The Downward Spiral

Although facts and figures regarding the meal assembly industry are suspect at best, it’s still possible to show a trend of what’s been going on over the past year. I’ve done some research and using old articles and other tidbits I’ve been able to pull together this interesting timeline. As you can see there has been a continual decline in the stores and companies offering meal prep.

There is little doubt that 2007 saw an explosion in the number of meal prep businesses with kitchens popping up on every street corner. It was a crazy time and franchisors couldn’t sell stores fast enough. All that cash coming in must have been dizzying. It’s no wonder no one was checking to see if the owners they were selling to and the locations the store would be placed in were suitable to the franchise. But the gold rush was on! So much so, that between September and December of 2007 there were approximately 450+ meal assembly companies operating, with some 1420+ outlets dishing out meals.

And then something happened.

Meal assembly was a hot movie starlet and everyone wanted their piece. But amid the glitz and glamour was the reality of the business and soon the star power began to fade and tarnish. The engagements were less frequent and this hot new trend was passed over for the next hot thing. As 2008 wore on, the store closings began to mount and owners ditched their store before they lost everyone or because they lost everything.

2009 presents us with approximately 320+ companies still doing business and just a few over 900 stores still operating. There is a lot of room for error in these figures but you can see that 130+ companies have disappeared and over 400 stores have shut down. Although I can’t find the exact figures I believe there was some speculation that over 2000 stores were actually in operation during the year. If that were true then over half the stores that used to be open are now closed and out of business.

Even if we just take the published numbers, you can see a steady decline.

And what of the big power houses of Super Suppers and Dream Dinners? They certainly lead the way in opening stores like it was going out of fashion. Gripped with the Starbucks mentality they figured opening more stores was as good as advertising, but they didn’t have to pay any money for it. So much the better!

The numbers fluctuate as to who is the true market leader, but there is no doubt both chains opened a tons of franchises. Each one claimed to be well over 200 with more bold statements that they hit 250 at some point. 225 stores sounds a little more reasonable and less prone to bragging so we will go with that number. Super Suppers has been dropping stores and currently sits at around 110 stores – a far cry from the 225 they inferred they had in the works.

Dream Dinners hasn’t done much better with less than 170 stores still operating. A pretty big gap between first and second. The stores were originally neck and neck and now a 60 store split separates them. But keep in mind it was just a few months ago SS was proud they had 140 stores. Darin claim righteously that he and his crew had a great relationship with their 180 owners. So, Super Suppers may have lost around 100 stores and Dream Dinners may have lost anywhere from 60-80 stores in the last 12-15 months. Basically we are seeing 30-40 stores close per month nationwide and out of those 4 are a Dream Dinners and 4 are Super Suppers. In essence each franchise is closing 1 store per week.

If you want to be even more depressed, think of it this way. If 500 stores have closed and each one of those owners was in debt by $100,000 (which many have stated they are) you’re looking at $50 million in debt because of this industry. And that’s were we stand now, not how it will be in a year from now.

Am I just picking on Dream Dinners and Super Suppers? I bring them up because they are the largest and most well known. Also, they should have larger capital assets to help guide them through these uncertain times. This just shows they aren’t impervious to the trend.

But there are of course other casualties. As an example, MealMakers went out of business, as did Dinner by Design. My Girlfriend’s Kitchen and Entrée Vous were sold before they collapsed.

The fact of the matter is that the total number of open stores has been reduced by half over the past year. And even at the store level you can see that franchises have lost a substantial percentage of their business. Is the trend over? I hardly think so. These store closings actually took place when the economy was still reasonably sound. People have tightened the budget all over to the point where other restaurants and food chains are taking a hit. Several of those have declared bankruptcy because of the heavy revenue loss. Meal assembly will be in the same boat. It’s possible the decline may slow, but more realistically, as layoffs continue, more retail businesses will feel the hit. There is no indicator that meal prep will pull out of this nosedive just in the nick of time.

There was once a claim of 3,000 stores and $1 billion in revenue for this industry. That seems even more ridiculous now than when I first read it.

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