It’s on to Plan B as a Hot Trend Cools Off

Hopefully you have all seen this article that appeared in the New York Times which Cookgal also provided a copy of, but in you missed it, here’s the link:

http://www.nytimes.com/2008/02/20/business/businessspecial2/20dinner.html?_r=2&pagewanted=all&oref=slogin&oref=slogin

But the thing to note is not just the fact that large publications are starting to talk about the “slow down” in this industry but that Bert Vermeulen is now backpedaling and contradicting what he just said a month or so ago.

Let’s start here:

“growth in the industry has slowed sharply, long before reaching expectations. Industry revenue, which two years ago was forecast to reach $1 billion annually by 2010, is now projected around $650 million by then”

The funny thing is Bert is not only contradicting what he said earlier this month he is contradicting the figures he actually came up with. Bert is the one who has been touting the meal prep industry as hitting $1 billion by 2010 with 11,000 stores. I quote again:

“Industry revenue has risen from $7.2 million US in 2003 to $117 million US last year. EMPA projections for 2006 call for revenues to reach $270 million US and to soar to $504 million in 2007. In the United States there were 561 meal prep business outlets at the end of 2005. This includes the meal pick-up business, as well as the meal prep business and franchise units. That number is expected to reach market saturation and grow to 11,000 by 2010, according to the Cheyenne, Wyo.-based Easy Meal Prep (Business) Association (EMPA).”

In his newsletter Bert said there would be a slow down, but that owners shouldn’t be affected by rising costs or other market factors. Of course here he is now saying most owners are going to fall short:

“The majority of owners bring in less than $25,000 a month, or $300,000 a year, in revenue, according to Mr. Vermeulen’s data. He figures that is about $5,000 a month short of what they need to stay out of financial trouble.”

And of course we have this little nugget:

“The total number of stores open will not change much during 2008. There are currently about 1400 stores open and that number will be about the same at the end of 2008. This is quite a contrast from the spectacular growth in 2003 (10x more businesses at the end of the year), 2004 (about 4x growth), 2005 (over 3x growth), 2006 (over 2x growth) and 2007 (about 22%).”

By Bert’s own numbers 264 stores closed last year (which I think is low), but then he claims:

“Some 264 meal preparation stores closed during 2007, Mr. Vermeulen said, more than three times as many as in the previous year. He forecasts fewer than 50 openings in the United States this year, compared with 562 in 2006.

If we just take the same number of closing that is a pretty significant drop in stores as a whole. Even if we subtract out the 50 new ones which open that is still 214 which will drop. And that is if nothing detrimental happens to any store or any store owner.

But let’s say the number is “three times as many as in the previous year” then you get 792 stores which I personally think is a lot closer to the truth. That coincides a lot closer with 60+ stores a month which as we saw is how the month started off.

My point? Basically everything everyone else has been saying for the last 6 months has been correct. Let’s not forget Bert Vermeulen is “an industry consultant and founder of the easy meal association.”

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