Monday, December 6, 2004

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The next Krispy Kreme

As someone who's married to a cereal addict, my view on this might be skewed, but I predict that a year from now Cereality will be talked about the same way Krispy Kreme was a few years ago. It's a restaurant that serves only breakfast cereal and cereal-related products. Here's one story by Howard Shapiro of the Philadelphia Inquirer on the opening of their new eatery near Penn:

As suppertime approached last night, the line started to form inside Cereality, the nation's first all-cereal restaurant, just opened in University City.

Plenty of college kids and people who think they are still college kids were finding comfort and sustenance in the ultimate fast food, which comes from a box....

In an age when breakfast is becoming more experimental, when some restaurants find sixth and seventh grains to mix into pancakes and spoon caviars of many colors onto egg plates, plain old cold cereal remains a clear American staple. This is particularly so for many young adults, who may have grown up fleeing into the pantry for some Cap'n Crunch whenever their parents were licking their dinner chops over yucky-looking raw-fish rolls and icky foreign-tasting meats.

Thus Cereality, which opened to hoopla and speeches and live remotes Wednesday and had its first real-world day of business yesterday. It's at 3631 Walnut St., on the same block with Cosi, which was actually serving sandwiches last night at dinnertime, and Penne, the restaurant at the Inn at Penn, where the kitchen staff was grilling veal tenderloins and honey-glazed sea scallops, with nary a box of Frosted Flakes in sight.

But even Angel Hogan, Penne's manager, was impressed with the fare up the street. She'd gone over for a specialty cereal - not the basic Cereality offering of two scoops of anything with one topping for $2.95. Hers was oatmeal with bananas, apple streusel and molasses, "really delicious," she said. "It was like eating in Grandma's kitchen."

According to the company's web site: "If there's not already a Cereality near you, there will be soon. In 2004, we will be opening several new units in a variety of settings." And here's the menu. If they expand to university neighborhoods, this will be huge. Huge.

[Isn't the Krispy Kreme metaphor problematic, given their recent financial troubles?--ed. Nope, it's dead on -- I see a few years of awesome growth, followed by the passing of the fad.]

UPDATE: Several commenters have argued that the Krispy Kreme logic doesn't apply, because cereal can be procured and eaten (more cheaply) at home compared to Krispy Kremes. This may be true -- but I doubt that any home has the variety of cereal choices available at Cereality, or the variety of toppings. Consider a different example -- Coldstone Creamery ice cream parlors. Ice cream can be bought and consumed at home, but that does not prevent ice cream stores from thriving.

One last thought -- these stores would be like gold in airport terminals.


posted by Dan on 12.06.04 at 12:12 PM


I think your comparison is dead wrong. Anybody can pour themselves a bowl of cereal, and I just do not see people paying $5.00 on an ongoing basis to let somebody else do it for 'em. Not too many people can make themselves a "Hot Donut Now". The better cultural artifact is the Pet Rock.

Krispy Kremes have a long history in the South -- they were Elvis' favorite take out, and probably had a role in his premature demise.

posted by: Appalled Moderate on 12.06.04 at 12:12 PM [permalink]

A very smart young woman here in Cape Town, Sandy van Hoogstraaten, opened a place in the city pedestrian precinct called "Crush" a couple of years ago where you can order up great cereal/muesli breakfasts (eg chopped fruit, muesli with brazils, yoghurt and honey), along with a great variety of crushed-fruit juices and smoothies. It's been my breakfast call for all that time. Now she's opening more outlets. I'm gonna have to tell her about this.

posted by: Dave F on 12.06.04 at 12:12 PM [permalink]

I have to see I agree exactly with what Appalled Moderate said above. There's a tremendous added value to the hot, sugary mess that is a Krispy Kreme over one from the store out of the box. Sure, you can use a microwave to heat up the doughnut, but I can tell you from experience there's nary a comparison to be made.

I think the better comparison is to pancake-type stores... Waffles House, IHOP, Hyde Park's own World Pancake House or whatever that place is called. Even here, though, there are two significant differences from a cereal restaurant. One, these restaurants tend to be very cheap; Cereality seems to be going for a more upscale environment. Second, there's a time factor. I can grab a box of Cheerios out of my cabinet, pour them in a bowl, add milk, and start eating in maybe two minutes, less if I eat in the kitchen. Making waffles, on the other hand, requires me to heat up the waffle iron, measure out flour, sugar, baking powder, melt butter, etc., mix it up.

If Cereality wants to be more than a quick fad, then they need to find some sort of locus of value additivity. Otherwise, I see the upside of being the Boston Market model, where they ride an initial wave of popularity to some level of success, before crashing down and settling into a thoroughly unremarkable niche.

posted by: Tom on 12.06.04 at 12:12 PM [permalink]

Another excuse to blow my diet! My taste buds say thanks - but don't tell the wife.

As far as Krispy Kreme, two things: (a) the reported loss for the first quarter of 2004 was an extraordinary expense whereas their sales and their operating margins were still a rolling; but (b) the stock price has been tanking so it seems to be paying a lot of attention to whatever the latest bearish news from their 3rd quarter results. But if the market does see transitional "awesome growth, followed by the passing of the fad" - there'd be little reason for high valuations in the 1st place (assuming Wall Street is still following that Efficient Markets Hypothesis).

posted by: pgl on 12.06.04 at 12:12 PM [permalink]

I think this is all some elaborate hoax.

posted by: / Lonewacko on 12.06.04 at 12:12 PM [permalink]

Not a hoax. I've read about this chain for a few months, and it is apparently very popular in AZ (which I think is the original store).

But personally I will never pay exorbitant prices for cereal. Toppings are nice, but not that great.

posted by: mls on 12.06.04 at 12:12 PM [permalink]

Had to read the story twice on the AP wire before I could make any sense of it. It will just be a fad. I agree with one commentor. Therre will have to be some special topping that would make customers come back for future bowls.

posted by: BT on 12.06.04 at 12:12 PM [permalink]

New Yorkers aren't terribly surprised to see the emergence of a cereal emporium, given the presence of Peanut Butter & Co. in the Village. The name pretty much says it all.

posted by: Jeremy B. on 12.06.04 at 12:12 PM [permalink]

I have to agree with the skeptics above. It'll go nowhere on campuses because cereal is about the only damn thing you CAN easily make in your dorm room. Any college block that has a Cereality is also going to have a 7-11.

It'll have a brief run of popularity until the ironic hipsters grow tired of it.

Now, your idea to put them in airports is a good one. You need to elimate the "i could just buy this as-is at 7-11 for less" factor, and being stuck in an airport does so nicely.

They should hire you as a consultant.

posted by: rufus on 12.06.04 at 12:12 PM [permalink]

Okay, having just read their menu page, I can't help but think either:

a) it IS a hoax
b) they're on crack
c) people are a lot dummer than I thought

How can you offer people TAKE OUT BOWLS OF CEREAL with a straight face? From their site:

Cereality, the Home Version

Behold the takeout container of the future. It's Cereality's own milk-tight bucket of crunchy, customized joy.

There might be some value added to actually EATING cereal in a funky, silly, atmosphere - but take out? This might be the first instance ever of food that's more of a pain to get as take-out than it is to make yourself.

If these guys make money, it'll be the best instance of pure marketing since the idea of selling brine shrimp as "Sea Monkeys"!

posted by: rufus on 12.06.04 at 12:12 PM [permalink]

A closer approximation would be Zoup!, a chain of little restaurants that only serve soup.

There used to be one on Van Buren in Chicago, near the Board of Trade, but it closed a few years back. I don't know what's going on with the company as a whole now.

posted by: Jon H on 12.06.04 at 12:12 PM [permalink]

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