Craig, Jenny

(1932-)
Jenny Craig, Inc.

Overview

Jenny Craig is the creator and founder of one of the most successful weight–loss programs ever marketed. Since the 1980s, her Jenny Craig Weight Loss Centres have helped numerous Americans lose unwanted pounds and learn to eat a nutritional diet that can lengthen their life span. In 1999 there were 661 weight–loss centers bearing her name in North America, Australia, and New Zealand.

Personal Life

Craig was born Genevieve Guidroz in the early 1930s and grew up in New Orleans. Her father, James Guidroz, was a boat captain and part–time carpenter, while mother Gertrude grew her own vegetables to help feed a large family of six children, of which Jenny was the youngest. She studied at Southwestern Business School and worked as a dental hygienist for a time, but by her late 30s she was married to a building contractor and was the mother of two young daughters, Michelle and Denise. The second pregnancy was a difficult one, with Craig having to stay in bed and eat every few hours. After the baby was born, she remained 45 pounds overweight. "I used to look in the mirror and cry," she recalled in an interview with People magazine in 1990. "I would just cry and say, 'What did you do to yourself?'"

Having come from a family with weight problems, Craig resolved to take action. Her mother passed away at age 49 from a stroke and had eight brothers and sisters who died before age 50—all of them overweight. Wanting to live a long and healthy life with her family, Craig went to work.

To fix her figure, Craig went on a drastic diet and began attending an exercise classes at Silhouette/American Health. Within a few months, she had lost 30 pounds. She then went to work for the health club in New Orleans and was eventually promoted to management. She began to see a need for health and diet education. The basic foundation for her company's beliefs was formed when Craig herself went through the struggle of losing weight. She was quoted in Women Entrepreneurs Only stating, "I began to realize that there was nothing out there telling people that they should eat this kind of food as healthy or avoid that kind of food as unhealthy. I was sure there were a lot of people just like me that want someone to tell them what to do. What really started me off in this business was my own research into what kinds of food I should be eating."

Craig met future husband Sid Craig in 1970 when he arrived in the New Orleans area to expand a chain of failing fitness centers he had just bought. His chain, Body Contour, was going to be positioned as a competitor with Jenny Craig's employer. The California entrepreneur had once been a tap–dancing child in the "Our Gang" series in the 1930s and then went to work as an instructor with the Arthur Murray Dance Studios. He eventually owned several Arthur Murray franchises before getting into the exercise business.

Sid Craig and Jenny Bourcq were still married to respective spouses when they met, but during the 1970s both unions ended in divorce. Craig, having just sold a business, had answered an ad in the paper that Sid had placed for employment with Body Contour. Jenny was hired to work in the new fitness center, and soon their working relationship evolved into a romantic one, and they wed in 1979. After founding the successful diet program that bears the "Jenny Craig" name, the partnership grew into a lucrative financial one as well. Into the 1990s, she held the title of president of Jenny Craig, Inc., while Sid Craig was the company's chief executive officer (CEO) and board chair at headquarters in suburban San Diego. They lived in an impressive beachfront home and were collectors of seventeenth–and eighteenth–century European art. In 1999 she was a millionaire, and some of that wealth funded a health clinic in Mexico for the disadvantaged. The Craigs once sponsored Australia's entire Olympic team. Sid and Jenny Craig also donated a large sum to California State University at Fresno, where Sid went to school in the early 1950s, and as a result its business school was named in his honor. In 1999, The Jenny Craig Pavilion was dedicated at the University of San Diego. The Craigs donated nearly half of the funds necessary to erect the new facility.

Chronology: Jenny Craig

1932: Born.

1970: Joined Sid Craig in fitness–center company.

1982: Sold Body Contour chain, netted $3.5 million.

1983: Launched Jenny Craig Weight Loss Centres in Australia.

1985: Opened first franchises in United States.

1990: Managed 285 outlets bearing her name.

1991: Initial public offering of stock on the New York Stock Exchange.

1993: Federal Trade Commission (FTC) charged company with deceptive advertising practices.

1994: Revenues reached $403 million annually.

1995: Temporarily lost ability to speak due to freak accident.

1997: Called for health–insurance providers to classify weight–loss programs as a valid medical reimbursement.

1997: FTC complaint resolved with consent agreement.

1998: Replaced by Philip Voluck as president and remains Vice Chairman.

1999: Launched e–commerce on web site.

1999: Announced restructuring plan due to declining revenue and a re–emphasis on basic nutrition beliefs.

2001: Released new cookbook 30 Meals in 30Minutes.

The Craigs also own a second home in Aspen, a private jet, and several thoroughbred racehorses. For a time, both Craig daughters from her previous marriage were multi–franchise owners of Jenny Craig Diet Centers. Craig, a proud grandmother, remained vice chair of the board of Jenny Craig in 2001. She still keeps to the low–fat diet, which launched her weight–loss success, and exercises an hour each day. In 1995 Craig, then 62 years old, suffered a freak accident; after dozing off while watching the news one night, she was startled awake by a loud noise on the television. Her head snapped back so violently that she damaged her jaw muscles. The odd mishap resulted in Craig's loss of speech because she could not control her lower jaw. After extensive surgery and ongoing speech therapy, Craig has regained the ability to speak but can no longer act as the company's spokesperson.

Career Details

When Sid Craig opened the first Body Contour fitness clubs in the New Orleans area in the early 1970s, Jenny Craig went to work for him. She brought her own ideas about nutrition, diet, and physical fitness to the relationship. Those ideas were not yet popular in the American mindset, and the weight loss industry was just beginning to develop. Nevertheless, Body Contour grew into a $35 million–a–year business. The Craigs pressed their partners to look towards these new ideas and wanted to start implementing them into the Body Contour business. The partners, however, did not see a future there.

In 1982 the Craigs broke ties with business partners and sold Body Contour to Nutri/System. A "non–compete" clause prevented either of them from working in the diet or fitness center industry for two years. The clause, however, only applied to the United States, so the Craigs went to Australia to pursue their plans of combining nutrition and fitness education. Despite cultural barriers, the couple opened 12 Jenny Craig Diet Centres in Melbourne, and they soon were operating 50, which were highly successful. Through hard work, confidence, and dedication—all of which Craig learned through her father—Sid and Jenny Craig made the company name synonymous with weight loss.

With over $50 million in gross income, they brought their idea back to American shores in 1985 and opened the first 14 Jenny Craig Weight Loss Centres in the Los Angeles area. Two years later, they had 46 outlets, and by 1990 the company had grown to number 285. Gregory K. Ericksen, author of Women Entrepreneurs Only wrote that, "five years after entering the U.S. marketplace, the company became the sixth–fastest growing private firm in the country."

Jenny Craig continued to grow and finally went public, offering shares on the New York Stock Exchange in October of 1991. To do so, a Wall Street investment bank that saw great potential in their concept of managed weight loss raised $100 million on their behalf to launch the shares. With the success of the offering, the Craigs and their children received $108 million; Jenny and Sid Craig still owned about 60 percent of company stock.

By 1992, Jenny Craig, Inc. was a $400 million company; its biggest competitor was Nutri/System. Weight Watchers and the Diet Center were also top rivals. There were 621 Jenny Craig outlets in 1993, and that year the company posted $467 million in sales. It was perhaps the height of the company's success, and thousands of over-weight Americans were attracted to the 16–week program, which offered nutritional counseling and pre–packaged foods called "Jenny's Cuisine" at an extra cost for both. The frozen foods, which provided ready–made meals to clients at a cost of around $70 a week, accounted for about 90 percent of company sales; individual counseling sessions cost about $7 each. The average member spent about four months in the program.

Yet problems arose along with the growth of Jenny Craig, Inc. In 1992 there were allegations and a court case from shareholders of the company's stock who claimed the rapid expansion in the early part of the decade was done to camouflage financial woes. "The suit claims that at the time of its October 1991 public offering, the company knew the market for diet clinics had become saturated but went ahead with expansion plans to boost revenue and create the illusion that Jenny Craig was a prosperous company," explained Denise Gellene in the Los Angeles Times. The profit the Craigs earned when the stock went public may have caused some of this dissatisfaction.

In 1993 the Jenny Craig Weight Loss Centres dropped the initial membership fee from as high as $185 for some plans to just $49 in a bid to attract new clients. It was estimated that the diet market in the United States hovered around 50 million at that time, or just under a fifth of the total population. A few franchisers were unhappy with the new lure and claimed that, in some cases, new clients could not afford the pre–packaged foods essential to successful weight loss in the Jenny Craig program. The Craigs bought out many of the franchises that were unprofitable, including some owned by Craig's daughters and their husbands. The fiscal year 1993 saw further problems with the company's finances: the stock had been trading at $34 a share in 1992 but had dropped to $15 a year later. In response, the Craigs restructured the company and brought in experienced executives hired away from other companies, none of whom remained on board for long.

By 1994 the company had posted heavy losses, and many centers had closed altogether. Dieting, as Leslie Vreeland wrote in a 1995 Working Woman article, had become "uncool" and cited trends such as a greater selection of low–fat foods on supermarket shelves and the avowal of television personality Oprah Winfrey never to "diet" again after losing a great deal of weight on a liquid diet and then gaining it back within two years. Vreeland also noted the success of anti–diet guru/infomercial host Susan Powter with her "Stop the Insanity" program. Furthermore, the reputations of programs such as Jenny Craig suffered a blow when a popular consumer magazine asked 19,000 people to rate their membership in and weight–loss success at such centers, and a large percentage of them reported dissatisfaction.

According to one observer, the typical experience for a woman who walks into a Jenny Craig Weight Loss Centre is to be immediately asked about her health and how much weight she wants to lose. If she agrees to sign up for the weight loss program, she will leave the center with instructions to consume a 1200–calorie–per–day diet consisting of single–serving meals sold exclusively by the company. This approach to weight loss is based strictly on portion control and calorie restriction. Nutritionist Mark Kantor, Ph.D., of the University of Maryland, explains why it works: "When you eat prepackaged food, you're going on a kind of 'no–thinking diet' in which you simply eat what you're given. You can't help but lose weight."

Jenny Craig, Inc. made headlines of a different kind in 1995 when a group of men who became known as the "Boston Eight" brought a gender discrimination suit against the company. The male employees of a Massachusetts Jenny Craig Centre filed suit in Massachusetts Superior Court for what they felt were condoned workplace practices that denigrated them because of their gender. In what came to be called a "reverse sexual harassment," the men claimed, among other complaints, that they were requested to shovel snow and were not invited for off–premise socializing with their mostly female co–workers.

Despite these setbacks, the company continued to forge ahead in the weight loss industry. In 1997 it introduced its "ABC Program." The program was designed to be an easy, user–friendly plan that made counting calories and fat grams obsolete by placing food into A, B, and C groupings. Jenny Craig believed that healthy eating habits should be easy to maintain and with obesity on the rise, this ease remained a focus of the company. According to government statistics posted on the company's web site, over 100 million people were over-weight—54 percent of the adult population in the United States in 1998. Although the company posted continued losses in September 1999, it looked to increased Internet presence and restructuring to get back on track.

In late 1999, in a move intended to improve sales, Jenny Craig entered a 20–year licensing arrangement with Balance Bar to market a line of diet bars under the Jenny Craig name. The joint venture marked the first time the Jenny Craig brand was accessible to consumers outside Jenny Craig centers. And at the end of 2000, Jenny Craig was poised to launch a major effort to differentiate itself based on a more "personalized version of its one–to–one consulting method."

In early 2001, the company announced substantial losses for the last six months of the previous year. According to Craig, the number of new customer enrollments had fallen from that of the previous year "due in part to increased competition and new market entries as well as an unusually high level of competitive advertising." At the end of 2000, the company operated approximately 660 company–owned and franchised centers in the United States, Australia, New Zealand, Canada, and Puerto Rico.

By March 2001, Jenny Craig, Inc. had significantly stepped up its marketing activities. The company's Web presence included a commerce–enabled Web site, online events, and marketing strategies such as search engine positioning and email outreach. In August 2001 the company launched the sale of a new Jenny Craig cookbook, 30 Meals in 30 Minutes, aimed at the nutritional needs of busy people with demanding schedules.

Social and Economic Impact

Jenny Craig Weight Loss Centres achieved phenomenal success in the 1990s with its diet program that gave clients counseling as well as an easy–to–use meal plan that saved time in meal preparation. In that decade, it was estimated that about 8 million Americans were joining programs such as Jenny Craig and spending about $1.7 billion a year. After Weight Watchers, Jenny Craig became one of the most recognized brand names of the bunch. Like Weight Watchers, the company spent a great deal of its budget on advertising and often enlisted celebrities as spokespeople. Entertainment personalities such as Susan Ruttan (once a regular on L.A. Law), Dick Van Patten, and Cindy Williams, star of the 1970s sitcom Laverne & Shirley, have been affiliated with Jenny Craig ad campaigns.

In late 1999, Jenny Craig launched a controversial new advertising campaign featuring Monica Lewinsky, the former White House intern. Stock price jumped 32 percent upon the announcement. But after only five weeks, Lewinsky was gone from the weight loss program's advertising. According to Jenny Craig's VP of Marketing, the company had decided by late 2000 to no longer use celebrities like Monica Lewinsky in its advertising campaigns, "because consumers can identify more with an everyday person than with a celebrity."

One reason for the name–brand identity that Jenny Craig Weight Loss Centres have achieved may be due to the fact that both Craig and the program she designed stress that overweight people need to learn not how to follow a diet but rather how to eat properly for life. Dieting, Craig has emphasized, should not be an occasional drastic measure. Nutritionists agree, but problems arose with some of the company's claims and practices. In late 1993, the Federal Trade Commission cited Jenny Craig, Inc. and four other diet programs for false advertising. Investigators asserted the programs made misleading claims about their effectiveness and the percentage of clients who were able to maintain their weight loss once they had left the program. In the spring of 1997, the company agreed to abide by guidelines that required them to offer proof that their customers were able to lose their desired number of pounds in a certain amount of time, and that those pounds remained off over a specific period of time without rejoining the program at an additional cost.

Federal agencies, however, were not without their own internal missteps. In 1996 the Food and Drug Administration (FDA) allowed dexfenfluramine and fenfluramine (known by the brand name "Redux" and "fen–phen"), the first new prescription drugs for weight loss since the early 1970s, onto the market. Initially, sign–ups and sales at diet programs such as Jenny Craig plummeted, but like some of its competitors, the Centres hired part–time doctors to prescribe the drugs. The drugs were withdrawn from the market in 1997, however, when a Mayo Clinic study linked one of them to heart disease. Concerned about the drug's side effects already and sensitive to critics that charged the company with becoming a "pill mill," Jenny Craig Weight Loss Centres had already ceased the use of the drugs two weeks before the announcement.

Returning once more to their credo, Jenny Craig, Inc. called for a new strategy to help overweight Americans: in response to the controversy, it urged managed healthcare organizations to adopt new rules that would reimburse members for joining weight–loss and weight–management programs such as Jenny Craig. Such health–insurance providers had reimbursed patients for the prescription diet pills before their side effects came to light. This call for a more health–focused approach to weight management fit in with a new strategy by Jenny Craig, Inc. to position itself as a wellness plan.

The Federal Trade Commission's (FTC) Partnership for Health Weight Management was launched in February 1999. Jenny Craig began her participation in the partnership that was created to develop industry wide standards for advertising and promoting weight loss in the United States. This move cemented the company's goal of being seen as a responsible, consumer–oriented firm.

In early 2000, the company remained focused on educating the public on good health and eating habits. Its redesigned web site allowed for consumers to become acquainted with the company's policies, products, and beliefs. Jenny Craig also introduced a new line of dietary supplements called Advanced Nutrients backed by Dr. Art Ulene, released fitness video cassettes, and produced its first television show, Jenny's Fit in 15, that ran on The Health Network in July 1999. According to Craig, "Our goal is to stem the tide of obesity by using a warm, personalized and one–on–one approach to help our clients make positive lifestyle changes. By teaching them how to create a healthy relationship with food, increase their daily activity levels, and maintain a balanced outlook, we give them the tools they need to successfully manage their weight."

In 2001, Craig's company struggled to show a profit, and revenues had dropped for the previous four years. In May 2001, USA Today reported that talk was brewing that Craig might sell her company, and in August 2001 the New York Stock Exchange suspended trading shares of Jenny Craig, Inc. Despite the difficult times, not all news was bad: for the fiscal year ending June 30, 2001, Jenny Craig, Inc. posted an operating loss of only $2.7 million on revenues of $238.6 million, compared to a loss of $12.9 million on $291 million the previous fiscal year. Although the year–end total was a loss, the company reported a profit of $4.1 million for the last quarter of the fiscal year.

Sources of Information

Contact at: Jenny Craig, Inc.
11355 Torrey Pines Rd.
La Jolla, CA 92037
Business Phone: (858) 812–7000
URL: http://www.jennycraig.com

Bibliography

"Ad Follies," Advertising Age, 18 December 2000.

Ericksen, Gregory K. Women Entrepreneurs Only: 12 Women Entrepreneurs Tell the Stories of Their Success. New York: John Wiley & Sons, 1999.

Farrell, Greg. "Jenny Craig Hires Monica Lewinsky Former White House Intern." USA Today, 29 December 1999.

Good, Brian. "What You Can Learn from Jenny Craig." Men's Health, January 2001.

Graney, Ed. "USD's New Arena Dedicated; 5,100 Jenny Craig Pavilion to Open in Fall of 2000." The San Diego Union–Tribune, 6 May 1999.

Ingersoll, Bruce. "Jenny Craig Settles FTC Charges That Ads Made Deceptive Claims." Wall Street Journal, 30 May 1997.

"Jenny Craig Assumes Proud Role on FTC Task Force." Secure. Available at http://www.secure.jennycraig.com

"Jenny Craig Diet Centers Stop Using Fenndash & Phen," CNN. 11 July 1997.

"Jenny Craig Fortifies Expansion with Balance Bar Debut," Brandweek, 8 November 1999.

"Jenny Craig, Inc." Hoover's Online. Available at http://www.hoovers.com.

"Jenny Craig Redefines 'Fast Food' With Newest Collection of Recipes Designed for Busy People." The Financial Times, 14 August 2001. Available at http://www.ft.com.

"Jenny Craig Reports First Quarter Loss." Secure. Available at http://www.secure.jennycraig.com.

"Jenny Craig Reports Fourth Quarter Results." PR Newswire, 19 September 2001.

Krantz, Matt. "Jenny Craig to Put Weight–Loss Company Up For Sale." USA Today, 14 May 2001.

Rodrigues, Tanya. "Local Firm Jenny Craig Steps Into Online Promotions." San Diego Business Journal, 26 March 2001.

Rose, Craig D. "Jenny Craig Expands Focus, Sell Dietary Sup plements." The San Diego Union–Tribune, 25 March 1999.

"San Diego's Highest Paid Executives." SDDT. Available at http://www.sddt.com.

"Strategic Notes." Health Care Strategic Management, March 2001.

Thompson, Stephanie. "Two ad pitches for weight loss gain more heft; Weight Watchers and Jenny Craig stress personalized diet programs." Advertising Age, 4 December 2000.