Much of the food-retailing industry segment concerned with meal solutions is gathered this week in Philadelphia for the annual meeting of the International Dairy-Deli-Bakery Association. At the top of both the official agenda and unofficial talk in the hallways is sure to be just about everything about the meal business.
In keeping with that, two issues of SN leading up to this week's IDDBA show have offered a special focus on the meal-solutions question: the SN of June 1 and this week's issue. The earlier issue featured an interview with Carol Christison, IDDBA's executive director, who spoke about the importance of the meal business to the supermarket industry. She pointed out that the centerpiece of this year's show is the ShowPlace Merchandising theater with demonstrations of how to sell meals.
As for this week's SN, you'll see a host of news articles about deli, food service and competitive formats. To pick something almost at random, you'll see that Fleming Cos., Oklahoma City, is working on the fresh-meals business from the distribution side by developing something of a turnkey solution for retailers who don't have sufficient expertise to launch their own meal offerings. That's on Page 24.
It's increasingly evident that supermarkets' foray into the meal business is very real. A study issued recently by the Food Marketing Institute shows that more than eight in 10 supermarkets now report offering signature menu items. It's also instructive to see that the number of items offered is declining to a median of 30, two-thirds of the 1996 figure. This shows that companies are increasing in their sophistication concerning menu items, and are better able to focus their energies on those that sell. Items that consumers demand most are chicken, pasta, sandwiches, beef and salads.
Despite all the outpouring of optimism concerning supermarkets' meal business, the occasion of this week's IDDBA show is a good time to point out an increasingly plain -- although seldom mentioned -- irony that surrounds the situation. The irony is that the supermarket industry was plunged into the meal-solutions business largely because of the competitive threat posed by one company: Boston Chicken, Golden, Colo. That's the parent of the far-flung Boston Market enterprise.
What's ironic -- or maybe even weird -- is that in economic terms, Boston Market is far from a successful company. That fact was pointed out to me by an old industry friend of mine, Tom Haggai, chairman and chief executive officer of IGA, Chicago. He wrote to remind me that perhaps three years ago he was prescient enough to predict to me that Boston Chicken might eventually prove to be less than a howling success. "I became increasingly weary at food-industry meetings when we were told to emulate this company. How grateful I am that we haven't copied their bottom line," he wrote to me.
Indeed, as of late last month, Boston Chicken posted a first-quarter loss of $4.38 per share. The price of a share of stock has plunged from as high as $41 in 1996 to about $20 a year ago to about $2 last week. Management hasn't escaped unscathed. Early last month, the chain's co-chairmen, who also hold the chief executive officer and president titles, resigned, as did its chief financial officer. New management is now looking into asset sales and other ways to make upcoming debt payments.
There's no question that the Boston Chicken experience should signal the supermarket industry to keep a sharp eye on sales and profitability. A popular menu concept apparently isn't sufficient to guarantee either.