This Is the Restaurant Shake Shack's Founder Says He Wishes He Created

If Chipotle is an upscale version of fast food, then Tender Greens likes to think of itself as an upscale version of Chipotle.

The California restaurant chain, which employs professional chefs to prepare locally sourced food at each of its 21 restaurants, symbolizes how far we’ve come from the olden days, when fast dining meant fast food. The rise of fast-casual restaurants such as Shake Shack (SHAK), Panera (PNRA) and Chipotle (CMG) — which place greater focus on quality but operate like traditional fast food restaurants in that customers order over the counter– means it is just as easy to grab a burrito bowl or a kale salad as it is to pick up a Happy Meal.

Tender Greens, which will celebrate its 10th anniversary on Friday, is betting there’s room for a more sophisticated layer in this fast-dining equation — it just needs to settle on the right name. At the moment, “what resonates most with us is ‘fine casual,’” says Erik Oberholtzer, the company’s co-founder and CEO.

The title may very well stick. It already has one powerful proponent behind it: “That’s what Danny’s been using,” Oberholtzer says. That “Danny” is Danny Meyer, the restaurateur behind Union Square Cafe, Gramercy Tavern and Shake Shack, among other establishments. Through his company, Union Square Hospitality Group, he invested in Tender Greens last year.

“It’s the biggest and only investment Union Square Hospitality has ever made,” Meyer says.

While the financials are important to Meyer — Tender Greens’ executives say annual revenue is growing 20% year-over-year and is in the neighborhood of $80 to $85 million — ultimately, the decision to invest came down to the quality of the food and its originality. “I wished I had come up with this concept myself. I’m ok that I didn’t, but I wanted to benefit from the opportunity to do something about it this way,” he says.

Creating craveable, ‘fine casual’ food

According to its CEO, Tender Greens aims to differentiate itself from fast-casual restaurants such as Chipotle, Panera and Chop’t with it’s “farm-to-to fork identity.” Each location employs a formally trained chef, and menus vary across each of its 21 locations. From the beginning, the chain has maintained direct ties with local farms and food suppliers.

“We wanted to bridge the gap between slow food, the high-end, very precious culinary philosophy of the Alice Waters revolution, and combine it with the efficiency and affordability of LA and the scalability of fast food,” Oberholtzer says. The category “didn’t exist in the accessible market.”

While Tender Greens’ serves salads, its most popular dishes — such as the backyard marinated steak and barbecue chicken, which cost around $12 — are heartier. According to Oberholtzer, the through line is creating “craveable foods” that taste like the dishes he and co-founders David Dressler and Matt Lyman served when they met working together at Shutters, the high-end, beachfront hotel in Santa Monica, in 2002.

tender-2 — Photo courtesy of Tender Greens

The strategy is propelling growth for the chain, says Elizabeth Friend, a consumer-food strategy analyst at Euromonitor, a market research firm. “It has all the convenience of Chipotle or a McDonald’s but you don’t have to make sacrifices on the food itself — it’s very much chef-driven.” The model’s success hasn’t gone unnoticed or unchallenged: Competitors, which including Lemonade, LYFE Kitchen and By Chloe, are carving out their own niches and expanding.

Friend says these restaurants are stealing share from higher-end eateries, a trend she sees continuing: “We feel good about giving it to our kids and ourselves, and we can be out the door as quickly as we need to be.”

Big Apple expansion

Tender Greens has strong roots in California, but the chain is eyeing an East Coast expansion.

“I think New York is going to be energized by Tender Greens,” says Meyer. “Shake Shack’s success in West Hollywood is an indication that quality is not temporal. If the quality and value and the experience is there, people are going to want it. I want to have that [Tender Greens] option for myself.”

The company has already compiled a lineup of Eastern seaboard farmers and fisherman, including suppliers to Union Square Hospitality Group’s restaurants. The final hurdle will be familiar to anyone who has moved to New York City: finding a suitable place to settle down.

Oberholtzer says opening that first New York City location is a priority but adds, “the real estate market there is overheated, in our opinion, so we’re being smart and strategic about where we go.” The chain expects to open two to three more restaurants by the end of 2016.

“It was always our hope to be in a position to move to the next level and roll out a national brand,” he says. “That’s what we’re gearing up for.”