HACKING AWAY

Big Meat: The indie butcher business grows up

There are two Danny Meyers. There is the ground-breaking restaurateur who opened Union Square Cafe, a restaurant that held the title of New York’s favorite for the better part of a decade, in his early 20s. And then there is the founder of Shake Shack whose fast food empire doubled in value when the IPO launched late last week. Meyer, already a wealthy man from his many successful fine dining restaurants, holds a 21% stake in Shake Shack that is now worth roughly $330 million.

The path from elite restaurant to premium fast food was laid over 20 years as Meyer expanded from Union Square, up Park Avenue and then over to Madison Square, the site of the hot dog cart that became the first Shake Shack. Along the way, Meyer’s Union Square Hospitality Group started Gramercy Tavern, one of New York’s first farm-to-table restaurants that used the volume and purchasing power of the restaurant in back to develop a tavern up front where small dishes were served to diners looking for a more casual, affordable version of the farm-to-table experience.

The success of Shake Shack’s IPO, the acceleration of Chipotle’s sales, and the growing number of imitators in the fine casual category who understand that customers equate sustainable agriculture with better taste is putting more and more pressure on the American food chain to harness small-scale farming.

Ground-breaking restaurants can be crucibles where converts are made on both sides of the swinging door. Gramercy Tavern taught Danny Meyer that his service-centered approach to fine dining could be scaled toward no less a fast food staple than the burger. Others have also learned the lesson of scale and looked toward making the same declension in other parts of the food chain.

Behind the counter

What Danny Meyer was to farm-to-table restaurants in New York City, Josh Applestone was to grass-fed, organic, pasture-raised butchers. Trained in the first wave of restaurants that put ingredients before process, Appleton eventually found his way to becoming a butcher through his experience breaking down animal carcasses in the kitchen. A vocal, visible and entertaining figure—he had a starring role in Julie Powell’s memoir, Cleaving, that followed up her Julie & Julia book and movie hits—Applestone became the face of the artisanal meat movement when he opened in 2004 his Hudson Valley-to-Brooklyn butcher shop, Fleisher’s.

Applestone also initiated a host of hipster butchers into the mysteries of his craft, housing them in an Airstream trailer on his property, before leaving Fleisher’s last year to focus on his own sustainable second act, The Applestone Meat Company.

These apprentices went on to found similar joints to Fleisher’s where the food has a long backstory and a short shelf life. Many of Applestone’s graduates chose to open outposts in hipster enclaves in smaller cities around the country.

It turns out the challenge facing the meat business doesn’t come from the consumer side. Americans like meat. They didn’t need a primal food craze to convince them of that. But in places where the animals don’t come with a provenance, the butchery trade doesn’t attract new entrants because the labor economics just plain suck.

In Minnesota, where there are 280 indy meat processors, a skilled butcher makes $23-an-hour, but the supermarkets and national chain retailers only pay $8-an-hour. Not surprisingly, those wages don’t attract many ordinary young folks to want to pick up a knife and learn this highly technical (and dangerous) skill.

In Minnesota, husbandry still attracts many small producers. The USDA says the land of 10,000 lakes has 4,000 farms raising and slaughtering fewer than 10 cows a year. Those 4,000 farmers from Duluth, Fargo, St. Cloud and Wisconsin, go to a guy like Whitman Baird, a rare 34-year-old in the butchery business in Minnesota who makes most of his money servicing these small farmers and, one whole month out of the year, breaking down deer for the Cabela’s set.

“Most of our business is custom cutting,” he said. “A farmer raises three beef; they put one in the freezer, give each a half to their kids for Christmas; the neighbors buy one.”

And that business is booming. “Especially in the fall time,” he said. “Everyone wants to fill the freezer.”

The alternative meat industry needs better infrastructure. Even in the heart of the craft food industry, the Bay area, small producers are not plugged into an effective distribution network. There are broken links in several places.

Restaurants and butcher shops take animal carcasses whole, in halves or quartered. But, as the food site Civil Eats pointed out two years ago:

“As of February 2013, there is not a single meat processing facility in the Bay Area that will deliver a whole, half or quarter beef carcass to a restaurant or butcher shop. Ranchers aren’t really equipped to make the deliveries themselves. One needs a refrigerated box truck with a meat rail inside of it—something that very, very few ranchers have. Same for restaurants and butcher shops—most chefs and butchers are not in the business of going out and picking up the products they purchase, particularly large bulky items that need to be kept cool at all times.”

Reforging these broken links in an economically viable, even attractive way is the focus of a number of these second-act butchers. The New Yorker recently profiled Anya Fernald of Belcampo, a $50-million venture-backed, vertically-integrated, farm-to-table sustainable meat company in California. Belcampo is built on a very California lifestyle appeal driven by the Paleo diet and its exercise-cult adherents who are part of the Crossfit craze.

One reason that Belcampo is vertically integrated is to counter agribusiness, which has been too successful in the US. Fernald’s vision is to create a company that can control every aspect from pasteur to plate to capture every dollar of margin in what amounts to a high-end business for lifestyle consumers.

Belcampo, which has its offices in Oakland, California, and its core landholdings near Mt. Shasta, owns a farm, a slaughterhouse, restaurants, and butcher shops, and grows most of its own feed. “Tyson figured out that vertical integration is the key to profitability,” Fernald says. “That’s the same thing we’re figuring out.”

Tyson, the apogee of the industrial meat system, was founded during the Great Depression and succeeded in making meat plentiful, cheap, and commonplace. Belcampo, born in the teeth of a historic drought that is devastating California agriculture, in a country flooded with $3-a-lb. skinless, boneless chicken breasts, wants to restore meat to its status as a luxury: delicious, expensive, and rare.

Back east in Connecticut’s Tesla towns, Ryan Fibiger is perfecting his own formula for his Craft Butchery in Westport. “I came into this with a finance background but quickly became passionate about butchery,” says Fibiger. “I discovered that this is an incredibly complicated business. To do it right has taken us almost four years to figure out just what the actual business model is.”

Fibiger trained at Fleisher’s and first opened a new-look butcher shop in a town where higher price points tend to attract the customers rather than drive them away. Understanding that he was as much in the education business as he was a purveyor of meats, Craft Butchery eventually opened a cafe next to the shop to feature prepared foods and let his potential customers experience their better meat before buying their own cuts and bringing it home.

The danger in an upscale town where homes have $100,000 kitchens that mostly hold take-out containers and prepared foods is that the restaurant business—where the margins are higher—will overwhelm the butcher shop. Fibiger is on guard against losing his focus. At Craft, he says, they lead with their core product, the meat.

“You look at the menu,” Fibiger says, “and you can see that there’s a conscious effort being made to use what’s not selling in the meat case. If we were to conclude that we could make more money selling a ribeye through the cafe than through the meat case, that would be an internal problem. But we never sell items like that through the cafe. That’s the way we differentiated it so you’re not robbing Peter to pay Paul.”

Integrating small-scale producers with the large market that craves their products turns out to be a terribly complicated business. Fleisher’s success—and the many other craft butchers around the country—is encouraging more to engage in animal husbandry as an avocation or a hobby. But the meat produced doesn’t have to be ostentatiously expensive. In fact, it can’t be if someone like Fibiger hopes to create a business of meaningful, not local, size.

Nose to tail to truck

To do that, a middleman like Fibiger has to crack the nut of logistics. “We absolutely need to gain control over our supply chain,” he says, “to gain operational efficiencies and economies of scale to make our unique product accessible to a wider group of customers and demographics. The catch 22 is that the process of bringing local, humanely raised meat to market is expensive and requires some scale in order to control the costs.”

To get to that size, Fibiger has merged his business with Fleisher’s, gaining two stores and a Red Hook processing facility. He’s also signed on a location in another Connecticut town, this time Greenwich. The new chain of four locations will be Fleisher’s Craft Butchery and now all Fibiger has to do is bring both ends back toward the middle.

Like Danny Meyer, Fibiger is looking to grow without getting overwhelmed by success or become just another food chain. Demand for Fibiger’s meat is a double-edged sword. “Other than the obvious affirmation that there is a sizable market for our product,” he says, “there are some negative impacts that we’re witnessing. Namely, the more mainstream something becomes, the more confusion there is about who the experts are, who is authentic and who is just on the bandwagon.”

In other words, it’s not enough to be a hipster butcher anymore. The industry has to grown up. You have to create a broader footprint, build efficient logistics beneath it and provide the air cover of a strong reputation. “One of the reasons Craft sought out a merger with Fleisher’s,” Fibiger explains, “was because we saw a our niche marketplace starting to cut corners and emulate the efficiencies of big agriculture. That’s not what we want our niche to represent and we think it actually serves to dull the differentiation that we’ve spent years creating. At a relatively young 10 years old, Fleisher’s has led the charge in our niche market and still represents the standard.”

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