Nothing fresh under the sun - the decline of Element Fresh

Once the go-to place for salads and eggs Benedict, after close to 20 years at the top of the market, the buffet chain has failed to embrace food deliveries and struggled on social media.

By LU Yibei


When news came out that the healthy eatery Element Fresh had filed for bankruptcy, old customers took to social media to reminisce about the good old days when the restaurant chain was the only place in Shanghai to get a tuna sandwich or cobb salad. Those halcyon days were back at the beginning of the century, and Element Fresh had a bright future ahead of it. For the next 15 years, the restaurant championed healthy eating to China’s increasingly cosmopolitan urbanites. Restaurants fail all the time but few evoke the same kind of bittersweet taste as Element Fresh.

Blame the pandemic

In a statement released on December 20, Element Fresh said financial burdens had become too much to bear. It has closed several restaurants and would “continue to review its business and take appropriate actions over the next few weeks.”

During an interview with podcast China Paradigm in July, Element Fresh founder and president Scott Minoie admitted that his restaurant had been slow to recover from the pandemic. Once out of quarantine, he said, people were eager to try new food, while Element Fresh, 20 years old with a “habitual customer base,” struggled to get its old fans back. “Established companies are more concerned about disruptors,” he said.

Once upon a time, Element Fresh was a disruptor itself. Almost immediately after its first restaurant opened in Shanghai in 2002, it was the talk of the town. Not only was the food ‒ salads, sandwiches, brunches ‒ unlike anything to be found at a typical Chinese restaurant, but the whole experience was novel. Customers could see their food assembled in an open kitchen. English-speaking servers swung by to ask, “Is everything OK?”

Behind the theater was precise operational management and quality control. Element Fresh built central kitchens and made sure that each penny and every ingredient was accounted for. By 2011, it was operating above 10-percent margins and was well on its way to expanding to 40 stores nationwide. Another period of growth followed in 2015 when the chain retained tennis player LI Na as brand ambassador. That coincided with the rise of fitness culture in China. Element Fresh scouted for prime locations and opened another 50 stores. Then the pandemic hit.

Although the pandemic has certainly played its part, there is no getting away from the fact that business was already in decline. The food industry was being redefined by social media. Deliveries became the mainstay of the business. Elements Fresh’s whole appeal was based on the restaurant experience, something that does not transmit well to an insulated box on the back of an e-bike.

It was Minoie himself who said that twenty years in China was ancient history, but Element Fresh is still dishing up twenty-year-old favorites such as Caesar salad, at fine dining prices. Minoie argued that menu innovation had to be reconciled with supply chain efficiency. It was no use, he said, to invent a pasta sauce so exquisite that no line cook could make it.

But the reality is that hits are hard to come by these days, even compared to five years ago, and complaints have cropped up, mostly related to Minoie’s hallowed supply chain. Availability of customer favorites became erratic and there were ironic complaints about a lack of freshness. 

The washed-out leader who walked behind

In the past year, Element Fresh posted 9 times on Weibo and 26 times on WeChat, less than what many of its competitors post in a week.

“A restaurant may seem to collapse overnight, but it’s the result of years of negligence and mismanagement,” said JIANG Liu, a food industry veteran. “Many don’t pay enough attention to the market.”

Preoccupied with prime locations and foot traffic, Element Fresh to this day refuses to pay fees and commissions to food delivery apps, which cover a much larger radius than its own delivery staff. Minoie said this was to guarantee a better customer experience, but in an age when online appearance is paramount, Element Fresh simply is not attracting enough of the right kind of attention.

“Food businesses today can no longer live in their own echo chambers and do things the old way,” Jiang said. “We need people with cross-industry experience to attract customers and build brands.”

Unhealthy trend

This has become more difficult, not least because healthy food seems to be enjoying a boom in China. The number of healthy restaurants on the food delivery platform Meituan increased 27 percent year on year in the second half of 2020, with orders up 50 percent.

Those in the mood for splurging have more glamorous options, even within the genre of healthy food. With cheaper and more convenient choices, an office worker is unlikely to ditch a 30-yuan convenience store bento box for a 100-yuan plate of leaves just because “you are what you eat.” 

As coffee chains and fast-food brands carved out shares of a growing market, Element Fresh clung to the glories of twenty years ago, oblivious to the forces shaping the market today. It became the old story of the once pioneering advocate that ended up being the washed-out.

With cheaper and more convenient choices, an office worker is unlikely to ditch a 30-yuan convenience store bento box for a 100-yuan plate of leaves just because “you are what you eat.”