It should have been a beautiful day. Clear sky, a warm, gentle breeze and a round of golf with a normally friendly bunch of Zehrs grocers. But for neophyte food processor David Chilton, that day in June 2002 was growing uglier with each hole. At the root of the tension were 55,000 boxes of Crazy Plates frozen dinner entrees languishing in Zehrs, Fortinos and Loblaws freezers across Ontario and tugging at the goodwill of the grocers like so many icy albatross.
When Chilton’s Crazy Plates meal kits hit freezer aisles eight weeks earlier, grocers sizzled with excitement. The meals were an extension of two of the most successful Canadian cookbooks ever — Janet and Greta Podleski’s low-fat bibles Looneyspoons and Crazy Plates. The team behind the meals included the Podleski sisters and Chilton, whose The Wealthy Barber has sold more than two million copies, making it one of Canada’s best-selling finance books of all time.
Expectations for the meal kits were high. Retail sales were not.
Which explains the mood on the golf course. “The Zehrs guys, who had been so excited a few months earlier, made no bones about telling me how disappointed they were in the lack of sales,” confesses Chilton. “It was the most humbling day of my life.” Late that night he phoned the Podleski sisters and said, “We can’t tinker our way out of this. We have to start over from scratch.”
A drastic measure for sure, but absolutely necessary. As they would soon determine, Chilton and his team had made the all-too-common error of creating a product for themselves rather than for a viable, well-researched market. They also fell into the easy trap of assuming their cookbook brand would transfer effortlessly to the food business. When the launch flopped, they had only two options: fold the business or do the necessary research and start again. “Folding,” says Chilton, “was never an option.”
The earliest roots of the business — Waterloo, Ont.-based Crazy Plates Inc. — date back to 1996, when the Podleskis approached Chilton for advice on how to get their first cookbook published. By 2000, the trio had ushered two cookbooks to phenomenal success (total sales of more than 1.3 million copies) and were looking for new opportunities. Enter Doug Ridge and Brandy Cameron, a pair of 30-something food-industry consultants who wanted to license the Crazy Plates name to a line of one-pot frozen entrees. Instead of selling the licence, Chilton hired the pair and set his sights on frozen food.
The concept was an instant smash with Loblaw Cos. Ltd. In return for exclusivity, the grocer waived listing fees and provided Crazy Plates with prime shelf space. “It’s a great deal,” says Chilton. “Without it we wouldn’t have been able to break into the market.” When the line was launched in April 2002, Loblaw bought 85,000 units and shipped them to stores across Ontario. A national rollout was to follow once the food kits achieved traction with consumers. But consumers purchased just 30,000 units in the first two months on sale, 70% below the partners’ initial projections. Which brings us back to Chilton’s humbling experience on the golf course. “We had to do something fast,” says Chilton, “or it was all going to fall apart.”
The partners identified several critical errors that doomed the first incarnation of Crazy Plates. “Almost all of them came about because we didn’t properly research our market,” says Chilton. “We ended up making a product that could feed a family of four or five without really knowing who our customers were. We were making food kits more for ourselves and for families like ours rather than for a well-researched market.”
A modicum of homework would have told them that 85% of frozen-food buyers are looking to feed two people for less than $10, and in fewer than 15 minutes. Unaware of these critical statistics, they went to market with five-person servings weighing as much as 1.8 kg per kit. Hands-on preparation time was up to 40 minutes. Worse, to make reasonable margins, the meal kits had to be priced at $13.95 a pop.
Then there was the packaging. The boxes were designed to mimic the cookbook covers in the hope of leveraging the bestselling brand. But the addition of customer photos and testimonials created too much visual clutter. In Chilton’s words, “The box looked cheap.” The package also lacked a wax coating, leaving it to pick up moisture and collapse when handled. “Nobody is prepared to spend 14 bucks on a crumpled box,” notes Chilton, who readily takes the blame for the look and feel. “I’m the last person who should make decisions about artwork, but there I was yelling the loudest for a box that would look like the cover of a Podleski cookbook. I thought brand extension was key.”
Once the mistakes were identified and production of the new, improved Crazy Plates meal kits was under way, there was still the vexing question of what to do about the 55,000 unsold boxes collecting frost in grocers’ freezers. “We decided to buy back the existing failed product, one store at a time, and give it away,” says Chilton. “We needed to show Loblaws we were serious and in the game for the long term.”
For the next four months, Greta Podleski spent her nights reformulating the meals and, with the aid of a professional art director, redesigning the packaging to resemble the attractive and highly successful President’s Choice brand.
During the days, the Podleski sisters, as the celebrity faces of Crazy Plates, spent much of their time traveling from store to store, buying back the product at retail prices and giving it away to lucky customers. Each box was accompanied by a letter saying, essentially, “Hey, we screwed up, but try the food and if you like it, come back and buy the new and improved products later.”
The buyback cost Chilton nearly $750,000 of his own money. He also sunk another $1 million into redesigning the package, reducing the servings to a kilogram or less and tweaking the recipes to allow for shorter cooking times.
From that lesson, though, Chilton created a 24-page business plan in which he frankly outlined what went wrong and what the Crazy Plates people had done right. With that plan and a couple of the new meals in hand, Chilton was able to win a $1-million investment from William Holland, CEO of CI Mutual Funds Inc., and another $250,000 from Simon Lewis, the recently retired former CEO of Royal Mutual Funds. It was enough to refloat the company and throw an aggressive radio ad campaign behind the October 2002 relaunch.
A year later the turnaround is complete. While Chilton keeps the numbers close to his chest, he does say that sales of the new Crazy Plates are up 400% over those of the old product. “The lesson here,” he says, “isn’t about the success of the relaunch. The real lesson is you can’t replace solid research with pure instinct. If we had known our market better at the start, you’d be writing a story about a successful launch, not a successful relaunch.”