A new segment in the food industry has risen called Meal-Kits.
Meal-kit services send their clients a weekly shipment of individually wrapped and labeled ingredients for as many dinners as the customer wants – typically four or five. The recipes are included and all the customer has to do is cook it. Their goal is to save customers the time and energy of grocery shopping and having to plan meals, while still providing the illusion of home cooking.
By some accounts this is a hot market. Two of the more prominent meal-kit services, Blue Apron and Plated, both founded in 2012, have raised $58 million and $21.6 million of investments respectively. Hello Fresh, a European company, just closed $126 million in Series E funding. Hello Fresh’s next step: the U.S. market.
Other experts point out that given the annual $1.2 trillion food market, meal-kit services are only catering to a tiny niche market that is probably not going to get bigger, and likely to get smaller as the novelty wears off.
Nevertheless, meal-kits could impact the restaurant takeout/delivery business because of where they are consumed – in the home. Will meal-kit services impact restaurants? Here are some things to consider:
Convenience. Takeout is always going to be the most convenient choice, and assures the meal is cooked to perfection. Meal-kits still require preparation and cooking, which doesn’t offer much to the underlying, driving consumer behavior to save time and minimize effort. With respect to convenience, there is a marginal difference that shouldn’t be threatening.
Cost. Meals-kits come in at around $10 per person, and wide reports are that portions are tightly controlled. Often, takeout offers larger portions, of which there is often leftovers. Yet again, takeout appears to offer more here in terms of the value of a meal.
Ingredients. Meal-kit components are shipped to the service, prepared, re-packaged, and then re-shipped to the end user. With multiple handoffs, it makes it difficult for them to claim freshness, which is something you can do on your menu.
Sustainability. Meal-kits require extensive packaging, including seemingly unrecyclable ice-packs. This is not good in a world where customers are sorting their trash and looking to shrink their carbon footprint.
For now, it seems meal-kit services are a blip on the screen. It’s hard to tell whether it will trend into something much larger, or something consumers will try once and then discard like a Pet Rock. They probably won’t become a competitive threat like “Home Meal Replacements” sold by grocery stores, but they are worth watching.