Peddling Healthful Street Food To Eco-Urbanites: Will It Fly?

By Thomas Heath
Washington Post Staff Writer
Monday, March 10, 2008; D01

Like lots of business plans, the one for a bug-like contraption
offering healthful food on the streets of Washington bubbled up from
some buddies kicking ideas back and forth.

As they mulled their quest for selling the perfect pizza slice on the
streets of Washington, Gabe Klein, who had worked for Zipcar, the
by-the-hour car rental company, began to think about other
possibilities. Pizza soon evolved into health food, and On the Fly was
born.

"People are used to a much higher quality street food experience than
you can get in D.C.," said the Connecticut native. "We looked at that
need and said that is something we can fill."

Klein, 37, and two friends founded On the Fly, offering locally
produced, good-for-you food in both mobile and bricks-and-mortar cafes
-- "smartkarts" and "smartkafes" -- that are showing up in downtown
Washington.

This is not your father's hot dog stand.

On the Fly says its target audience is the earth-loving,
health-conscious, exercising, frugal-but-affluent urbanite who lives
or works in downtown Washington.

Starting at a 2,500-square-foot central kitchen on Capitol Hill, On
the Fly creates a menu ranging from homemade hummus to a four-soy
salad with tofu and shiitake mushrooms. The macaroni and cheese
includes whole wheat pasta and low-fat smoked gouda. You can get
organic smoothies and fresh-cut pineapple, but there's no sugary corn
syrup in the house.

They also sell specialties from local restaurants, such as a chicken
barbecue sandwich from Rocklands on Wisconsin Avenue or a veggie
empanada from Julia's Empanadas in Adams Morgan. The bread is whole
grain, but good luck finding mayonnaise or butter to smear on it.

"It's Whole Foods meets 7-Eleven," said On the Fly finance chief
Michel Heitstuman, 48, an engineer who once worked for IBM and AOL.

On the Fly hasn't arrived without controversy.

D.C. Council member Jim Graham (D-Ward 1) voted to change the city's
licensing laws to allow On the Fly and similar businesses to operate
on the streets, which angered some vendors already doing business.

"I wanted to allow more creative vending opportunities," Graham said.

George Harrop, who started and sold a group of upscale espresso bars
in downtown Washington, said that aside from controlling costs, which
is the bugaboo of most food businesses, On the Fly must become
something special to its customers in order to be a success.

"The demographic looking for health food is looking for experience,"
Harrop said. "If they can provide that, they might have a chance of
success. But does the perception of health food fit with a truck on
the street?"

In this case, a truck that resembles a fly.

The "smartkarts" are electric vehicles built by a Chrysler division in
Fargo, N.D., and are specially outfitted with steam wells, holding
ovens and refrigeration so that On the Fly can serve hot food at
regular locations. Two are in service: the Diego specializes in Latin
food and is stationed at Eighth and H streets NW, while Smokin' Joe at
Seventh and F NW has a barbecue menu. A third vehicle, Ms. Miyagi,
will arrive later this month and offer Asian Fusion cuisine at a
location yet to be named.

The conventional cafes are above the Farragut North Metro station and
at the Results Gym on G Street SE.

Klein, Heitstuman and their partner, Christopher Lynch, 38, owner of
L'Enfant Cafe, divide up duties: Klein knows transportation and the
city; Lynch knows food; Heitstuman minds the money. They raised about
$1 million to get their business off the ground, including nearly
$500,000 borrowed from banks. The three partners chipped in $100,000,
and investors made up the difference

"I am in it for the long haul," said Jenny Crawford, a real estate
agent who invested in the firm because she said there's a niche for
good street food in D.C. "We have the option of reinvesting or pulling
out at the end of 2009, and then annually after that."

Heitstuman said the firm hopes to be cash positive this year,
depending on how fast it grows. The company, which employs 15, within
months plans to have eight food carts stationed around the city at a
cost of up to $40,000 per truck. A third cafe may open this summer.

There could be more after that, depending on revenue and demand. They
also have their eye on a spot somewhere near the new Washington
Nationals Park, the baseball stadium that opens March 30.

"Our business plan is to provide great food for people of D.C. and
other cities as we move forward in an environmentally conscious way,"
Klein said. "We are trying to provide a healthy alternative where
people live, work and play in high-density areas with the highest
traffic. And if we do the right thing for our customers, and do the
right thing for the environment, they we will get a good return."