Monday, August 30, 2010

Small-Format Butcher Shop-Grocer 'The Meat House' Has Big Growth Plans For Southern California

Inside The Meat House's Costa Mesa, California store, which opened in January 2010. Click on the photo to enlarge it. You can view additional photographs of the Costa Mesa store here.

Southern California Market Region Report: Format Bending

A fast-growing, small-format (the stores average 3,500-4,500 square-feet) butcher shop and grocer new to the Western U.S. and California has plans to open numerous stores in Southern California over the next few years, along with elsewhere in the U.S., Fresh & Easy Buzz has learned.

The grocer is The Meat House, which opened its first store in Portsmouth, New Hampshire in 2003, just a few months after it was founded in 2002 by partners Justin Rosberg, a former Bear Stearns investment banker, and Jason Parent, a restaurant industry veteran. The retailer is headquartered in Portsmouth. Rosenberg holds the title of CEO. Parent is president.

The Meat House, which currently has 25 stores in eight states - New Hampshire (8 units), Massachusetts (7), Maine (4), North Carolina (2), New York (1), Connecticut (1), Texas (1) and Southern California (1) - opened its first California store in Costa Mesa in January of this year.

The retailer operates on a mixed corporate ownership-franchise basis, although it doesn't grant any single-store franchises. Instead, any franchise holder excepted must open a minimum of four stores in a given area. The Costa Mesa store (at 103 East 17th Street) is one of those franchise operations, owned by partners Brian Smith and Robert Hagopian. Both live in nearby Laguna Beach.

About 60% of the current 26 stores are corporate-owned. The food retailer only created its franchise option in February of this year. It says it currently has territory agreements with franchise partners for at least 125 new stores in 11 states.

Two new Southern California stores - with more to come

The Meat House is preparing to open two more stores in Southern California - in Mission Viejo and in Brea, our source at the company tells us. Plans are to open both stores before the end of this year.

Additionally, numerous other The Meat House stores are on the drawing board for Southern California over the next few years.

The full-service butcher shop in a typical 3,500-4,500 square-foot The Meat House store. The full-service counters generally have more than one butcher working behind them regularly.

More than a butcher shop: A small-format grocer

Like the name says, The primary merchandising focus of The Meat House is fresh meat and poultry, merchandised in full-service meat cases similar to the old-fashion neighborhood butcher shop, which the format is modeled after, although with a modern day twist or two. The retailer describes the format as "a modern revival of the neighborhood butcher – only better."

In addition to fresh meats and poultry, the markets offers a deli featuring fresh-prepared foods and other items, a specialty cheese section, fresh produce, fresh baked goods, a wine and craft beer selection, and an assortment of shelf-stable specialty and gourmet grocery products in the center of the store.

In its specialty foods and grocery section, the retailer puts an emphasis on locally-produced items. For example, many locally-produced products offered in the Costa Mesa store aren't offered in the New Hampshire or other stores. Instead, a selection of grocery items locally-produced in those regions are offered in those stores. Localization.


The Meat House has a few current trends in its favor. One is the currently hot trend towards butchers and butchering, in which many consumers are preferring to buy their meat un-packaged from an "old fashion" butcher shop rather than buying pre-packaged meat at the supermarket.

Fueling this trend are both food safety-oriented and local/neighborhood concepts. The idea of knowing your butcher, and where he gets his meat, is appealing to many shoppers today, as it was before pre-packaged meat became the merchandising norm in the U.S. More and more U.S. supermarkets, for example, are offering full-service, butcher-style meat cases, along with pre-packaged self-service cases.

The face-to-face interaction with the butcher also is part of the appeal for these "back-to-the-future" grocery shoppers. The Meat House puts a high premium on this type of customer - or butcher-to-customer - service in its small stores.

Many consumers have also become interested in do-it-yourself (DIY) butchering. These folks range from the hardcore, those who are taking classes and learning how to butcher a whole animal, to those who just want to purchase primal cuts from the butcher and do the finishing work at home, which also can be a money-saver for consumers.

Time magazine captured the growing trend in a piece earlier this year, 'DIY Butchering,' which you can read here.

Numerous forecasters have named the DIY butchering trend as one of the top five food trends for 2010, in fact. Fresh & Easy Buzz has followed the trend closely - and agrees it's extremely popular today - and appears to be growing, as part of the local food and personal food knowlege movements.

The writings of Michael Pollan, including his best-selling book, 'The Omnivore's Dilemma,' have also helped fuel the trend of consumers wanting to know more about where their meat comes from and wanting to have a hand in the process, even if it only means having a regular butcher to interact with over the counter on a regular basis.

The Meat House offers various in-store classes and other events geared towards informing shoppers about where it procures its meat, how customers can purchase better quality meat, and how they can prepare it. The goal is to forge a relationship between shoppers and The Meat House's store employees, especially the butchers, something the independent neighborhood butcher and grocer have, and generally still are, the best at doing.

It will be interesting to observe how well The Meat House can do that as a chain, particularly as it grows it number of stores. The franchise ownership aspect is an attempt to enhance that local aspect. The company's long-term goal is to have only about 20% of the total number of stores corporate-owned, with the 80% eventually being owned by locally-based franchisees.

The Meat House, like Tesco's Fresh & Easy Neighborhood Market and many other grocers and other types of retailers, also is counting on the growing ready-to-eat and ready-to-heat fresh-prepared foods trend to aid it in its growth and success. The stores offer fresh-prepared foods of various types and also offer all sorts of value-added items and concepts - marinades, rubs, simple recipes - to make preparing the meats they offer easy to do at home.

By offering prepared foods, fresh produce, bakery, wine and the other departments and product selections in the small stores, which range so far from downtown storefront locations to suburban centers, the grocer also is attempting to cater to more than just the meat needs of shoppers. This is essential, in fact, because by offering a variety of food products complementary to meat - bread, produce, wine, ect. - in the stores, the retailer has a better chance of increasing the average market basket size purchases by customers, which is a key indicator (higher the better) for the success of any food and grocery retailer regardless of store size, than it would by merely offering meats and poultry alone.

The Meat House stores, which the company like to call a "modern revival" of the corner butcher shop, could also tap into another growing trend in the U.S. - nostalgia - which can be described as a yearning for something from the past. Many shoppers, including those who are to young to have ever experienced the corner meat market unless they grew up in a traditional U.S. big city like New York, Philadelphia, Chicago or San Francisco, for example, like the idea of going "back-to-the-future" for shopping, hence in part the growing popularity (along with cost) of flea markets, second hand stores, farmers markets, and even corner mom & pop grocery stores. We suspect The Meat Market would like to see such a trend blossom.

Costa Mesa 'The Meat House' Reviews

In the eight months since it's been open, the Costa Mesa, California The Meat House unit has received 34 reviews on the popular review site. All 34 of the review are positive - and many of the customer reviews are darn right gushing. You can view the reviews here.

There's a lot of vacant commercial space in Southern California. And at just 3,500 -to- 4,500 square-feet, the start up costs of opening a The Meat House store are relatively low.

The stores also, because of their format and size, can be located in urban and suburban areas. As such, Southern California appears to present a good opportunity for the retailer's growth plans. The region's strong food culture also could be a good match for The Meat House's offering.

After the two new stores - Mission Viejo and Brea - open, the fast-growing butcher and grocer has plans to open additional units in the region in 2011. The Meat House is also looking to Northern California for stores in the not to distant future, along with additional states beyond the current eight. The competition is strong - but the butcher shop-food retailer may have found a niche it can continue to fine tune and localize for success?

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