Time will show that we now live in the dog days of deli – a time of uncertainty about how to proceed and how to build an industry. The cause of the interruption: The collapse of Boston Market.
When Boston Market – once known as Boston Chicken – burst on the scene, the reaction was visceral. You could hear the passion in the voice of an old grocer who told how his store had been selling rotisserie chicken for decades and he wasn’t about to let this upstart steal the business.
There was genuine fear throughout the industry that business was going to be lost, and aggressive action was needed to stave off the interlopers on the supermarket share of stomach. In the councils of FMI, it was this attitude that led to the birth of the Meal Solutions show. Boston Market was a call to arms to the deli.
There were hundreds of articles about how much business was being lost by supermarkets to food being prepared outside the home. Thousands more studying Boston Market, then later upstarts such as eatZi’s, all pointing out the enormous failures of supermarket deli operators. Some industry conventions seemed to turn into almost surreal self-flagellation sessions in which supermarket operators paid good money to attend session after session telling them how incompetent they were.
Yet there was always an awful lot of Wall Street hype in the stories about Boston Market. In one of this magazine’s proudest moments, Deli Business broke the story about the sham that was the Boston Market business model back in 1996. After all, there is no challenge to building pretty restaurants or serving good food – the challenge is selling enough food, at a good enough price, to merit the investment required to do this.
As a public company, Boston Market is an exceptional case because we had access to financial information that provided insight into the success, or lack thereof, of the Boston Market concept. That is why much of the coverage of eatZi’s and other concepts is overdone. Though interesting for the insight into merchandising and operational techniques, the evaluation as to whether the concept makes sense and is worthy of widespread emulation pivots critically on financial information we simply don’t have access to.
For a few years, the looming threat of Boston Market concentrated the minds of top supermarket executives on the Home Meal Replacement arena. This led to the real attention being paid to rethinking deli. New concepts, new programs, new pricing options — a plethora of approaches was being tried to stem the Boston Market juggernaut and seize the market share that was there for the taking.
Today, Boston Market teeters on the edge of bankruptcy, a national chain of restaurants in search of a viable concept. With this realization has come self-doubt about supermarket HMR efforts. The doubt is justified.
Many of the statistics cited to justify the opportunities were always misunderstood. It turns out that an awful lot of those meals eaten outside the home are far out of reach of the supermarket industry. People in hospitals, prisons and assisted living centers, for example, consume many of these meals. Others are so intricately tied to social events, dating and what not, that supermarkets could only compete by becoming a restaurant – which is in fact what most large-scale supermarket efforts wind up as.
The wok station, the pizza program, the sushi bar, etc., are different only in name from building a food court in the supermarket. The in-store restaurants are indistinguishable from independent restaurants of the same type. One chain built a series of ethnic food stations, then added seating, then moved the whole thing to the front of the store, then added an independent entrance. It is, today, simply a restaurant in the front of the store; it could be a concessionaire for all it has to do with the supermarket.
None of this is bad. Old-time grocers did not beat out greengrocers or butchers – they just added these products and services to the mix. If people want ready-to-eat food, such as they buy at a pizzeria, there is every reason in the world for supermarkets to give it to them. But doing so doesn’t mean that supermarkets beat out pizzerias. It means that supermarkets have started operating pizzerias, a very big conceptual difference.
The pause in the deli industry is a pregnant one, and it is important that the industry use this moment to rethink its direction. The bottom line is that many of the large-scale HMR programs are hemorrhaging money with no particular strategy for how they will turn around. Many are ill-planned and based on false ideas about what people want from a supermarket.
The fall of Boston Market provides a unique opportunity to rectify a mistake in how the industry thinks about HMR. Being motivated by a competitive spirit, many supermarket operators adopted paradigms and procedures from Boston Market, eatZi’s and other types of operations. Stealing good ideas has a long heritage, but using plays from the other team’s playbook rarely works. Each organization and business type has its own strengths and weaknesses, its own culture and expectations.
Success comes from identifying not only what the world will welcome, but also what one’s own organization can effectively execute. If what comes forth from the current moment of reflection is a series of new initiatives – each one built on the unique competencies of each operator – the industry as a whole will begin a march to prosperity never dreamt of in the present day.