After filing for bankruptcy, One Table Restaurant Brands CEO Harald Herrmann believes Tender Greens and Tocaya Modern Mexican brands still have growth potential ahead—either as sister brands or separate chains.
The Los Angeles-based parent company One Table filed for Chapter 11 bankruptcy protection on July 17 and the two fast-casual brands are for sale as part of the process, including the 24-unit Tender Greens and 15-unit Tocaya.
The two were combined in 2021 in a move designed to leverage the benefits of a shared platform as both brands attempted to recover from the “catastrophic” impact of the pandemic. And that shared platform strategy was working, Herrmann said—although not well enough to overcome the sharp rise in interest rates on debt that that became too much to manage, the company laid out in court filings.
In an interview with Restaurant Business two days into the bankruptcy process, Herrmann said both brands have been rebounding, especially Tender Greens, which has seen the average unit volume climb from a pandemic low of $2.3 million to $2.9 million last year. That compares favorably to competitors like Sweetgreen ($2.9 million), and Cava ($2.6 million), according to Restaurant Business sister brand Technomic.
However, Tocaya has more work to do, he said. AUVs last year were $2.1 million, which was even lower than the average in 2020 of $2.3 million.
Both brands had an AUV of $3.5 million in 2019.
What both Tender Greens and Tocaya need now is “capital to put into a refresh where appropriate, and into technology where appropriate, and most importantly new restaurant growth,” he said. “Both brands, I think, are growth brands.”
Tender Greens was founded in 2006 by chef Erik Oberholtzer and two restaurant industry friends who wanted to create an affordable concept that offered the kind of food they liked to eat. The focus is on quality ingredients, like organic greens, grass-fed beef and heritage pork.
In the early days, for example, the vaunted produce supplier Scarborough Farms in Southern California was an equity partner, and Tender Greens was one of the first chains to experiment with hydroponic farming, growing lettuce in shipping containers or sometimes even on its restaurant patios.
In 2015, restaurateur Danny Meyer’s Union Square Hospitality Group made a significant minority investment in the chain when it had only 18 units, with plans to bring the concept to New York. That happened in 2018, though the two units in Manhattan later were shuttered during the pandemic. Now the chain operates entirely in California.
Tender Greens’ menu is built around build-your-own plate meals, with proteins like Chipotle BBQ Chicken, Grilled Steak or Seared Tuna, with various greens, sides like mashed potatoes or seasonal vegetables. Salads and sandwiches were also a cornerstone, and, more recently, the chain added bowls, like the new Longevity Bowl with black lentils cooked with dried pears and fennel, roasted cauliflower, purple potatoes, arugula salad and either roasted maitake mushrooms or grilled salmon.
Herrmann said Tender Greens units in Southern California are currently outperforming their fast-casual peers on both same-store sales and traffic. In June, the chain rolled out new summer LTOs by longtime Executive Chef Oliver Plust, like a summer harvest salad with stone fruit, blackberries, pistachios, goat cheese, caramelized onions, baby lettuces and a golden balsamic vinaigrette, and a California Bowl (with salmon or chicken) with roasted corn salsa, cilantro brown rice, cabbage slaw, queso fresco, pepitas and lime crema.
“We have a way to go still to recover from Covid,” he said. “Our mark is to get Tender Greens back to $3.5 million AUVs.”
Tocaya, meanwhile, was founded by restaurateur Tosh Berman, now the co-founder of the restaurant group Noble 33. It began in 2016 as a spinoff of the full-service Toca Madera with a Mexican menu and a California vibe positioned as healthful, with bowls, burritos and tacos and plenty of vegan options. It operates in California and Arizona.
When Tender Greens and Tocaya were combined, Tocaya had the attractive benefit of an exclusive agreement with Postmates that promised a guaranteed income stream of about $12 million. But that agreement turned out to be a thorn in the brand’s side later, according to court documents.
The exclusive agreement was later terminated by Postmates without explanation, which was challenged by One Table. The parties later reached a settlement that reduced the sales guarantee to $5 million, according to court documents. But then the delivery provider began discounting Tocaya’s menu heavily, a move that One Table argued was a significant driver of Tocaya’s post-pandemic struggles.
Herrmann, the former president of Darden’s Specialty Restaurant Group who also co-founded the Yard House chain, was tapped to lead One Table after Tender Greens and Tocaya came together under One Table.
He said the third-party delivery issue has been resolved amicably, and the partnership is no longer exclusive. But he said it will take some time for Tocaya to shake off the guest expectation of waiting for a discount to show up. Guest satisfaction scores, meanwhile, are the highest they’ve been in years, he noted.
“Our mark for Tocaya is, first, to have it swing back to a much higher number, but also to get it back over the $3 million AUV mark,” he said. “We have some work ahead to get them there.”
Fundamentally, Herrmann said lenders see One Table as “a good business with a bad balance sheet.”
He is optimistic that both Tocaya and Tender Greens are moving in the right direction.
The key is to “find a home for both brands, whether together or separate, but a home with the capital behind it to grow them and realize their full potential,” he said. “That is success at this point.”