Is the coronavirus pandemic sparking a meal kits comeback?

Discussion
Photo: Blue Apron
May 11, 2020
Tom Ryan

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.

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?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Kits of all kinds are crushing it right now, because they lessen the burden of procurement."
"I have seen many local grocery chains really stepping up their game creating basic meal kits or at least a larger variety of pre-prepped food options."
"Meal kit companies need to position themselves as a substitute for restaurant meals and highlight the “cooking together” aspect..."

Join the Discussion!

14 Comments on "Is the coronavirus pandemic sparking a meal kits comeback?"


Sort by:   newest | oldest | most voted
Bethany Allee
BrainTrust

Kits of all kinds are crushing it right now, because they lessen the burden of procurement. With supply chain issues present and recurring, reducing the need for consumers to figure out how to get the items they want and need is a winning business model. Long-term viability will stem from a combination of savvy subscription models, a solid partner/supplier network, and diversification/evolution of services (AKA what Netflix did).

Dave Wendland
BrainTrust

Well articulated, Bethany. Couldn’t agree more!

Bethany Allee
BrainTrust

Thanks, Dave!

Dave Wendland
BrainTrust

Yes, there has undoubtedly been a resurgence and interest in meal kits. Key survival factors, however, have not changed: 1.) quality ingredients; 2.) affordability; 3.) consistency; 4.) variety; and 5.) convenience. I believe this is not a fad and the “return to normal” will not look like the past. That said, meal kit options should continue to spark interest and growth. New competitors – as cited in this post (e.g., Panera, Taco Bell, and other restaurants and grocers) – will continue to emerge and vie for a share of spend. Agility, responsiveness, price, and ease will separate winners from losers.

Richard Hernandez
BrainTrust

I have seen a lot of advertisements for meal kits as of late. Here is the opportunity for this segment of the food business to really push their advantages to those who are making meals at home more. It will be a long time before the general public (especially those with children) go out and people are finding out they like cooking at home and some like cooking but don’t want to cut vegetables up, etc. It’s definitely a lifeline for those meal kit businesses that were on the edge, pre-pandemic.

Lisa Goller
BrainTrust

Last month I sheepishly reunited with one meal kit company I swore I’d never use again. Any company that delivers food to our door (vs. BOPIS or having to enter physical stores) will win my love and consumer loyalty during the pandemic. Emphasizing convenience, time savings and risk mitigation can help meal kit companies win (back) consumers. Sustained growth beyond the pandemic demands consistent quality and freshness, lots of variety and reasonable prices.

Kathleen Fischer
BrainTrust

Meal kits are a great way to get “restaurant quality” meals without the worry of physical interaction plus they offer everything you need for the meal in one box so you can avoid multiple store visits. Meal kit companies need to position themselves as a substitute for restaurant meals and highlight the “cooking together” aspect while maintaining high-quality standards and ingredients.

Ralph Jacobson
BrainTrust

I think the time is right for targeted advertising of these ship-to-home meal kit companies to talk about contactless meal prep, etc. I also believe it is presenting opportunities for all food stores to push packed fresh food of all kinds. Pre-pack produce has a great margin and is perfect for the pandemic panic currently. ADVERTISE, folks!

Evan Snively
BrainTrust

I have seen many local grocery chains really stepping up their game creating basic meal kits or at least a larger variety of pre-prepped food options. None go as far as a Blue Apron, with every ingredient separate and multiple meals – but if Blue Apron or others wanted to branch out their business model and create in-store box sets, I think customers would be pretty receptive to that right now. Minimizing time needed in the grocery store by pulling all the ingredients together plus people buying weeks of food at a time instead of days.

Richard J. George, Ph.D.
BrainTrust
Certainly meal kits have enjoyed a resurgence due to the pandemic, as has all forms of cooking; as Americans look to cope with “shelter in place” boredom. Going forward, as Americans return to work and other out-of-home activities, I see these kits needing to simplify preparation. Now we are in-home food starved. Shortly, we will become time starved again. I would not rule out grocery stores as a source of meal kits. Home Chef, a meal-kit maker owned by Kroger Co., is expanding capacity by using other Kroger production sites and commissaries that usually prepare meals for airlines and is seeing some good traction. However if Panera, Chick-fil-A, Denny’s and others can address the quality, variety and ease of preparation with their meal kits, foodservice solutions may grow dramatically. I would add to the list of potential competitors to Blue Apron, et. al., independent restaurants which have been forced to be more innovative in take out meals. Their resilience has indicated that the fully prepared meal sector is their business, which they will defend. I… Read more »
Georganne Bender
BrainTrust

Personally, I was never a fan of meal kits because I like to shop for ingredients, and I like to cook, but things are changing. For a while it was fun to plan meals, now, it’s a chore and grocery shopping can be a nightmare which makes it the perfect time for meal kits. Once customers get hooked on the variety of meal options, and how easy the kits are to prepare, the challenge will be how to keep them engaged and and coming back for more once the pandemic is over. This will require more than a weekly delivery.

Dan Frechtling
BrainTrust

The question about positioning has two facets: 1) appeal of kits over conventional cooking and conventional restaurants, and 2) home delivery. Both are wrapped up together in the pandemic.

First, kits need to win consumers. If Blue Apron and others can solve prices, portions, packaging, and variety, consumers trying meal kits will stick with them. But that is unlikely to happen as providers focus on keeping up with a surge in demand. Blue Apron says it is boosting marketing and meal flexibility, which hardly seems enough.

Second, home delivery needs to beat store quick trips. A package at your door makes sense when you’re cooped up at home. Unfortunately, it may not when you’re driving home from work and the grocery store is on the way.

That’s not to say many consumers won’t subscribe. But that is a shift forward in demand from those who would have become subscribers anyway. I suspect old habits will return after the pandemic for most buyers.

Shikha Jain
BrainTrust
Grocers and other meal kit providers have their work cut out for them. Consumers are looking for more convenience, comfort and certainty right now, and a meal kit subscription provides all of the above: weekly deliveries that come (ideally) at the same time every week, a fixed monthly cost, and reduced/eliminated need to risk virus exposure by spending time in stores (and waiting in lines). It provides both consumer and seller increased transparency and predictability in cash flow—that is, provided these companies can retain clientele. Kit subscriptions can be an excellent tool for garnering customer loyalty as long as they deliver on the features they need. The pricing, portioning, packaging and assortment issues need to be addressed first. Restaurants and meal kit services can ensure sustainability with the right bundling and pack sizes. Not only does this ease consumer decision-making, but it also builds overall basket and average transaction size, plus it opens up entire potential consumer segments (such as millennials or individuals). An added perk for restaurants is that they will have remained top… Read more »
Gene Detroyer
BrainTrust

At their introduction, meal kits grew rapidly. Then they didn’t. Why?

Now there is a resurgence. Why?

Answering both those questions will give you an idea of what the future holds. I believe this trend will repeat.

wpDiscuz
Braintrust
"Kits of all kinds are crushing it right now, because they lessen the burden of procurement."
"I have seen many local grocery chains really stepping up their game creating basic meal kits or at least a larger variety of pre-prepped food options."
"Meal kit companies need to position themselves as a substitute for restaurant meals and highlight the “cooking together” aspect..."

Take Our Instant Poll

How likely are meal kits to gain more of a foothold of American household purchases as a result of the coronavirus pandemic?

View Results

Loading ... Loading ...