Meal-prep operators build their businesses with mixed results

Nation's Restaurant News, August 27, 2007 by Andrea Brunais

CLEARWATER, FLA. -- Tampa Bay Supper Club owner Dave Stender says that the question "What's for dinner?" creates daily frustration in the lives of busy people. Even so, marketing the Supper Club, a meal-assembly concept based here, was tougher than he anticipated. In April he was looking for a partner with $100,000 to invest, hoping, he said, that marketing strategies and food upgrades including such exotic meats as boar would bolster his financially struggling two-year-old business. Without such an angel, he would be forced to exit the business, he said. In August, the concept's website noted that it was for sale because one of the owners was moving out of state and the phone had been disconnected.

"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.

For every story like Stender's, however, there are stories of success. Michelle Demo, co-owner of the eight-unit Tampa, Fla.-based chain WeekDay Gourmet, sees her meal-assembly kitchens as havens for people too busy to cook and those who want to avoid "going out to dinner every night and spending a fortune."

At WeekDay Gourmet, after an investment of about two hours, customers walk away with a half-dozen meat- or fish-dominated dinner entrees to stash in the freezer. The dinners, while cooked at home, are first assembled in a kitchen whose staff has already done the shopping, cleaning and measuring, Demo explained. The kitchens reportedly started in Seattle as after-church parties among friends and began spreading nationwide in the late 1990s.

The meal-prep concept took off in west central Florida in 2004, growing from five stores to 21 in Tampa and St. Petersburg between 2005 and 2006, Vermeulen said. Today there are 23 meal-prep kitchens with three new ones on the way. Some are franchises such as Dream Dinners or the Tampa-based chains Let's Eat! and WeekDay Gourmet, while others are independents.

Statewide in Florida, there were 57 stores by the end of 2006. By April, that number was 98, with those stores soon to be joined by 29 openings. Market penetration is poised to begin in the Miami-Fort Lauderdale area, Vermeulen said.

Meanwhile, Imagineats, also an independent stere in Tampa, closed its doors for good in April after just more than a year in business. Owner Ellen Zusman specialized in hormone-free and antibiotic-free meats. Despite the well-defined niche, she found the business required a continuing investment of $5,000 a month, financed through her earnings as a realtor. Imagineats, while finally beginning to break even, was a "financially and emotionally draining" enterprise, she said. In March, she decided to "walk away from [her] investment," determined to spend more time with her 2-year-old daughter and earn back the $100,000 she sank into Imagineats.

The "maturing market" of food-assembly kitchens in west central Florida and Orlando will lead to a shakedown, Vermeulen said. He characterized Stender's and Zusman's troubles by paraphrasing Warren Buffett: "It's only when the tide goes out that you can see who's been swimming naked."

In a pioneers' market, "you could make a lot of mistakes and still succeed," he said.

The challenge as stores begin to crowd cities, he said, is for stores to brand themselves in one of four niches: a "party" store, where meal assembly is a convivial outing; the classic model with sign-up required two days in advance; a grab-and-go emporium for the impulse shopper; or a store focused on singles and retirees concerned about nutrition.

For the Supper Club's Stender, the west central Florida growth spurt brought "four or five places just like mine within a five-mile radius of my store," he said. His self-confessed errors were undercapitalization and too few hours devoted to marketing.

Yet Dream Cuizine, an independent in Florida's Pinellas County, is "doing wonderfully" after 15 months in business in Palm Harbor, said co-owner Jolene Essex. Not bound by a franchisor's set menus and policies, Dream Cuizine doesn't require a minimum purchase.

"You can come in and make just one meal," Essex said. The cost is $3.25 per serving for an entree that serves six, and less than 50 cents more per serving will buy you preassembly.

Essex credits Dream Cuizine's success to community involvement, such as donating to charity auctions and sponsoring youth sports teams, and a lack of direct competition in northern Pinellas County.