Meal Assembly – A New Marketing Platform for Brands
By Rick Moss
New types of retail store formats pop up all the time, but of the concepts of the past few years claiming to be truly unique, meal assembly centers may actually have a point to make. In a sense taking the middle ground between grocers and restaurants, at meal assembly centers, customers follow simple recipes, putting together pre-cut and per-measured ingredients provided by the center; then bringing the fully assembled meals home for final heating and serving, or to be frozen for later use.
There are social and even educational aspects involved with the center environments that are more akin to cooking classes than food shopping or buying take-out. And based on this week’s announced pairing of Kraft Foods with Illinois-based Dinner by Design, the meal assembly business may demonstrate some interesting brand marketing talents as well.
According to Crain’s Chicago Business, Dinner by Design, which had been using some Kraft products in its recipes all along, approached the company’s food service folks last fall about a collaboration. The meal assembly chain, with 75 franchised outlets around the country, in the deal announced earlier this week, will be paid by Kraft to use the food company’s branded products in its assembly line, including Oreo cookies, Stove Top stuffing and A-1 Steak Sauce. The branded items will also appear on chain menus and in marketing materials. Additionally, couponing to chain customers and product sampling are being considered.
The timing seems right for brands looking for an entry point into the meal assembly business. According to the Easy Meal Prep Association, there are currently over 850 outlets
in the U.S. run by around 300 companies. Industry sales last year were approximately $117 million and the association predicts that figure to approach the $270 million mark by
end of 2006.
Discussion Questions: What is unique or more advantageous about meal assembly that might open new opportunities to brand marketers? Do you see risks
for these businesses becoming over-reliant on brand funding?
Kraft likens the Dinner by Design marketing opportunity to co-branding methods traditionally used in food service, such as the inclusion of Oreos in Dairy
Queen and Sonic menu items and Kraft Mac & Cheese at Bob Evans restaurants.
However, there appears to be a fair amount of creative thinking going into this new type of collaboration. For instance, a spokesperson described how Kraft
may provide the chain with samples of test products, a new cheese blend, for instance, that would be both worked into recipes and sent home with customers. Presumably, the feedback
would be beneficial and there would be an opportunity to create some advance buzz on a new product. In this way, the meal assembly companies may augment manufacturers’ own test
kitchens and focus groups, possibly giving a more uninfluenced “read” on a product’s viability in the marketplace.
Don’t get too excited – the business model for meal assembly is not a very strong one. Success depends heavily on frequent repeat business and our experience here in Atlanta is that it is not happening. The meals are not inexpensive, the quality of the recipes is shaky and variable, and location proliferation is rapidly reducing the target markets. The demos tend to be upscale at these establishments and they are unlikely to take kindly to even “middle America” branding.
This may work in the red states but, in the more densely populated time-scarce blue states, people just do not have the time for something that is not fun, will not save them that much money and still leaves work to do and time to spend. Innocents are buying franchises (don’t they always) and, unfortunately, these ventures have less than no chance in most of the US, maybe all, but I do not know Iowa and Nebraska well enough to be sure that they will fail in all 50.
This is a great idea. It offers a different way to increase food sales, without impacting prepared foods or any of the peripheral food categories. Only time will determine the success of this approach. Because it offers a social atmosphere, it might be a better approach as a complementary service to semi-prepared foods or more.
Indulge me while I put a consumer’s perspective on this.
My wife and I have a kitchen full of unused gizmos and gadgets that were (mostly) wedding gifts. We have no idea how to cook. Neither do any of our thritysomething peers. It’s not that we don’t want to, we just don’t know how. This is not news, really, to anyone in this forum, but it bears repeating because we – as a couple and as a subset of consumers – already spring for take-and-bake solutions at the store and are seriously considering taking advantage of these meal prep centers.
When I go grocery shopping I don’t even know what to buy, so I end up spending more than I need to on frozen dinners and impulse snack-type foods. We spend $200 at the grocery store, get home and realize we still don’t know what to make for dinner once the frozen pizzas are gone.
I am hoping that meal prep centers will help teach me some simple (heck, even complex) recipies that I can then duplicate at home. If Kraft gets in there and tells me I need A-1 for the recipe, I’m going to buy A-1 when I attempt to do it at home because I don’t know what I’m doing enough to improvise. This is where it pays off for Kraft.
These meal assembly stores offer a new opportunity for companies like Kraft to grow their business not only through the use of their products in these stores, but also by testing and introducing new products, and through the use of these customers in real life test kitchens.
The risk for the owners of these stores is in depending too much upon the manufacturers to the point where it damages their credibility and they lost business. The risk for the manufacturers is that, like many new and innovative ways to interact with the end user customer, it’s how the relationship and the feedback is managed and controlled that will either help to make this concept successful, or be its demise.
Supermarket chains should share space with meal assembly firms like Dinner By Design, just like Barnes & Noble shares space with Starbucks. The meal assembly firms, their customers, and the supermarkets would all benefit. Food manufacturers have a great upside by partnering with the meal assembly folks, since sampling and word of mouth are the best marketing methods for foods. And why not offer weight-loss plans, engaging customers in preparing their own Jenny Craig or NutriSystem meals?
There are several different formats; some focus on family meals, some focus on meals for families, some focus on nutrition, and some focus on special diets. One or two of them allows the consumer to choose which format or what kind of meals they want to create when making an appointment. While the price is not inexpensive, they do provide a savings in time when five or six family meals can be prepared in two hours, or meals for five days of out-of-town company can be prepared ahead of time. Time will tell where there is enough demand to support this type of innovative service. However, the appearance of these services is in response to consumer needs. It may take awhile to find the right format or outlet that is profitable, but the experimentation is finding a base of consumers who need to save time but want nutritious, good-tasting meals. As Gen Xers and Gen Yers face the need to prepare meals for families, the need for similar services may increase since the number of people in these groups who know how to cook from scratch has fallen significantly.
Meal assembly is an obvious subset of the whole “meal solutions” approach that many retailers and brand partners have adapted to try to recapture “share of stomach” dollars that have left the supermarket and now firmly reside in the restaurant domain.
Like most things that are introduced to supermarket shoppers, the success of this initiative will depend upon how easy and sensible the process is perceived by the consumer, and of course, how well retailers support it and execute it. Like many things that are introduced in the hectic supermarket environment, the trial period for success is all too short. But if retailers listen to the consumer, and fine tune the offering with some reasonable patience, meal assembly has an opportunity to succeed and even win back some of those lost dollars to restaurants.
Not sure the high potential of creating a social event of making a meal with someone and then heading in different directions to consume it works… seems to miss closing the loop in the social aspect. The larger issue over time is going to be how convenient is it really going to be and should we follow the Ukrop’s model which has been successful for years — a pre-made meal ready to go?
Potentially, Kraft has the products, marketing power with consumers and these possible food shops/retailers/fast foods to create a business.
And down the road, it may be be a deli/foodservice opportunity in supermarkets. Co-branding comes to mind, and Kraft has done well with its Oscar Mayer Brand, with foodservice outlets!.
The issue is variety, on an on going basis, and the retailers integration of this program in its business. Again, retailer training comes into play.
I don’t see a kit approach to sell shoppers of say, a DQ working.
Today there are many other finished foods and meal options! But, Kraft is the one food company that could build a totally new business, and model! Hmmmmmmmmmm
I would like to know if everyone who has displayed their comments have been to a meal assembly store. Being a mother of 2 toddlers I think this is a concept that America needs. We live in a very stressed out society. There are never enough hours in the day. Meal assembly is about making meal time less stressful and helping busy families. I have been going to a meal assembly store “Super Suppers” since January and I am a firm believer in it. I don’t know what I would do without it. It has made my life so much easier. I think once America gets educated about the concept and understands how to use it – it will be a winner. If America bought into a $4 cup of coffee that they don’t need, I would certainly hope they buy into this concept that they so desperately need.
I think it was a smart move for Dinner By Design to team with Kraft–think advertising dollars! Kraft is known to EVERYBODY, whereas DbD is completely new to 99% of society. Kraft’s rep will help position DbD as a leader in the meal prep industry.
I am surprised to see so much “negative” press for meal assembly stores. As a mother of 3, the whole concept appealed to me and a friend so much, we opened our own. It’s not an easy business. Lots of long hours, but at the end of the day, I know I helped families that normally eat “junk” for dinner, eat nutritious foods (no added salt/preservatives) and guess what? They ate TOGETHER at the dinner table.
There is a food revolution on the way. I have visited several meal assembly operations. I personally observed moms, couples and even mom’s with teenage sons preparing meals. The coupling of meal assembly operations with known brand names will continue to enhance meal assembly businesses. Also, costs can be controlled via on-line pre-ordering. Meal assembly stores know fairly well in advance what their upcoming customers will buy. The meal assembly business can keep excess inventory to a minimum.
Meal prep businesses are hot right now with approximately 70 new ones popping up each month in the U.S. alone; most of which are mom and pop type operations. But like every new industry, I think the companies that will outlast the others will be the larger franchises and grocery stores that implement this model into their outlets.
That being said, I think that grocery chains will have to adapt from their traditional model and implement an online order process to excel in this space; by doing so they will be able to minimize their cost by purchasing from their suppliers as they receive orders via the web. Thoughts?
Here are my thoughts on the industry.
I think the concept of meal assembly is wonderful; it does provide a great service. I still challenge anyone to make the meals with the same quality ingredients, with the ease and speed that is possible by going to a meal assembly store.
The problem isn’t the product we provide, it’s the gold rush mentality of people (independents, franchisee and franchisors) opening these stores that will ultimately over saturate every good market and thousands of people will lose a lot of money.
The entire meal assembly industry is undergoing a massive shakeup at this time.
As I see it, one of the following happens with every store. Are there exceptions? Sure, but these two scenarios cover the majority of the stores open right now.
1. Stores that have opened in an area that just can’t support the concept so they never make any money.
2. Stores that open in the right location are very successful and then everyone else in town seems to think the market is unlimited so lots of copy-cat stores open up, none of which will ever replicate the success of the first store.
Don’t think this will happen? Don’t kid yourself. It happens every day. Personally I have seen the market in my area go from my 2 stores to 18 in the past 12 months. (With more planned…)
You will either never make money in the meal assembly industry or you will be successful until the market is so oversold that none of the stores will generate any revenue. One thing I can almost guarantee, you will lose money.
One of the biggest issues I see with the concept is that nobody opening stores seems to understand that there are a limited number of customers in the actual valid core demographic. And let’s not forget what will happen once the supermarkets decide to enter the market full force. I know of 3 that are already doing it and more will follow.