Is the Responsible Food Trend Sustainable?

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More Americans are interested in responsible food.

On a warm summer afternoon at Bi-Rite Market’s Mission grocery store, customers stand elbow to elbow, jostling for space while balancing shopping baskets laden with fresh produce. The line to the cash registers stretches past the charcuterie counter, around a display of artisan chocolates, with a slight zag right by the freezer section, filled with Bi-Rite Creamery’s popular ice cream.

Even by San Francisco standards, the store is a crush.

Bi-Rite’s Mission site, a block from crowded hipster haven Dolores Park, was the first of now two locations, and the grocer’s focus on locally produced, socially responsible goods has been a hit with the foodie-friendly Bay Area.

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iStock/RBOZUK

Business partners Sam Mogannam and Calvin Tsay, a 1997 MBA graduate of Stanford GSB, are part of a booming trend in premium, natural foods, whose biggest players include Whole Foods and Sprouts Farmers Market. Retail specialty food sales jumped 19% from 2012 to 2014, according to a 2015 report from the Specialty Food Association. That compares with a 2% uptick in food sales overall.

Tsay, who joined the company in 2006, discusses the decision to open the second shop, growth in the industry, and why the responsible food trend isn’t simply a fad.

How do you define Bi-Rite to out-of-towners?

Bi-Rite started as a neighborhood market, but we see ourselves as a San Francisco-based food company. My business partner Sam Mogannam’s dad and uncle took over Bi-Rite in 1964. It stayed a single store and then Sam took it over in 1997. And now we have two markets. (Also under the Bi-Rite name is a catering company and the creamery, although each is a separate business entity with different partner owners.)

We focus on local food, traditional food, and responsible food, but it’s about more than food. Our goal is to create community through food. We’re creating honest, sincere, engaged, deep relationships with our entire community. Our staff members are people who grow, make, and craft our food. Our storefronts improve the neighborhoods.

How did you come on board?

Cooking has been a lifelong passion. I was watching Julia Child when I was just a kid and her shows were still in black and white. When I went to work for Chip Conley, founder of Joie de Vivre (a hotel and restaurant company), I was the general manager there and Sam was the executive chef. He left to take over the family business. In 2003, Sam and I kind of reconnected and I started doing a little work for him. We definitely saw potential for something bigger.

How has it changed since you joined?

We’ve grown pretty rapidly over the last few years. We opened up the second market (on Divisadero Street) in 2013. In the summer of 2012, we were 150 people. Now, we’re a little over 300.

What drove that decision to launch the second market?

A large factor involved creating another business so that our managers could grow. One of the things we feel strongly about is having a business where one has a career. The family had actually considered a second market probably a little earlier. I think we could see the demand was there.

The specialty grocery market is booming. What’s been the biggest change you’ve seen since coming on board?

The entire community has changed. Our guests were the ones asking us for products like pasture-raised eggs. That was something that wasn’t really on the scene, and now everyone has pasture-raised eggs. It’s also really exciting to see how many people want to be artisan farmers, ranchers, food makers.

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Shana Lynch

I think we’re going through a renaissance in how we see food. The industrialization of the food business is a recent phenomenon. But if you go back to our parents or grandparents, this is how they lived, this is how they ate. If they needed a butcher, they found a butcher. And Sam the Butcher bought food from John the Rancher. They didn’t go through the big, billion-dollar food companies. There was a relationship — a direct relationship between the people who grew the food and the consumers. It was a very direct link but that link fell apart. Hopefully, it’s coming back.

Is this a fad? Will people go back to the billion-dollar behemoths?

Unfortunately, there has been a culinary illiteracy, where we just haven’t been paying attention. Cooking and learning about food used to be life skills that passed from one generation to another. That stopped happening a couple generations ago.

But I hope this new interest isn’t just a fad. I hope that people realize the connection between how good food is grown and our environment and that what goes into our food impacts our health. I think there’s a general trend that people want to know what’s behind the labels.

Is that a San Francisco Bay Area interest, or does it extend nationally?

I was at The Good Food Awards (a San Francisco program celebrating American food producers), and I distinctly remember there was a coffee roaster from Alabama — a single merchant coffee roaster buying beans from all over the world.

He told me that he was at a farmers market when he was just starting out and selling his coffee. He said that this good old boy with a corncob pipe came up to him and said, “Let me buy your coffee.” And they were talking about Guatemalan coffee, Ethiopian coffee, what have you. The guy wanted good coffee. So hopefully, it’s not just in areas like Portland, Brooklyn, and San Francisco.

Can these businesses scale?

We belong to an association of retailers called INFRA. It stands for Independent Natural Foods Retailers Association. I’ve gotten to meet people from all over the country. Down in San Diego, you’ve got Jimbo’s. In Santa Cruz, you’ve got New Leaf. There are small ones; there are midsize ones. I’ve met people, and they’re running successful, thriving businesses all over the country. The membership in the association itself has grown. I don’t know the exact numbers. I do know people are spending more on organic foods. I see that in acquisitions. General Mills bought (natural food company) Annie’s. Hormel acquired Applegate, which is a producer of natural, organic hams and charcuterie.

In grocery retail, margins can be tight, especially if you’re buying local and organic products. How do you stay profitable?

Through a lot of work. It’s also sourcing appropriately, having the distribution for something that allows for efficient transportation of the goods, and it’s also as a society, having an understanding of how much food costs. Michael Pollan in The Omnivore’s Dilemma talks about how food spending has gone down as a percentage of the GDP, while medical expenditures have gone up. That’s something that we have to address. In other countries, more of the budget is spent on food.

It’s also about building relationships. We have everyone from first-time cooks to San Francisco chefs shopping here, so we have to offer something for everyone.

Talk supply chain. A major supermarket has one truck come in that delivers all the produce. You have many more, smaller vendors. How does that work?

I’m not sure the number of checks we cut each week. It’s over several hundred. In the summertime, probably more than 70% of our produce comes directly from farmers.

We probably employ a lot more — our labor percent is much higher than your typical grocery store. It takes labor to have these relationships. We’ve got people who are ordering from all these farmers. It probably takes them a lot more time each and every day than the typical grocery store.

How do you define local?

We’re actually working on that. One of the things we are doing right now as a team is developing and documenting a product mission — we’re going through the process of how do we put down on paper exactly what we care about. How do we define good food?

We’re trying to support a responsible food ecosystem, and sometimes it warrants putting down a mileage counter. What’s the difference between 100 miles and 150 miles? How do we describe local, maybe in terms of the size of the producer? There’s a multitude of criteria when talking about good food, and local is just part of our discussion.

Your business is obviously beyond selling ice cream and foods. You’re also a producer, with a Sonoma County farm. How does that work?

We lease the land in Sonoma County. We tried eggs. They worked out well. We’ve got to do a second try. What was amazing was basically we didn’t have to buy any additional feed. We used the compost from the market to feed the animals, but they needed more protein.

The value of having the farm is that it’s another way for us to connect with what our farmers have to deal with each and every day. And it’s a great opportunity to bring the staff to work the farm.

You’re not the only business to try to go vertical — several restaurants have their own farms now. Is this the future?

We’ve talked about vertical integration and where it makes sense. Here in California we have to address land prices. But it’s also about expertise. We’re learning to be farmers. Our produce buyer is a former farmer. People are devoting their lives to learning their craft. So, maybe we have the right partners.

OK, last question: What’s your favorite ice cream flavor?

I love the malted vanilla. We also have a seasonal flavor — honey butterscotch, which is amazing. It’s like butter pecan. That was one of my favorite flavors growing up.