Will The 2020 Meal Kits Boom Continue?
Loyalty has always been an issue in the meal kit space. Back in 2017 we wrote about how meal kit companies can foster loyalty amongst online meal kit subscribers and in 2018 we explored whether in-store meal kits could be the answer to meal kit providers' woes. There is no doubt that the meal kit space was struggling to find its place in the world pre-pandemic. Blue Apron reportedly lost a staggering $24 million in the last three months of 2019. Covid-19 has rendered 2019 stats completely irrelevant however and meal kits have seen somewhat of a resurgence in the past three months. Mindful Chef reported a 425 percent increase in customers in March. Hello Fresh customer numbers almost doubled year-over-year in the first quarter of 2020 and U.S. customers spent a staggering $100 million on meal kits for the month ending April 11, double the spend during the same period in 2019.
Why are meal kits so popular during the Covid-19 pandemic? Necessity is a major factor. We still need to eat but many of us have been avoiding grocery stores for a variety of reasons and restaurants have been closed. The lack of flexibility surrounding our dining options benefits the meal kit space. Where three months ago we might have grabbed a coffee and a muffin on the way to work, visited a local cafe for lunch and picked up something quick for dinner on the way home, many of us are now preparing breakfast, lunch and dinner at home almost every day. Not just that, but supply chain issues and high demand in supermarkets has meant empty shelves. Meal kits provide a valuable sense of convenience, comfort and certainty when ingredients are otherwise unavailable and trips to the supermarket are infrequent. People are cooking from scratch more often not just because of necessity but also because they have time to put more thought and effort into their meals. A home-cooked meal is easier to prepare when your commute is reduced to a short walk from the home office to the kitchen, but for those who are not used to cooking at home, it is a daunting enough task without adding planning meals and buying ingredients to the mix. Meal kits lessen the burden of procurement. They also take the hassle out of planning a week's worth of meals in one go. Pre-pandemic, people spent 40-minutes a week planning meals and searching for recipes, and while many of us have the time to do so now, fitting in meal planning around working from home, homeschooling and keeping everyone entertained isn't always an option. Meal kits provide the variety we crave and eliminate the sometimes tedious nature of finding meals that suit everyone.
All of these factors benefit meal kit companies right now, but what happens when people are back in the office, restaurants are open and supermarket trips become less daunting? 66 percent of people say they are not yet ready to eat out in restaurants, with 47 percent saying they will wait another three months. Bad news for the restaurant industry but good news for the meal kit space and the wider popularity of home cooking. So what factors might work against continued consumer adoption of meal kits post-pandemic? The number one reason people cancel a meal kit subscription is a perceived lack of value for money. Economic uncertainty, job losses and pay cuts will mean this is even more of an issue post-pandemic. More frequent trips to the grocery store, increased options for out of home dining and a craving for variety beyond what meal kit companies can provide will also come into play. The biggest issue is that the guided nature of meal kit recipes might be too good at teaching people how to cook. For those who couldn't or didn't usually cook pre-pandemic, meal kits provide a convenient way to get to grips with cooking from scratch. Weeks of carefully following meal kit recipe cards have meant that many of these people have grown in confidence in the kitchen and are ready to move on to other recipe options. According to a Hunter report, 75 percent of Americans say they have become more confident in the kitchen with 50 percent learning more about cooking and 73 percent enjoying it more than they did before.
The most pressing concern for meal kit companies right now is whether they can leverage the staggering pandemic interest in what they have to offer and foster loyalty post-pandemic. What do they do when they are no longer a necessity for many? One option is to take their cue from the success of restaurant meal kits. One restaurant in Dublin, Ireland has had such a reaction to their meal kits that they're searching for a separate premises to enable them to continue with the service as lockdown lifts. What restaurant meal kits offer during lockdown is a sense of novelty, a break from the monotony of pandemic life and the comfort of brand recognition. While meal kit companies change their menus weekly, their pre-pandemic issues suggest that this variety isn't enough to keep consumers coming back for more. What customers crave is something a little more special. Once-off collaborations with restaurants or celebrity chefs, cocktail pairings, dessert recipes that leverage the increased popularity of baking and weekend project recipe boxes that require a little more time or use unusual ingredients are all options that are worth exploring. While meal kit companies usually rely on customers purchasing meals for multiple days a week, the pandemic has illustrated that people are more than willing to make a one-off purchase of a meal kit that offers something a little different. Adding this as an option alongside the regular meal kit offering could boost revenues significantly.
It is too soon to predict how the meal kit space will fare post-pandemic, but the increase in interest out of necessity illustrates that meal kit companies have not previously given people enough reason to subscribe long-term. Creativity, killer recipe content and getting a true sense of what people really want from meal kits need to be top of the agenda for meal kit companies as lockdowns ease.