How Costco Execs Plan to Overthrow Fast Food With The Organic Coup

Coming Up Costco

Costco first introduced organic milk in 2003, and Welton was the one who brought the item into stores. She spent the next 12 years turning Costco into the nation's top organic food retailer, eventually wielding so much influence in the organic world that she could convince corporations to develop exclusively for Costco. It was at Welton's request that Lay's created its first organic potato chip, and why Hidden Valley removed MSG from its Costco ranch dressing.

It's safe to say she's a big deal, which is why Hoover needed no persuasion to sign on to the project. Welton approached him with the idea for The Organic Coup just as he was retiring from his position as senior vice-president for Costco's Bay Area region. After 33 years at Costco, during which time he oversaw $11 billion in business and 15,000 employees, Hoover knew the score. "It was Erica's vision from the start," Hoover told Eater. "She's an unbelievable businessperson."

Each now play to their strengths, with Welton driving the organic and food aspect, while Hoover focuses more on operations. But it's with "the Costco way" in mind. "That Costco mindset — whether it's on the quality of the product or rewarding our employees with the right wage or driving volume and being the most efficient that we could possibly be — all of that went into the thought of this business," Welton told Eater.

Creating a Concept

The idea for a cleaner fast food option first occurred to Welton in the standard entrepreneurial way: identifying a hole in the market. "Having kids, our house over the last 10 years transitioned to the point where 80 percent of our house is organic. I just look for clean food. I travel around with prosciutto and almonds in my pocket just to have clean snacks," Welton said. "I realized, 'Wow, there are other people like me. Where are they eating?'"

Welton was in the perfect place to see how much people were willing to pay for organic. "People started speaking with their dollar more and more [at Costco] to the point where we were up over 100 percent [in sales in the category]," she said.

With this knowledge in mind, Welton attacked how to best plug that hole. "Fried chicken sandwiches were so popular, between Chick-fil-A, Fuku, Shake Shack, Bakesale Betty. Between 2014 and 2015, it was kind of like 'the item' of ready-to-eat food," Welton said.

With a "clean" concept, fried chicken may seem an odd choice over the healthier grilled, but Welton insisted on it. "I wanted to offer something people can't get everywhere and don't make at home for themselves. Grilled chicken just doesn't seem special. Not that we wouldn't ever have it, but it is not something I would expect to be center stage," she said. "I wanted to serve food that tasted awesome — and oh by the way, it happens to be organic."

Making the Menu

With fried chicken decided upon, Welton set out to make the best version possible, enlisting a consulting chef in Florida (whose name she is keeping private, though she chose him for his "high-end background and experience with fried chicken"). "The fried chicken is our organic diva," Welton said, so while she developed a lot of the other items, like the sauces, herself, she felt it was necessary to bring in a chef to find the right breading and seasoning ratios.

Welton and Hoover recognized they had to keep the menu simple in order to gain organic certification, so once they had the right main item, they stuck with it in three different variations: a sandwich with slaw, a wrap with slaw, and slaw salad. The slaw has cabbage, carrots, jalapeño, and red onions. There are a lot of ways to customize with the sauces — ranch, sesame ginger, spicy barbecue ranch, and mustard vinaigrette — that Welton said gives people "a different eating experience every time."

The menu in full. | Photos: The Organic Coup & Patricia Chang

The only other item on the menu (besides organic drinks sourced from outside vendors) is the chocolate caramel popcorn. It's incredibly simple compared to the myriad of options available at McDonald's or Chipotle, but "our menu is our business plan," Hoover said. "The only reason we're sitting here is because that sandwich is delicious." Welton has already experimented with adding dishes — tater tots are at the Pleasanton store and will come to SF in a few weeks, the SF location is debuting with a tofu option, and a breakfast item will be added to both stores come June.

The menu may be short, but developing it was not. Take just the ranch sauce, which Welton said was the hardest item to develop. She recognized that the flavor had to compete with the category leader, which is Hidden Valley. "When people think ranch, their mind immediately remembers Hidden Valley. Because Hidden Valley ranch has MSG, and that chemical in it kind of imprints on your mind that taste, that eating experience," she said. "We wanted to deliver that level of quality and not disappoint people." Some of the ingredients used to mimic the flavor include kombu extract and shiitake extract.

Sourcing Suppliers

With a concept basing itself on being organic, finding the right suppliers was essential. Welton wanted them to not only be organic, but also local. With that in mind she wielded her strong influence from her Costco days to get top organic suppliers to develop product specially for The Organic Coup:

• The chicken: Mary's Air-Chilled Organic Chicken. Mary's chicken is sweeping the nation, seen with increasing frequency on restaurant menus and in Whole Foods. Rather than chill the chicken in chlorinated water, which is how most chicken producers do it, Mary's chills the chicken in a refrigerator. It also kills the chicken in a less stressful way than standard industry practice.
  
  For Welton, Mary's (located in San Joaquin Valley) started raising five-pound chickens, which created the perfect size breasts for her chicken sandwich, once cut in half. "She helped get our chickens in different marketplaces," Mary's Northern California sales representative Dan Sinkay told Eater SF as to why Mary's went through the extra effort for Welton.



The Hodo Soy tofu patty

• The tofu burger: Hodo Soy. Right here in Oakland, Hodo Soy is used by many local chefs like Corey Lee and Daniel Patterson, as well as national brands like Chipotle.
• The bun and wrap: Best Xpress. "I had executives from Bimbo bread company, which is the largest bread company in the U.S., come in and ask, 'Who is doing this bread because your bun is awesome,'" Welton said. That company is Best Xpress, which — surprise — developed the bun and wrap for Welton after supplying bread to Costco for the past 30 years.
• The tater tots: Cascadian Farm. This all-organic farm in Washington supplies the frozen product for the soon-to-come at all locations tater tots. Suppliers for this product will be switching up over time.
• The produce: Bay Cities Produce. "I was nervous about the produce, of course, especially after Chipotle," Welton said. But Bay Cities Produce "not only tests the produce that's washed, but they also test the water that the produce is washed in, and they have a lab in house where they're testing every production line," according to Welton.
• The popcorn: Popcornopolis. The variety of popcorn The Organic Coup uses from this Los Angeles-based company is coated in caramel and drizzled with white and milk chocolate, plus the SF store now freshly pops some with sea salt.
• The oil: Nutiva Refined Organic Coconut Oil. Though this is the most expensive oil Welton could use, she insisted on it for its clean flavor and nutritional benefits.

Pushing Paperwork