Dieting for Dollars : Jenny Craig Program Proves a Heavyweight
Don Weiner is no stranger to dieting. “I would start a diet every Monday morning, which would last until Monday afternoon,” said Weiner, a director for a San Diego sports photography agency.
Then one day a photographer snapped Weiner’s picture. Weiner didn’t like what he saw. After researching several options, he signed up at a Jenny Craig Weight Loss Centre.
Why Jenny Craig? “A friend spoke highly of them; I was attracted by their ads, and I liked them financially,” he said.
That recipe has the Carlsbad-based Jenny Craig cooking. Since it opened 14 facilities in Los Angeles in 1985, the company has emerged as a heavyweight in the weight-loss industry. It is also the sixth-fastest-growing privately held company in America, according to Inc. magazine.
The magazine estimated Jenny Craig’s 1987 revenues at nearly $45 million, with each center averaging annualized sales of about $1 million.
In 1988, the company’s sales jumped to $87 million, and they could reach $120 million in 1989, according to Sid Craig, the company’s co-founder, chairman and husband of Jenny Craig. Unlike Bartles and James, of wine cooler fame, she is a real person.
Profits ran between 11% and 15% of revenues in 1987, according to Inc.
The company has 120 locations, including 8 in San Diego and 40 in Los Angeles. But this is just the beginning, according to the firm: Jenny Craig has plans to blanket the nation with 1,000 centers by 1993, half franchised and half company-owned. At full strength, it hopes to have 1,200 units generating $1.2 billion in sales a year.
The weight-loss market is huge. A 1986 consumer survey conducted by the Calorie Control Council, an industry trade association, found 65 million Americans actively dieting. Every year, about 50% of all women and 25% of all men try to shed unsightly pounds.
‘Apparently a Trend’
The most popular method is substituting low-calorie foods--a $40-billion-a-year industry--for high-calorie ones. Americans spend another $5 billion on diet books and fad diets. And, said Russell Lemiuex, spokesman for the Calorie Control Council in Atlanta, every year about 11% of all adult women and 3% of adult men attend weight-loss classes.
“That is apparently a trend,” said Sharon Denny, nutrition information coordinator for the American Dietetic Assn. in Chicago.
And the trend is big business. For example, Idaho-based Diet Centers, founded in 1970, now has 2,300 centers open and grossed more than $200 million last year. Nutri/System, founded in 1971 and headquartered outside Philadelphia, has 1,067 locations and grossed a record $232 million in corporate revenues in fiscal 1988. And Weight Watchers, perhaps the pioneer in the field, estimates it has served more than 37 million people in 24 countries since 1963. More than a million people attend Weight Watchers meetings annually.
Sid and Jenny Craig launched Jenny Craig Weight Loss Centres in 1982, after selling Body Contour, a Los Angeles-based chain of weight-loss and exercise centers. Although the deal made them multimillionaires, they didn’t walk away with as much profit as they had hoped. Plus, neither felt old enough to retire.
A two-year, non-compete clause meant they could not open another Body Contour-like program in the United States. So they decided to concentrate on a nutritional approach to weight loss and open shop in Australia.
They spent one year and $1 million to develop a line of private-label foods. On May 9, 1983, they opened nine centers in Melbourne.
Not Instantly Successful
The centers were not instant successes. First, the Craigs discovered that the Australian palette differs from the American. Then the Australian equivalent of the U. S. Food and Drug Administration demanded that the Craigs dump 100,000 boxes of vitamins into the ocean because they contained a substance that was prescription-only in Australia.
But the Craigs’ thorniest problem was the fact that, until they arrived, Australia had no weight-loss centers at all.
A sustained marketing blitz solved that problem and, within two years, the Craigs opened 100 centers in Australia, 10 in New Zealand and several in London. They were grossing $40 million a year. It was time to return home, which they did with a vengeance in 1985, spending $4 million in advertising to make their name known.
Under the program, customers pay $185 for as much weekly private and group counseling as it takes to reach an ideal weight. For $99, they get another year of counseling to help keep the pounds off. An optional set of motivational tapes costs $75.
And then there is the food. Until half the weight is lost, customers must eat only Jenny Craig meals, supplemented by fruits and vegetables bought in the supermarket. Each of the first two weeks’ worth of menus costs $70 to $75. Thereafter, the week’s grocery bill falls to $50 to $60. Beginning at the halfway mark, dieters are slowly weaned from the Jenny Craig cuisine.
“I think it is very expensive,” said Evelyn Tribole, a registered dietitian based in Newport Beach, author of the book “Eating on the Run” and a spokeswoman for the American Dietetic Assn.
Price a Factor
“We are about half the price of others,” Sid Craig countered, although the firm plans to raise its prices this month.
According to a Jenny Craig spokeswoman, to lose 30 pounds with Nutri/System, the firm’s most direct competitor, costs $300 to $500 in service charges and $50 a week for food.
Weight Watchers costs $30 to sign up and $8 per meeting. Diet Center programs cost $400 to $500. Neither provides private-label food.
“When I went in, I had made up my mind that, if Jenny Craig’s price wasn’t ridiculous, I would do it,” said Frank Sonntag, a newspaper circulation director in Oceanside. “It wasn’t cheap, but it was a good investment.” Sonntag said he has lost 27 pounds in two months.
The Jenny Craig menus provide about 1,000 calories a day for women and 1,200 for men.
“One thousand calories is pretty low,” said Densie Webb, editor of Environmental Nutrition newsletter of New York, which compared diet centers in 1987. “Customers should be watched by professionals, especially if they are used to 3,000 calories a day.”
Widely Used Figure
“You can get into nutrient deficiencies under 1,200 calories,” acknowledged Robyn Moss, Jenny Craig’s director of nutritional programs and a registered dietitian. “But to lose weight, 1,000 calories is the most widely used distribution.”
Moss said the Jenny Craig plan provides well-balanced meals, meets federally established nutritional standards and uses vitamin supplements. Moreover, she said, in her experience doctors invariably approve 1,000-calorie-a-day diets for weight loss. (The Diet Centers and Nutri/System programs also target 1,000 calories a day.)
Lisa Harris, editor of Current Diet Review and a nutritionist for the San Bernardino Unified School District, has reviewed the Jenny Craig meal plans. “The program is nutritionally balanced and, since fruits and vegetables are not tightly controlled, 950 to 1,000 calories is not dangerous,” she said.
Harris assumes that, if people are hungry, they cheat a little. So does Moss.
Despite the size of the market and the potential long-term harm that can come from a poorly devised weight-loss program, the weight-loss industry is virtually unregulated. The FDA has established labeling guidelines for food and will intercede when medicinal claims are made. Otherwise, said the American Dietetic Assn.'s Tribole, “it is a free-for-all. Anybody can hang up a shingle and say they are a nutritionist.”
Consequently, the most important marketing strategies are word of mouth and testimonials.
Most Through Referrals
Although Sid Craig has actor Elliott Gould, “Sun Up San Diego’s” Jerry Bishop and KJQY’s Claudine St. Clair pitching for him, “about 50% of our customers come through referrals,” he said.
For example, Phyllis of Vista, who asked that her last name not be used, lost 57 pounds in the Jenny Craig program. Today, four of her relatives are involved. And her daughter works as a counselor for the firm.
Dietitians agree that a successful weight-loss program must change the customer’s long-term eating habits. The trick to losing weight--eating less, exercising more--is simple. Keeping the weight off is more difficult. Weight that constantly yo-yos can be more dangerous to a person’s health than being a little overweight.
After only two years in America, Jenny Craig has not conducted any long-term studies to see how many of its customers have kept their weight down. Nor has Nutri/System. Diet Centers says that, one year after its customers finish the program, 54% are still at their ideal weight and 79% are within 10 pounds.