Meal Kits Are Making a Comeback

But the DIY products still face some hurdles. 

June 04, 2020

ALEXANDRIA, Va.—Two years ago, in-store meal kits were big news as grocers worried about encroaching businesses, such as Blue Apron. In response, Albertson’s, Giant, Kroger, Stop & Shop, Whole Foods and others began offering meal kits in-store, reports Grocerydive.com

“I think grocers felt like subscription meal kit companies were really a threat, and I think they were, because they’re eating out of their fresh category,” said Hannah de Boer, co-founder and CEO of Meisterdish, a meal kit technology platform for grocers. “So, their answer to that was to acquire these larger meal kit companies.” 

But once those companies were acquired, de Boer thinks that retailers saw that they didn’t make financial sense and began offering the in-store model. That move wasn’t as seamless as retailers expected, however. Albertsons removed and attempted to relaunch Plated kits in stores after canceling the online service, and Amazon never rolled out its kits at all Whole Foods locations. Eventually, customers shied away from the meal kit industry. 

Struggling meal kit companies were revived by the coronavirus pandemic, which finds people cooking at home. Shares of Blue Apron have surged this year, while other companies, such as Sun Basket and HelloFresh, gained new fans as millions turn to online shopping. As restaurants have been forced to shutter due to the pandemic, some have adopted the meal kit model to let customers make their signature dishes at home.

But what looks like a boon for grocers’ in-store meal kits has been a mixed bag.

Early in the pandemic, Kroger-owned Home Chef, now available in 2,000-plus Kroger locations, saw a jump in demand as shoppers stocked up. But sales have seen a marginal decrease as in-store traffic has quieted, said Rich DeNardis, Home Chef's chief revenue officer.

Overall, meal kits are doing better than they have in the past, according to Nielsen data. Sales of in-store meal kits in the U.S. were up 23% during the one-week period ended May 2, compared with the same period a year ago, and up 30% over the nine-week period ended the same day.

With salad bars and other self-service stations shelved for the time being, more dollars could shift to grocery store meal kits. But freshness and shelf life remain a concern for companies and consumers, and there is evidence that consumers view meal kits as too pricey.

NACS has published two case studies related to the sale of meal kits as part of its refresh initiative and covered the trend in the feature “Driving In-Store Growth” in the July 2019 issue of NACS Magazine.

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