Food Republic got red velvet cake advice from Sarah Fennel, who operates the blog Broma Bakery. She suggests substituting beetroot powder for the typical red food coloring.
Pink or red beetroot powder is made by finely grinding up dried beets. You should only use a little bit so that other flavors in the cake can offset any overt earthiness.
Many classic recipes for red velvet cake with cream cheese icing incorporate acid in a couple of different forms by way of buttermilk and vinegar to get that characteristic tang.
This is key when using beetroot powder as a red dye because, without enough acid, the powder will oxidize, leaving you with a more earthy brown cake than a classic red one.