Since launching just 13 years ago, the meal kit industry has rapidly adapted to delight changing customer appetites and become a multi-billion dollar segment of subscriptions. The industry has seen its share of ups and downs; lows like with meal kit giant Blue Apron losing nearly 14% of customers in a single quarter and highs like HelloFresh anticipating revenue to increase as much as 70% this year.
With buying habits shifting significantly in 2020, we’re taking a deeper look at this ever-changing industry and how you can navigate finding the perfect option for your family:
History of Meal Kits
Meal kits are a type of meal delivery service, often subscription-based. They typically include fresh ingredients, sometimes pre-chopped and/or with premade sauces and spice blends, along with recipes to prepare home-cooked meals.
Meal kits originated in Sweden in 2007 with the launch of Middagsfrid. Middagsfrid quickly gained popularity for their convenience and spread to other European countries.
Meal kits entered the U.S. market a few years later with the launch of Blue Apron, Hello Fresh, and Plated (no longer in business online) around 2012. Shortly after, Home Chef launched. These days, there are more than 150 meal kit companies in the U.S. and hundreds more worldwide.
Initially, meal kit services grew in popularity with older millennials who had more disposable income in urban areas. As of late 2019, however, nearly 64% of meal kit buyers were among Millennials and Gen X’ers with high incomes, high levels of education and with a full-time job.
Like other subscription services, meal kits offer convenience to consumers ––– no planning, no trips to the store, and oftentimes minimal effort to make a home-cooked meal. In addition, meal kits can help cut down on food waste as they are typically packaged with pre-portioned meal ingredients.
Many customers also appreciate that meal kits give them the opportunity to create unique dishes outside of their comfort zone or normal rotation, and are more cost-effective and healthier than takeout.
While many find meal kits to offer substantial benefits and time-savings, they are not without their drawbacks.
Most subscription-based meal kit companies find that there is high customer churn; customers tend to cancel within a few months to try another meal kit or to take a break as they don’t want to be locked into a subscription. The packaging that’s used to securely ship meal kits also has been criticized for contributing to landfill and environmental waste, meal kits brands continue identifying new ways to develop eco-friendly packaging, and research has found that they are often have a smaller carbon footprint than grocery stores. Changing eating habits of consumers has also add a complex layer to operating a food subscription, requiring brands to adapt quickly and work to understand their audience’s preferences often.
Evolution of Meal Kits
Over the past eight years, the meal kit industry in the U.S. has evolved to meet the ever-changing needs of its current customers and to expand its customer base. Customers simply want and expect more. They want:
- more meals that fit their specific lifestyle and dietary needs.
- more meal choices each week.
- meals that can be made fast.
- meals for the whole family.
- And, of course, lower pricing.
Meal kit companies like HelloFresh and Marley Spoon have been able to adapt to these needs by not only changing their menus but also creating new brands to appeal to the more budget-conscious consumer.
For example, HelloFresh launched EveryPlate and Marley Spoon launched Dinnerly as low-cost meal kits with simple recipes, fewer ingredients, and fewer weekly menu options.
There are now more meal kits aimed at specific dietary preferences such as keto and Paleo as well as changing lifestyles. This is reflected in the rise in plant-based eating in response to climate change.
Green Chef brings diet-specific meal kits, like keto and Paleo, to users every week, and Purple Carrot delivers vegan meal kits to the growing number of Americans turning to a plant-based diet.
More meal kit companies are also offering meals that can be made in less than 20 min. Gobble successfully built on the “15-minute meal kit,” while Sun Basket and Home Chef have added meals that require minimal prep to their line up.
To offer customers more options, most meal kit companies offer a wide range of add-ons in addition to an expanded meal menu, including snacks, breakfast, proteins like meat and seafood, premade dessert and baking kits, as well as wine. Some meal kits companies focus on snacks and even pet meals.
We’ve even seen a rise in seasonal meal kits, including:
- Thanksgiving and Easter meal kits
- Big Game meal kit (Blue Apron)
- Date Night meal kit (HelloFresh)
The concept of grocery store meal kits has risen significantly in the last two years with examples like the acquisition of Plated by Albertsons, Home Chef by Kroger, and the partnership between HelloFresh and Giant and Blue Apron and Costco.
Grocery stores and consumer packaged goods (CPG) companies are also now producing their own meal kits as a result of increased demand, which is providing consumers with non-subscription, local meal kit options.
The Making of MealFinds
Amidst all this growth and change, it’s understandable that many find choosing the “right” meal service confusing and overwhelming. This is what inspired MealFinds.
Launched in early 2020, MealFinds brings order to an increasingly complex online food and beverage space. Founder Alison Chew, an early-adopter of meal kits, was tired of using the same three or four meal kit companies and wanted to see what else was out there. To her surprise, she discovered that there were a lot of meal kits available outside of the major players in the space.
Reflecting on her firsthand frustrations finding a meal kit option to suit her family and hearing stories from family and friends about their challenges navigating the meal kit space, Alison decided to explore how she could make the process of discovering meal services more efficient and convenient.
In 2019, the pieces started to come together and MealFinds was born.
MealFinds acts as an online meal service directory that helps users easily discover the meal service that is right for them. Users can apply over 20 filters to narrow down their options based on their individual needs, including options like 16 Dietary preferences (like vegan, keto, Paleo, and diabetes-friendly), Price Per Serving, Location, Meal Service Type, and more. By including national and local meal services, MealFinds helps users discover new and interesting products and services that they may not otherwise have found.
In addition, users can read honest product and service reviews, find money-saving coupons, and (coming soon!) leverage user-generated ratings and tags to help with their search.
At present, MealFinds has over 360 meal services on its platform, spanning three countries: the U.S., Canada, and Australia. The site also covers 12 meal service categories: Meal Kits, Prepared Meals, Grocery Meal Kits, Weight Loss Meals, Baby/Kids Meals, Smoothies & Shakes, Seafood Delivery, Baking Kits, Meat Delivery, Wine Delivery, Pet Meals, and Snacks.
Heading into 2021, MealFinds will have over 500 meal services, expanding into Europe, and will add the popular Coffee & Tea category.
COVID’s Impact of the Meal Kit Industry
While the long-term impacts of COVID-19 on the meal kit industry are still unknown, there are several trends that have been seen during the pandemic that will affect the meal kit industry going forward.
- More consumers in the kitchen. Due to stay-at-home orders and the closure of in-restaurant dining, more people are cooking at home In fact, 54% of consumers reported cooking more, according to a Hunter Food Study Special Report. And as people turn to time-saving, convenient and healthy ways to make a home-cooked meal, meal kits have seen a surge in popularity. Analysis from The NPD Group suggests a 7% increase in the share of the population using meal kits since the pandemic began, a tremendous increase in a short period of time.
- Broader customer base. According to two popular meal kit companies, Home Chef and Purple Carrot, the demographics of consumers using meal kit services has expanded to a broader audience, including older populations who aren’t inclined to go to the grocery store as well as younger consumers who are tired of takeout and aren’t choosing to eat in restaurants.
- Rise in restaurant meal kits. Many restaurants that were forced to close during some or all of the pandemic are pivoting to stay afloat; these locations are offering meal kits or take-and-bake meals in addition to takeout. This is a great way for some restaurants to stay relevant, offer an alternative to in-person dining or takeout, and empower customers to continue supporting local businesses.
Will these new habits and customers stick around?
Among the consumers who reported to be cooking more in the Hunter Food Study Special Report, 51% said that they will continue to cook when the crisis comes to an end. Many shared that they liked that cooking at home was healthier, saved them money, and they found it relaxing and enjoyable to try new recipes.
While not all of the consumers who are currently cooking from home are using meal kits, some are and will continue to well beyond the pandemic. In fact, one report predicts the meal kit delivery service market could reach nearly $20 billion by 2027.
It’s clear that Americans, pre- and post-COVID, are looking for convenient, healthy, home-cooked meal options and that meal kits are a clear solution for time-strapped consumers. The meal-kit industry is still relatively new and will continue to evolve over time to meet the needs of its customers. We are excited to see what’s next for meal kits and for MealFinds.
Alison Chew will be a speaker at SubSummit ’21 in Dallas, TX.
Meet Her at the Subscription Industry’s Largest Conference This September!