Healthy Food Startups Avoid Recession's Bite

By Deborah L. Cohen

CHICAGO (Reuters) - Cleetus Friedman is convinced consumers will continue to pay a premium for healthier, locally sourced food, despite the sluggish economy that has many watching their wallets.

"You're not paying $12 for a sandwich, you're paying for an experience," said Friedman, who runs a Chicago-based catering company, City Provisions, where he makes his own smoked meats, condiments, organic desserts and fresh cocktails. "Everything is made by hand from farm-fresh products."

The effort requires constant education of staff and customers alike. But Friedman has survived the downturn, all the while learning to be more selective about new business, willing to turn away catering clients that won't pay enough for him to make a profit.

"If you're doing a wedding and you have $50 a person (budget)… that's not going to work for me," Friedman said, adding he targets food-savvy clients who understand the importance of fresh, local ingredients and are willing to pay for it. "When you put everything in - food and drinks - you're probably going to be $150 to $200 a person. Is that 20 percent more than competitors? Probably."

Friedman launched his catering firm in 2008, just as the recession was taking hold. He managed to land some funding to add an upscale storefront deli in 2010, building more awareness for his products and additional revenue.

"Our mission is to connect our community with food," said Friedman, 40, a vocal advocate for sustainable eating. "Local artisans, brewers, winemakers, cheesemakers, distillers - we know who makes it, where it comes from."

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