Balance Grille Hopes to Tip Scales in Brand's Favor With Downtown Toledo Aquaponics Farm

March 5, 2018 | by S.A. Whitehead

A simplified supply chain, lower food prices and vastly increased quality control: Those are just three benefits expected from a daring venture by the founders of Toledo-based Balance Pan-Asian Grille. Prakash Karamchandani and HoChan Jang are building an 8,600-square-foot aquaponics farm in the middle of downtown Toledo, Ohio, next to the chain's newest location opening this month on Summit Street.

Aquaponics is an ultra-efficient system of farming that uses fish to cultivate plants, which, in turn, purify the water. And even though it's innovative and very "green," plunking down one of these farms in the middle of a Rust Belt city's downtown may not seem like the choice location for such an operation. But Karamchandani said, for Balance Grille, it's just about perfect.

"Our customers know not just where our ingredients are sourced, they can visit the facility and view the production happen,"  he said in an interview with QSRWeb,  referring to the farm's location adjacent the brand's newest restaurant. "Our brand is gaining visibility in multiple channels, including grocery stores and our brand is differentiated."

The venture has taken about two years, a lot of creative thinking and cutting through miles of red tape with both the property owners and the city of Toledo, but if things work out as planned, the farm promises big payoffs.

"We will be able to offer local organic produce year-round in Ohio's climate," Karamchandani said. "We are connected deeper in our community with new relationships, including with children's science and learning museum, Imagination Station, which will be organizing educational tours for school children and adults."

It may sound like a lofty goal for the four-unit chain, but these restaurateurs like to embrace innovation. Last year, for example, they instituted a "managerless" form of restaurant operation, so this kind of project is right in line with the way these two University of Toledo graduates think. 

Of course, QSRweb wanted to know more, so check out our recent interview with Karamchandani.

Q: Local sourcing is a huge demand now from restaurant brands and this certainly is right in line with that. Why was that important enough to your brand to go to the somewhat extreme lengths of operating your own aquaponics facility?
A: I realize "local" has been a buzzword in our industry for several years now, and it's almost becoming cliché. [But] going back to our roots, as restaurateurs, we want to nourish our neighbors/community. From a nutrition perspective, the faster we can get product from the field to the store, the better overall quality we offer to our customers. 

From an economic perspective, we're keeping the dollars within our community. From a culinary perspective, we have a direct connection to producers allowing for some really unique opportunities compared to standard "big box" distributors.

Q: When and why did you decide to go for an aquaponics facility?
A: We decided to continue vertical integration in late 2015. We had an existing dry-stock warehouse and distribution servicing our three area restaurants. We added cold refrigerated storage and delivery capability and found we could help a few small producers with their local delivery route.

One of our producers specialized in microgreens and we connected with the aquaponics method of food production, the balanced relationship between fish and plants. Over approximately a year, we began to play with a couple of R&D prototype systems to try and grow a variety of ingredients outside of the microgreens we use on our menu. 

Space in the farm was limited (an old warehouse, under 1,700 square feet), so we were unable to move beyond the testing phase. But, we were hooked. In 2017, we purchased the farming operation, formed an operating partnership, and began to develop plans for a production-level facility.

Q: Why downtown Toledo and where are you in the development process? 
A: We located the new farm next to our flagship Downtown Toledo Ohio location opening Q1 2018. Its footprint is 8600 square feet, and located in the first-floor retail area of a historic parking garage in the heart of the commercial district. As of the end of February 2018, our space is in the demolition phase of construction while we complete permit approval with the City of Toledo.

Q: So how does this work and what will be grown there? 
A: The grow facility will be comprised of the plant grow space, a small tank room/workshop, and an office. The plant grow space will be comprised of 15-by-36-foot rack systems, each three to four tiers tall, depending on ceiling height. 

Each tier will house specific grow systems with LED grow-spectrum lighting. Racks will be specialized in the deep-water channel, dutch-bucket style, and thin-film channel type grow systems. We will be able to section off areas to adjust temperature and humidity, so racks can be grouped and specialized for a specific crop.

Our crops will include leafy greens, micro greens, living and harvest herbs and certain fruiting vegetables (primarily peppers and tomatoes), although we can theoretically produce nearly any crop that grows above ground. We will also have 4-by-600g tanks used to raise tilapia fish, which will be sold live for pond/lake stocking or algae control, not for consumption. In the future, we hope to add freshwater prawn/shrimp propagation to the system.

"Our customers know not just where our ingredients are sourced, they can visit the facility and view the production happen. ... We are connected deeper in our community with new relationships, including with children's science and learning museum, Imagination Station, which will be organizing educational tours for school children and adults."

Q: Operationally, how much will the farm cost to run and how is that being incorporated into your expenses and balance sheet?
A: We have modeled the operating overhead, labor, and debt service into our crop sales internally to our own restaurants, which account for 70 percent of the facility's initial production capacity. Fully burdened, we are conservatively anticipating a 10 percent reduction in ingredient cost from the restaurant's perspective. The remaining 30-plus percent of production capacity will primarily generate profit for the company.

Q: Why aquaponics as opposed to other types of agriculture?
A: Aquaponics, like hydroponics, allows for year-round growth and consistent crop harvest, perfect for restaurant supply purposes. [Likewise], hydroponics often uses chemical fertilizer and has a high water waste ratio. This combination's runoff would add to an existing algae problem in our area of Lake Erie, similar to the traditional field or hoop-house type agriculture. 

Aquaponics is differentiated because it is inherently organic: Feed the fish, and allow the plants to act as the water's filter. On an ongoing basis, regarding water waste, we are only adding water to offset the system's natural evaporation, a few gallons per day.

Q: Where have you turned for expert input on this operation and making it work business-wise?
A: Our operating partner is obviously a great resource. But our area has a rich agricultural heritage, and we have community resources like the Center for Innovative Food Technology and Agricultural Incubator, less than 30 minutes away. We have also visited multiple commercial aquaponics facilities in the Midwest to learn from their experiences and acquire best practices.

Q: Are you aware of other restaurant brands globally using an aquaponics farm for sourcing? 
A: As of this interview, we are unaware of any restaurant brands vertically integrated to the degree we are. Generally, we don't make it a practice to watch other restaurant brands. Our goal has always been to focus on our own cultural values. If we are missing out on a similar effort, we'd love to connect and share insights!

Q: Where do you see this going in the future and how will you measure for success? 
A: If Balance Farms continues to be a successful part of our brand, we plan to add an aquaponics facility to each metro area we grow to. We will be watching basic financial and operational metrics, including profit margin, the effect on our restaurant's P&L and volume of product produced. 

Our only advice (to others in the business) is to follow your passion where it leads you.
Topics: Back Office, Business Strategy and Profitability, Customer Service / Experience, Equipment & Supplies, Ethnic, Food Cost Management, Going Green, Health & Nutrition, International, Marketing / Branding / Promotion, Operations Management, Research & Development / Innovation, Seafood, Social Responsibility, Sustainability, Systems / Technology

S.A. Whitehead

Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of Pizzamarketplace.com and QSRweb.com after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.