Montreal Commercial Design Contest), run by the city's Bureau of Design. Atelier Zbulon Perron designed many of Montreal's hottest spots, including Montral Plaza, Hof Kelsten (a partner bakery of Foodchain), and retail chain American Apparel.

Jeffrey Finkelstein

Jeffrey Finkelstein was a partner at Foodchain. He had an impressive restaurant background, having worked at five of the top 50 restaurants in the world. He owned Hof Kelsten, which he described as a chef-driven boulangerie where he fused all his culinary inspirations to produce superior bread. Hof Kelsten supplied the top gastronomic spots in the city with their bread. His customers included many Montreal hot spots like Toqu, Joe Beef, Club Chasse et Peche, Dominion Square Tavern, Tuck Shop, Lemeac, and most recently, Foodchain.

The Employees

Foodchain employed approximately 20 people, and the staff were both excited and intrigued to participate in the pioneering spirit of the restaurant. Certain staff were particularly excited to be working alongside such well-renowned chefs. Sandrine Vermette, manager at Foodchain, was motivated by the employees on the floor. She was grateful to work alongside Foodchain employees, who she said possessed "stunning minds." Foodchain employees viewed themselves as more than just a cog in the machine. As such, the labor turnover at Foodchain was significantly less than a typical fast food restaurant. Because the Foodchain process for preparing food was simplified and machine-based, it did not require many highly trained, specialized cooking staff. In fact, most employees could operate both in the kitchen and in the front line, interacting with customers. This meant that employees required a set of skills that was wider-ranging than staff at other restaurants, but it also provided management more versatility for staffing on any given day.

Montreal: A Restaurant City

The city of Montreal is unique in many ways. Montreal is the second largest city in Canada. It is largely bilingual and has a large student population, with 11 universities concentrated in the city. The Montreal restaurant scene is vibrant, with the city hosting one of the highest rates of restaurants per capita in North America. One can find a wide variety of restaurants, ranging from quick bites to luxury five-star dining. Fast food restaurants are less prominent in Quebec than in other Canadian provinces (see Figure 1).

Figure 1. Population Size and Quick Service Restaurant Establishments in Canadian Provinces

Source: Author generated graphic based on data from IBIS World QSR Review.