Meal-Kit Sales Still Face Hurdles

ALEXANDRIA, Va. —Meal kits, those pre-portioned and ready-to-prepare meals that began as online subscriptions, have been migrating to the supermarket, but so far, the concept has not prospered offline, according to a report from Bloomberg.

Blue Apron and Home Chef meal kits have moved to supermarket shelves. Kroger bought Home Chef last year, following Albertsons’ acquisition of Plated in 2017. HelloFresh, the European meal kit, is available in almost 600 U.S. supermarkets, while Blue Apron is seeking prospective partners after a disappointing pairing with Costco. The challenge for grocery stores is persuading consumers to try and keep buying meal kits. That’s exactly what has plagued the online meal-kit business since it started. 

Originally, meal-kit subscriptions were marketed to consumers who wanted to cook but didn’t know how. Blue Apron offered three meals a week for $9.99 per person per meal, plus shipping. At first, fans were excited to receive the raw ingredients and easy-to-cook recipes at home. Then came the complaints: The meals were too expensive, shoppers had to plan ahead, and people disliked tossing all the packaging that is required to keep ingredients fresh. Luring and retaining customers required margin-eating discounts, which often didn’t work.

Putting meal kits in grocery stores seemed logical. Customers wouldn’t need to buy multiple meals ahead of time, and without shipping costs, prices should come down and encourage sales. Early results were positive, with in-store meal kit users jumping by 2.2 million households in less than a year, according to Nielsen.

The strategy solves the common “what’s for dinner tonight?” question. Consumers can run into a store, pick a meal, and cook it that night. But there are already signs that it could be flawed. While featuring less packaging, meal kits still have much potential for wasted food because national chains are hard pressed to tailor meals to local demand. Even without shipping costs, meal kits are still pricier than buying separate ingredients and chopping them yourself. And while customer churn has been an ongoing issue for the online subscription model, winning loyalty is even harder in the supermarket, where countless options, many less costly, vie for shoppers’ attention.

The answer for meal-kit companies may lie in picking niches rather than trying to be all things to all people. Sun Basket is targeting consumers who want gluten-free, paleo-diet and vegetarian meals. It still operates as an online subscription.

Marley Spoon, which has teamed up with Martha Stewart in the U.S., sells less-expensive meal kits aimed at families who already cook. The Berlin-based company recently rolled out a sub-brand called Dinnerly that sells for $4.99 per serving (plus $8.99 in shipping).

Fabian Siegel, founder and CEO, said recurring customers made up 90% of Marley Spoon’s $100 million in sales last year. But so far, the company has no plans to put meal kits in grocery stores. “We are a service for customers with a regular life, who cook for their families,” Siegel said.