Brown Bag Naturals is moving out of the mansions and onto the streets.

The Manhattan Beach-based company that sells and delivers healthy bagged lunches to students around Los Angeles has arranged for Stretch Island Fruit Co. to provide its Fruitabu products for lunches at low-income schools.

Brown Bag Naturals began in 2005 by supplying lunches to schools in wealthy areas of the city such as Malibu, Manhattan Beach, and Beverly Hills. Adam Zauder, founder and chief executive of the company, wanted to be where people were familiar with the concept of health foods.

"We started with schools in very affluent neighborhoods, where Whole Foods customers live and they are very familiar with what they do," he said.

Zauder is attempting to offer similar healthy, organic lunches to students in low-income areas at little or no cost with funding from large companies and partnerships with organic food companies. The lunches normally cost students $5.

Stretch Island is providing its organic fruit products for free, but will receive advertising space on the menus that get sent out to schools and on the Brown Bag Naturals Web site. Kashi Co., which makes granola bars and cereals, is also a partner.

A small number of companies offering similar services has been popping up around Los Angeles in recent years, including Freshlunches Inc. and Susan's Healthy Gourmet.

Zauder, a Yale M.B.A., spent a number of years working for three Internet startup companies before going into investment banking.

In 2005 his work with a boutique New York-based investment banking firm called Elixir Advisors took him to the Natural Products Expo in Anaheim on behalf of his client Burt's Bees, a natural personal care products company.

He noticed an abundance of organic products aimed at kids. Combined with his knowledge of childhood obesity issues, he developed the idea for Brown Bag Naturals.

Zauder used personal financing to open Brown Bag Naturals later that year. He started with 35 lunches a day at one small Montessori school. Each morning, he would get to work at 4:30 a.m. to make the lunches by hand with a select few employees.

Now the company makes lunches for about 750 students a day at 12 schools in a commercial kitchen near LAX he no longer works packing lunches, though.

In December, the company received its first outside capital injection from locally based VC firm Momentum Venture Management.

By September, Zauder plans to be in at least two more Southwestern cities as part of an attempt to become a national brand. By 2009, he estimates that the company will be making $8 million to $12 million in revenues.

Union Building Renovation

The process of renovating the ground floor of the building at 760 South Hill Street in downtown, where the Union Bank used to be located, began this month, the first step in creating the Union Restaurant & Lounge a new steak and seafood house in the space.

With more than 10,000 square feet including the conversion of the underground bank vault into a lounge, the location will accommodate about 200 seated guests and is expected to open in spring or summer of this year.

Prices will be on the high end for dinner and lower for lunch. The restaurant will be marketed to the loft-dwellers downtown as well as diners from around the city, said John Valencia, senior partner at the Los Angeles-based Valencia Group, a company he created to own and operate the Union Restaurant & Lounge.

Valencia was previously involved in several construction projects in Miami's South Beach as a silent investor.

He was raised in Los Angeles and worked in downtown for a time and came back because he was interested in getting involved in the revitalization of downtown.

"I wanted my own place," Valencia said. "After seeing several spaces, I came across this space through a friend. I love old things. I have always told people I was born in the wrong generation."

The building was completed in 1928 and includes 1920s style art deco architecture.

News & Notes

Arich Berghammer has made his way around a number of the most well-known Los Angeles-based entertainment locations including SBE Entertainment Group and House of Blues, and is now moving on to pursue a position as the president of Pink Taco LLC, a Mexican food chain that is trying to expand to global prominence... It's called DineLA Restaurant Week, but it will take place over the next two weeks. The event, organized by LA Inc., the Los Angeles Convention and Visitors Bureau, and American Express, will feature more than 140 restaurants around Los Angeles providing a special fixed price menu, including some high-end establishments such as Patina downtown.

Staff reporter Sarah Filus can be reached at (323) 549-5225, ext. 235, or at sfilus@labusinessjournal.com .

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