For a while, meal kits were hot. They promised gourmet meals even amateur chefs could make, with preportioned ingredients sent directly to your door. A dash of maximum convenience with a pinch of minimal effort resulted in a theoretically perfect dish for modern living.
Then enthusiasm waned. Subscriptions were expensive, and menus got repetitive. Rather than revolutionizing the way we eat, meal kits settled into a dinnertime niche.
Now, with much of the nation working, exercising, socializing and eating breakfast, lunch and dinner within the confines of the great indoors, the buzz is back. The meal kit industry has its shot at redemption.
In recent weeks, Sun Basket and Purple Carrot have experienced a bump in mentions and engagement on social media, according to online media analytics firm Talkwalker. In March, HelloFresh and Blue Apron saw boosts in organic search traffic compared to the previous two months, according to market intelligence company SimilarWeb. While some, like Home Chef, declined to provide specifics and noted only a “material increase in orders,” another, Marley Spoon, said it is seeing growth of more than 40% year-over-year compared to Q1 2019.
“Right now, it’s a great time to be in the meal kit business,” said Andy Levitt, founder and CEO of plant-based meal kit company Purple Carrot. “I wouldn’t have said that six months or a year ago.”
The big-dollar question, though, is whether meal kits can use this current momentum to become a permanent part of how America does dinner, or if they’ll fade back into their corner once options for consumers open up again.
The rise and stall of meal kits
Perhaps no company better illustrates the trajectory of meal kits than pioneer Blue Apron. Established in 2012, Blue Apron had acquired over a million customers by the first quarter of 2017. With much hype and a $2 billion valuation in 2015, the company went public in June 2017.
Share prices have been more or less declining ever since.
Part of the issue was that about two weeks prior to Blue Apron’s IPO, Amazon announced plans to purchase Whole Foods for $13.7 billion, spooking investors. Food delivery services such as GrubHub, DoorDash, Postmates and Uber Eats were also maturing, offering consumers plenty of at-home meal options that required zero cooking.
Then there’s the fact that Blue Apron has failed to turn a profit, and its income is shrinking. In 2019, Blue Apron reported $455 million in net revenue, down from $668 million the year prior and $881 million the year before that. Recent numbers reveal Blue Apron now has only 351,000 customers, a 65% decline from its peak in early 2017.
It certainly didn’t help when meal kit competitors started gaining momentum as online grocery options from Amazon, Walmart and Instacart proliferated.
That’s in part why the meal kit category as a whole has struggled to catch on. Throughout 2019, only 5% of U.S. adults said they had tried a meal kit service in the past 30 days, according to market research firm the NPD Group. That number is higher than the 3.5% of consumers who said the same a few years prior, but not by a margin that indicates meaningful growth.
“It seemed as though adoption had stalled,” said Darren Seifer, food and beverage analyst at NPD Group.
A pandemic brings change
Then the coronavirus came and upended any semblance of normal life.
Just as Home Chef and Marley Spoon are thriving in this environment, HelloFresh has also seen an increase in sales, according to a company spokesperson. Freshly, which provides fully prepared dinners, shipped around 5 million meals in March, up from 3.5 million in February.