Tuesday, May 2, 2017

How About Some Meatballs?

You've probably heard of IKEA, the international retail giant that is known for its modernist design aesthetic and its clever some-assembly-required furniture.  You may have wandered around one of it cavernous stores or received their catalogs.  You may even have guessed that IKEA is the world's largest furniture retailer, with some 400 stores in almost 50 countries and annual sales of over $36b.

What you may not realize that IKEA's restaurant business has annual revenues of $1.8b.

Fast Company reported that IKEA has started taking its food division -- which includes cafe/restaurants and Food Markets -- more seriously.  Michael La Cour, the division's managing, told them:  
This might sound odd, but it’s almost something we didn’t notice.  But when I started putting the numbers into context of other food companies, suddenly I could see, well, it really is not that small.
At the time, in 2013, those revenues were $1.5b, but by 2016 were up to $1.8b.  OK, that's not McDonald's territory, but well-known chains like Five Guys, Steak-and-Shake, or P.F. Changs would salivate at those numbers, or at the 8% annual growth.  IKEA serves some 650 million diners a year, and are known for their family-friendly prices.

And, of course, for their meatballs.

Business Insider calls them "one of the most underrated restaurant chains in America."  LA food critic Merrill Shindler noted that the Burbank IKEA's restaurant holds 800 diners at a time, "But show up on a Saturday at lunchtime and perhaps twice and even three times that many are lined up, cheerful and flushed with the joy of consumption, and hungry for Swedish meatballs."

Oh, two other facts that should be of interest.  IKEA estimates that 30% of their restaurant customers are coming there just to eat, not to shop,  The cafes may have started as a way to help keep people shopping longer, but they've become a dining destination for some customers.

Which leads to the second interesting point: they've tested standalone pop-up restaurants in several cities, including London, Paris, Oslo and Toronto.

Curbed reports that,IKEA demurred on expansion plans for its food division, saying no decisions on standalone restaurants have yet been made, but one would have to guess that it is much less expensive to open up an IKEA restaurant than a new IKEA store, with pop-up restaurants especially cheap to test.  

And then I think about hospital food.

That's not entirely fair, of course.  Many hospitals have made efforts to upgrade at least the appearance of their cafeteria, to make the food selections healthier and more appealing, and to give patients more control about what their choices are.  Still, though, as Dr. Joel Kahn wrote in the Huffington Post last year, "There is wide agreement that the quality and choices of food at most hospitals is abysmal."

The Physicians Committee for Responsible Medicine scored the food menus of multiple hospitals, finding significant variation in how healthy their offerings were.  In the previous year's report, they detailed how many hospitals contract with fast food firms under terms that they say helps promote unhealthful foods.

It is not a pretty picture.

Two things I'm pretty sure of: unlike IKEA's cafes, no one is choosing to dine in a hospital cafeteria, and no hospitals are thinking about opening their own free-standing restaurants, pop-up or not.

To be fair, institutional food is hard.  Not many people like school lunches or find stadium food a good value, and let's not even talk about prison food.  In hospitals there is the additional problem of trying to balance the needs of sick patients versus the tastes of their presumably healthier visitors.  The end result is often food that no one likes and that no one would stay longer for, much less come for.

You have to wonder how IKEA would address the problem.  Or, as they might see it, the opportunity.

Many retailers offer some food options.  Still, though, no one is praising Walmart or Costco food, and most of the cafes that large department stores used to offer have gone by the wayside.  IKEA knew it had hungry customers and wanted to help them with that, managing to do so with good quality and affordable prices.

It wasn't their business but they made it their business, and did it well enough for it to become a business on its own.

There are two distinct lessons that health care organizations should learn from this:

  1. If you're going to do something, do it well.  Hospitals have to serve food, and their "customers" don't have much choice about eating it, but that's no reason to do it badly.  If a furniture retailer can make a dining experience delightful, why can't a hospital?  
  2. Be open to opportunities: IKEA wasn't really in the food business, much less the restaurant business.  But once they realized its potential, they weren't afraid to embrace it.  No "but we're in the furniture business!" objections.  They were good at something, customers were seeking them out, so they didn't let their past dictate their future.
This is not a suggestion for hospitals to get in the restaurant business (although it is a plea for them to at least do their food services better!).  It is, rather, a suggestion that health care organizations -- not just hospitals -- do a better job of identifying and taking fuller advantage of their assets and opportunities.  

Hospitals have been on an consolidation/acquisition spree, both horizontally and vertically.  Much of that, though, seems to have been more about locking up their existing markets than opening up new ones.  Certainly we have hospital systems like UPMC or the Cleveland Clinic expanding internationally, many health systems opting to get in the health insurance business, lots of hospital-run health clubs, and much investment in new technologies.  

Still, though, how many are doing something that really makes you think "well, that's interesting!"?  Like IKEA's expanding into the restaurant business.  

If meatballs prove to be IKEA's breakthrough asset into a new business, which of their assets are health care organizations overlooking?

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