Founding Restaurants

Only a restaurant owned by farmers could get away with a painting in the middle of the dining area of a young, hip George Washington with reddish hair in a man bun, sunglasses sticking out of his vest pocket and holding up a glass of whiskey.

Cool George is one of the latest additions to the Founding Farmers restaurant chain, based around Washington, D.C. The eateries are 90% owned by more than 40,000 farmers, all members of the North Dakota Farmers Union (NDFU). Another 192 shareholders, most with close ties to the NDFU, hold the remaining private shares in the chain.

Early on, Founding Farmers restaurants nearly failed--a common fate in a highly competitive business. But, the investors decided to change course and emphasize the brand’s ties to agriculture. Today, a sign over the front door of each restaurant states: “Proudly owned by the North Dakota Farmers Union.”

Connections. The original idea behind Farmers Restaurant Group (FRG) was to bring consumers closer to producers. Mark Watne, a third-generation farmer and NDFU president, says his fellow farmers wanted to go directly to the consumer, and they concluded the restaurant business worked better than grocery sales. The goal was to bring farm products directly to consumers, taking those urban dwellers back to the source in a sense, to “affirm that family farming was, and remains, essential to our nation’s well being”.

The first restaurant, Agraria, opened in 2006, in Georgetown. This trendy southwest-Washington neighborhood is a gathering spot for college students, professionals and politicos. Agraria catered to a select niche of foodies. The idea looked good on paper, but it didn’t catch on.

“We failed miserably out of the chute. We had a lot of little issues,” Watne says. “We never really built the concept that we had put into the business plan. Too few products, too high priced, and, of course, service wasn’t good and value on the food was not good. The restaurant was too big for that style, and we failed.”

Enter a consulting firm led by Dan Simons and Mike Vucurevich. The pair had worked for the popular restaurant franchise Cheesecake Factory before breaking out on their own. The relationship between the firm and the farmer group started at the consulting level, moved into a management relationship and eventually grew into a partnership.

Simons says: “We really helped right the ship with the first restaurant [Agraria]. But, there were still some fatal flaws. So, we then went to the board in North Dakota.”

They told the group they loved the original idea of a farmer-owned restaurant but didn’t think it should be positioned as fancy or upscale. In addition, the consultants stressed a farmer-owned tie-in would create a strong brand. That led to the opening of a Founding Farmers restaurant just half a mile from the White House.

Success In D.C. This time, Founding Farmers’ focus was on comfort foods--corn bread, meatloaf and chicken pot pie. Add in a large bar, and Founding Farmers became an immediate success. The reservation website OpenTable dubbed Founding Farmers the most-booked restaurant in the country despite some critical local reviews. Instagram has listed Founding Farmers as the most “geotagged” restaurant in D.C.

Roger Johnson, president of the National Farmers Union and a North Dakota native, was an original investor, which started with a minimum early stock purchase of $2,000. Original investors are offered first option to invest in any new restaurant. Working in Washington, Johnson has been able to see the restaurants start to mature.

“We’re still kind of early in this thing,” he notes. “It’s like any new business. It takes awhile to turn it into something.”

Brand Building. The popularity of Founding Farmers has helped to grow the brand. Farmers Fishers Bakers is now in Georgetown. In addition, locations have opened in suburban Maryland and Virginia, and Farmers and Distillers recently opened in downtown Washington in a growing, redeveloping neighborhood just off Chinatown.

By the end of 2017, the chain had seven restaurants--six in the Washington metro area and one in King of Prussia, Pennsylvania.

“When you open a business, and it’s successful, your partners and investors like that and are inclined to keep growing and do more,” Simons points out. “So, we have just been chipping away at it from there.”

People often ask Farmers Union members why they chose the D.C. market. From a point of sheer volume, Washington provides needed density. Restaurants are a capital-intensive business. Farmers and Distillers, the latest restaurant in the chain, holds more than 300 seats. The original Founding Farmers serves more than 10,000 people a week.

“From a scale standpoint, you just can’t beat the density of the major urban markets,” Simons explains. “I think that’s the allure of the East Coast. The volume allows us to be as ambitious as we are.”

Rebekka Dudensing, an associate professor and Extension economist at Texas A&M University, says this group of restaurants is a unique form of investment for a farm group.

“Do it outside their location, and do it somewhere where it is new money. It’s not North Dakota money, it’s Washington, D.C., money. It is really pretty cool, in addition to the ag-vocating piece that goes along with that, too,” she says.

Farmer Sourced. Speaking of ag-vocating, Watne notes farmers are able to sell some products to the restaurant. For instance, all of the flour used in the bakeries comes from a state mill in North Dakota. Sugar comes from the Red River Valley, and farmers in Minnesota and Wisconsin are supplying artisan cheeses and butter for the restaurants. Farmers in South Dakota and Montana could start to provide some seasonal products, as well, Watne explains.

“I’m trying to connect with farmers to get some fresh cherries coming out of Montana for a seasonal item,” he adds. “That would be kind of another phase in owning that whole system.”

All of this points to a restaurant group that is increasingly becoming its own supply chain--baking its own bread, roasting and selling its own brand of coffee, and even distilling a line of branded spirits.

“I don’t think you could eat or drink in one of our restaurants, and not get the message that it is owned by farmers,” Simons says.

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Founding Farmers

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