Lyfe in the fast food lane: Alums pioneer a new type of restaurant

Lyfe Kitchen is the brain child of fast-food alums, but you won't find any soft drinks or French fries here.

Instead, customers order from a menu crafted by a former chef for Oprah and one who worked at Charlie Trotter's well-known fine dining restaurant, with items such as quinoa buttermilk pancakes and a vegetable chimichurri salad. Each dish contains fewer than 600 calories and 1,000 milligrams of sodium, with sandwiches around $9 and entrees north of $11.

Roots at McDonalds

LYFE Kitchen's iconic herb wall comes to life in the Tarzana restaurant.
LYFE Kitchen | AP
LYFE Kitchen's iconic herb wall comes to life in the Tarzana restaurant.

Although the small chain operates with fast food-like efficiency, its executives are betting on a different type of restaurant for today's taste buds.

"We agonize over seconds of serving the customer," said Mike Donahue, Lyfe Kitchen's co-founder and chief brand officer, about the company's 10-minute service goal (while that's slow for fast food, it's relatively speedy considering how much cooking occurs in the kitchen.)

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Still in its infancy, the restaurant has grown quickly since launching its first outpost in 2011 in California. Donahue spent two decades at McDonald's before leaving, and later partnering with the fast food giant's former global president and COO Mike Roberts, to create Lyfe.

Lyfe Kitchen's recent opening in New York City marks its 14th restaurant and first on the East Coast. As it expands, CEO and President Chance Carlisle said franchising presents "a significant opportunity" for the company, which so far has been deliberately shy about signing franchise partners and only has two now.

"Our unit economic model says we can build a significant number of units—in the hundreds," said Carlislie, adding that right now it's focusing on developing the concept and other revenue channels, such as grab-and-go items.

Currently, the company's restaurants are profitable, although he added that it is "still a little bit heavy" with 14 outlets in its overhead costs.

"For our next phase, it really comes to a question with our investors of how much capital do we want to raise and how fast do we want to move, and there's a balance between raising destructive levels of capital today at a lower valuation and really speeding up for an exit or taking a slow and steady approach," said Carlisle, who also serves as a vice president at his family's company, Carlisle Corp.

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As a large Wendy's franchisee, Carlisle Corp. is no stranger to the hospitality business. After it sold a large chunk of its units in June, it bought a minority stake in Lyfe Kitchen.

Carlisle said he sees more opportunity in the category that Lyfe Kitchen plays in—what Donahue terms "lifestyle"— than traditional fast food or quick service restaurants (QSR).

"Yes, only because traditional QSR has done an amazing job of cornering the market—it is an extremely difficult industry to break into because of their pricing power, their size, their scale," he said.

"People love their brands," Carlisle added. "They don't serve as many people as they do every day because people detest them…So to compete head to head with them is tough."

Still, Carlisle doesn't see his move to Lyfe as quite the radical departure that others do. "We're still in the great tasting hospitality business," he said. "The food is certainly more elevated and educated."

Just don't call it healthy. The chain tends to avoid using the "h" word for fear of turning some people off. Instead, it chooses to emphasize food education and taste.

"We knew that we could do a lot of different things, but if it didn't taste good, the customers wouldn't come back," Donahue said.