Meal-prep operators build their businesses with mixed results

July 12th, 2008 |

I came across this article which had some interesting comments about the state of meal assembly back in 2007. As you can see the idea hadn’t really caught on like everyone thought it would and you could expect a 20% failure rate of the 1,300 currently open stores.

“The concept hasn’t caught on the way everyone thought it would,” Stender, a veteran of advertising sales, said in April. “Old habits die hard. Whether they’re running into Publix for a rotisserie chicken or going to a drive-thru restaurant, they are enduring that rigmarole every single day, and they still don’t make the change”
The number of meal-prep operations nationwide has exploded over the past few years, jumping from 40 stores three years ago to about 1,300 today, said Bert Vermeulen of the consulting firm Easy Meal Prep, which is a member of the two-year-old International Association of Meal Prep Businesses in Oak Creek, Wis. With such explosive growth, however, the meal-prep segment can expect a failure rate of about 20 percent over the next year, Vermeulen said.

The middle of 2006 saw customer interest in the idea starting to wane, but the number of stores kept increasing. By 2007 the number of stores simply outnumbered interested consumers and by the first quarter of 2007 you could see the effects it was starting to have. Stores were indeed closing and the number of customers visiting meal prep kitchens was on the decline.

So the unrestricted growth mentioned in 2006 was adjusted to represent a more realistic view of the world.

But from this article we get:

In 2006, Vermeulen predicted the number of meal-prep outlets would reach 3,000 by 2010 with $1 billion in revenues. Today, the association forecasts just 1,935 stores with $650 million in sales in 2010.

Meal assembly has been on the decline for over a year now and that was before the cost of ingredients nearly doubled and the economy nose dived. But yet somehow, meal assembly will once again show explosive growth and open another 800 stores (nearly two a day) in a little over a year? Or let’s say we go until the end of 2010 to try and hit this number, it’s still one store opening just about every day from now until December 2010 (365 days x 2 years=730 stores). But these new figures don’t take into account any of the stores that are currently in the process of closing or will close by the end of this year. Once again I ask how is this forecast even remotely possible? Is there any sense of reality to that statement? People are walking away in droves from this business and sadly many of them are carrying $250k in debt with them. I really would like to know under what set of conditions this forecast will ever come to fruition.

This article shows an industry already in distress and it has clearly followed along the same path. MA stores hit their peak in 2007 and even though he back pedals again the 20% failure rate was at least closer to the truth at the time.

Over a year later, very little has changed.

Meal-prep operators build their businesses with mixed results