Not even David Segal could have read the tea leaves when determining what 2020 would have in store for his newest venture, the nearly three-year-old gourmet fast food chain Mad Radish. And as one of the founders of DavidsTea, Segal knows a thing or two about tea leaves.
With a stated food philosophy of “simple ingredients and big flavours,” the Ottawa and Toronto restaurant chain had been thriving thanks to its core customer base of Monday to Friday office workers. Mad Radish was conceived as a healthier alternative to standard lunch fare, with a menu built around sandwiches and salad bowls.
“We just felt there was a void in Canada for fast food that makes you feel good and tastes great,” said Segal. “Oftentimes, you have to compromise between eating bird food or stuff that’s going to leave you hungry two hours later, like a bowl of spinach, or food that’s going to leave you sluggish, like a burger.”
Segal business instincts proved correct, and Mad Radish restaurants, particularly those in locations saturated with government workers and office employees, were doing thousands of dollars in business each day, supplemented by healthy after-hours trade from some of its neighbourhood locations.
But then along came COVID, and with it an immediate halt to the lunchtime trade that was the foundation of Mad Radish’s business model. “It fell off a cliff very fast,” said Segal, who quickly closed two of the chain’s six restaurants. “We had a thriving office catering business doing thousands of dollars [of business] a day, and overnight it was gone. It’s not a good environment out there for restaurants, that’s for sure.”
But you learn a few things about navigating choppy business waters when you take a single-store location in Toronto’s Queen St. West neighbourhood and grow it into a $200 million a year company—as Segal did with DavidsTea—and Segal moved quickly to re-orient Mad Radish around the home delivery and pick-up models that he expects to sustain the restaurant industry for the foreseeable future.
While many brands, particularly those in the hard-hit restaurant sector, might be focusing on their short-term survival at the expense of big-picture thinking during the pandemic, Segal remains a proponent of investing in brand during a downturn. “I think it’s important to stay relevant and strengthen your value proposition,” he said. “Brands that hang in there and survive this and get better are the ones that are going to thrive on the other side.”
So rather than retreating, Segal and his team at Mad Radish plunged their time and resources into creating two new food brands to complement the original brand: Luisa’s Burritos and Bowls, offering hand-crafted burritos with internationally inspired ingredients; and Revival Pizza, which offers a “modern and creative twist” on pizza.
The company describes the model as a hybrid that brings together the functionality of a customer-facing restaurant and the “ghost kitchen” concept— a professional kitchen that prepares meals for delivery-only—that has come to prominence during the pandemic.
“We did not go into a corner to wait this out; we are full-steam ahead innovating the business and we think at the end of this we’re going to end up with an even stronger market position,” said Segal. “We’re going at it head-on, and innovating at a pace that is faster than it was prior to the pandemic.”
With the savviness of a marketing veteran, Segal describes the two new food brands as “made-to-order, but built to travel.” All three brands currently have their own storefront on Uber Eats, while Mad Radish has also launched its own app spanning all three brands that offers contactless pick-up. The percentage of people ordering via Uber Eats ranges from 30-60% depending on location, with bedroom communities, for example, tending to favour delivery over pick-up.
Mad Radish boasts the simple, clean design aesthetic that characterized DavidsTea, the company that Segal co-founded with his cousin Herschel Segal in 2008, and left in 2016.
It doesn’t have the ad budget of its would-be QSR rivals, choosing instead to use targeted social through channels like Instagram, complemented by some neighbourhood-focused out-of-home. “It’s a lot of community-centric advertising” using internal resources, he said.
Mad Radish co-founder Stephanie Howarth, who spent several years as creative director and head of retail marketing with DavidsTea overseeing everything from branding to tea naming to copy and social media, has taken a similar role with Mad Radish. “We know how to design brands and turn out campaigns,” said Segal. “It’s just something we’ve learned how to do.”
The plan is to carry the online storefront brand approach forward, saying it’s a reflection of how the restaurant industry was already being gradually transformed by the growing popularity of delivery even before it was upended by the pandemic. “[Online delivery and pick-up] changes the economics of the business, and we just think we have a more robust model right now,” he said. “I’m sure we’ll be tweaking it, but for now this is the plan.
“We’ve done some serious innovating that I think will benefit us. We’re going to end up with new areas of business we didn’t have before, and hopefully some of the old ones come back.”
At the same time, however, Mad Radish also plans to move ahead with the opening of a seventh brick-and-mortar location, a neighbourhood-type spot in Ottawa’s Barhaven neighbourhood, early next year. “We want to be the leaders in gourmet fast food, and we think it’s going to have a place during the pandemic, after the pandemic and well into the future, and we’re focused on communities where we think it’s going to resonate,” said Segal.
Segal is candid when asked about his personal ability to adapt and thrive when faced with significant business challenges. “I wouldn’t have asked for this, but entrepreneurship in many ways is a personal pursuit described as a business pursuit,” he said. “You are able to grow as a person if you embrace some of the challenges that are thrown at you. I think this is an opportunity for our business to evolve, but also for me to personally evolve.
“It requires new ways of thinking, new mental stamina and new management skills,” he added. “It’s a very difficult situation and one I’ve never faced in my career. My hope is that I come out of this stronger. I don’t know what that’s going to look like right now, but I’m not afraid to take it on.”