The Lempert Report LIVE

Feasting on Food Industry News: From Cell-Based Chicken to Economy a SNAP Ban

July 17, 2023 Phil Lempert Episode 86
The Lempert Report LIVE
Feasting on Food Industry News: From Cell-Based Chicken to Economy a SNAP Ban
Show Notes Transcript

Are you ready to dig into some meaty food industry news? Prepare to have your appetite for knowledge whetted as we chew on USDA-approved cell-based chicken, high schoolers in Philadelphia battling hunger with an innovative indoor farm project, and the bold proposition by Marco Rubio to restrict SNAP benefits. Aldi's latest bargain find, a George Foreman grill, might just sizzle its way into your shopping list! 

But wait, there's more to savor! We'll also serve up some tantalizing insights about how inflation is tilting consumer behavior towards economy and value cigarettes, and the potential implications of this trend. The dish of the day, however, could well be the unexpected closure of the first ever Chick-fil-A restaurant. Is this a sign of a broader industry trend? Tune in to find out. As your hosts, we've cooked up a menu filled with thought-provoking discussions, inspiring stories, and the latest buzz from the food industry. So, buckle up, and get ready to sink your teeth into this deliciously informative episode!

Phil:

Welcome to the Lempert Report LIVE. On today's broadcast the USDA approved cell-based chicken. high school students in Philadelphia fight hunger, Marco Rubio's food fight and on the Bullseye, more restaurants are closing. Now, Aldi just released its Aldi finds for July and you're going to love this one. It's the infamous George Foreman 5 serving grill On Amazon. Gonna cost you around $50 bucks at Aldi. You'd better hurry. You can get it for just $24.99. That's a find. Let's get started. So, Sally, the USDA has approved for upside foods the first ever cell cultivated meat. It's chicken, it's going to come from chicken, and what they've actually done, which was interesting, is they're partnering it with Bar Crenn, which is a James Baird award winning chef, restaurateur and activist Dominique Crenn to launch the product. What do you think? Do you think that cell-based chicken is going to make it?

Sally:

Well, we'll have to see how it tastes and how consumers respond to it, but it is definitely a game changer as far as globally thinking about the possibility of these lab created meats becoming a good replacement to help with the environmental concerns that we have, with concerns over humane treatment of animals. Just looking at our health and nutrition overall, maybe there are some helpful nutrients as they cultivate these meats and develop them that could help us.

Phil:

The big question still out there, besides taste, as you point out, is cost. The cell-based products are very expensive initially, and whether or not the cost is going to come down to be something that we can have at something that's not a James Baird winning award restaurant. Yet to be seen. So there's some interesting things going on in Philadelphia, with some high school students who now have a farm indoor farm that produces two and a half acres of food every week, and what they're doing, which I find fascinating, is they're actually growing this food and giving it out to Philadelphia communities who are in need. This is a program that I think is so cool.

Sally:

Absolutely. This is a charter school in Philadelphia. It is part of the STEM program. For those who don't know in schools, that is science, technology, engineering and math, and these are programs that help to enhance education in all of those areas for students. And this school, Imhotep Institute Charter School, is doing an amazing job by building what appears to be much like a container garden, a very large container, enclosed container garden that they're using engineered lights and irrigation within the system. The students and the faculty can check on the props with their mobile phones, their mobile devices, and see how it's going and make sure that that's getting light and water and nutrients. So it's a wonderful program. And the added benefit is, yes, that it is helping support food needs in the community.

Phil:

It is. I really applaud this and I wish that there's going to be more schools around the nation do exactly this, because one of the most important things we could do is educate our kids about agriculture, how to grow food, where food comes from and, with that, being able to feed whether it's homeless or people in need. It's fabulous. Marco Rubio, without getting very political, is urging Congress to restrict SNAP benefits for junk food purchases. The reality is that 65% of SNAP recipients who are between the age of 50 and 64 are diagnosed with diet-related disorders. He has introduced the Health SNAP Act where you cannot buy, currently with SNAP, you can't buy alcohol, cigarettes, vitamins. Now he wants to go a step further to eliminate sugary treats as well as a lot of other foods that sweetened beverages, desserts, salty snacks, candy and sugar. He argues that it now costs taxpayers more than $204 billion over the next decade if we don't do this. And there's a conservatives think tank called American Enterprise Institute who found that 65% of adults on SNAP program, age 50 through 64, not only have been diagnosed with a diet related disorder, as I said, and 42% are obese. So what do we think? Do we think that Marco Rubio's plan is going to work and it's something good for us.

Sally:

Well, it's an interesting concept, you know, because we do know that we have a problem with obesity and diet related illnesses. There are a couple of holes in this plan, one being that the research they're citing does show that, you know, the age range 50 to 64 has a higher incidence of obesity and buying these products. But, however, according to the Economic Research Service at the USDA, that there hasn't been a study that correlates between a higher incidence of obesity overall with SNAP recipients in all ages. So we don't really have that research to show. However, you know, wanting to limit the intake of these sugary drinks and sweets and ultra processed foods is something that we all would really love to do. The problem is how to regulate that, how to choose which products can be a part of that program and which ones aren't. And then we're looking at our cashiers playing food police, you know, and being in that situation where somebody brings a sugary cereal, let's say, for example, and wants to buy it, and then the cashier in the line right there has to say you can't have this because it doesn't fall under the SNAP requirements. So there are a lot of holes in this plan and a lot of Americans, I also believe that they would like to have that choice with what kinds of foods they buy.

Phil:

Absolutely And to your point, putting cashiers or any workers in the supermarket at risk for getting into arguments with customers just doesn't make it. Thanks, Sally. As inflation took hold last year, shoppers at independent convenience stores shifted to economy and value cigarettes in a big way. This clip from last week's CMA-SIMA webinar from Skupos highlights a significant change in shopper behavior. Members can view the entire webinar on demand in CMA's resource library. Take a listen.

Skupos:

So what we looked at, we drilled down into cigarette category, which had the most substantial change in purchase behavior within top 10 C- store category, as you can see, from January 22 to December 22. So over the last calendar year, economy and value cigarettes have seen a substantial increase in unit velocity and overall unit sales, while premium and super premium sales have pretty substantially inconsistently declined in an inverse relationship with the economy value. So what this tells us is, with higher prices and the decrease unit and decrease market basket sizes, when customers are coming into the store they are choosing to get more for their buck, more bang for their dollar, and we are seeing very noticeable switches in customer behavior from premium brands down to economy brands.

Phil:

On today's bullseye. We can't blame the pandemic for these restaurant closures. What's going on? Earlier this year, Steak 'n Shack shuttered 11 franchise stores and two company-run locations. Since 2018, the company has reduced the number of its restaurants from 626 to 493. Fast food giant, Burger King says that it's going to close between 300 and 400 restaurants this year. That's about double the number of closures in a typical year for the company. Rising building costs and pressure on franchisees operating margins have caused Applebee's to pull back from growth plans. The chain now expects to end this year with up to 20 fewer US locations. At least 8 Red Lobster locations closed earlier this year and several others disappeared late in 2022. The closures are part of a trend that dates back to 2020. This spring, a spate of closure took place in four states: Kansas, Missouri, South Carolina and Georgia. In all, a half a dozen locations closed their doors. TGI Fridays has closed locations in Thornton, Colorado, Taunton, Massachusetts, Big Flats in Elmira, New York, and Plano, Texas. In many of these communities, residents learned of the closures abruptly after signs were posted on restaurant doors. The first ever Chick-fil-A restaurant recently closed its doors at the Greenbrier Mall Food Court location in Atlanta. The location had been doing business since it started in 1967. Blame it on the tight labor market, customers pinching their pennies, and just maybe customers are looking for somewhat healthier and tastier fare. The Lempert Report is all about inspiring ideas, making our industry think and challenging each other. Let's think about being the shopper and how we can bring our supermarkets and our restaurants closer to meet their needs. I hope you'll be back to join us next week on the next installment of the Lempert Report LIVE when we focus on the biggest and the best insights and the things that really matter. Visit us at www. S wwwsupermarketguru. com all week long for the latest marketing analysis, issues and trends. I'll see you back here next Monday at 2.30pm Eastern for more.