Death.
Difficult to talk about, uncomfortable to plan, but
inevitable. And with Covid-19 killing over 500,000
Americans in the span of a year...
it's on everyone's minds.
Morgues, mortuaries and funeral parlors across the
country have been pushed to their limits as they
try to reach surging demand.
Overwhelmed with the massive death toll, funeral
homes have had to adapt to changes surrounding the
pandemic and increased costs.
People tend to say, oh, my goodness, you're in the
funeral business. It must be a great time to be a
funeral director. And, you know, they don't realize
that there's so many costs associated both
financially and just, you know, or otherwise
associated with being a funeral director during a
pandemic.
In the past decade, dying has become an increasingly
expensive thing to do.
In 2019, the median cost of a traditional adult
funeral with viewing, burial and vault was $9,135
, compared to $8,508 five years prior.
In tough times, more and more families are choosing
cremation or simply scaling down on memorial
services for their loved ones
Both of which turn less revenue for funeral
businesses that tend to rely on extravagant
services and expensive caskets and burials.
That's where Silicon Valley comes in.
Startups are stepping in to disrupt a business
model that hasn't changed in nearly a century,
allowing families more options for how they get to
honor their loved ones.
I think it's really about optionality and just...we
are breaking with tradition.
We're starting to say what's personal and
meaningful for me and my loved one, what feels
right rather than what have we always done.
Amid Covid and changing consumer preferences, the
death care industry has faced a lot of challenges.
But much like the increase in fatalities,
investigations and exposes continue to mount.
Hidden fees, exploitation and the mishandling of
bodies are just some of the accusations to come to
light. So with modern funeral rituals becoming more
obsolete, increasingly expensive and entrenched in
criticism, what does this mean for the industry?
The history of funeral homes in America really
begins with the civil war.
Prior to that, families in America would care for
their own dead. Their bodies were prepared and
displayed in the parlor of the house.
It wasn't until after the war that embalming became
a regular practice.
Families would request that their dead soldiers be
shipped home, which required embalming in order to
preserve the body. But it was President Lincoln's
assassination that had the more profound influence.
His embalmed body, which was put on display across
the northern states, while it made its journey
home, really gave the American public an up close
and personal view of embalming, not just their, you
know, fallen president who symbolized so much even,
in death.
But really, you know, the body was put on display,
there was an embalmer who traveled with the body and
it represented the future of disposition
in American culture.
Embalming became popular among everyday Americans
and allowed funerals to be held much later than the
usual 24 to 48 hours after death.
Along with the boom of the automobile industry, this
made it possible for extended family to travel and
attend a funeral service.
At the turn of the 20th century, the death care
industry revolutionized.
Funeral homes began expanding beyond family-operated
businesses. Family gravesites also began
transitioning to burials in park-like cemeteries.
The industry was growing rapidly, and undertakers
called for a need of professional, unified and
ethical practices.
Thus, the National Funeral Directors Association
was born. The number of funeral directors rose from
9,891 in 1890 to 24,469
469 in 1920.
People who got involved in taking care of the dead
started to organize and try to institutionalize
their services.
Associations and organizations that have all kinds
of statements of ethical principles, as well as
efforts to be as transparent as possible, you know,
kind of got built into the funeral industry and,
as, as I'm suggesting, really allowed for it to
claim a certain kind of legitimacy.
At the end of the 20th century, the death care
industry became incredibly profitable and
multinational corporations began to buy into what
was once a mom-and-pop operation across the board.
This raised concerns about the intentions and
morality behind for-profit businesses taking care
of the dead.
That didn't mean that there were great many people
who thought making money off the dead was
inappropriate and off limits.
So the funeral business has, from the get go, been
a target of a number of attacks on, again, this
question of their real legitimacy and motivations
and so on.
Aside from critics, evidence shows that there's
still a lot of gratitude and appreciation for
funeral homes.
Excluding modernized changes, like using hearses
instead of horses, traditional funeral rituals
haven't changed much in nearly a century.
The U.S. funeral service industry is a $16 billion
business, and in 2019 there were 19,136
funeral homes in the U.S..
Most funeral home directors are small business
owners. According to IBISWorld, approximately 86.4%
percent of funeral homes are owned by families or
individuals. The other 13.6% are owned by three
publicly traded companies: Service Corporation
International, Carriage Services Inc.
and StoneMor Partners, with SCI and making up the
majority market share.
Funeral homes have a unique business model.
They operate 24/7 because death is, well,
unpredictable. They're also capital intensive.
In order to own a funeral home, most inventory has
to be purchased outright; furniture, vehicles,
embalming equipment, preparation room, casket
inventory, insurance.
It's estimated that opening a midsize funeral home
takes about $450,000 in startup costs.
For less upfront costs, there are several franchise
opportunities in the U.S.
It takes an average of $20,000 dollars to buy into
one. It's worth noting that funeral homes are still
a for-profit business.
To increase their bottom line, some funeral
directors use sales tactics.
And in recent years, many of these businesses have
been scrutinized for attempting to upset items to
grieving families.
Some dishonest funeral directors will even insist
that families purchase items or services that are
not required by the Federal Trade Commission, also
known as the FTC.
Although it varies state to state, things like
wooden caskets, vaults, embalming and burial in a
funeral plot are not required by federal law.
Consumer advocates have found that some funeral
directors prey on the bereaved to get them to spend
more money.
The family members and friends of the person who
died is in a very vulnerable state.
Some funeral directors take advantage of that,
bottom line.
And will imply...
use different statements such as, "you want the
best for your loved one, don't you?" Or something
like, "well, to properly honor your loved one,
doesn't this make sense?" And things like that.
And at that point, they're likely to spend more
money and not focus on a budget because, you know,
casket B is way better than casket A, and they're
not focusing on price anymore.
And that can lead to problems.
It is a very emotional time.
It is a time that can be riddled with guilt and
shame. And often times we advise individuals who
are navigating any type of loss, whether it be
physical death, weight loss or symbolic losses, to
not make any major decisions in the first 90 to 120
days if they can be prevent it.
And unfortunately, death kind of disrupts that
advice. And part of the reason that we provide that
suggestion is because we are making emotional-based
decisions that may not be logical, that may not be
actually good for us in the long term.
The funeral rule created by the FTC requires funeral
homes to provide a written itemized price list for
their products and services when asked.
But many still aren't transparent about their
pricing. In 2018, the Funeral Consumers Alliance
and the Consumer Federation of America survey 211
funeral homes and found that only 16% posted their
complete priceless online and only 27% posted any
rates at all. Consumer advocates are urging the FTC
to revise the final rule to require prices be
listed online. Another study by the FCA and CFA
found that most people aren't aware of their
funeral rights.
25% of all consumers surveyed knew about the pricing
rule.
Be sure to ask for this GPL and people don't know to
ask for it. That's one of the biggest problems.
They don't realize is that they have to give it to
you. And it's not in packages, it's broken down to
each item.
Over the years, there have been several
investigations uncovering dishonest and unlawful
mortuary practices.
Some of the claims include funeral homes selling
body parts, unrefrigerated bodies left to decompose
and mixing up the identity of the deceased.
The Covid-19 death toll has risen to over 500,000
Americans. Leaving hospital mortuaries, funeral
homes, crematories and morgues overwhelmed with
bodies. The federal government provided aid to
several hot spots during the height of the
pandemic. In New York City, for example, funerals
and morgues received refrigerated trucks to store
the overflow of the bodies.
But with stress came lawsuits.
And April 2020, a Brooklyn funeral director lost
his license following an investigation for failing
to respectfully and lawfully handle remains.
According to the article, neighbors complained of a
stench coming from a U-Haul truck and a trailer
truck. The owner said he had used the trucks for
overflow storage, but only after he had filled the
chapel with more than 100 corpses.
A lawyer representing the funeral director claimed
that many others were doing the same thing, but his
client was used as a scapegoat.
It's a common misconception that funeral homes have
increased their bottom line during the pandemic due
to the enormous increase in bodies.
But the industry as a whole actually lost money.
Pandemic restrictions require families to hold
smaller services or none at all.
For a few professionals, our cost of doing business
has increased during Covid.
There's much more personal protective equipment
that's needed. There's, you know, we've had to have
increased staffing because we needed to rotate
shifts and keep people safe and work in separate
groups. We haven't been able to use things like our
limousines and cars that have been sitting in our
garages for a year and a half we're still paying
for.
The economic downturn also contributed to an
increase in families opting for cremation, which
costs less than a typical funeral.
The NFDA projects that roughly 56% of those who
died in 2020 were cremated.
By 2040, they predict that the U.S.
cremation rate will rise to more than 78%
In 2019, the average cost of a viewing and cremation
was $5,150.
The cost of a traditional funeral and burial was $
7,640.
Why am I going to put all that money into a casket
that's just going to, you know, to decay and this
and this and that?
I want to use that money for other things.
And that's why I think more and more people are
moving away from a traditional burial.
And while you're likely to see more cremations and
or green burials, but more and more cremations,
just because the savings and costs.
As history repeats itself, many families are opting
to have home ceremonies for their loved ones.
Even prior to Covid, consumer preferences were
beginning to change.
Induced by cost considerations, environmental
concerns and more people becoming less religious.
Silicon Valley is seeing a surge in startups
specializing in end-of-life care.
A major investors are backing them up.
According to data from Crunchbase, over the past
three years, venture and seed backers have put
capital into at least 26 companies offering
products and services around death and bereavement.
From water-based cremations to online memorials,
families are opting for alternatives to traditional
funerals and burials.
Cremation ash startups are some of the most popular
choices among consumers.
Take, for example, Eterneva.
It's a company that helps families memorialize
their deceased loved ones by making diamonds from
the carbon in their ashes or hair.
I think what's really unique about us as a company
is that we're really a lot more than just a
product. We've designed an entire experience around
the diamond creation process that actually parallel
processes with someone's grief.
Takes about seven months to do.
So every month we're sending pictures and videos and
updates.
More established companies are disrupting the
funeral industry as well.
Amazon and Costco have entered the business,
selling competitive priced caskets online.
As we start kind of coming into this new year,
because people have started to figure out creative
ways to have their own celebrations of life, honor
their loved ones in different ways, that's a lot
more pressure in the funeral industry to start
modernizing, offering different options, really
meeting the consumer where they are.
And I think they're feeling a bit of that pressure
more than ever.
So with the less religious landscape, cremation on
the rise and embalming on a decline, what does this
mean for the traditional funeral home business?
Experts say it's going to be around for a while.
It's hard to know where the funeral industry will go
into the future.
But I would venture to say that funeral industry is
here to stay.
It is a kind of pillar institution and a lot of
ways that even in its
capacity to really, as I said, adapt and to
provide all kinds of different services are
possibilities or options for people who are
grieving, people who are struggling to deal with
death and take care of their dead, that, you know,
you want to have a go-to-person.