The subscription business model is one where customers pay a monthly or annual fee to gain access to a product or service. This approach was first used by newspapers and magazines but is used by a wide range of businesses and websites today. Other businesses that utilize this model include pay-tv channels, satellite television or radio, cell phone companies, fitness centers, and many more. Another example is industrial kitchen equipment leasing through companies such as ckitchen.com.
In recent years, many meal delivery services have adopted the model, such as Blue Apron. These meal kit delivery services have rapidly grown to be a $1.5 billion market that is expected to double in the next few years. Bringing in a new era of culinary convenience, these services are bridging the difference between takeout and home-cooked meals. But, are they here to stay or are they just a trendy fad? Only time will tell, but there are valid points in support of both sides of the debate.
Solving the Problem of “What’s for Dinner?”
Subscription meal-kit services appeal to consumers because their products offer convenience and quality with fresh, pre-measured ingredients along with recipes and instructions for preparation. Now it’s possible to have chef-quality meals without all the planning and shopping. More than 150 of these services are competing with each other on a local, regional, and national basis. Currently, the leaders in the industry are Blue Apron, Plated, and HelloFresh. According to Packaged Facts.com, one out of four Americans reported ordering meal kit delivery services in 2016, and that number is expected to increase.
The meal kit market has recently attracted the attention of Tyson Foods, Inc., Kroger Company, and Martha Stewart. In fact, the CEO of Kroger recently stated that Kroger would definitely pursue expanding into the meal kit market. To date, the market is crowded with many small companies already beginning to close due to intense competition. According to Food Business News, it is likely that only a few of the major companies like Blue Apron will remain in business. To stay relevant to consumers, many of them will likely expand their offerings with such items as prepared meals, branded ingredients, cookware, and even professional kitchen supplies.
Changing the Way We Eat or Just a Fad?
Although grocery stores blame these services for the decline in grocery sales growth, only about three percent of U.S. consumers use a meal kit service regularly. Most of those who have tried meal kit services end up canceling their subscriptions. Nationwide, only about one percent of all food expenditures are spent on meal kits, according to CNBC. With these numbers in mind, it’s easy to wonder if subscription food businesses are merely a passing fad.
Since the industry began in 2012, it has quickly become saturated with companies fighting for their share of the market. Today, however, only a few major players remain with many startups having already dropped out of the running. It’s interesting to note, most customers who cancelled their subscriptions did so because of the price. As more companies join the competition, this will hopefully drive down prices and stimulate more subscriptions.
Let’s take a look at some important price comparison figures:
- Most meal kits cost between $60 to $75 a week for three meals for two people (this is an average of $10-12.50 per meal)
- For four people, the price goes up to $130 to $150 per week (an average of $10.85-12.50 per meal per person)
- The average cost of a meal made with store-bought food is 4$ per person per meal for those eating at home
- The average cost per person for a restaurant meal is 10$
These cost comparisons may show meal kits to come at an exorbitant price. However, many consumers consider the convenience factor worth the price. Less time in the grocery store and in the kitchen equals more time to spend with the family. It’s hard to put a price tag on that aspect of the equation.
When comparing prices of subscription meals to home-cooked meals many people overlook the fact that these foods are healthier than some of the cheaper meals we usually prepare. Sure, we can fry some spam and cook a box of $1 macaroni and cheese, but our health gets short-changed in an attempt to cut food costs. But, cost isn’t the only reason for our unhealthy eating habits. Most people just don’t have time to do the planning and shopping required to prepare healthy meals. According to PackagedFacts.com, meal services are healthier than dining out, and many of the recipes hold extra appeal for people who are on special vegan or gluten-free diets.
Comparing the Top Three
A fad is defined as “something that has an intense and widely shared enthusiasm, and is short-lived and without basis in the object’s qualities.” Based on the superior quality of the food offered by companies such as Blue Apron, HelloFresh, and Plated, it’s safe to say meal-kits are not a fad. In a review posted by ConsumerReports.org, these three major companies were evaluated and compared. Here are some of the highlights of that review:
- HelloFresh: Rating “Excellent.” The healthy recipe offerings and consistently good taste scores puts HelloFresh at the top of this review. They offer more traditional fare than other services. Taste tests were performed on six recipes and they were rated “very good” with well-blended flavors. The menu also got high marks from the dietitians in the survey.
- Blue Apron: Rating “Very Good.” Blue Apron offered the most recipes with an ethnic flare, and the fewest number of more traditional fare. This variety of choices gives customers a chance to experience new cuisines they might not have tried otherwise. For instance, they offer Asian, Greek, or Mexican dishes among many others. The review also states that Blue Apron had the lowest prices for their services than the other companies being evaluated.
- Plated: Rating “Very Good.” Plated earned high marks for taste in this review. They were found to be the most flexible in terms of the number meals you can order weekly. Plated is the only service that offers dessert options, but they cost extra. Tasters praised the salads and other recipes they tried were given “excellent” scores.
If meal kit services are just a trend, then why have they grown to become more than a billion dollar market since 2012? Also, the market is projected to increase tenfold in the next five years, according to Technomic. Do we need to worry about saying goodbye to Grandma’s big home-cooked Sunday dinners? Maybe so, if your Grandma was one of today’s millennials. These meal plans appeal to millennials because of their busy lifestyle and a desire to adhere to a healthy diet.
Seller ratings can often be the best way to determine the overall quality of these companies via a valid rating system. Seller ratings are found on search engines like Google. Seller ratings appear as a series of stars next to the company’s ad on the search results page. These ratings are based on authentic customer reviews obtained from independent customer feedback companies such as eKomi. ekomi puts a premium on credibility and verifies each review prior to publishing, ensuring authenticity for consumers.