Pure Foods Eyes San Diego for Low-Carb Markets

01/27/2004, by Larry M Edwards

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SAN DIEGO -- When talk turns to food these days, more often than not that talk is "low-carb." Short for "low in carbohydrates," low-carb is THE buzzword in diet circles.

And with nearly one in three Americans trying to lose weight, there's money to be made selling low-carb anything -- upwards of $15 billion are expected to be spent on low-carb products this year, according to an industry survey.

Hoping to cash in on this fad is Pure Foods LLC, which plans to open two retail stores in the San Diego area in the coming months.

"With $200,000 you can jump on the low-carb craze and open a Pure Foods low-carb market anywhere in the United States and Canada," trumpets today's press release from the Beverly Hills company.

Pure Foods, which opened its Santa Monica store last month and will open the Beverly Hills store next week, is now franchising the concept for rapid expansion.

Founded in November by former hotel manager Brad Saltzman and Stephen Bikoff, the company had planned to keep the California market for itself. But after receiving dozens of requests from people in California who wanted to purchase a franchise, they have changed their strategy.

San Diego was initially targeted for corporate stores, but because of the high interest level by potential partners, the stores are more likely to be operated as franchises.

But is the operative word "craze," which might quickly turn to "crash" as fickle American dieters move on to the next fad and leave Pure Foods franchisees holding the bag?

"This is not a fad," Saltzman said, contending that Pure Foods is a tremendous investment opportunity for the entrepreneurial-minded.

An estimated 42 million Americans are on a general low-carb diet, according to Valen Group, which conducted a survey that was presented at the LowCarbiz Summit conference in Denver last week. The survey also concluded that the $15 billion industry could easily double in sales by the end of the year, boosted by growth in the natural and organic foods sector.

It's this sort of news that puts Saltzman in pitch mode. "Our goal is to open a Pure Foods Low Carb Market in every major city in California within the next 24 months," he said.

The company is pumping an initial $5.5 million into developing its low-carb concept, Saltzman said. In addition to the retail stores, the company also has wholesale and catering divisions.

He described the stores as looking like a small Whole Foods Market, but where the Whole Foods emphasis is on organic foods, the Pure Foods emphasis is on low-carb. "We complement each other, and we will locate our stores near Whole Foods whenever possible," Saltzman said.

What's behind the low-carb juggernaut is the oft-maligned Atkins Diet. It was introduced by Dr. Robert Atkins more than 30 years ago, but it didn't really catch on until the late 1990s when a number of celebrities became converts.

The basic tenets of the diet are to limit the intake of carbohydrates and avoid refined carbs -- sugar and white flour -- while eating a balance of fats and a variety of protein sources, such as red meat, fish, poultry, eggs and tofu.

Low-carb, an Atkins off-shoot, is now all the rage. Restaurants, both conventional and fast-food, are touting low-carb menu items. TGI Friday's introduced low-carb menu in December, Burger King is introducing a bunless burger, and KFC is promoting low-carb (but not low-fat) fried chicken. On store shelves, packaged foods that proclaimed "low-fat" and "no-fat" and being pushed aside for "low-carb" and "no-carb."

The Pure Foods wholesale division will offer a variety of low-carb items, including eight frozen dinners, cheesecake and sugar-free barbecue sauce.

But the low-carb diet takes the Atkins diet a step farther, restricting the consumption of fruit and vegetables that have high carbohydrate and sugar content.

Which leaves some health professionals concerned that people won't get balanced diets. Ingesting high amounts of protein over a long period can cause kidney damage or bone loss, they say.

Dr. David L. Katz, professor at the Yale School of Medicine and author of The Way to Eat, cautions against diets that ban any food group. For example, during the low-fat diet craze of the '90s, fat-free sweets loaded with sugar became popular. People consumed large amounts of highly sweetened foods and many gained weight. Low-carb diets are taking us down the same road, he contends.

CNN's Dr. Sanjay Gupta has similar concerns. "These diets are low in fiber, which could be a problem in the long run," he said. "There is a very high drop-out rate, and after a year, the thing most people seemed to be concerned about is similar weight loss to a low fat diet. So there is not very much of an advantage there."

Saltzman said there will always be cynics and naysayers. "They're welcome to their opinion; I just don't think it's valid." He pointed to Harvard University studies that support the basic premise of the Atkins diet and have been critical of the U.S. Dept. of Agriculture's long-standing food pyramid that encourages the high consumption of carbohydrates and low consumption of fat.

"There's always somebody that's going to be cynical," Saltzman said. "Those people are not practicing a low-carb lifestyle, and they don't know enough about it."