Soup's On!

The Heat Is On

Recipes aren't the only things the new soup marketers are updating for the '90s: Soup selling has taken a high-tech turn. Fax orders, phone orders and deliveries are common at the fledgling soup restaurants. Daily Soup has taken the process one step further by taking orders via the Internet. New Yorkers can log on to the site ( ), make their selection from the menu, choose one of the five locations, hit enter, and lunch is on the way. Spiegel says Daily Soup makes about 50 deliveries per restaurant per day for orders placed on the Web. Now if only they could deliver to St. Paul, Minnesota, on a 40-below day.

That may not be far off for the Daily Soup team. Spiegel and company are already taking another cue from the savvy marketers at Starbucks: wholesaling their products to gourmet specialty stores and introducing a mail order arm. So far, the firm is delivering soups to New York City gourmet shops such as Balducci's and Dean & Deluca.

At most soup restaurants, expansion through additional locations is the number-one priority. "In the short term, we're trying to capture the New York market. In the long term, we're trying to capture the tri-state area and eventually, the nation," says Hale & Hearty's Schnipper.

The franchising route could prove a tasty alternative for entrepreneurs who can't find investors to fund the high cost of opening company-owned soup restaurants. Like many other food-based ventures, the costs of opening a single soup restaurant can boil up to nearly $300,000. Schnipper says Hale & Hearty's central kitchen, where they prep the soups for all their locations, set them back nearly $500,000.

Store design may be costly, but it plays a huge part in creating a company's overall image. Some of the new soup vendors are adopting a crisp, clean industrial look. But the image at Hale & Hearty is much like its name sounds: warm and comforting. A glass wall filled with lentils, red beans, chickpeas and an assortment of other legumes adds color to the stores, which mainly feature earth tones. "You've got to remember, soup is a low-tech, earthy product, and that's the look we're going for," says Schnipper.

Earthy or minimalist, exotic flavors or traditional fare, friendly service or tough love--so far, many of the formulas seem to be working. Let's look at the 1997 revenue projections for some of the key souperstars: Daily Soup's five eateries are expected to hit the $7 million mark, Soup Nutsy's single take-out-only location is looking at the $1 million range, and Hale & Hearty's four restaurants should gross between $500,000 and $1 million each.

While these aren't the only players in the field, they've made some of the biggest strides in terms of expansion. Soup Nutsy's Melwani says the New York City market is already getting saturated, which can only mean some of the current players won't be around in years to come. "Sure, there will be fall-off; maybe two or three companies will survive," says Melwani. "We want to be one of the survivors."

Al Yeganeh isn't letting the newcomers pass him by. He, too, is joining in the expansion frenzy by partnering with a marketing guru in an effort to take his soups nationwide. And how does Yeganeh feel about all the other soupsters who are jumping into the stew? "I don't see them as competition," he says, "and I'm never going to have any competition."

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This article was originally published in the November 1997 print edition of Entrepreneur with the headline: Soup's On!.

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