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Craig, Jenny - Overview, Personal Life, Career Details, Chronology: Jenny Craig, Social and Economic Impact

weight diet company loss

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 1997 there were 780 weight-loss centers bearing her name in North America, Australia, and New Zealand. It is the only such company traded on the New York Stock Exchange.

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 Guidroz 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 the late thirties was married to a building contractor and was the mother of two young daughters, Michelle and Denise. Her second pregnancy was a difficult one, and Craig gained a lot of weight. “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?’”

To fix her figure, Craig went on a drastic diet, began attending an exercise class, and within a few months had lost 30 pounds. She then went to work for a health club in the New Orleans area, and was eventually hired as a staff member. She 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 1970s both unions ended in divorce. 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. In the 1990s, she held the title of president of Jenny Craig, Inc., while Sid Craig was the company’s CEO and board chair at headquarters in suburban San Diego. They lived in an impressive beach-front home and were collectors of 17th- and 18th-century European art. In 1997, her annual salary was over $885,000. Some of that wealth has funded a health clinic in Mexico for the disadvantaged, and the Craigs once sponsored Australia’s entire Olympic team. Sid and Jenny Craig donated a large sum to California State University at Fresno, where he went to school in the early 1950s, and as a result its business school was named in his honor.

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 is the grandmother of seven, still keeps to the lowfat diet which launched her weight-loss success, and exercises an hour each day.

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 diet and physical fitness, which was still a fledgling industry at the time, and Body Contour grew into a $35 million-a-year business. In 1982 the Craigs sold Body Contour to Nutri/System, but there was a “non-compete” clause that 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 and opened the first Jenny Craig Diet Centres there, which were a success. 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 in 1985.

Two years later, they had 46 outlets, and by 1990 the company had grown to number 285. They continued to grow, and took their company 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 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 the aforementioned 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 overweight Americans were attracted to the 16-week program, which offered nutritional counseling and prepackaged 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.

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: Oversaw 285 outlets bearing her name.

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

1993: FTC charged company with deceptive advertising practices.

1994: Revenues of $403 million annually.

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

Yet problems arose as a result of the swift 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,” noted 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 its initial membership fee from as high as $185 for some plans to just $49 in a bid to attract new clients. It is estimated that the diet market in the United States hovers around 50 million, 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 prepackaged 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.

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 snubs, that they were requested to shovel snow, and were not invited for off-premise socializing with their mostly female co-workers.

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 eight 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.

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 “fenphen”), 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.

Crais, Robert - Author, Career, Sidelights, Selected writings [next] [back] Craig, Arthur(1871–1959) - Engineer, educator, Improves Tuskegee’s Curriculum and Campus, Chronology

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