Is the coronavirus pandemic sparking a meal kits comeback?
Meal kits have undergone a quick resurgence during the pandemic as families under lockdown rediscover home cooking and seek to avoid supermarket runs.
For households, meal kits add variety beyond staple offerings with their promise of fresh ingredients, convenience and unique recipes.
Blue Apron saw a sharp increase in demand from new and existing customers in late-March as stay-at-home and restaurant restriction orders arrived. The subscription service was not able to fulfill all orders.
“We also believe that even as restrictions begin to lift there may be a long-term negative impact on the ability of some restaurants to operate at levels prior to the pandemic, if at all,” said Linda Findley Kozlowski, Blue Apron’s CEO, on her firm’s quarterly conference call. “These factors combined with the work that we’re doing to retain and engage customers lead us to believe that a portion of the uplift in demand we have recently experienced can be maintained beyond the period of the direct impact of COVID-19.”
Sun Basket, Purple Carrot and HelloFresh are among other subscription providers noting a pick-up.
Chick-fil-A, Taco Bell, Shake Shack, Just Salad and Panera, as well as many local restaurants, have also begun offering meal kits amid COVID-19 restrictions. Fat Rice, an award-winning Chicago restaurant, has shifted full-time to meal kits because the owners don’t see regular dine-in customers returning for at least a year.
Profitability challenges due to the costs of sourcing, marketing and distributing meal kits have soured investors on meal kits in recent years. Many shoppers drop subscription services after just a few months, and companies have had to resort to extreme promotions to attract new customers and avoid churn.
Customers cite high prices, small portions, too much packaging, inconvenient delivery schedules and inflexible and repetitive meal options as reasons for canceling subscriptions. Kits from retailers also have failed to gain much traction. Many retailers are retooling them as quick-prep meal solutions.
COVID-19 has given meal kit companies an opportunity to reintroduce themselves to American consumers. According to The Wall Street Journal, Sun Basket has been focusing on stronger engagement on text, email and social media to improve retention. Blue Apron has been promising greater choices and flexibility.
- Blue Apron Holdings, Inc. Reports First Quarter 2020 Results – Blue Apron
- Blue Apron Holdings, Inc. (APRN) CEO Linda Findley Kozlowski on Q1 2020 Results – Earnings Call Transcript – Seeking Alpha
- Meal Kits Thrive During Coronavirus Lockdown – The Wall Street Journal
- Meal Kits Had Their Chance. Covid-19 Has Given Them Another One – Adweek
- Blue Apron CEO Linda Kozlowski reveals how the coronavirus meal kit boom may help the beleaguered company finally make a comeback – Business Insider
- Why is Blue Apron’s stock skyrocketing? – TechCrunch
- Q1 2020: HelloFresh SE records very successful start to the year – HelloFresh
- It’s not a fad. Meal kits are going to change the way you eat. – CNBC
- Fat Rice, an Acclaimed Chicago Restaurant, Shifts to Meal Kits – The New York Times
- Can on-demand sales stabilize Blue Apron? – RetailWire
DISCUSSION QUESTIONS: How should meal kit companies position their services to capture or recapture customers amid the pandemic? What will be critical for sustained growth beyond the pandemic?