Freshii's CEO Says McDonald's Franchisees Want to Open Healthy Shops Inside Fast-Food Restaurants
The CEO of healthy restaurant chain Freshii has an offer for McDonald's that he believes the fast-food giant can't afford to refuse.
Last week, Matthew Corrin released an open letter addressed to Steve Easterbrook, McDonald's CEO, challenging him to allow Freshii to co-brand a McDonald's location. The move, he said, would pay for itself, increasing sales by 30 percent and boosting annual profits by $250,000.
"My promise: If after one year Freshii in McDonald's has not improved your sales and profits, I will refund you the difference," Corrin wrote. "I'll assume all the risks to prove my theory that fast food and fresh food can coexist, to the benefit of all."
Corrin was inspired to throw down the gauntlet at McDonald's nearly six months ago, as he was reflecting on Freshii's mission to make healthy food accessible and affordable in late 2014. One way to accelerate Freshii's progress, he realized, is to tap into a supply chain and real-estate footprint: two areas in which McDonald's can beat anyone in the business.
"McDonald's is a brand that, if they wanted to materially impact citizens' health and wellness, which is, we know, an epidemic around the world… [they] could fundamentally change that," says Corrin. "So I started to think about, why haven't they? It's not for lack of effort."
While critics have slammed McDonald's for a lack of healthy and vegetarian options -- two areas in which Freshii excels -- the chain has put salads and other healthy offerings on the menu many times but failed to grab customers' attention. Corrin says that McDonald's methods have been flawed, as their offerings have failed to innovate and customers continue to see the chain as a burger-and-fries joint. This is where he believes Freshii could be of service to the fast-food giant.
Freshii, which Corrin founded in 2005, currently has more than 160 locations in 13 countries, with 150 new locations planned this year. The chain sells customizable salads, wraps, quinoa bowls and juices and only needs about 150 square feet for a location. Freshii's small size is, according to Corrin, key to the partnership's potential, as McDonald's typically generous seating areas could accommodate a Freshii outlet in about 75 percent of restaurants in the U.S.
Corrin believes that by opening Freshii locations inside McDonald's, the cobranded restaurants could bring in a whole new sector of customers. While he admits that the small number of McDonald's customers who buy salads would likely switch over to Freshii offerings, he says McDonald's sales would still increase due to new customers: people, such as parents picking up dinner for their kids, who typically visit McDonald's without buying any food for themselves and customers who would typically never venture inside a McDonald's. Meanwhile, Freshii would benefit from McDonald's convenience and huge supply chain.
Corrin waited to release the letter as McDonald's promised bold changes under new leadership in the early months of 2015. When the brand's much-hyped turnaround plan, released in early May, failed to provide concrete plans to radically refocus on health, Corrin decided to take action and release the open letter to Easterbrook.
McDonald's has not yet responded, but Corrin says that franchisees are already hungry for a cobranded location of their own. In just two business days, he says he was flooded with inquiries from McDonald's franchisees, as well as franchisees from other fast-food chains, eager for a no-risk profit boost thanks to Corrin's promise to refund any difference if sales fall short.
McDonald's did not respond to Entrepreneur's inquiries, but it seems unlikely that any franchisee would be allowed to open a co-branded location without corporate approval. McDonald's relationship with franchisees has been rocky in recent months, as aspects of the chain's turnaround plan – such as the drive-thru unfriendly Create Your Taste customizable burger platform – failed to resonate.
As McDonald's tries to revamp its reputation, testing cobranded locations could be a blessing or a curse for the chain. Previously, McDonald's has at times attempted to adopt a rebellious, back-to-basics image that emphasizes fundamentals like burgers instead of paying lip service to healthy (and trendy) foods like kale. Plus, Freshii's decade in the business and 160 locations can seem like a blip on the radar compared to McDonald's 75 years and 36,000 locations.
However, the chain's turnaround plan is now centered on becoming a "modern, progressive burger company." Freshii, a self-described millennial-centric company, has built progressive leanings into its core message – something that would ideally rub off on McDonald's if a partnership ever happened.
Corrin believes that if McDonald's executives don't start taking major action the company's stagnation will only get worse. A focus on health, he argues, is not only ethically necessary, but what customers demand.
"I think and I hope that my open letter precipitated discussion and bigger and bolder thinking, outside the box for health and wellness for these brands," says Corrin. "I can tell you I have been contacted by other big retailers in response to this letter who have shown interest."