Where will the meal assembly industry be in 2009? (Part 4)

So what’s in store for 2009?

Honestly I don’t think anything is in store for meal assembly in 2009. It would appear this industry has run its course and while there might be a few owners who find a small market for themselves, I think the cards are stacked against this business gaining ground. When the economy was good meal assembly had to overcome a lot of hurdles to even get recognition. It did manage to grab the attention of many consumers for the short term, but that quickly faded with most of them returning to their previous lifestyle. Visiting a store was an idea they toyed with, but it remained in the background and was seldom acted upon.

But this was all before the bottom fell out of the entire economy. Now that hundreds of thousands of people are losing their jobs on a monthly basis all across the country and almost every day another company announces layoffs in the thousands, how will consumers view the idea and expense of meal assembly? On the whole, they won’t. It won’t be in the budget and will be outside the norm of their routine. People retreated into their own kitchens at the crippling gas prices and huge cost increases on all food items. In light of the critical financial disaster that is more than likely going to strike the nation as a whole which will cause almost everyone to think twice about any purchase, this industry faces almost insurmountable odds to try and lure customers through the door. Almost every tactic and ploy has been used on the public to get them to buy into this idea, but it has failed to take root. There is very little cause to believe that 2009 will somehow be miraculously different.

I easily see another 500 store closings by the end of 2009. Quite frankly, it wouldn’t shock me if that number was closer to 800 and it occurred before the year was half way over, but I’ll try to show a hint of optimism. By the time summer comes along you may only see a handful of stores left across the county. And of those left it will be hard to say if they’re going to break even.

More franchisors will realize what they’re facing and simply give up. Smaller outfits will be first to go, giving owners a chance to strike out on their own as independents. Will this merger save The Dinner A’Fare or Super Suppers? I don’t think so. Sadly I think their days are just as numbered as they were before. Basically, what have these merger accomplished. Companies like Make and Take Gourmet will disappear off the map having too little money to keep going. They have made such a mess of things that I full expect them to be gone in just a month or two from now.

As these disappear you will see more of the domino effect which has already started. Customers that are still going to a meal prep kitchen will be shaken with all the closings and will think twice in the future. Will they get their monies worth? Will the store still be open when they go back in a month or two? I would expect to see a lot of franchises drop off the map within the first few months of 2009.

And what of the bigger outfits? How will they survive without royalties? Lawsuits and CEO splits aside, if there are no customers, there’s no money. No money, no jobs. No jobs, no employees. No employees, no business. You can’t run a company without money and no meal assembly franchise has enough liquid assets to handle that sort of loss of income. If those companies were to lose half their stores (which is going to happen) they will have no operating capital and when that hits, the brakes are on and you’re off the rails. I don’t see banks loaning out too much money to companies with no secure source of revenue. All the pieces are in place and the clock is ticking. The countdown has begun.

Dream Dinners and Super Suppers will hold out to the bitter end. Not because they have the money, resources or special plan that needs time to cultivate, but because of ego and vanity. When Dream Dinners and Super Suppers do finally go under (and yes I think that will occur this year) they will not let people keep using the name. They will pack everything up, leave the sanbox and go home. Owners won’t be a given a chance to continue using the name. They will need to come up with something rhythmical and cliche on their own if they wish to stay in business and continue losing money.

But let’s say for the sake of argument that consumer confidence spins on a dime, banks gain stability, drop interest rates and make it easy for people to take out a loan, layoffs come to an end and America goes on a massive hiring spree, how will the meal prep store owners gain customers? What magic bullet will they be able to use in the upcoming year that they haven’t used up to this point? How is that customer who hasn’t been educated about meal assembly over the past 5 years will suddenly gain enlightenment over the process and become a monthly customer? Made up statistics, jumping up and down like an excited cheerleader, offering to make the meals or a menu that changes every month or even stays the same just doesn’t seem like it’ll work. Well, it hasn’t worked so far. So, even in an outstanding economy how is it that people will all of a sudden start using a service they’ve previously been cold towards? Of course, with so many stores closing in an area consumer confidence will be at an all time high and they should have no trouble in giving money to a business that might disappear off the face of the planey six months from now.

I will once again ask, what three factors will make customers incorporate meal assembly into their monthly routine?

– Cost?
– Convenience?
– Healthy Ingredients?

Oh yes, these have worked swimmingly so far. They have been beaten to death over the past three years. I don’t think the mantra is working. It may have grabbed a couple of people at one time, but they aren’t solid enough reasons to put a sparkle in a customer’s eye and dazzle them enough to come in en masse. I mean it hasn’t worked in the past why should it work now?

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This year has been more damaging to this industry than had been previously been predicted, there is nothing to indicate that 2009 will somehow be kind and forgiving and money will rain down on the owners who decided to stick it out. The store closing will continue and the smaller franchises will either give up or be forced out of business; probably by those pesky lawsuits. The bigger franchises will continue their tired story of how they are making money and customer’s enjoy the convenience, but by the time summer hits it will be a barren landscape out there. When the dust settles at the end of 2009, only the independent owners will be left and there won’t be that many of them.

References:

Unlike certain associations out there who spout figures, stats and predictions without any justification as to how they arrive at their conclusions, here are a few articles for you to ponder about where we are headed for 2009.

Western Digital to lay off 2,500, close plants
Best Buy earnings drop 77 percent, offering buyouts
Sony to lay off 8,000 full-timers, 8,000 others
Circuit City confirms massive store closings, layoffs
Google Gets Frugal
Yahoo pink slips issued, recruiters circling above
Layaway makes a comeback
No housing upturn until 2010
Economy lost another 533,000 jobs in Nov
Record 1-in-10 Americans in mortgage trouble
Credit card holders livid about ‘rate-jacking’
Companies Slash Customers’ Credit Lines

And this is just a small sampling of the articles which have been published in the last 2 months outlining some of the major economic factors and reprocussions they have had on our lives. In many cases this may just be the tip of the iceberg. Several companies are looking to cutting cost through manufacturing or packaging, as well as offering severance packages if employees voluntarily leave. For larger companies this might be quite effective, but smaller companies won’t have this kind of wiggle room available to them.

Other Articles of Interest:

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