Small Business

A Wedding at a Funeral Home?


As profit margins shrink across the industry, funeral directors are acting more like event planners, adding snazzy reception centers and selling nontraditional services

Ripping the wooden pews, stained glass, and towering cross out of the chapel was only phase one. When Mark Musgrove and his brother, Jeff, took over the family's Eugene (Ore.) funeral home in the mid-1990s, they knew a radical break with the past was crucial to Musgrove Family Mortuary's survival. Families were requesting fewer traditional funerals and more no-frills cremations—which meant the chapel their father had built back in the 1960s was standing empty half the time.

By converting the chapel into a multipurpose "family center," with a catering kitchen in the back where the flower room used to be and a 12-foot screen for multimedia presentations, the Musgroves aimed to meet the needs of those seeking nontraditional funerals. "When all we had were pews, and families wanted something different, our facility wasn't an option," says Mark, 50, a former president of the National Funeral Directors Assn.(NFDA). "Now we can accommodate secular families, Jewish families, Muslim families…."

Pre-renovation, the chapel's entryway, with its mauve carpeting and wallpapered walls, "looked like, well, a funeral home," says Mark. He put in slate flooring, a seven-foot fountain, and a big comfy couch, painting the walls in the golden hues that decorators call "Tuscan" and Musgrove calls "Starbucks colors." To the cemetery, he added a "scattering garden" complete with gazebo and a waterfall.

Full-Service Station

All across the country, funeral homes—some 89% of them owned by individuals, families, or private companies, according to a 2001 survey by the NFDA—are adding similar reception halls. And most of that change has come within the past three or four years.

For Mark, the foray into catering is just one part of what he hopes is a transition to a truly full-service facility. "We would like to help families wherever they have their receptions," Mark says—even if it's in the family's backyard.

In the future he would also like to help facilitate travel arrangements for out-of-town guests, perhaps working out partnerships with local hotels and a travel agent. Another possibility: partnering with a law firm to assist families with estate planning and wills.

If all that sounds suspiciously like event planning, Mark says those functions have always been a major piece of what funeral directors do. But those services are also where funeral directors are finding the greatest opportunities for growth.

With the nationwide cremation rate rising fast—it's expected to top 50% by 2025—many funeral homes have seen revenues drop. (The average funeral with in-ground burial costs upwards of $7,000, according to the NFDA, while a direct cremation can cost one-fifth as much.) And since the Federal Trade Commission's Funeral Rule took effect in 1984, profit margins have continued to shrink as well.

Cheap Caskets

Before the Funeral Rule, funerals were typically sold as package deals. Everything from embalming to limousines was bundled into the cost of the casket, along with a healthy mark-up of 500% or more.

Now funeral directors are required to provide an itemized price list from which consumers have the right to choose only the goods and services desired—or to buy certain goods, like caskets, from a third-party vendor (see BusinessWeek.com, 4/8/02, "Facing the Financial Side of Funerals").

In recent years pressures have only continued to mount, with more low-cost caskets on the market from China and from independent retailers like Costco (see BusinessWeek.com, 8/18/04, "Costco: Coffins in Aisle 0"). That has helped drive the industry towards service and convenience, which are harder to put a price tag on.

Glenn Gould of MKJ Marketing, which specializes in the death-care industry, says the move is a no-brainer. "Contrary to what most people think, there's not a lot of money in handling the deceased," Gould says. "The business of a funeral home is to have events. If you take out the events, it's just not that profitable."

Flowing Bubbly

On-site reception halls and specialized services also ride the wave of two trends that baby boomers are suckers for: convenience and personalization. So while a family might be unwilling to drop a few thousand on a lavish cookie-cutter funeral, many are willing to spend as much or more on a customized "celebration" of a loved one's life, complete with extras like a video memorial, a prime-rib dinner, even a champagne fountain.

Once in the realm of champagne fountains, it's perhaps no surprise that in recent years many funeral homes have also started renting out their spaces for other events—including weddings.

Miller is a New York-based staff writer covering startups and small business. Miller is a graduate of Brown University.

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