Weight loss program Jenny Craig is going out of business after four decades. The subscription-based company originally said they would close select brick-and-mortar weight loss and nutrition centers and move to an all-online model. The company said they were “winding down physical operations” and would announce new plans online in the coming weeks. However, the company changed course and decided to shutter the business altogether due to an “inability to secure additional financing.”
The company had reportedly been looking for a buyer after struggling to compete against other weight loss programs (e.g., WW International, NutriSystem), the proliferation of weight loss drugs like Wegovy and Ozempic, and the gravitation by consumers to online weight loss solutions. When they couldn’t find a buyer or secure other financing, the Carlsbad, California-based company opted to shutter their doors.
Leading up to the closure
Before the company announced its plans to shut down, in an FAQ document, Jenny Craig said they issued WARN notices to sites that employed 50 or more people about potential impacts.
“We do not know the exact employees/groups whom (sic) will be impacted, and if any employees may be retained. As a result, we would suggest that you anticipate that your employment may be impacted and begin to seek other employment,” the FAQ document said, according to NBC News.
After NBC News reported the company’s plans, a spokesperson said Jenny Craig was “embarking on the next phase” of their business to evolve with what consumers today want and expert.
“Like many other companies, we’re currently transitioning from a brick-and-mortar retail business to a customer-friendly, e-commerce driven model. We will have more details to share in the coming weeks as our plans are solidified,” the spokesperson said.
The other shoe drops
Employees were notified via email late Tuesday, May 2, reports NBC News. That was also the last day for hourly employees at the company’s approximately 500 weight loss centers across the U.S. and Canada. Jenny Craig’s corporate and salaried employees worked until Friday, May 5. In a termination letter, the company told employees they would receive their final paycheck including compensation earned through their last day of work and any accrued, unused paid time off. It did not include information about severance packages or job placement support will be offered.
The company’s website shared this message:
Jenny Craig posted these messages on their Facebook page on May 4:
On May 5, two days after employees were notified of the company’s closure, a group of former Jenny Craig employees filed suit in a federal court in New Jersey. Seeking class action status, the plaintiffs allege Jenny Craig did not provide the appropriate state and federal WARN notifications, which requires 60 days’ notice of mass layoffs or clinic closures. Some employees received WARN letters, but NBC News reports that the lawsuit could cover hundreds of former employees.
Subscription-based program
The Jenny Craig program was a subscription-based program that started in 1983 in Australia before spreading to the U.S. in 1985. It was one of the first programs of its kind. According to Healthline, the average monthly cost of the program was $420 to $840, not including the cost of additional groceries, and a shipping cost between $20 to $30 per shipment. The program included portion-controlled, reduced-calorie, prepared meals and snacks. Those subscribed to the Max Up Weight Loss Plan also received weekly one-on-one health coaching. Other plans included the Simple Meal Plan and the Essential Meal Plan.
Insider Take
Jenny Craig is perhaps the victim of a perfect storm. During the pandemic, people changed how they shopped and secured products and services. Online options were often the only choices available for specific industries. Depending on the state of residence, fitness studios, gyms and weight loss and nutrition centers were shut down or had limited capacity. The Jenny Craig centers became almost obsolete, especially when customers could subscribe and purchase their products and services online.
Added to that mix was growing competition, some with less expensive solutions and programs than Jenny Craig. NutriSystem and WW International, for example, offer similar products and services but at much lower costs. With inflation growing, consumers have tried to find ways to cut costs. Jenny Craig likely priced itself out of the market. In addition, the popularity of weight loss drugs also chipped away at Jenny Craig’s audience, as did more nuanced weight loss programs like Noom that focused more on the psychology of weight loss than on products. (Editor’s note: Noom had problems of its own, settling a subscription auto-renewal lawsuit in federal court for $62 million in February 2022.)
All those external factors together created a hurdle that Jenny Craig couldn’t clear. There may have been operational and other financial considerations that played a role in their demise too. Regardless of what contributed to the demise of Jenny Craig, it is unfortunate. The company had a good run for 40 years this year, and 1,000 people are out of jobs and some subscribers are without access to a tool that worked for them. While Jenny Craig may have been able to address internal issues, perhaps they weren’t prepared or able to counteract external issues beyond their control and purview. With a lawsuit pending, we have not heard the last of Jenny Craig.
