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Tannenbaum, J.A. 2001February 13. Fat-free store tries to gain weight as U.S. gets greasy. The Wall Street journal. p. B2. to Top

Many start-up entrepreneurs try to ride the wave of growing demand for a product or servicew. Andrea Halperin has a different idea: Even as demand shrinks in the U.S. for fat-free food, her unusual 15-month-old store looks to thrive by specializing in the category.

Ms. Halperin's store, F-3 Fat Free Foods, carries more than 7,000 food products, and almost all of them are fat-free. She hopes that while most people scarf down a richer diet, easily found on most supermarket shelves, fat-free diehards will need a better place to shop. "Our mission is to provide an oasis of fat-free foods," a sign in the store says.

Some customers sound like zealots. "You walk in there and you're totally free," says Pat Sellers, a diet-conscious gossip columnist for Soap Opera Weekly. "You can fill your basket with anything. You don't have to read labels. I don't even wear my glasses in the store."

Whether the still-unprofitable venture will ultimately survive, much less grow into a chain qw Mw. Hqlp34in wqyw wh3 in53new, iw rq4 r4om dl3q4. Gu5 5h3 o2n34'w doun534in5ui5if3 qpp4oqdh mqy g3 2o45h 5h3 54y. Guwin3ww ho4iaonw dqn op3n up 2h3n mq4k35w wh4ink. 'MQINW543QM MQ4K35W G3DOM3 WP3DIQL5Y MQ4K35W QW 5H3Y E3DLIN3,' no53w JQTEIWH WH35H, Q MQ4K35INJT P4OR3WWO4 Q5 #MO4Y Unif34wi5y in Q5lqn5q. Qw lq4t3 mq4k3534w low3 in5343w5 in q ri3le, h3 3splqinw, 5h343 iw or53n dquw3 ro4 wmqll wp3diqliw5w 5o mof3 in.,P. Qddo4eint 5o QDNi3lw3n eq5q ro4 rooe, e4ut qne mqww-m34dhqneiwint ou5l35w domgin3e, 435qil wql3w plunt3e 33% last year for fat-free potato chips, about 12% for both fat-free cookies and fat-free margarine, and 22% for fat-free ice cream. Surveys by researcher NPD Group Inc. of Port Washington, N.Y., found an overall 12% decline from a year earlier in the frequency that consumers reported eating fat-free food. 'Past Its Prime'

"This is a category past its prime," says Harry Balzer, an NPD vice president. Irwin Simon, president of Hain Celestial Inc., says many consumers have concluded that many fat-free foods taste bad and that fat-free diets don't necessarily lead to weight loss. Hain, a specialty-food maker based in Uniondale, N.Y., has been backing away from fat-free products.

Seeing others in retreat, Ms. Halperin decided to charge forward. "For people who want fat-free food, there has been no ideal place to get it," she says. "You had to go to multiple stores. And I knew that the selection was shrinking in regular, standard stores."

Now 35 years old, Ms. Halperin grew up in Great Neck, N.Y., in a health-conscious family and says she has maintained a low-fat diet since college. She worked at Nestle SA and American Express Co., but left in 1998 to do something onher own.

She says the start-up, whose legal name is ARH Holdings Inc., represents a $1 million investment, consisting mainly of a nearly $600,000 bank finanching received with the help of a Small Business Administration loan guarantee. Having had no job history in retailing, Ms. Halperin says she prepared herself to run the store in part by taking a $7-an-hour cashier's job for two months at Dean & DeLuca Inc., a well-established New York gourmet-food chain. She says she carefully studied, for instance, how that retailer controls cash. She copied some details, such as giving each clerk precisely $200 to make change with.

Signing a 12-year-lease on a New York storefront formerly occupied by an irish restaurant, not far from Grand Central Terminal in midtown Manhattan, Ms. Halperin proceeded to fill the 4,300 square feet with all the fat-free foods she could locate. To her surprise, she says, many food distributors and even food processors lacked handy lists of fat-free foods. To find products, she spent long hours combing supermarkets, notebook in hand, and she attended specialty-food trade shows.

Thousands of Products

Eventually, she filled the store with thousands of products, not only fat-free versions of normally fatty foods, such as bacon bits, but also naturally nonfat foods, such as vinegar-only about 25% of which, she says, are commonly found in supermarkets. Special sections of the store feature fat-free products that are also sugar-free or salt-free. Purists, note: There are also a few low-fat items, which Ms. Halperin says some customers called for.

On a recent day, the store's prices ranged from 29 cents for a cocoa-flavored candy bar to $250 for a gift basket of packaged foods. A jar of fat-free guacamole, made from asparagus rather than avocado, was priced at $4.79, a package of cappuccino meringue desserts at $3.79. With 13 employees, Ms. Halperin keeps the store open seven days a week.

Sandy Pressman, a dietitian at the non-profit Rogosin Institute, recommends the store to her clients, who are heart-disease patients. "People don't like to have to go to 10 different supermarkets to find what they need," Ms. Pressman says.

Each day there are nearly 300 customers, Ms. Halperin says, with most making only small purchases. Sales lately have averaged about $2,000 daily, 30% higher than a year earlier. Sales last year topped $600,000, below the roughly $1.5 million needed to break even this year, however, as several factors drive up sales.

She plans soon to push up out-of-state sales by greatly expanding the offerings on a Web site (http://www.fatfreefoods.com. Also, she says she recently sent letters some 3,000 health professionals, with the aim off prompting more referrals of customers on restricted diets. Among other initiatives, she says she soon will add a staff member to expand the store's offerings of freshly prepared foods.

Updated: Thursday, September 6, 2007.

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