Tedium - Meal Deal Economics 🥪

Today in Tedium: We have been subjected to a suspicious number of viral food stories in the last 10 years or so. There was “The Chicken Sandwich War,” that period we all awkwardly fetishized bacon, and the continuing wonder over most things Costco. Something about these stories has always bothered me, but a recent British kerfuffle has helped me pinpoint why. And I’m going to take a potshot at David Foster Wallace in the process. Today’s Tedium is looking across the pond at a recent controversy over the Tesco meal deal and why the food made at supermarkets matters. — Andrew @ Tedium

Today’s GIF comes from a video of the world’s largest sandwich factory, based in the U.K.

(Phillip Pessar/Flickr)

Let’s start with America’s cult-like obsession with regional grocery chains

Considering the non-stop market consolidation forces that have reduced many industries to just a few significant players, the American grocery market is remarkably regional. New York City has two different grocery chains with no locations outside the metro area. Ralph’s and Stater Bros compete exclusively in southern California though the former has been owned by Kroger since 1998.

But one of the best loved American regional grocery chains is the Florida-focused Publix Super Markets, or more generally just Publix. Headquartered in Lakeland, Florida, about an hour outside Tampa, Publix is jointly owned by relatives of the company founder and its employees. It is the largest employee owned company in the United States, employing more than 225,000 people, all of whom are eligible to purchase stock. And to the ever-increasing number of people relocating to Georgia, Florida, and South Carolina, Publix is often the first recommendation their new neighbors make when offering tips about their new homes.

Publix has a singular focus on making the grocery shopping experience as pleasurable as possible, which is why the company slogan is literally, “Where shopping is a pleasure”. Since a good number of employees are actually owners in the company, and are paid higher than the area average, stores tend to be very clean with nice, helpful staff. They also have great sales that allow customers to load up on pantry staples or seasonal produce (like a 10 for $10 deal). And they have a store brand that offers high quality products for lower prices than established brands, a successful tactic for drawing shoppers’ attention, as we’ve noted in Tedium before.

But one major draw that helps turn potential customers into Publix devotees is a staple of Southern cuisine: fried chicken. In the American south, fried chicken is a blood sport. A good fried chicken recipe can mean the difference between a profitable business and insurmountable debt. There are two basic types of Southern fried chicken: the one made by your mom/grandmother/favorite relative and the restaurants/places that make it good enough when the hankering hits. By any measure, Publix excels in the latter category.

(Rod Herrea/Flickr)

Whether traditional bone-in drums or perfectly battered tenders, Publix fried chicken has been called “legendary” and has been debated as quite simply “the best fried chicken”. The Publix chicken tender sub has a genuine claim as Florida’s unofficial state sandwich. One Twitter user even dedicated an account to alerting Publix customers when the sub was on sale, until the company issued a cease and desist notice. Closure of the account garnered local news coverage in Jacksonville.

To develop a truly dedicated customer base for a grocery store chain, a high quality shopping experience combined with pre-prepared regional delicacies seems to be incredibly effective.

Anyone want to take a guess at the most popular sandwich option in one of Britain’s favorite meal deals?

…

Here’s an incomplete list of Tesco sandwiches:

• Chicken and bacon mayonnaise

• Cheese and onion

• Tuna and sweetcorn

• Coronation chicken

• Roast chicken, bacon, and stuffing

• West country cheddar and pickle

And the most popular? It’s just the BLT, allegedly. Not as satisfying an answer as I’d hoped.

(spanaut/Flickr)

The British reaction to an increasingly international problem

The adoption of supermarkets in European countries during the 1950s mirrored trends happening in the U.S. Previously, people went to specific stores, like a dedicated butcher or grocer, and did not serve themselves. The self-serve grocery stores we now recognize as supermarkets first debuted in Tennessee in 1916 under the “Piggly Wiggly” brand name. One of the first supermarkets to open in the UK is still the British grocery market leader: Tesco.

There were a few hiccups adapting the American grocery model for the British public. Jack Cohen, the founder of Tesco, made his way to the U.S. in 1932 to explore the self-service grocery stores sweeping the country. He scoffed at the idea and believed British customers would too. It wasn’t until after World War II that Jack could be convinced to give the now common self-serve grocery store model a try. And it struggled to launch. Customers were somewhat bemused at the idea and the store closed after a year, only to open up again another year later to a more receptive public. This model is now dominant across most of the world.

So how exactly did modern supermarkets get into the business of prepared food? Like much of the rest of the grocery industry, this change was driven by convenience seeking customers. In a July 2002 retrospective on the history of supermarket delis, Supermarket News, an American industry trade publication, quoted a grocery executive who watched the development firsthand, “The thing about deli is that it grew out of what other departments didn’t want. Originally, it was part of the meat department, and in the Midwest, luncheon meats were big. Olive loaf and pickle loaf were the ‘wow’ flavors. Cooked chickens didn’t sell that well in meat, so they migrated to the deli [when it became a separate department]. Kroger was one of those that led the way in the ’70s and ’80s by populating all its stores with delis.”

Though trends in the U.S. grocery industry were historically reflected in Britain’s, by the 1980s each country was facing very different economic realities. The U.S. economy was booming under Reagan-era deregulation and access to cheap credit. Britain in the 1980s faced some harsh domestic decisions that saw hundreds of thousands lose jobs in heavy industries like manufacturing and mining. Whole towns and villages became destitute virtually overnight. Brits were calling for cheap food options and it was a pharmacy to answer first.

Boots is a well-known British pharmacy that introduced the concept of the meal deal to the public in 1985. Odes to the Boots meal deal can be found scattered online in both established media outlets and across social media. Rather than limit the main to a sandwich, wrap, or salad like Tesco, Boots also include sushi options, along with a greater variety of choices for their snacks and drinks. However, considering Tesco’s position as Britain’s primary grocer, their meal deal quickly became the most popular when introduced a few years later.

Like everyone else, the Brits argue about things with their friends, family, and neighbors. (And with no one in particular online.) And one of the testier topics of debate is the best meal deal. Today, virtually every British grocery chain has some type of meal deal.

Sorry about the old picture, which I’m sure reminds you that the Tesco meal deal used to be £2. (Rakka/Flickr)

Before the pandemic, Tesco was the market leader of meal deals, accounting for some £167 million in annual sales. Sales in 2020 plummeted 61 percent as citizens were locked down, often making lunch at home rather than picking up something on the way to school or work. To boost sales, Tesco began expanding options available for the meal deal, but how well this strategy works remains to be seen. Especially when paired with a seemingly reasonable price increase that has drawn especially intense criticism.

Cost of living issues in the UK are hitting the population hard, with Brexit and recent European events exacerbating global trends. In an era of stagnant wages and record corporate profits, the extra squeeze for .50 on a meal deal has been a step too far. While backlash against higher prices should be expected, one particular caveat to the increase annoyed some members of the British public especially. Tesco did increase the public facing cost of the meal to £3.50, however, if you signed up for a loyalty card and scanned it at check out, the cost would remain £3.

Attitudes about privacy and personal information tend to vary between people and countries. European governments have been fairly forward thinking regarding personal privacy and information sharing online, as with Article 17 of the EU General Data Protection Regulation, i.e. the right to be forgotten. However, globally, people are increasingly willing to share personal information for trade-offs, like protection from hackers or deals on medium quality supermarket sandwiches. And of course, the UK is no longer in the EU.