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[16 comments]

The Starbucks of Meat

May 2, 2011

Seattle-based Bill the Butcher heralds its new retail concept as "the return of the neighborhood butcher shop." But it's bringing it back with a twist: the focus is on organic and natural, grass-fed meats.

The first location, in Woodinville, WA, opened in August 2009 and it now counts six in the Seattle area with several more on the way. While small, it is also publicly-held, reporting sales of $559,000 in its first quarter, an increase of 266 percent versus the same period last year.

"We are pleased with our performance in what is only our sixth quarter of operations," said J’Amy Owens, chief executive officer, in a statement. "In this short amount of time, we have achieved a tremendous amount in refining a retail concept that we already know to be powerful. Bill the Butcher will be to meat what Starbucks is to coffee."

The company works directly with local ranchers and farmers who follow sustainable and organic practices to "deliver the highest quality meat that is healthiest for consumers while being good for the environment," according to the company's website. At the same time, it works with "small farmers and ranchers who treat animals humanely and share our belief that grass pastured meat is far healthier."An article last year on MSNBC noted that Bill the Butcher is just one of a number of meat shops popping up in cities across the country appealing to consumers looking to be more connected to their food as well as those concerned about health, the environment and the better treatment of animals.

Ryan Ford, co-owner of The Organic Butcher in Virginia, said that when his shop opened nearly five years ago, butchers regularly spent 20-to-30 minutes with first-time customers explaining where the meat came from, how the animals were raised and what terms like "grass-fed" meant.  But much of the service provided by the new breed of butchers replicates the interactions between the butcher and consumer of yore that doesn't happen as much in supermarkets anymore, including offering advice on cooking, cuts and portion sizes.

Speaking to MSNBC, Ms. Owens likened the high-end meat trend to the movements toward local wine and gourmet coffee.

"It’s an ancient commodity that is changed by how it’s presented to the consumer," she said.

She also expects many consumers will pay a premium once they taste the difference between locally grown meat from animals raised without added hormones or antibiotics and regular grocery store meat.

"After you have a latte, you rarely go back to Folger’s drip," Ms. Owens said.

Discussion Questions:

Discussion Questions: What do you think of the growth potential for organic, upscale butchers? How appropriate is the comparison to the gourmet wines and coffee trend? What challenges does this new breed of high-end butcher face?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

What do you think of the growth potential for organic, upscale butchers?

Comments:

I think there is a new opportunity for mid- to high-end meat markets in the U.S.

If we look at Trader Joe's, Starbucks, Whole Foods and other similar retail offerings, as well as the emergence of case ready meat in many supermarket operations, the opportunity to provide high quality meat and seafood with cooking tips and serving size suggestions exists in many markets. The secrets to success will lie in being very selective in the store locations, the consistency of the offering, the training of the personnel, and the product supply chain.

The ability to create a unique retail concept with individualized customer service should result in an operation that can be reasonably well replicated across numerous geographies.

Phillip T. Straniero, Executive-in-Residence, Western Michigan University

There is (literally) a Bill the Butcher one block from my office. Not related to the one in the story, but pretty much the exact same concept. Best meat quality, best service and top end pricing to match. Very busy and successful place.

If wine shops, cheese shops and gourmet food shops can make it, then certainly there is a place for a proper meat market. Staff will need to be brilliant. Consumer education and interactivity will be essential. And, a commitment to total quality has to remain.

Have to run now ... all this talk about the butcher has me now running out the door to buy a great steak to bbq tonight!

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Kevin Graff, President, Graff Retail

Organic, upscale butcher shops are like the recent pro football draft in that it takes three years to learn whether or not you have a winner.

Times are changing, tastes are changing, social perceptions are changing. That's what has given momentum to Starbucks, Whole Foods, Trader Joe's, Chili's and others.

It's an intriguing thought, but creating a "Starbucks of Meat" seems a challenge except for today's insatiably searching "IN" crowd who seek new adventures in consumption. This audience is affluent, finite and willing to spend extra bucks for the latest societal "fashion" even if it doesn't really taste better than (or as good) the cornfed, fat-enhanced meat products revered in the past. But a food many folks want to align themselves with "today's taste buds" and the leading edge developments so they'll support and sustain a "Starbucks of Meat."

In three years let's revisit this trend to see if there are enough of such customers to cast a "Starbucks of Meat" into the marketplace's future midstream.

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Gene Hoffman, President/CEO, Corporate Strategies International

Leaving aside the veracity/efficacy of "organic" and "natural grass fed" for a moment--the potential for this concept is quite good by all indications. I recently stopped by a Chipotle that had a temporary sign posted apologizing to customers that their normal supplier of 100% natural grass fed beef was unable to meet demand, and that they hoped to be back in supply within a couple of weeks.

A large farmer in my hunting areas of southwest Georgia has established a grass fed beef business--White Oak Farms--including building his own abattoir. Now the farmer who's land I lease has just made the same change. After seven generations of row cropping (cotton, soybeans, peanuts, etc.) on the farm, it is now four thousand acres of 100% grass fed cattle farm serving as a sub-supplier to the first. Clearly these men, both Auburn Masters of Agriculture holders and both having been "Georgia farmer of the year" know this is going to be big business.

But we can't let the irony of the comments about "Starbucks vs. drip grind" go unremarked. Natural grass fed beef is what we all ate until the Chicago stockyard barons figured out that highly marbled beef was both more tender and more flavorful--and that people would pay a premium for it! Will people now pay a premium for the original grass fed stuff? I'm sure they will. Does it really "taste better"? Me thinks only in the perception, but not on the palate.

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Ben Ball, Senior Vice President, Dechert-Hampe

Wait until the unemployment numbers drop before getting too excited....

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Liz Crawford, VP, Strategy & Insights, Match Drive

Another potential success story begins in the Seattle area. This may not be the idea whose time has come; but the long range potential remains strong. Trader Joe's and others like them can become a supplier for Bill The Butcher. Possibly Bill The Butcher could lease space in Trader Joe's? The possibilities are limitless.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

In just the last 2 years 2 butchers have opened shop in our small town. "The Meat House" which is a franchised model and a truly local butcher "Butchers Best." Both are doing extremely well and they are trying to keep things local. For example Butchers Best purchases all his lamb from a local farm in the town. He also smokes his own meats and fishes and cures his own bacon. Not only do they serve the local community, but local restaurants as well. Local restaurants purchase not only the cuts of fresh meat to order, but specialty items like sausage.

I am so pleased to see this trend growing and local communities supporting the effort. Although consumers can buy bulk at COSTCO or Walmart for less, consumers are choosing to spend a little more and know where the meat came from and who cut it for them.

Now all we need is a candle stick maker.

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John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC

The concept of a "local" butcher shop as a standalone retail business has huge potential. While many local specialty merchants have been crowded out by large chains, ironically including Starbucks, the quality of mass produced meat and produce is almost universally inferior to locally sourced "boutique" growers/producers.

Coupling the quality with the customer experience delivered by Bill's, if they can maintain the customer-focus, should prove to be a winner. Perhaps they'll do this for seafood too, which is another category fertile (pun intended) for development.

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Phil Rubin, CEO, rDialogue

This retail concept has limited appeal and growth potential. While the organic market segment is growing, the growth rate is declining. This will work best in larger cities with higher income households, which tend to be smaller in size. This is where we are seeing consumer more and more shopping like Western Europeans, i.e. purchase fresh products, daily. In suburbia a modern 45,000 square foot supermarket can duplicate the offering and service easily.

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W. Frank Dell II, CMC, President, Dellmart & Company

I believe customers are more interested in knowing where and how their beef/pork/poultry are raised and how/what they are fed. The growth for organics is becoming incrementally larger day by day. I don't really see the direct connection to locally grown wine but maybe that is because I live in an area that is not known for raising wine grapes. One additional and important way they could improve their company's positioning would be to incorporate humane slaughter methods as well.

Sue Brown, President, Green 4 Good Fundraising

Love the thought of fresh produce, great beef, superb seafood markets, etc. And, they are businesses that strong entrepreneurs can drive, and make a solid return.

However, beef, particularly at today's record level prices for prime, don't make this a scalable investment that offers thousands of stores.

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Roger Saunders, Managing Director, Prosper Business Development

My hope is that more consumers are becoming more enlightened about the value of natural and organic products, sustainability, and the basic virtue of treating animals that we use for food more humanely, throughout the system. If this is the case, it bodes very well for companies like 'Bill the Butcher', but I have no hard evidence that this is the case.

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Al McClain, CEO, Founder, RetailWire.com

Where I live we never lost our local butcher shops, high-end grocery stores or co-ops that sell high quality, locally produced meat. In fact they have been expanding (mostly from the core cities or small towns in which they started to the suburbs) for the last 20 years or so. I assume that this means that there is a market for what they sell.

At the local butcher shop close to my house (in business since the 1930s), the owner does not use the new marketing buzz words on signs for his products but he can tell you that his bacon, cold cuts and hams are produced on sight "without preservatives" and of you order a duck or a turkey he knows what farm it came from and what it ate.

Some people have always wanted to know where their food comes from and see a connection between the integrity of the producer and the quality of the final product. It's nice to see that more people are beginning to care.

'tmlens'

Living in the upper Midwest where every town has at least one butcher shop and a cheese factory, the idea of a franchised meat market trying to sell "grass fed" lean beef is quite funny.

These shops compete statewide and nationally for the best beef, sausages, hams, bacon, jerky, and salami. They proudly hang all the awards they have won up on the wall behind the counter.

Our butcher shops are part of the local economy. They buy locally including 4H beef, hogs and lamb. You know that 4H beef has been not only fed the finest grains, timothy hay and alfalfa,(not grass) but has had hands-on care all its life. The meat is fresh, marbled and tastes like the best meat you remember when you were a kid. You can buy aged beef that is so tender you can cut it with a spoon or fork.

If we want lean, tasteless grain fed meat we just have to go to the local Walmart.

Paul Sikkema, Owner, Todaysmower.com

In select, high-income markets such as Woodinville, WA, designer meat markets may do okay. I think that Ms. Owens' quote in the story "After you have a latte, you rarely go back to Folger's drip" has been disproved, as evidenced by Starbucks performance.

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Larry Negrich, Vice President, Marketing, nGage Labs

As a meat expert, the grass fed beef is not very tasty, and the concept only will work in the high-end yuppie markets. My customers want great prices...end of story. We offer them great prices, service, and quality, every day. Poor people cannot afford to pay for the deals we currently have now in 2011, and are trading down to chicken, and smoked meats, plus whatever is on sale.

Business is like politics...It is all local, and I am aware of my surroundings in Northeast Ohio. If I don't cut my margins, and stay aggressive every week, I'm gone. The key is to turn the product quickly, and move on to the next deal, in order to maintain profit dollars moving through the system.

I wish all the "local butchers" well, as we are a dying breed.

Bottom line: Know Your Customer, and serve them well!!!

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Tony Orlando, Owner, Tony O's Supermarket & Catering

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