Meal Kits Replace In-Home Meals

Meal kit delivery services are a growing sector in the food industry. They’re helping consumers satisfy the need for fresh foods without spending time gathering the food, but should grocers or restaurants be more fearful of the potential impact on their business?

On a per-person basis, food consumption is a zero-sum game, meaning an increase in one behavior is often at the expense of another. For example, we’ve mentioned over the last decade more consumers are having eggs, yogurt, bars, and a few other foods more often at breakfast, but these increases are largely coming at the expense of cold cereal consumption.

Our new report, Thinking Inside the Box: A Fresh Look at Meal Kit Delivery Services, sheds new light on the growth dynamics of these services as well as several of the potential pitfalls these fledgling businesses could face. Among them is the finding that two-thirds of meal kit users say the meal they prepared from the box replaced a home-cooked meal; less than 25 percent say it replaced a restaurant meal.

It seems the most direct competitor to the meal kit is the grocery store, on the surface at least, since that would have been the source of the meal that otherwise would have been prepared. The question is whether or not meal kit users see the value in replacing their home meals with a more expensive meal where everything is premeasured and delivered to their doors. On average, the cost of an in-home dinner where the consumer sources the food from a grocer is about $4 per person. Meal kits are about $10 per person for the same meal. For those who live in a high cost of living market such as New York or San Francisco, $10 per person for dinner might sound like a bargain, but elsewhere it represents a higher cost in need of justification

Companies such as Blue Apron and Hello Fresh will have to convince consumers that the extra spend at dinnertime is outweighed by the time saved at the grocery store and the time spent searching for recipes. In the meantime, manufacturers should consider how they can get “in the box.” This would be a new way to show consumers additional ways to use your products as they prepare meals. For restaurants, take advantage of your flexibility – allow customers to order on demand and aim to satisfy everyone's personal tastes with different meals. To avoid lost trips, retailers can leverage prepared food sections and further the Grocerant concept by providing fresh food customized to consumers’ tastes.

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