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Meal Kits Maximized: Turning the Tables from Pitfalls to Profits

Meal Kits Maximized

86% of consumers would like the ability to add dessert to their meal kit1

In only a few years since their debut in the U.S., meal kits have delivered a rapidly expanding, multibillion-dollar food category. Meal kits have served up a feast of sales, tallying $5 billion in revenue in 2017, and they’re projected to bite even deeper into the market and reach $10 billion by 2020.2

While meal kits have become a proven revenue engine that drives sales in a market hungry for fresh, convenient food options that can be enjoyed at home, there have been bumps in the road. And the competitive field is crowded: 150 new meal-kit companies have emerged over the past five years.2

As David Sprinkle, research director for the market research publisher Packaged Facts, explained: "The meal kit market is highly dynamic and prone to fluctuations, with the top meal kit providers falling in and out of favor since their introduction in the past few years.”3

Still in its early stages, meal kit mania seems sure to evolve, but as Sprinkle points out: "Market expansion is expected to be much more reliant on alternative purchase venues than the traditional subscription delivery model, due in part to the convenience and flexibility of online shopping.”3

As grocery chains continue to acquire subscription-based meal kit brands (think Albertson’s acquisition of Plated) and market them for sale individually in stores (e.g., HelloFresh’s expansion to retail), expect the market to pivot and penetrate the restaurant landscape. According to the foodservice research firm Technomic, nearly half of consumers surveyed would purchase meal kits from their favorite restaurant.4

Just Desserts: Meal Kits with Desserts Poised for Sweet Sales

Chef-prepared meal kits would present the perfect opportunity to include signature desserts. Technomic survey data shows that an overwhelming majority of consumers would like the option to have dessert added to their meal kits.1 Dessert ingredients and recipes could give restaurant meal kits brand differentiation and give the consumer the convenience of a complete menu that can be prepared at home.

Based on encouraging results from its “Mealtime Kits” test of five different chicken recipes in Atlanta-area restaurants, Chick-fil-A seems poised to extend the offer to more markets.2 “We were really happy with the positive response from our customers,” said Michael Patrick, the quick service giant’s Beyond the Restaurant program lead.2 Chick-fil-A’s Mealtime Kits site includes a form that allows visitors to suggest where the program should test next. The addition of distinctive dessert concepts could only sweeten the deal for consumers.

International food and restaurant consultants Baum + Whiteman see individually sold meal kits as a potential solution for casual restaurants to turn the tables on the high costs, ongoing commitment and limited options that may curtail the growth of subscription services.

“If a fast food chain can assemble its own meal kits, certainly casual restaurants could hawk their own at lunch for people to have for that day’s dinner ... or at dinner for customers to take home for lunch tomorrow,” Baum + Whiteman write in their 2019 Food & Beverage Trends Report.5 “With a la carte pricing and packaging, restaurants could produce highly flexible meal kits of the ‘always on-demand’ generation.”5

Restaurants and Retail Turn to Meal Kits to Serve Up Sales

Meal kit subscription services are also likely to integrate snacks and desserts. Plated now offers dessert, which could be a key growth driver in a category looking for a fresh taste of success. Given the roller-coaster ride of market valuation at Blue Apron and growing competition from retail chains, subscription meal kits seem poised to take their menus to the next level with innovative desserts that can’t be found anywhere else.

What’s more, HelloFresh is not the only meal kit subscription brand to branch out into retail. Blue Apron kits have become available at certain Costco locations, and Plated kits are available at select Albertson’s stores.

To reach the consumer base that wants to avoid cooking altogether, Blue Apron is testing ready-to-eat dishes delivered by GrubHub in an hour,5 and HelloFresh plans to market prepared meals online.6 Both the retail and ready-made channels can exponentially expand the market reach of subscription meal kit brands.

As the meal kit market continues to morph, expect the menus to do the same, with the addition of innovative dessert concepts composed of trusted, popular brand ingredients to round out each product offering with a flavorful flair.

1 Nielsen, Understanding the Meal Kit Landscape and Consumer Preferences, Mar. 20, 2017
2 Kelso, Alicia, “Chick-fil-A Encouraged by Meal Kit Test,” Forbes, Dec. 5, 2018
3 Redman, Russell, “Meal kit players adapt to changing market,” Supermarket News, Nov. 29, 2018
4 Technomic, Consumer Evolution (Feb.2018), p. 2
5 Baum + Whiteman, 2019 Food & Beverage Trends Report, p. 9, 2018
6 Ladd, Brittain, “Meal Kits Are DOA: The Next Big Trends In Food Are Being Driven By Amazon, ICON Meals and Mercatus,” Forbes, Dec. 3, 2018

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