Meal Kits: Threat or Opportunity?

Everybody is talking about online grocery shopping. Countless stories have been written about who is doing what where, and why it’s important to at least test a service. But there have not been a lot of stories about a cousin of online grocery shopping – meal kits ordered online and delivered to the home. I consider this omission to be an opportunity to provide some information and opinion on how this newfangled service affects grocers.

I know of five meal-delivery companies: Blue Apron, Plated, Hello Fresh, PeachDish and Home Chef. As an investigative reporter, I tried three and found them convenient and tasty. Here is how they work: Consumers go to the website and select three mouth-watering meals from a menu that changes each week. The service does the grocery shopping and then sends pre-measured ingredients, recipes and cooking instructions to consumers who do the meal prep and cooking.

Pricing per plate ranges from $10 to as much as $30 for some organic and specialty dishes. Most meals are at the lower end of the price scale. Only one supplier provides nutritional information for the meals; others only give calorie counts, which average 700-800 calories per meal. Most services allow you to choose the delivery days from pre-determined options. “Free delivery” is available with a minimum purchase.

Some meals are exotic, providing an easy and fun way to taste international cuisine. Examples: Peruvian Lomo Saltado Steak Stir-Fry with Potatoes, or Pan-Fried Shrimp Gyozas. Consumers would find it difficult to duplicate those meals because most traditional supermarkets don’t stock esoteric ingredients such as masa harina, tom yum noodles, or skate fish wings.

Collectively, these services can’t be considered a threat to supermarkets yet because they are just emerging. But they are advertising and promoting heavily on the internet, and consider grocery stores as their competition. Consider the following from Hello Fresh’s website: “No more waiting in line at the grocery store, buying too much of one ingredient, or having the same, boring meal each night. We do it all for you: from creating the recipes and planning the meals, to grocery shopping and even delivering all of the pre-measured ingredients right to your door!”

Could these meal-delivery companies chip away at the traditional grocery business? Sure, and the service is now being offered by at least one online grocer. Relay Foods has launched a meal-planning service that enables consumers to follow a weekly menu from a registered dietitian and add recipes and ingredients to their shopping lists from Relay's searchable database and other web platforms.

Zach Buckner, founder and CEO of RelayFoods.com in Charlottesville, Va., boasts, “This combination of simplicity, personalization, and seamless delivery of ingredients is unprecedented in both online and in-store grocery shopping history.”

He is right. So what should traditional grocery retailers do? There are only two choices: One, do nothing and hope meal-delivery services remain a tiny niche, or two, be bold and get into this business as an extension of online grocery shopping. Yes, it requires an investment and may be difficult to get started (hint: buy one of the meal-planning services). But what break-through innovation is easy and done on the cheap?

Here are four ideas for grocers launching meal kits:

• Include premium private label, thus enhancing the store brand business. The meal kits consist of fresh produce and – depending on the recipe – ingredients like black beans, tomato paste and spaghetti. The latter group of ingredients are typically second-tier or regional brands, or no brand at all.  
• Make purchases of meal kits part of the store’s loyalty card program. 
• Include flyers inside the delivery boxes that cross-merchandise cooking utensils such as graters, whisks and spatulas, which are likely sold in the store anyway. 
• Promote the fact that meal kits contribute to the store’s focus on sustainability. With pre-measured and pre-cut produce, there is no possible food waste. For instance, if a recipe calls for one stalk of celery, there is no need to put the rest of a store-bought bunch in a corner of the refrigerator where it will hide until wilted and tossed.

On a personal note, I probably will order these meal kits once in a while. Maybe my local Giant Eagle or Heinen’s in Cleveland will get into this business.