Ready Meal

Famous Brands’ savvy move into the ready meal market

Supermarket ready meals had better watch their backs. Famous Brands, owner of eateries such as Turn ’n Tender and Wimpy, broke with tradition and bought a stake in caterer By Word of Mouth. It would seem an odd fit at first, but it really isn’t.

First, some background. Famous Brands is the Pac-Man of the SA restaurant space. Just when we’re digesting (corny, I know) one of its buyouts, it makes a play for something else.

This is Famous Brands’ sixth acquisition this year, and it now has some debt on its balance sheet. What’s different, though, is that it will be playing in the food service or catering industry —that’s meal prep, outside the home, which is different from its legacy quick-service restaurant or table-service business.

This is the plan. By Word of Mouth will give Famous Brands entry to the fast-growing segment of commercial catering and corporate functions.

Companies, despite the incredibly bleak economic environment, continue to shell out a decent amount of cash for schmoozing. Forget sausage rolls — I’m talking rose-gold buckets of oysters and caviar, and crème fraîche blinis. Shoptalk went to a function the other day where they served chocolate truffles with edible gold leaf. I may have eaten one. Or five. Anyway.

With this deal, Famous Brands will also enter the home meal replacement retail space. This is a biggie.

A shift towards convenience and the rise of dual-income families has meant that those who are not short of money but are short of time have boosted the casual dining sector — that’s the fancy but not too establishment places … think tashas, not Marble — as well as the market for ready meals. These are also called “prepared meals” — a slightly more circumspect term you would use if, say, your mother-in-law were visiting.

A while back, research by Kantar Worldpanel showed that the average time taken to prepare the main family meal had been reduced from 60 minutes two decades ago to about 32 minutes across all social groups.

Still, the pressures of modern life have meant that between Monday and Friday, when we are not pretend MasterChef contestants or Nigella coquettishly licking our wooden spoons, we still want an equivalent of a home-cooked meal while chatting to our kids over dinner or watching Suits.

SA’s retailers have largely escaped the high-in-calories, low-in-nutrients stigma associated with supermarket meals. Mostly, I think, this is because of brand equity, transparent nutritional info and supply chain practices. Who remembers beef lasagne à la horse meat in the UK?

There are those who prefer an offering with a more wholesome, less processed homemade cachet.

Now, By Word of Mouth is quite well known in Jo’burg. And Famous Brands has the muscle to take a range of bespoke products from what is a highly acclaimed caterer to a wider consumer base. Remember, Famous Brands has been building its back-end capability over the past few years — it owns every kind of plant you can think of: ice cream, spices, bread, juice …

The model it’s looking at is not unlike that of COOK in the UK, which makes frozen meals that taste and look homemade. The company essentially makes recipes using kitchen-cupboard ingredients and simple processes, and scales them up. COOK has been clever in how it’s gone about it. It delivers, has a click-and-collect service and close to 90 shops across the UK. But, more importantly, it caters to dietary vagaries and its menu has depth.

If there is one thing economically resilient high-income consumers are prepared to pay for, it’s fuss.

One must not forget that Famous Brands also has a lot of pull with property landlords — it will get the space it wants for a significant rollout across SA.

Source: Financial Mail