Archive for January 22nd, 2018

Service of Meal-Kits: Less Work for Mother and Father—Or Is It?

Monday, January 22nd, 2018

I founded Delivered Delicacies in the dark ages. I brought prepared foods and the best-of bread, pasta, desserts and more from Manhattan vendors and dropped them off at my clients’ homes and apartments in Brooklyn Heights. In the day, the Heights was a food desert.

Good idea yet there were many reasons the business failed: Too small a pool of potential customers; most didn’t share my passion for great cheese, pâté and other goodies and didn’t get the concept of topnotch prepared food. I soon learned that there was a reason that none of this was available in the neighborhood.

More than Brooklyn has dramatically changed since then: Americans everywhere increasingly appreciate first-class food. It’s no surprise that the meal-kit business has taken off. According to Heather Haddon’s Wall Street Journal article some brands are still thriving in spite of the title, “Once-Hungry Investors Pass on Meal-Kit Startups– Investors are losing their appetite for meal kits.”

A meal kit comes with fresh ingredients and recipes. You cook. An article on in November, noted prices for three meals for two from companies that deliver nationwide ranged from around $72 for Sun Basket and Plated to around $60 for Gobble, Hello Fresh, Home Chef, Marley Spoon and Blue Apron.

Haddon wrote that in the last five years some 150 new meal-kit companies opened so “A shakeout was perhaps inevitable,” according to investors and analysts. I heard a commercial on Bloomberg Radio for Hello Fresh this weekend.

Some “still expect the sector to continue to grow as people look for easier ways to cook at home. Meal-kit sales are projected to grow to more than $6 billion in 2021 from around $2 billion in 2016, according to consultancy Pentallect LLC. Also, meal-kit companies targeting certain diets and taste preferences, such as a paleo diet, could perform well, backers say.”

Hurdles to food startups, wrote Haddon, include larger rivals and some “say meal-kit startups have lost all novelty with Amazon, Wal-Mart Stores Inc. and Peapod LLC, as well as supermarket chains such as Kroger Co., getting into the business. Bigger companies typically don’t depend on subscriptions and can sell meal-prep kits more cheaply.” Wal-Mart must have tracked my online research because I got an offer for their meal-kit out of the blue last week!

Another significant challenge to the meal-kit business is the expense of keeping subscribers. In a survey the negatives consumers pointed to were the expense, “the burden of having a subscription,” and delivery difficulties. One woman dropped out because too much food was going to waste; another grew bored with the concept and frustrated “with all the packaging.”

I would hesitate before investing in a finicky industry like food that is so impacted by trends, the latest being deliveries of meals from high end restaurants. Do you think meal-kits have the kind of legs one forecaster predicted, noted above, of a $6 billion industry by 2021? [though who, in three years, will remember they said this?]. Let a major thing go wrong with a bunch of meal-kits or if enough people tire of the concept, poof, the kits will go up in smoke. Have you tried a meal-kit? Would you be interested in doing so if you haven’t yet?

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