Why the Meal Prep / Meal Assembly Kitchen Franchises are Failing. Part 3
Sean seems to catching onto this scam that has become the meal assembly industry. He offers up this 3rd article on why franchises are failing and it holds a lot of merit.
“Franchisor delusions that franchising is easy.
Any new franchisor who thinks they can (or should) open 60-70 units in the first year lacks experience.”
As I’ve stated before I think the growth of these franchises were completely unchecked and unregulated. Dream Dinners sold to anyone who asked. Super Suppers opened in groups of three. Meal Makers sold their franchises with the intent of opening within eyesight of other MA stores. And do you think Bert ever said no to someone offer to buy his offerings?
Franchisor Greed has been a key to this mess. 20 stores in a single city? Sure, they all think it’s a good idea and that the meals themselves will keep customers coming back. Not only were many of the owners on their own bandwagon of grabbing a store they were told could make money, but the franchisors never bothered to even check to see if a city could even support them coming to town. Complete mismanagement, complete greed and a total disregard to owners and customers. Perhaps Stephanie needs to practice what she preaches about the bottom line and how it’s not all about money before she saturation bombs another town with wall to wall Dream Dinners stores.
Why are the meal assembly kitchen franchises failing?
One reason: Self-Delusion.
In a recent post, I wrote about an article on Michele Bellso, the cheery franchisor of 14-unit Make & Take Gourmet, whose enthusiasm for selling more franchises appeared unaffected by the fact that 3 of her first franchisees have lost their $200K investments. She freely admits that she doesn’t know the cause of the failures, and didn’t seem too concerned about figuring it out.
She also freely admits to not knowing for sure whether they’re in the meal prep kitchen business or in the take out prepared foods business. She talks about the concept “evolving” to a model that sounds suspiciously like one we already have. It’s called a grocery store.
Why the Meal Prep / Meal Assembly Kitchen Franchises are Failing. Part 3
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May 2nd, 2008 at 7:51 pm
I am a person that was so enthusiastic about this concept that I found a job in a MAK. I wanted to see the inner workings of the business and experience the food they sell. After the experience of working with customers and sampling much of the food, I have a few thoughts.
1. The food has to be outstanding-it CANNOT disappoint. The recipes all need to be tested and possibly tweaked before they go on the menu. If the chicken recipe is titled “crispy”-it better be crispy. It needs to look flawless and be the freshest. People need to crave the food like they crave a restaurant.
2. Women view handing over a lump sum for these dinners in a different way than paying a grocer. It is difficult for them to view this as “business as usual” like the grocery store. Many find the thought of paying out to a MAK painful-because they have to go to the grocery store anyway. Many can’t get past the idea that this is a “luxury” in their own minds and that it is “expensive”-even though it really isn’t most of the time. Also, the fear that after they pay out the lump sum, their family might not like some of the entrees.
3. MAK are banking on being able to change a person’s lifetime habits with dinner time since this a fairly new concept. We all know how hard it is to create good habits and break bad ones. I saw that we could get a customer once, but it was difficult to get them back as a repeat. Success in this business is about changing people’s habits-and that is difficult to do.
4. The coupons, competition down the street (and the next street and so on) has trained customers to want a deal. To be profitable you can’t always be giving the product away and discounting it. It seems like many new businesses go through a coupon or discount or “try me” phase and then grow out of it, but MA can’t seem to come out of it due to the competitors giving away down the street. Nobody can raise their prices currently, even with costs skyrocketing because they are terrified of losing what customers they do have. Once again, strangling the owners and making a profit just that much more impossible.
5. The concept is difficult and sometimes lengthy to explain and many people are confused by it. The minute a person realized we weren’t a restaurant they were frustrated-especially the senior citizens. They either LOVED the idea or HATED it.
6. People who are cooks proclaim “I can do that myself”……. Some customers made the meals, saw the simplicity of the recipes and really did go home and do it themselves…….
Simply stated the success of this business depends on persuasion and changing people’s habits. Everyone says “we all have to eat”-but up until 6 years ago, no one had ever made dinner like this. When I began working in a MAK, I really thought my enthusiasm and art of persuasion were going to be enough to bring people in, it turned out to be harder than I thought………………. Lots of people said “oh that’s a great idea” but few actually got in the car and came down and tried it.
May 3rd, 2008 at 2:22 pm
BINGO!!!
May 6th, 2008 at 2:01 pm
I think there are some great points to this post — but…now what? We own the store, we owe on everything, and we felt the idea was good enough to buy a franchise or open an independent.
There are LOTS of reasons why it’s NOT working…thoughts on how to make it WORK?
Do you just shut the doors or do you try a different route? Is pre-made freezer entrees going to be that next route? Is the whole idea going to fail?
I’m worried and scared like everyone else and we’re weeks away from the summer and people stop coming in. I’m tired. I don’t know what to do next and reading posts about what is wrong doesn’t help b/c I know those things! How do I fix it?
May 6th, 2008 at 3:34 pm
Dear So Now What?,
I believe the concept will continue to exist, but it will not be mainstream.
“Interested Bystander” actually provided the first opportunity for sales in her/his point #1.- The food MUST be outstanding. It can’t be a can of condensed soup plus (fill in the blank). Fresh, possibly organic (although the appeal of organic is loosing it’s appeal with consumers, too). It’s an advantage to be an independent.
“Bystander’s” point #2.- I agree the $200+ entrance hurdle is just too high and scary for most buyers. Figure out a way to get it lower. Reduce your minimums… and then, when the guest is in the store (and the memory of spending the initial cash has dissipated), figure out things to sell to get an upcharge. It doesn’t have to be just food. It’s an advantage here to be an independent.
“Bystander’s” point #3.- You can’t create a habit with once-a-month. Nobody has a once-a-month habit (no, getting your hair done is not a habit, anymore than trimming your nails is!) Maybe the solution here is to combine points #2 and #3- Get her to come once a week, for less time each visit. Maybe she buys the month’s worth at once, then comes in weekly so her items are fresh, NEVER frozen. Or maybe you can get her to spend weekly. Either way, have other items that will appeal to her so you can get the upcharge. (This also eliminates the problem of the items sitting in the freezer way beyond their shelf life, and the excuse, “I still have some in my freezer.”)
Point #4- Couponing isn’t good. It becomes the norm. If you are going to do it, build the coupon into your costs.
Point #5- Figure out a way to explain the concept quickly. “You make the meals, we clean up the mess” is a start, but can be improved upon.
Point #6- Yes, cooks don’t need the concept. But they may use it anyway, if you can convince them (in very few words) it’s to their benefit that you will clean up behind them, and the quality of your ingredients is as good as what they would buy themselves if they did the shopping. It’s an advantage here to be an independent.
I caution against pre-made freezer entrees. I’m no expert but you don’t have the technology to freeze like the big boys. You don’t have the science behind you. You might be able to sell a few, but why buy frozen meals from you when I can go to the grocery store and buy name brands, organic, natural, pretty much whatever I want, in a full spectrum of quality, and I have to go to the grocery store anyway…….
I think the concept will stay.. .but the growth years are over. What to do? Fine-tune constantly and listen to your customer …and you may be okay.
May 14th, 2008 at 7:11 pm
Hello So Now What-
I have viewed this site quite a bit and the only problem I have with it is how often streams auger into negativity. It’s not that there isn’t a lot of bad news out there - and for those who have lost everything it’s all bad. There is a lot of upside. But, What’s Next, nobody is going to solve it for you but you. Meal assembly as an industry is dead. Kitchen outsourcing is alive and well. It is your job to determine what your customers find valuable and then to let them know that you are willing to deliver it.
As zors rushed to dominate the MA landscape they imposed their flawed model on those who invested in them. It is important to keep in mind that the failure rate of the industry is not simply stated as 50% of the people who went into the business failed. More accurately, 90% of the people who went into the business chose franchising and 50% of those people failed. Most of those people never REALLY wanted to operate a small business. They were sold a bill of goods described as a business that operated itself. Technology was the silver bullet. You only needed to be in the store for the few hours a week that people were assembling meals. Etc. Then, to the extent that these storeowners were capable of solving the problems the realities of the marketplace dealt to them they were disabled from doing so by their franchise agreements. The value of brand was grossly overstated but the zors strove to protect it anyway. I don’t drive from Washington to Boston and stop in NY to buy four raw flank steaks because I can rely on the Dream Dinners name. Your brand is only valuable in your neighborhood to your customers. I can’t tell you what your customers want, you need to ask them. I can tell you what mine do and don’t want.
They don’t want me to start every conversation with, “When do you want that thing that you haven’t yet told me what it is?” (Calendar first ordering). They don’t want to find the website, find the state, find the store and THEN begin a 7-step ordering process. (There is meal prep store software available with all of the back-office support that has a 2-step process: Order & Pay). They don’t want to make a 48-hour reservation to be my customer.
My business model is similar to that of a restaurant. “May we take your order?” I don’t need $200 tickets to be successful. I’ll take my chances that I can add enough value for my customer that they are willing to stop in regularly. If I can’t do that I should go get a real job. In fact, I want them to be in the habit of stopping in. I want to sell them wine to go with that meal. I want to sneak their little girl a cookie. I want to tell them about the great lasagna or the par-baked calzone I just made and sell them some to put in their freezer. I want to give them something that they will eat and enjoy that night so they think of me when they sit back fat and happy. I want to give them enough food so that they are truly satisfied.
It is entirely possible for a kitchen outsourcing business to thrive and grow. This is not a niche business. The potential value of the service was the node of truth that got everybody excited about meal assembly. But meal assembly is an “experience” strategy. As has proven out, this is indeed a niche. It is only appealing on a sustainable basis to a small segment of the population. What is needed is a “service” strategy. The scheduling, the tyranny of the technology, the $200 minimum orders… these are all about servicing the business owner. There’s no future in it.
Fresh foods, one-stop convenience (fresh vegetables, salads, wine, dessert, bread). These are my answers because this is what my customers want. And if I price it too high because I don’t think there will be enough business then there certainly won’t be enough business. Why is somebody going to pay you $10 for two marinated chicken breasts? At least, why are the going to pay that twice? Those two boneless, skinless breast only cost you $2. Cut the sucker a break and sell more.
And if you’re associated with a franchise… QUIT! Just quit. They won’t be able to stop you. They can’t make you stay. Are they going to spend $50k to sue you? They’re broke. And so are you. They’ve already seen to that. They can’t sue for “specific performance”. They will have to prove damages. It would take months, years. What would their judgment be worth and how is it going to look in the class-action suit. Heck, they’ll be gone next year anyway. Just quit. Get your own software for next to nothing. Buy a sign.
One other thing, as I have converted my store from assembly I have found a lot of space left over. I am in the process of negotiating a concession/lease with a baker. Cupcakes and cakes mostly. High traffic business. The $3,000 per month she saves me (she is thrilled to not have to do her own build-out) reduces by $200,000 per year the revenue I need to break even. She will bring bodies into my store and her bakers work 4 AM to Noon. She will staff my sales in the morning and I will staff hers in the evening.
What’s Next? You decide. It doesn’t have to be that bleak. Try as I might, I’ve never been able to make lemonade without lemons. Good luck!
May 14th, 2008 at 8:14 pm
I’d sure LOVE to know what your store is?
Cupcakes, lemonade, cookies?
(No sarcasm intended or implied)
May 14th, 2008 at 8:46 pm
Kitchen outsourcing, such a nice term, strangely it reminds me of some other industry… what was it called?
Oh yeah, a grocery store. You think you can compete with a national grocer?
Whole Foods?
Dean and Deluca?
I wish you the best of luck.
How’s the coalition working out?………..
MB
May 14th, 2008 at 8:59 pm
Does that mean you like it? It’s a little too techno for me but it sure describes the business. Meal replacement was already taken and that sounds too much like Similac.
Is your question can I compete on price? Yes, kinda - well, in the range. Customer service? Superior! Experience? Superior! Quality? Definitely.
Was that a serious question or were you being sarcastic?
And: Quite well thank you. Kind of slow. Life is like trying to change your shoes while you’re running a race.
May 15th, 2008 at 6:24 pm
Well I must say David you have one of the most interesting posts I’ve read in quite awhile. There are however few real specifics. You sound like you changed your model to a grab n go business….but so the meals are cooked or par cooked it sounds like? You were a franchisee who saw the light and told your Zor where to stuff the Calzone? You make it sound like you found the answer. Are you profitable?
I do have to take issue with you on two points though….first few of us got into this thinking we only needed to be there a few hours a week. Where did you come up with that?? If you have been reading the posts as you say you have, MAK owners have given all they have so they didn’t lose it all! Personally I would have lost a toe it meant the business would go!
Second, I would argue there still does have to be a niche for what it sounds like you are doing. Our store was located only half a mile from a grocer that has the premade meals….both of us would not survive on grab n go alone when folks can get everything else they want there too….and I don’t mean the salad and dessert. A liquor store is right next to it as well. Folks are terribly lazy….let’s see two stops or one?
However, when I think about it, if we were in a ritzy neighborhood that was willing to pay consistently for the best ingredients that would differentiate us from the grocer…probably yes….but then that’s a niche.
May 15th, 2008 at 9:02 pm
George-
I got into this business when the client I was working for (who I have recently revealed is my sister) came to me with her failing business. I investigated and learned that she had been defrauded by Dinners Ready. We told them to shove it and reopened as an independent. Sis was never very good with stress and uncertainty. Recently she called me up and said she was throwing in the towel. So here I am… my bride and I bought the business. We ran it out of the freezer for just a little while and have closed - will reopen revamped in June. We sold a lot of meals before we closed so the bills are prepaid for a while.
To your comments:
1) My part-time comment referred to the bill of goods many zees told me they were sold by their zors. As you know and have stated - far from the truth.
2) We are in a nice community in Intel and Nike land. A large international population as well. But, more importantly, we are in a region where good food, organic products and sustainability, and local support for small businesses are compelling issues. If people learned that they were being sold Tyson products we would never see them again.
3) I believe that you can use the service of meeting needs as they occur Now (so called grab-n-go) as opportunities to sell more and increase your ticket size. Wine and salads and desserts are examples of ways to do this. So is actively selling backstock for people’s freezers. But you need to actively sell. Using freezer sales is a good way to keep the relationship alive. And advertise darn it. We are using 8 1/2 x 11 inserts in the regional paper by delivering them to the local dealer and he has agreed to insert them for very little cost. We use Constant Contact for client emails and that really dresses thing up.
4) The niche thing. I am a business guy - a good cook but my bride is the chef/restaurant pro. I break down markets into 4 categories. These are the categories that spell out the criteria that your CORE CUSTOMERS use to choose you. They are 1) Price & Product e.g. (Home Depot) 2) Niche product 3) Specialty Service 4) Unique Experience. Numbers 3 & 4 are the cornerstones of a relationship strategy. Meal Assembly was founded on an Experience strategy. This failed. That is the criteria that people used to choose them, the experience is just too inconvenient, thus undermining the Service component of the relationship strategy. Usually every customer has all four criteria in play more or less and marketplace conversations are indeed dominated by price considerations. But Your and My core customer is never going to choose us because we are the lowest price, here you need to make a value argument. They are going to come to us for the Relationship. And that relationship needs to be founded on Service. The Experience is one of Recognition and Convenience.
The cumbersome online systems that MA owners expect to handle all of the details of customer communication actually serve to undermine relationship. The system needs to be greatly simplified as is now available… like online takeout ordering. Order and pay. Calendar is secondary and only to make sure their order is ready when they come in.
You might have great food. But it’s not niche food unless you have vegan offerings (which we will try to do). What you offer is better defined as Specialty. Great food with Specialty Service and a Unique Experience. Now go out there and make love to your customers.
I don’t think you need to be in a ritzy neighborhood to do this. But you do need to know your customers and understand who your core customers are and why they choose you. Direct all of your conversations toward those who dwell within that bullseye and you will still pick up the ones that sit in the inner rings. If you only focus on price and they are there for the service they probably won’t choose you… and they won’t even know why.
David
May 15th, 2008 at 9:15 pm
I can’t say that I completely agree with this:
And if you’re associated with a franchise… QUIT! Just quit. They won’t be able to stop you. They can’t make you stay.
However, I do agree with this:
They’re broke. And so are you.
Taking the first path is risky indeed and personally, I do believe that would constitute a “breach of contract”. So if a single owner were to try something like that I think there could be some trouble.
However, if dozens of owners across the country were to follow that same path at the same time, well, then you might have something. You could create quite a tipping point with some very interesting outcomes…
May 16th, 2008 at 9:34 am
Tuckerbox says:
However, if dozens of owners across the country were to follow that same path at the same time, well, then you might have something. You could create quite a tipping point with some very interesting outcomes…
And I ask:
So why, oh why, is the Kitchen Coalition so horrible in your eyes?
In the words of Janis Joplin:
Busted flat in Baton Rouge, waiting on a train
And I’s feeling nearly as faded as my jeans.
Bobby thumbed a diesel down just before it rained,
It rode us all the way to New Orleans…
Freedom’s just another word for nothing left to lose,
Nothing don’t mean nothing honey if it ain’t free, now now…
We can sing the blues all day long, but changing our situation might cost a few pennies. Lisa
May 16th, 2008 at 12:14 pm
because it is not a PROVEN model- your giving false hope to already struggling Owners.
May 16th, 2008 at 12:45 pm
For a vast majority of people, meal assembly does not generate enough money to be considered an income. In fact, for a majority of people it is costing them thousands a month just to be open. If you feel you could spend 40 hours a week or less handling your store and generating a paycheck for yourself that would be the equivalent of making $65k a year, then staying in meal assembly is feasible. But that situation would encompass how many people? How many people are even making $35k a year? How many people are actually taking home $3,000 a month for themselves?
My comment was to state the idea of multiple owners under the same franchise creating an action in a unified effort whereby they could get out of meal assembly once and for all. Not simply switch from franchise to independent, but to use that money to take the necessary steps to put meal assembly behind them and move forward with their lives and work towards something that will rebuild their financial situation.
People need to get away from meal assembly, not just switch teams.
I have said it dozens of times and I am going to say it again - meal assembly is a great concept, but it’s not a good business.
May 16th, 2008 at 1:10 pm
Well said Tuckerbox. I totally agree.
I am finally free from the mak industry as of yesterday and I have to say, it feels LIBERATING! I chanted all day - I am free! I am free!
I still have tons of debt and it will take me many years to pay off. But it could be worse.
My advice to anyone still in the business - GET OUT! Pack your bags, and leave it behind. If not for you, for your family and if not for your family, for your future!
May 16th, 2008 at 1:58 pm
Guest, welcome to the club…
David and Lisa-I hope No One on this board takes either of you seriously.
Seriously
Tuckerbox you are right on. You can’t make a silk purse out a sows ear and it won’t change the fact that concept is a DOG by changing the name to Home Meal Replacement-that word has been around for at least 15 years, you plan on just dusting it off, promote it as HMR and become the next “Pinky & the Brain”?
WHEN you post a profit for 2 years with your new/old concept -THEN you come here and give people advice…make love to your customer-You’re kidding right?
Is that the newest catch-phrase in marketing these days?
Marketing? That’s the best you can do go out and sell yourself?
Like we didn’t all go out and sell ourselves.
Hell, if it was that easy sis would have made money right?
You’re gonna tell these people you have the answer and it’s becoming ..what is it MB called it.. Oh yeah a GROCERY STORE?
(Just a note-this type of thing has been done in Philly for YEARS-nothing new-also a franchisor named CENA does what you are proposing and guess what? THEY DON”T MAKE ANY MONEY EITHER!!!)
1.David-You’re “the business guy”- Where were you again when sis was going into hock for her store? You as the “business guy” didn’t enlighten her that owning her own business could be stressful?
Did YOU help her with her due diligence or did you come to the rescue AFTER?
2. Let me get this straight, you’re the business guy?????
3. And did I mention YOU were the BUSINESS guy?
4. You “sis” came on here telling us all you were the best thing since sliced bread and that you were going to “save” her business-I guess that didn’t work out so well huh? She didn’t mention you were her “business guy” brother either.
5.You are also David of Kitchen Coalition fame? Somehow it all makes sense.
What we have gotten from both of you is lie after lie..unreal
David I don’t even really know who you are except someone -business guy- who MAY just have too much money on your hands.
You David and Lisa are UNBELIEVALBLE.
And for every KNOT-HEAD who listens to anything you say they are certifiable too.
**One last question- When did you say you plan to franchise?
May 16th, 2008 at 2:30 pm
I can get the anger - I really can - I’m angry too. But I wouldn’t personally attack people who are trying to succeed in this business. There are plenty of people to be angry at without flipping out on other owners, and quite frankly, David makes some good points. Have you always been doing everything you need to do to keep your customers? Maybe you have - maybe you haven’t. Maybe you’ve been reading these posts and that can and does affect your attitude toward both your business and your customers.
There is a way to make this good concept into a good business and I’m going to struggle to stick around to see if it can be figured out. I’m going to do my part in helping figure it out - and David and Lisa - I appreciate your comments. I may not jump immediately onto every bandwagon, but I can listen, decipher, and reason for myself. Allthingsculinary, apparently, cannot.
May 16th, 2008 at 2:52 pm
Tuckerbox, I agree with you, there are a lot of people in this industry that want to get totally out, and I respect that. There are also people who want to get out, but out or not, have a lease agreement to uphold, what to do about them? And then there are people like me who love my business and truly believe they can make it work–I agree, it is a niche, it was always going to be a niche business, but it WILL work for some people, and so all of these people with various and sundry goals and options need to help eachother find a way OUT, wherever out takes them doesn’t matter, but that is the first step. And for me the second step is to recreate the value that I have found in my system of franchise owners, recipe development, computer support, etc. I am sorry I brought it up, but you brought up the topic. I like your idea Tuckerbox, tell us how you would make it work?
And all things culinary, you are angry, but you need to aim your anger where it belongs, my trying to build a business should not be so threatening to you. And if I am a failure, well so be it, and people are free to ignore anything I say, but at least I have always been honest about who I am and my accomplishments, or lack thereof. I won’t be the first or the last to fail or succeed, but I can know I gave it all I had and never hurt anyone in the process. Can you say that?
May 16th, 2008 at 5:10 pm
ATC-
You are right. I would have told her not to do it. She didn’t ask. It is one of my sayings, “If you give a person an answer to a question they do no have, they will not hear you.” Clearly you do not have any questions. I would encourage you however to refrain from forming conclusive judgments if you have not bothered to inquire about the facts
My sister couldn’t take the stress. She’s not a foodie. She can’t even smell or taste. For her, MA was a fatal attraction. She bought the zor bill of goods that this was a business that would more or less manage itself and she believed she could make it fly by adding good marketing. My sister got out early. It was a good decision for her and it would be a good decision for a lot of the readers. When she said she couldn’t take it any more and was going to simply close I tried to convince her that she had arrived at a place of freedom. Since she had accepted worse-case scenario she could now just have some fun with it. She couldn’t do it and that was the best decision for her.
Tuckerbox, I agree with you as well. But I believe that a good concept can be a basis for a great business. But the concept doesn’t make the business. The business makes the business. Who your customers are, how you communicate to them and the details of what you ACTUALLY do day in, day out (chop wood, carry water), that’s what makes the business. MA got it wrong.
As for termination, anybody can close. You don’t need to terminate to close. And many owners should take their lumps and get it over with. So many have already. What I feel termination does for those who should get out of the business is that it may give them something to sell. They have a customer base, a freezer, a cooler and a lot of stainless steal. Can they turn that into something that a person like me thinks he can combine into a decent business? I think it’s their best shot. Perhaps it will just help them get out from under the lease… it beats a lot of other options.
And for those who have learned their lesson that the devil is in the details (and in the zor boardrooms) and they think they might be able to use their experience to create a better result… do it. Nobody’s is going to hand it to you. Certainly not your zor.
ATC - I promise never to be rude to you. Will you give me the same promise?
David
May 16th, 2008 at 5:56 pm
Can’t zors sue zees for lost royalties if they close? I’m sure this is on a case-by-case basis, but for some reason I was under the impression that this particular threat was very real.
May 16th, 2008 at 6:22 pm
Zors can sue zees for lost royalties, but my hope was always that if we ALL leave, they would have to sue all of us in all 50 states and with such a mass defection we would surely attract the attention of the best franchise attorneys in the business who would take all our cases for a fraction of what it would cost us all to defend ourselves. Just a thought, I thought it was a good one, but others didn’t agree, I haven’t given up, though, Lisa
May 17th, 2008 at 11:41 am
David:
First to clarify, our store is closed. Note that I said “was” near a grocer. That said and now that I understand more of where you are coming from, I too don’t think you should be advising what will work. While you certainly seem like you know what you are talking about in some respects, you also talk in circles at times and most importantly….it’s all hypothetical. I found your original post so interesting because it sounded like you had actually made this different business model work….not that everyone could go out and find a baker to rent half their space or have the money to retrofit to something else….just a new sign is 5K! Also I always have thought in retrospect that were we to do it over again, I would rent half the space, only make the meals, and combine other things that sold during the day (ie coffee and pastries and catering)….so you caught my attention. It’s terribly hard to let go!
But the reality is you have no track record and you must understand that the MAK owners here have had their fill of Zors throwing stuff against the wall to see if it will stick. For that reason it is giving false hope as was already said by others and no one should be even encouraged to revamp or buy a closed store to follow anything resembling what you are doing.
I try to keep an open mind when reading posts because in fact we are all interested in how to change the broken model to one that works (which is a long shot)….forget the fact that we were sold something that supposedly was a viable model. For those still in business with money to retro fit their store (not many)….ideas that have ACTUALLY worked should always be welcome. For Zees, there would of course be the legal crap to deal with and I personally have my doubts that any Zor would let such a precedent stand.
Lastly, I am naive in terms of your relationship with others posting here based on references by you and others. Why did you recently reveal who your sister is and to who? Is there a relationship with Lisa or Kitchen Coalition? I might be slow.
Lastly, you seem to have a lot of confidence that what you are doing will fly and I wish you the best.
May 17th, 2008 at 12:22 pm
Here is a guy: David Bowels, who has uncovered the mucky pit of the ZORS. He has spent countless hours proving that Dinners Ready among other Franchise’ the lies and fraud that they resprent. In doing so, He has put together a plan to help Owners get out the UFOC. On the surface it looks good. He even got seed money from Bert V. (meal prep) ($70,000) to help support his efforts. In doing all of this He understand that the original business model is failed- unfixable.
Originally he has quoted ‘his’ client, now it seems it’s his sister. This still could be true, but why not come out and say that from the beginning? To protect her? What is there to protect? To gain sympathy amongst Owners…to gain a spot on meal assembly watch?
What David Bowels is claiming to start is not something NEW. The business model he is designing is STILL not proven to work and make a profit. It all SOUNDS good but like Meal Blogger has pointed out, others with DEEP pockets have tried and they too have disappeared.
Here is my speculation: I think David is out to buy up all the stores, at rock bottom prices, pennies on the dollar, so He in return can resell his NEW invention.
Everything starts out all innocent and wonderful- then BAM, out comes the greed, dishonesty, & lies. WE have already seen one lie….(claiming to help his sister)
Like I have stated in my last post, David is the Business guy, and he sees $$$
…at your expense!
May 17th, 2008 at 1:08 pm
Hey if David wants to buy my location “at rock bottom prices, pennies on the dollar, so He in return can resell his NEW invention.” Great-it is better than what I have now.
May 17th, 2008 at 2:51 pm
So David, is that who you are? If so, the web of deception in this industry continues to amaze. However I will say even if his real interest is in buying folks out for pennies on the dollar for a model that doesn’t work either, then his deck is missing a few cards.
May 17th, 2008 at 5:47 pm
I put out a couple of other posts that said who I am. My business is what they call turn around management. I work with distressed businesses. Usually they are much larger than an MA store. I have a good track record of going into situations that are trapped in a cycle of failure and producing results. Most often the businesses have been too far gone or the owner just wants out.
I learned that ATC is Kelly (I didn’t know this when I first responded to her little diatribe.) She owned a meal prep store that went bankrupt. I met her when she volunteered to be a board member for Kitchen Coalition. One day she kind of snapped and went on a Bert/What’s Cooking Software tear. It is a little sad that she keeps expressing her judgments about things that seem to confuse her. She is becoming a real pain in the a**. Kelly, go away.
Bert and EMP have nothing whatsoever to do with Kitchen Coalition. Bert has not put up a dime. Bert and I have talked on a number of occasions. he talks to a lot of people and has some great insights. Bert has positioned EMP as a service provider. He really endeavors to maintain neutrality between zors and zees and he has really done a pretty good job at that. I wouldn’t want to be him right now and I to not have the political savvy to walk a line like that. And I wouldn’t care to have any association with the zors unless one of them came to me to facilitate a dissolution. The $70,000 came from me, from my attorney, from my graphic artist and from What’s Cooking. And I don’t want to argue with anybody about the merits of making a living providing a service for people who are having difficulties. There isn’t anybody except zors who have made much money on MA, least of all Bert and WCS.
Bert believes that the Coalition is a timely incarnation to provide advocacy and support. I am on the advocacy side. Lisa is involved. She is more about support… always has been and a lot of the readers know that from working with her over the years. I have tried to avoid positioning the Coalition as “against”, as there is so much negativity in MA right now. But, frankly, I really am all about kicking zors butt. That they dally as they do and ponder the disintegration of their schemes while there is blood in the streets and innumerable families are being devastated because they said yes to a zor… well, it’s reprehensible. That’s the best thing I can say about it. I honestly cannot figure out why people are so passive about disemboweling them.
Shelley was my client and is my sister. I would not have taken her case no matter how compelling the story if she wasn’t my sister. I cost too much. I gave her half-rate. I think she paid me about $15,000. I stopped charging her and worked for free for the last 3 - 4 months. I am fired up about Dinners Ready the most. They are outright frauds. I have proof and the State of Oregon found it compelling enough that they commenced an investigation that is currently ongoing. DR has no defenses. My second tier of targets is Super Suppers and Dream Dinners. MGFK is right up there. Shelley and I did not reveal our relationship to anybody. We did not want to diminish our roles while the battle was raging with DR. Shelley quit. She has a case for damages against those bankrupt suckers but how would she get paid. DR’s CPA breached a few major standards of his profession and many people relied on his audits that concealed the scope of DR’s insolvency. His E&O insurance is a great resource to tap. DR’s attorney is a hack with bad grammar and I’m guessing she has some perverse connections to these sociopaths in addition to legal representation and her E&O (she’s enough of a hack she probably doesn’t carry a policy) may also be a good resource. Her name is Janet Martin. [Hey Janet! You don’t like what I’m saying here? Well, come get a piece of this you lowly creep!] See what I mean about keeping it positive.
(You see what I mean when I talk about my political savvy).
I am curious how it would work but I have no interest in buying any stores. Please don’t come to me with any offers.
I am no better than anybody but I am really good with business and at making money. I am convinced I can’t make any money on an MA owner. But I could make a few mortgage payments from helping 100 of them, or 300. I have promised Shelley that I will repay her fees if this works out OK for me. I hope some owners will let me get out front and take a few arrows for them. WCS will pay me to coach people on a business solutions for their independent stores and write the requirements for the software. As long as I have the time and resources I’ll help anybody who asks at no charge and nobody is obligated to buy software. It is my business strategy to add value and the rest will take care of itself. And I really want to kick zor butt.
Meanwhile I own a store. I met with the baker last night and we worked out a new floor plan. She is going to spend about $20,000 on improvements. I’ll have all the room I need including room to merchandise wine and a little pottery. My rent is $4,300/mo and she’s going to pay me $3,000, 1/2 the electric bill and 1/2 of the gas bill. I can make $80,000 per year now at $320,000 per year and break even at about $240 - rough numbers. I went to the farmers market today and came back with some great leads for local organic meat and produce suppliers at Very competitive prices. These are my solutions for my store. Each problem has its own answers. There are no silver bullets.
I know a lot about the software now. I could tell as soon as I started investigating this industry that the bassackwards ordering systems were a big part of the problem MA owners face. It’s unbelievable to me that so many people would think these processes were a good idea.
Good people disagree. I advise the reader (though you get what you pay for and my advice is free) to avoid forming judgments about things that you have not directly observed. The habit of doing so is one of the scourges of our time.
Kelly, take a break. And George, be careful what you ask me. I am not known for brevity. But, honestly, thank you for taking the direct approach.
David
May 17th, 2008 at 7:57 pm
So why does Kelly have a new alias? I could feel the anger and venom and the pinky ahd the brain reference was a giveaway, what is that anyway? Lisa
May 18th, 2008 at 10:08 am
Very interesting is all I will say for now. Thx David.
May 18th, 2008 at 2:14 pm
Yes and you can see Kelly’s new website - http://www.allthingsculinary.biz - which it looks like she has partnered with Mindy from Joyfilledyou.com.
May 18th, 2008 at 6:07 pm
I am glad Kelly is a pain in David’s Ass. Her opinion has been instrumental to me. I may not agree with everything she says but it sure is entertaining! She sheds light on these entire yahoos’s. If it weren’t for her anger & passion, the Zor’s would continue to lie and steal from innocent people.
I don’t have time in my day to do the research she does; I have grown to depend on her for advice.
Again, David with Kitchen Coalition is defiantly interesting, and I am all in favor of bringing down the Zor’s.
Kelly, Tuckerbox and others give a great commentary and I enjoy reading what you have to say. So, carry on…remember who the enemy is.
May 19th, 2008 at 1:12 pm
Great things are seldom accomplished by filling a room with people who agree with each other. That being said, I guess I’m gald Kelly makes my posterior region ache.
The dialog is useful, evn those parts of it that come from left field. Thanks for your comment One DDOwner… and Kelly too I suppose.
D
May 19th, 2008 at 2:29 pm
One other comment on Kelly. As a former owner of the same the franchise she had and having had personal conversations with her, I will reiterate her passion for educating the public about the realities of the MAK industry. I share that passion though she, Tuckerbox and others here have had the energy to put much more into the effort than I. Many former MAK owners chose to push forward without spending any time lamenting over what could have or even recognizing they were had…otherwise there would be even more blogging here, elsewhere, and more lawsuits.
Though some of Kelly’s message may be lost at times by the loudness of her voice, her intentions should not be doubted. Through their research much has come to light about the many webs of deceit that abound within the industry. There is a natural paranoia that has resulted!
You have opened up about who you are and sound committed to ensuring the Zors are pushed into the sunlight for what they are. However at the same you are choosing to see if you can create something different that will in fact work….great! Go for it and develop a proven system….I think the MAK owners here would be surprised if it looks ANYTHING like a current MAK if it is successful. Just don’t try to get others on your bandwagon prematurely.
I look forward to your continued commentary. You’ve got a lot of work ahead of you!
May 19th, 2008 at 2:33 pm
Although this seems contrary to some of your other goals, I completely agree with these statements:
David: I really am all about kicking zors butt. That they dally as they do and ponder the disintegration of their schemes while there is blood in the streets and innumerable families are being devastated because they said yes to a zor… well, it’s reprehensible. That’s the best thing I can say about it. I honestly cannot figure out why people are so passive about disemboweling them.
Lisa: Zors can sue zees for lost royalties, but my hope was always that if we ALL leave, they would have to sue all of us in all 50 states and with such a mass defection we would surely attract the attention of the best franchise attorneys in the business who would take all our cases for a fraction of what it would cost us all to defend ourselves.
I don’t know if its proper to encourage such activities (wink wink), but I would agree that by a more unified stance owners may have more leverage to get out of their contracts and it may prove too costly for the Zors to take action.
I would look at this as the first goal the owners need to accomplish. Very little else can be done until they distance themselves from their corp. affiliate. That could take many forms…
May 19th, 2008 at 3:06 pm
Tuckerbox says:
I don’t know if its proper to encourage such activities (wink wink), but I would agree that by a more unified stance owners may have more leverage to get out of their contracts and it may prove too costly for the Zors to take action.
I respond:
May 19th, 2008 at 3:14 pm
Tuckerbox says:
I don’t know if its proper to encourage such activities (wink wink), but I would agree that by a more unified stance owners may have more leverage to get out of their contracts and it may prove too costly for the Zors to take action.
I respond:
I would never encouage anyone to take that step, I just dream about it, and consider it myself every day, so I am always looking for like minded people to talk to who might like to throw around ideas, etc. I have never engaged in anything illegal or improper (well, to paraphrase GW, when I was young and stupid, I did young and stupid things, but that’s irrelevant to the matter at hand…) and would never encourage anyone else to do anything they think is improper, but a good discussion of options is not wrong. Any dreamers, feel free to give me a call, Lisa
May 19th, 2008 at 4:39 pm
Lisa: I hope you didn’t take my comment the wrong way, of not encouraging owners, it was loaded with sarcasm, thus the (wink wink).
I agree with the statements both you and David made.
And I’m all for discussions on how owners can accomplish those goals!
May 19th, 2008 at 6:31 pm
How about a new stream called “Zor Buttkicking”?
I am all about encouraging owners to terminate. Maybe you get that.
This is contract law. I am not a lawyer but I am pretty experienced with contract law. My own concerns about “encouraging” zees to terminate originally pertained to the issue of contractual interferance. I have consulted multiple attorneys on this and have gotten the same answer. As long as I am not extorting/bullying or deceiving there is no claim. Even if I am a competitor, which I’m not. Of course, anybody can sue anybody. It was one of the main reasons I wanted to form Kitchen Coalition, so that the zors would need to go through that corporation to get to me. Things are going too slow at KC and I’m not that patient so here I am on the frontier all by myself. It’s risky, but I’m pissed off. And, heck, I’m pretty broke too so there’s not that much downside.
There are two ways to get out of the relationship with a zor but they both amount to simply walking away. The first is to rescind and the second is to terminate. The zees with a case for recission are those who signed up with just about any zor in 2007 and 2008. Some, such as Dinners Ready zees, have good cases for recission in 2006 because that document was fraudulent. Virtually every zor did not update their disclosure docs after things went south on them. They used their state filings as a safe harbor and to license yheir disclosures for a year. Most of the regulatory states have a stated requirement that zors must update the UFOC if there is a “material change” in the company’s condition. I can’t find a single zor who has filed new docs this year. I know of one Super Suppers sale where SS just recently provided a UFOC to a new buyer. They used the 2007 filing that had 2006 financials, store counts and failure rates, etc. DO YOU THINK THAT THERE HAS BEEN A MATERIAL CHANGE IN SS’s CONDITION SINCE 12-31-06? In fact, SS’s UFOC was outdated when they filed it as the store failure rate was plummeting to almost 150 failures. They only disclose 25 failures in the 2007 UFOC filing. Thus, every SS owner who relied on the 2007 UFOC has not only a great case for recission but an excellent case for fraud.
In the case of fraud, the corporation does not provide a shield for the officers and shareholders. For example, in Oregon the law requires zors to furnish financial statements not mor than 90 days old and also requires that the UFOC is fully updated and current at the time of delivery. To use outdated Washington or California filings is not tolerated. Oregon reviwed the facts against Dinners Ready and immediately commenced an investigation. The law in Oregon states:
ORS 650.020 Liability of franchise seller; defenses; amount of recovery; attorney fees; joint and several liability; limitation on action; indemnification of corporation; right of contribution.
(1) Any person who sells a franchise is liable as provided in subsection (3) of this section to the franchisee if the seller:
(a) Employs any device, scheme or artifice to defraud; or
(b) Makes any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
(3) The franchisee may recover any amounts to which the franchisee would be entitled upon an action for a rescission. Except as provided in subsection (4) of this section, the court may award reasonable attorney fees to the prevailing party in an action under this section.
>>>>>>> (5) Every person who directly or indirectly controls a franchisor liable under subsection (1) of this section, every partner, officer or director of the franchisor, every person occupying a similar status or performing similar functions, and every person who participates or materially aids in the sale of a franchise is also liable jointly and severally to the same extent as the franchisor, unless the nonseller did not know, and, in the exercise of reasonable care, could not have known, of the existence of the facts on which the liability is based.
In Washington law it clearly states the such omissions are also characterized as fraudulent and the zor is subject to treble damages. BUT ARE YOU GOING TO SUE? You’d want to name everybody, including their lawyers and accountants. It would take 1 - 2 years to resolve. You could win and lose on appeal. In the case of DR, they’re already broke. AND - here is the important part - you’d spend $50 - $100,000. The good news is, these are the same considerations that the zor has. They don’t have the scratch for their own retainers. They’ve been talking to their attorneys and they are scared to death. If they put you into a lawsuit, you’ll have countercalims. They know they’re vulnerable and they don’t want to draw your fire. They know they’ll lose you sonner or later and only care because it would be one less store in the portfolio when they finally dupe some sucker to buy their company. And they can’t MAKE you perform and they can’t get through you to your buyer - in the event you have one.
So, as I said, anybody who received their UFOC in 2007 and who wants to walk away should call their brothers and sisters and throw a wave of terminations at them. The second wave could/maybe should come from zees who see the handwriting on the wall. Let’s solicit everybody who is thinking about bankruptcy and talk about it in a private forum. The Coalition would provide this if it makes T-box nervous but I think MAW would be the best site to use. All of the zees who are near death should band together and just quit. Sign up for software for next to nothing (heck, I might sponsor some of it) and GO TAKE ONE FOR THE TEAM. These zees might not even need to change their sign, just their web page. The more terminations there are the more evidence there is for zees to defend themselves if a zor did get cranky. The third wave is all of you who are just about pissed off enough to do it out of spite.
Think how the zors are using your royalty dollars these days. As far as I’m concerned, to keep giving them money is to be part of the problem. Now THAT comment ought to bring out the guardians and naysayers. For myself, I’m inclined to fight if I find my back against the wall because somebody decieved me or has failed to keep their promises to me. I have never been much of a fan of powerlessness. I have to admit though, from time to time this attitude has gotten me in more trouble than I could have avoided. This post is a case in point. And I’m not even a zee.
David
May 19th, 2008 at 7:40 pm
David,
We may not always agree on various topics, but that was a good post.
I did notice one statement that isn’t exactly accurate.
“I can’t find a single zor who has filed new docs this year”
DD has filed new FDD docs. I know some folks on this site have seen them. I have not, but as soon as they are made publicly available, I’m sure Tuckerbox will link to them in the UFOC section of this site.
Unless I’m mistaken all franchisors have until July 1, 2008 to adopt the new FDD format. I understand this to mean that any franchisor that wishes to continue selling franchises must have new documents filed by that date.
MB
May 19th, 2008 at 8:46 pm
MB is right, DD has filed in CA, but no, the zors should have filed within 120 of the close of their fiscal year, which I think is December 31, for most, and David is right about updates, but it is not just states, the FTC rule and the CFR require quarterly updates to the UFOC for material changes. The FDD rule goes into effect in July, but that just means that Zors could either file a UFOC, then update it, or file an FDD now. They could have started using the FDD last July, I think, not sure of the month, but sometime last year. Was that clear as mud? The bottom line is the Zors, all of them had enough changes last year that they should have filed updates and as far as we know, not one of them did. Lisa
May 19th, 2008 at 11:53 pm
I have been talking with Mindy for about 4 mos. over this idea of the Kitchen Coalition. Your post David was just what I needed to read tonight. It is something I am interested but where do I start. I am broke, and facing the summer on a shoe string.
Scared is an understatement- I choose a franchise in 2006 so I Wouldnt have these issues, and now I am tired of all the false promises, lack of support, & NO marketing plan other then these 87 Initiatives’. (Dr. Phil being one of them) & other mindless corporate scheme.
Thanks.
lokiju
May 20th, 2008 at 10:25 am
I’ve been wondering how many UFOCs have been updated…last time I looked at STU it sure didn’t reflect reality. Great post.
In terms of Zees terminating their contract, if this thing gets any traction I sure wouldn’t think you want to keep discussing it here for all the world to see. Coordination could be problematic. Because some are still drinking Koolaid keeping things confidential will be a bitch.
May 20th, 2008 at 11:09 am
ODDOTA - Today’s lesson is on the hypothalamus.
My understanding of the hypothalamus is that it a gland in the brain that, among other things, can control every endocrine gland in the body. It secretes peptides in response to stimuli and these race to specially configured receptors in cells, inserting themselves as a key into a lock. When the key fits, the peptide can penetrate the cells and invoke the prescribed response. If we are in a situation or have formed habits wherein we practice or experience an overabundance of one feeling, the cells’ receptors become filled and the peptides don’t have any place to go. Sensing this, when the cells regenerate they do so with more receptors for the common peptides - and this important - at the expense of other receptors. Therefore, as an example, if we are experiencing an overabundance of anger or fear we eventually diminish our capacity to experience joy or well-being. These new hybridized cells are longing to have their receptors filled so the brain mollifies them by indulging in these common feelings. And the cycle continues. Thus - we actually become addicted to these feelings. Any time you have a feeling that you are not in control of you are participating in your addiction. It takes a lot of will and determination to break this cycle.
I believe all things happen for a reason, that our angels conspire in the night to bump us onto our path. Faith is not knowing something that cannot be proven. It is an actualizing force. When we take that step onto the right path we unleash the hierarchies to do their work, to fulfill their destinies. This is the force of faith. Our angels weep while we dither and dally. I am not prescribing anybody’s “correct path”. I am just suggesting that they grab hold of what they need to do the right thing for themselves and to regain their balance.
I have taken some terrific hits in my life… ravaged by scoundrels. I learned my distressed business business the hard way. I have been self-employed since 1978. This is the first time around for many zees. In looking back, I realized that the creeps who pillaged me actually provided a service, as they bumped me off of a path I shouldn’t have been on. I’ve wondered if their and my angels had been conspiring in the night. I believe that some people actually play these roles in a number of people’s lives. In a way, they have sacrificed themselves (and their karma?) to provide this service. Perhaps holding open the possibility that this is true can help free people from the tyranny of their fear and anger. You are where you find yourself and you got here for a reason. This is not where you want to stay. What is the next step? There are many among who should be taking similar steps - surrender, terminate, hunker down… whatever. Work together, support each other - and get on with it.
D
May 20th, 2008 at 11:37 am
Well written David!
May 20th, 2008 at 12:58 pm
George- Tuckerbox has set up a private group to add security for discussing issues that might not be appropriate to hang out there in plain view of the entire universe. I just posted in the forum to allow people to discuss this matter with greater privacy. This is all new stuff for this site (and for me) so I am not sure how it will all work. Check it out:
http://www.mealassemblywatch.com/Forum/index.php?topic=244.0
D
May 20th, 2008 at 1:25 pm
David, I agree with a majority of what you say and how owners need to come together and that if they were to break away in droves that franchisors would be pretty powerless to do anything and further that if such an action were to take, I have my doubts as to whether that franchisor would have the financial stability to stay in business. However, I still shy away from the idea that owners should then establish themselves as independent store owners and continue in the meal assembly business. This seems to just be trading one pair of shackles for another. It also seems to be a Catch-22. If you were making money under your current system there would be less chance you would want to break free. If you aren’t making money, getting rid of the royalty would certainly be helpful, but is that the only think that keeps you from making a profit?
Breaking away from the franchisor is probably the best choice for many out there, but considering the economic times and a lack of stable system for making money, I still think continuing in the industry, but under a different banner poses just as many risks.
May 20th, 2008 at 2:39 pm
T- I can’t say that I disagree with you. The level of risk remains high and it would be more work than ever to create success. But you cannot ignore the fact that most of the risk capital has already been sunk into the business. The largest remaining risk is the additional time the owner would give over to the business… and, of course, negative cash flow from operations. This has different offsets for different owners. For example, those owners with personal guarantees on space leases may have a lot to lose by just closing shop.
But there are a few other significant facts. 1) An MA franchise is extremely difficult to sell. Any business is difficult, but a revamped hybrid business is a better story to sell and the buyer won’t need to pay fees and royalties. 2) A non-franchised storeowner is free to run their business as they please. Selling wine, subletting or sharing space with a related business and adding sit-down dining are few examples of adaptations an independent can make that a zee can’t. 3) Not paying royalties is good for business.
Every set of circumstances needs to be examined on its own merits. If I was tied to a lease with personal guarantees and owed money on a pile of stainless steel, I might try to set somebody up in business as a partner, no money down, and I step away as the “investor”. Let them infuse their energy and capital into a new plan. They can make the lease and loan payment. If they fail I’d be no worse off and they might last until the lease and/or loan is paid. I would give them an attractive buyout option. If they were successful I would either get a share of the profits or they’d buy me out and I’d get a chunk of cash.
OK, that’s a deal a lot of people couldn’t make… but some of them could. But none of them could do it as a zee. This all being said, terminating is not a silver bullet. In many ways you’d essentially be starting a new business. But terminating is a gateway to many options that are not otherwise available.
May 20th, 2008 at 5:42 pm
David, I love what you wrote about faith:
I believe all things happen for a reason, that our angels conspire in the night to bump us onto our path. Faith is not knowing something that cannot be proven. It is an actualizing force. When we take that step onto the right path we unleash the hierarchies to do their work, to fulfill their destinies. This is the force of faith. Our angels weep while we dither and dally. I am not prescribing anybody’s “correct path”. I am just suggesting that they grab hold of what they need to do the right thing for themselves and to regain their balance.
I just thought it was worth repeating. Some days, faith is all I have to keep me going in this quiet store . . .
Thank you!
Kaye