Article
Meal-Kit Delivery Services Continue to Evolve

Meal-Kit Delivery Services Continue to Evolve

January 29, 2020

Our recent survey data shows that only 28% of US households have tried a meal-kit delivery service like HelloFresh, Blue Apron, Freshly, and others. Of those that have tried the service, only 18% are considered regular users (use the service at least monthly).

 

The concept of a meal-kit delivery service resonates with many households because it is marketed on convenience, quality ingredients, and healthier options than eating out. Over half (55%) of the households that have tried the service have children. Many of these households tried the service with the hopes that it would make their busy lives more manageable. However, the idea of meal-kit services is more appealing in theory than in reality. The majority of households tried the service for a short period and stopped using it for a variety of reasons. They may not have liked the recipes, had issues with deliveries, or just realized they don’t want to cook. Unfortunately, not everyone needs a chef in their kitchen.

 

This challenge has plagued the meal-kit industry for several years. Meal kit startups pioneered the model of sending recipes and preportioned ingredients directly to consumers on a subscription basis around 2012. A few years later, investors poured nearly half a billion dollars into the category. Last year a little over $60 million was invested in the space. Funding has virtually dried up.

 

It’s become increasingly clear that direct-to-consumer subscription meal-kits aren’t sustainable as a standalone business model. Instead, it appears that meal-kits are emerging as a promising marketing tactic for grocery retailers.

 

By stocking meal kits for different recipes at the front of the store, grocers can make shopping more convenient. Several grocers have acquired meal-kit startups over the past few years, including Kroger acquiring Home Chef and Albertsons acquiring Plated. Several others have partnered with startups to sell kits in stores, including Walmart with Gobble and Costco with Blue Apron. Some grocers, including Kroger, have also developed their meal kit lines.

 

So while the concept resonates with consumers, the business model appears to be evolving. Going forward, we’ll likely see meal kits integrated more deeply into grocery stores and grocery websites — as a feature, not a full business.

 

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