IKEA's fast food intrusion
IKEA doesn't just sell furniture. They also sell a lot of food, and have become a competitive player in the global QSR foodservice industry. According to a Wall Street Journal article (October 17, 2013) written by Jens Hansegard, IKEA sells 150 million meatballs annually through their store cafeterias. Jens describes IKEA's Food Division as a behemoth rivaling Panera Bread and Arby's with $2 billion in annual food revenue. That means 700 million people will eat at their 300 store cafeterias worldwide.
Swedish meatballs are a hit, but not without taking a hit
As previously mentioned, the WSJ estimates IKEA will sell 150 million meatballs in 2013, but they were smeared with the bad publicity of horse meat found in their meatballs earlier this year. The fact that horsemeat showed up in their meatballs showed the soft belly of their quality assurance and food safety programs. Further research seems to indicate that IKEA had poor food tracking and tracing processes and process controls — that caused them to reduce their supplier base from approximately 15 to 7 supplier locations. With Country of Origin policies and Global Food Safety Initiatives already standardized internationally, it's hard to understand this "miss" in their QA and Food Safety programs. With subsequent DNA testing now in place, and fewer suppliers, we are not likely to see horsemeat in IKEA meatballs again.
Why haven't meatballs become a menu hit in U.S.?
If meatballs are a hit in IKEA stores, why haven't they become a menu hit in the U.S.? That's a hard question to answer because meatballs have all of the characteristics to be an American menu hit — I even blogged on this a couple of years ago. My best guess is that U.S. marketing personnel see meatballs as to risky to place on the menu, if no one else was doing it. Or marketing departments were sleeping on the job.
IKEA's meatball low-price-point strategy
According to Michael La Cour, the current head of IKEA Food, "The menu is completely in line with the way we develop furniture...we begin with the end price" — do I hear low price point? They currently sell 15 meatballs for $5, and a $2.99 kid's meal — similar pricing to chicken nuggets.
IKEA's high price point strategy
In addition, IKEA also sells salmon, roast beef, and smoked reindeer steak. Generally they have limited their menu to five items, but allow one regional menu item to connect with local customers.
Meatballs meet four customer needs
In summary, meatballs meet four customer needs;
1. Taste – IKEA customers love the flavor of Swedish meatballs.
2. Convenience – meatballs give customers an opportunity to 'refuel' while walking throughout the large IKEA stores. And they can take some meatballs home for dinner.
3. Price Point – a low price point creates an "affordable perception" to customers that drives repeat purchases.
4. Multifaceted Menu Ingredient – IKEA meatballs can be added to hundreds of food dishes, which provide variety for the family at home.
IKEA meatballs certainly aren't innovative, but they sure taste good and fill the great corporate profit appetite!
For more information on our 2014 Food Innovation Workshops across the United States, or to volunteer your company as a host site, please contact me at email@example.com or 303-471-1443. The first workshops will be held in Denver (February), San Diego (March), and Chicago (May).
Darrel Suderman / Darrel Suderman, Ph.D., is president of Food Technical Consulting and founder of Food Innovation Institute. He has held senior R&D/QA leadership positions at KFC, Boston Market, Church's Chicken and Quiznos and led KFCs development team of Popcorn Chicken, now a $1B international product invented by Gene Gagliardi.