Archive for January, 2008

How does meal prep fare?

The first month of the New Year has come to a close and without casting aspersions on everything I see and having you think I just see the negative side, I did want to point out a few things that I’ve noted over the month. And no, it’s not a happy forecast.

The number of stores for sale this month is just shy of 70. If you remember back in August of last year I did roughly the same thing of counting the number of store listing I found as I did research on meal assembly. At that time the number I came up with was 60 stores for sale during the month. So we are slightly above that number. However, this doesn’t count the stores that simply close (something that is probably happening more frequently now). Some owners aren’t putting their stores up for sale anymore and are simply closing their doors and moving ahead with the legalities that involves. How many stores does that account for? I have no way to really answer that, but I think it would be realistic to say that 10 stores shut their doors rather than sell.

So what does that mean? We still have an increase in the number of stores going out of business even if it’s only slight (if you call a 20 store per month increase slight). Basically the market is still decreasing. The number of stores for sale may also start to decline very shortly, but I won’t take this as a sign that the industry is actually getting better. Instead that will mean that owners are just closing their doors and are skipping the sale process. I think it’s nearly impossible to sell a store in the current climate. When you list a store for $25k knowing it cost you around $250k (or more) to get it started that should be an indicator that it’s not a sellers market.

In conjunction with the fickle nature of customers and showing the worth of meal assembly we now have the added burden of rapidly rising food costs. Prices are jumping by leaps and bounds and there is no indication this will be short lived. A recession looms on the horizon which will certainly spell disaster for this industry. Customers already feel meal assembly is a too highly priced luxury they can do without, and these two factors could solidify their opinion once and for all. With most families turning to Hamburger Helper, pasta, Mac and Cheese, tacos and other easy and affordable options it’s hard to say that meal assembly will fit in with a majority of these families new budgets. This new chain of events may very well push meal assembly further outside the mainstream and make it an option most families won’t consider. If things progress along this path we have the makings of a very slow lead in to the New Year which will push us right into the normally slow months of summer. If the summer of 2008 is anything like the summer of 2007 it could be crippling for a majority of owners. This would basically make barely a trickle of business for the first 6-8 months of the year.

Another turn of events has been the news of a new CEO taking the helm of Dream Dinners. It would be hard to dispute that this is an indication that one of the major players in meal assembly is in trouble and is looking for help. To bring in a CEO when your business is expanding faster than you can manage is one thing, but to bring in outside help when your business has shrunk by nearly half is another matter entirely. Owners aren’t paying their royalties, downsizing has taken place and cost cutting measures must certainly be in place. From the outside this looks to be a company in trouble. The market is shrinking, owners aren’t happy, the revenue stream is drying up and this looks to be a scramble to keep the ship afloat as long as possible. Whether you call the new CEO and changing of staff the best hope or creating a scapegoat it certainly gives the appearance that the corporate office is starting to feel the same effects that store owners have been feeling for awhile. Is this the start of a corporate decline into bankruptcy? Does Dream Dinners have enough reserves and market savvy to prevent closing their own business? Time will certainly tell, but this could be interpreted as a very rocky start for Dream Dinners. And considering the change in CEO wasn’t brought up in a press release or touted by the company as great and exciting news it does makes you wonder.

Dinner by Design continues to flaunt massive expansion plans across the Midwest. They have staked out a huge area of the country as their stomping ground and where they will build their meal assembly empire. This contradicts what owners are saying about those same locations where stores are closing and business is very slow. They have announced big expansions before but as yet very few of their new stores have actually opened (pre-buyout). It’s an audacious plan and quite frankly seems to fly in the face of reason, but keep in mind there is a big difference between saying you will do something and actually doing it. You can say a city will support 40 more stores and you can say this huge tract of land across the country is a prime location for more meal assembly stores, but that doesn’t mean it will come to fruition.

Merger and buyout rumors had us talking but considering what could be instability at the head of Dream Dinners, any talk of mergers is even more fanciful than it was previously. Talk of My Girlfriends Kitchen being acquired was also bantered about, but there is still no official documentation to support that. But even if it is true, what’s to be gained? Why takeover a company that really has no market share, no household branding and very little market penetration. Where is the return on investment and how do you plan on using those assets? Again, if it is true, it doesn’t seem to make too much fiscal sense.

Super Suppers kicks off the year by offering pizza as a new menu item. Is this giving in or a bold market strategy? Pizza can be had in every shopping venue you can think of, does MA really need to play this card? Considering burgers and pizza are the staple diets of the American consumer maybe they do. This might keep meal assembly on the minds of families, it may entice them to come in, it may be an offering that strikes a chord. In truth, it seems like a last ditch effort to try and keep from being shut out of homes completely. Hopefully it will work, but pizza has been on the menu for many independent stores for some time. For many it has worked well, but is it enough to keep a store and even an industry afloat? Empires have been built on pizza so it certainly generates revenue, but can MA use it to their advantage?

We have also seen a pretty big shift in “sessions” versus “pick-up”. In order to compete and to bring in customers you need to make the meals for them. Having customers come in to make the meals is fading away. They don’t want to do it and they’re not going to pay extra for you to make them. How do you keep this part of your business under control? Do you hire employees to help make the meals or do you handle it all alone? Can you sustain a 60 hour work week? And even though customers want you to make the meals now, in a month from now will they still go for it? Even owners who make meals for customers at no charge are having a hard time getting them in. Plus customers seem to want you to take the extra step and deliver the meals
There have been some great ideas presented on things to try to keep things moving. Business drop off, smaller portions, the “Seniors” market and even marketing interns. So there are still things to try to bring in some business and depending on the area opportunities left to explore.

But to be honest I have to say that this year is starting off on much shakier ground than I had expected. The store closing are about where I thought they would be, in fact they’re a little lower than I would have guessed. Customers are hard to figure out but that’s nothing new. The rising foods costs, shaky economy and now the changes within Dream Dinners lead to me think things are much worse than they were a few months ago. Unfortunately I think things will slow down even faster than expected. Consumers will budget their money even more so than before and the trouble we saw last summer will probably start happening next month (March). People may splurge for Valentine’s Day but I don’t expect it will go beyond that. Every part of the food industry is seeing the effects of a slumping economy and growth is slow all over.

You can call me pessimistic or negative or a naysayer, but I’m just bringing to light some of the points we’ve already made. There were a lot of them and taken together it paints an interesting picture.

If you want to hear rosy stories about how everything’s going to be fine and there’s nothing to worry about go read Bert’s newsletter. Quite frankly, I see an iceberg ahead…

Chocolate room heralds Valentine’s Day

I just thought this was a great diversion. It really is Willy Wonka and the Chocolate Factory!
Have a look at the main article for a picture of the chocolate room. :)

NEW YORK — Don’t lick the walls. An all-chocolate room was unveiled in Manhattan on Tuesday – a pre-Valentine’s Day creation complete with furniture and artwork made of the sweet stuff.

“It’s the perfect bit of sin,” said Ali Larter, star of TV’s “Heroes,” of the Godiva chocolate “pearls” that are her private daily indulgence.

Here, they were dripping off the chandeliers above the dining table, which was a sea of stars, truffles and crescents – all chocolate, of course, under glass.

Larter is the celebrity face hired by the Belgian chocolatier for its annual Valentine’s Day promotion contest. This year, anyone who buys the winning box of chocolates – for $23 and up – may win the chocolate room. It is to be re-created in a suite of Manhattan’s Bryant Park Hotel for a pampered getaway weekend for two in May.

The winning box – sold only in North America – will contain a note informing the buyer of his or her good luck.

While no doubt a shameless commercial promotion – created by Los Angeles designer Larry Abel – the demo chocolate room set up on the sixth floor of an East Village building packed a tasteful, artsy punch.

Hanging in the “living room” was a painting built entirely of multicolored chocolate pieces inspired by Gustav Klimt’s painting “The Kiss.” Above the dining table was a “canvas” dripping with brown and white chocolate – a takeoff on Jackson Pollock’s signature “drip” paintings.

And instead of words, books opened to a mound of chocolates.

You could actually sit on the plush sofa, which was chocolate-graced only on its sides, and the walls are made of chocolate.

There were a couple of “dont’s” in the room: lighting the fireplace (with its chocolate logs and mantle) and the candles (all chocolate).

In addition, sinking into the easy chairs was discouraged – unless you wanted to rise with a chocolate-covered derriere.

Have a look at the article and picture here:

Flipping for Burgers

The love affair with the burger seems boundless…

‘ve eaten more hamburgers than any other food, and I still don’t get it. It’s a hot ground-beef sandwich–and ground beef just isn’t all that great. There isn’t a meat loaf restaurant every two blocks. The world hasn’t embraced fast-food meatball chains. Yet people crave hamburgers. And many of the nation’s top chefs are devoting themselves to cooking them.

It became cool for famous chefs to make burgers in 2001, when Daniel Boulud, James Beard Outstanding Chef of the Year, opened his casual DB Bistro Moderne and sold a $27 hamburger: ground sirloin stuffed with braised short ribs, foie gras and truffles. As much as I love Boulud’s cooking, I found it disgusting–a gooey mess of indistinguishable, nauseating fat. I was, once again, alone: it now accounts for 30% of the bistro’s food sales. This year, Boulud, Bobby Flay (New York City’s Mesa Grill) and Thomas Keller (French Laundry in Napa Valley, Calif.) are opening burger joints. Eric Ripert (New York’s Le Bernardin) has put a burger on the menu of his new Washington restaurant, and Hubert Keller (San Francisco’s Fleur de Lys) has opened a second Burger Bar in St. Louis, Mo.; he already sells 1,400 burgers each weekend night in Las Vegas.

It isn’t just the opportunity to charge a lot for ground beef that appeals to chefs. A year before Boulud’s burger, executive chef Sang Yoon, then 29, ditched his job at Michael’s in Santa Monica, Calif., to take over a nearby tiny dive bar called Father’s Office and cook burgers. “Fine dining is not how people wanted to engage chefs anymore,” Yoon says. “It’s not the most fun night to hang out.” Father’s Office is now one of the most crowded restaurants in L.A., with people willing to stand in order to eat Yoon’s $12 burger, which comes with caramelized onions, Gruyère, Maytag blue cheese, bacon compote and arugula–whether you like it that way or not. He’s able to make the food he wants, without compromise (he doesn’t serve ketchup), because of the gourmetization of America. Even burger munchers now care about the pedigree of their food.

Flay believes the trend is so far-reaching that he’s planning to open a high-end burger chain, Bobby’s Burger Palace–with a menu featuring variations from different parts of the U.S.–starting in Smithtown, N.Y., and Monmouth County, N.J. “Everybody across the country now understands that at any price point you should be able to eat well, whether it’s a burger or a prix fixe meal at Thomas Keller,” says Flay. “People are finally willing to pay more for better food, whether it’s fast food or five-star food.” Keller’s upcoming Burgers and Half Bottles in Napa Valley, which pairs his house wines with simple burgers, was conceived back when he lived in L.A. and would sit in his truck drinking wine with a burger from the In-N-Out chain. “I’ve always found it fun to unwind in a casual restaurant that offers great food–especially after working long hours in a fine-dining environment,” he says.

Burgers aren’t interesting to chefs just because young people are willing to pay a lot for dude food; it’s also because they have access to better meat. Though Yoon began grinding dry-aged New York strip and mixing it with a bit of chuck in 2000, grinding meat isn’t done at most restaurants. So until a few years ago, everyone used chuck for burgers. Then New York’s Pat La Frieda Wholesale Meat Purveyors started selling a proprietary blend of chuck and brisket to top restaurants, some of which also had short rib and hanger steak added. Burger Bar’s Hubert Keller makes his excellent burgers by grinding meat in a butcher area at the back of his restaurant. “When it comes to pizza and burgers, people are eating so many of them that when you give them a great burger or pizza, they can tell the difference,” he says. On his public TV series, Secrets of a Chef, one of the three recipes in each episode is a burger. Keller is shocked at how popular burgers are, having opened his Las Vegas Burger Bar only as a favor to Mandalay Bay hotel and casino, which also houses his second Fleur de Lys restaurant. “Five years ago, nobody thought of putting their name on a burger joint. I was gambling,” he said. “I thought the press would fire back and say the man has made four-star restaurants his entire life, and now he’s doing a burger.”

Burgerphilia has become so acceptable among foodies that two books on the subject are coming out this year: Hamburger America, by documentarian George Motz, and The Hamburger: A History, by New York magazine online food editor Josh Ozersky. “All people are genetically programmed to love meat, and beef is the meat people love best,” Ozersky says. “The hamburger is the most accessible way to enjoy the experience of eating beef: the brown crusty exterior and the soft, supple juicy interior. It delivers all the power of eating meat in an accessible, easy-to-eat package.” Add the bun (which, if toasted, also has a crusty exterior and a soft interior) and some cheese and condiments, and you’ve got a lot of flavors and textures going on. All of which, Ozersky fears, will be ruined by the big-name chefs. “I think these guys don’t really get burgers,” he says. “They all want to tweak it and one-up each other, so they use Kobe beef and truffles, but it can’t be improved upon. All these efforts are doomed to folly.” Which, at least, is something about burgers I agree with him on. After all, if we could make ground beef better by adding stuff, we’d be driving though Meat Loaf Kings.

Read the article here:

Marketing may Influence how often parents feed kids fast food

NEW YORK: Marketing may influence how often parents feed their children fast food, according to a new study.

The study, led by Sonya A. Grier, an associate professor of marketing at American University’s Kogod School of Business, indicates a need for further research into the effect of fast-food marketing–and food marketing more generally– on the attitudes, social norms and behaviours of members of specific ethnic groups.

In the study, the researchers designed a questionnaire to obtain parents’ self-reports of fast-food access, exposure to fast-food promotion, attitudes toward fast food, fast-food social norms and their children’s fast food consumption.

The questionnaire was administered to parents of children ages 2 to 12 at eight community health centres in medically underserved areas located on the United States’ East Coast and in Puerto Rico.

The questionnaire was administered to parents in the presence of their children and in the parents’ preferred language. Children were measured for height and weight.
Parents’ reports of greater exposure to fast-food promotion were linked to beliefs that eating fast food is a regular practice of family, friends and others in their communities.

Reports of greater exposure to fast food marketing were also linked to increased fast food intake among children. Additionally, the more parents perceived fast-food consumption as a socially normal behaviour, the more frequently their children ate fast food. This was true among the entire sample, not just members of specific ethnic groups.

Hispanics and African Americans reported being exposed to more fast-food marketing and having greater access to fast food than whites. They also reported significantly more positive attitudes toward fast food than did whites. Asian parents expressed the least normative views of fast food consumption.
The study, titled “Fast-Food Marketing and Children’s Fast-Food Consumption: Exploring Parents’ Influences in an Ethnically Diverse Sample,” is published in the Journal of Public Policy & Marketing.

Read the article here:

As global food costs rise, are biofuels to blame?

Converting corn and soybeans into fuels is contributing to higher food prices. The dispute is how much.

The biofuels industry plans on producing record amounts of ethanol this year to meet a mandate of the new US energy law – and will need a lot of corn to do it. At the same time, global food prices are at near-peak levels. The question is, how big is the connection between those two developments?

It’s a topic getting more scrutiny as the world enters 2008 with the lowest grain stockpiles on record, near-record grain prices, and prospects for even tighter supplies as global demand rises for food and fuel.

Political instability over higher food prices is a key concern. Last year saw tortilla demonstrations in Mexico, pasta protests in Italy, and unrest in Pakistan over bread prices. Soybean prices, meanwhile, prompted demonstrations in front of Indonesia’s presidential palace. Food inflation in China is a major problem.

But the connection between the expansion of biofuels and higher global food prices is not clear cut, with the biofuels industry saying its impact is relatively small and biofuel critics saying that ethanol plants are driving up the price of corn and biodiesel producers are taking a bite out of the soybean crop.

“The United States, in a misguided effort to reduce its oil insecurity by converting grain into fuel for cars, is generating global food insecurity on a scale never seen before,” says Lester Brown, president of the Earth Policy Institute (EPI), an environmental think tank in Washington. World population growth will require food for an additional 70 million people this year, the EPI said in a report last week.

Driven mostly by population growth, world grain consumption rose an average of 21 million tons per year from 1990 to 2005, the US Department of Agriculture reported this month. Demand for grain to make ethanol soared by 27 million tons last year, USDA reported.

“Putting [corn-ethanol] land back into food use would have a profound effect on the price of corn,” says Bruce Babcock, an economist at Iowa State University’s Food and Agricultural Policy Research Institute. This year, he estimates, the US will produce about 8 billion gallons of ethanol. To do that, nearly one-fifth of the 80 million acres now devoted to corn will go to make ethanol.

That demand is helping to boost feed prices for cattle, as well as for crops like peas and beans because less land is devoted to growing them, he says.

In a counterpoint study last month by corn growers and the biofuels industry, higher corn prices were found to be only a small element in rising food costs overall – although higher energy costs for fuel to transport crops and grow them were a larger factor.

“This analysis puts to bed the argument that a growing domestic ethanol industry is solely responsible for rising consumer food prices,” Bruce Scherr, CEO of Informa Economics, a food and agriculture research and consulting firm based in Memphis, Tenn., said in a statement.

The “farm value” of commodity raw materials used in foods accounts for 19 percent of total US food costs, down from 37 percent in the 1973. Higher costs for labor, packaging, transportation, and energy were a “key driver” behind higher food costs, the report said.

Read the rest of the article here:

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