2018 Predictions: This Year Will Be an Inflection Point for Home Meal Delivery

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Marc BrazeauMarc Brazeau | Editor | Food and Farm Discussion Lab | @eatcookwrite


[This is a series of 5 predictions for what to watch in 2108]

2018 WILL BE AN INFLECTION POINT FOR HOME MEAL KIT DELIVERY

When the Betty Crocker line of instant baking products launched in the 1950’s General Mills thought they had it all figured out. The mixes had all the ingredients, including milk and eggs, in dry form. All they needed was water, a stir and a bake. Sales were disappointing. A team of psychologists were brought in. Why didn’t housewives embrace this labor saving breakthrough. “Guilt” was the answer the psychologists came back with. They felt they were somehow shortchanging their families and tricking their guests.

Against all marketing conventional wisdom, General Mills revised the product instead, making it less convenient. The housewife was charged with adding water and a real egg to the ingredients, creating the perception that the powdered egg had been subtracted. General Mills relaunched the new product with the slogan “Add an Egg.” Sales of Betty Crocker instant cake mix soared.

Why would such a simple thing have such a large effect? First, doing a little more work made women feel less guilty while still saving time. Also, the extra work meant that women had invested time and effort in the process, creating a sense of ownership. The simple act of replacing the powdered egg with a real egg made the creation of the cake more fulfilling and meaningful.

After nearly two decades of Food Network programming, a widely hailed embrace of knowing what’s in your food and getting to know your farmer, and the persistently strong sales of cookbooks, actual humans in the USA struggle to find the time and energy to do actual cooking in the USA. Whether it’s guilt, pleasure or the satisfaction of making something, people still want to cook, but they don’t really know how, or they don’t need the cognitive slog of picking a recipe, evaluating its quality, integrating the ingredient list into their shopping list and then deciding if they want to spend $7 on a jar of marjoram and $14 on some kind of vinegar they’ve never heard of.

For those that have given up, there’s the Trader Joe’s frozen meals section, Chipotle and Panera. For those that haven’t, various solutions have come and gone. A bunch of years ago, I was reading about startup open commissary kitchens where busy moms could stop in, grab a few recipes, assemble ready to go ingredients, do a little chopping, socialize, and scram, leaving clean up for the staff. Now I can’t even figure out how to google those articles.

Currently, billions are being invested into home meal delivery kit services. You go online, pick your meals, they arrive in a box via FedEx or UPS with all the ingredients in correct proportions, clear instructions and just enough prep work left to make it feel like cooking, because it is (more or less) cooking. It’s the fun part, without the drudgery, especially if you have a dishwasher, which you probably do if you can afford FedEx’d meal kits.

HOME MEAL KITS: A Brittle Business Model to Solve a Resilient Problem

This seems to me a brittle business model to solve a resilient problem. Delivering groceries for dinner meals via home shipping is really expensive and inefficient. Customers still need to do their regular grocery shopping. Meal kit companies need to invest in vast, new infrastructure and real estate to create regional commissary distribution centers. This while Amazon just bought Whole Foods, with built in real estate and commissary infrastructure as well as retail space for in store meal kits. Other grocery chains are also adding meal kit options that give consumers a more tactile, more spur of the moment experience than ordering online ahead of time.

Some delivery services are adding other products – wine glasses, paring knives, breakfast options – to their catalogues; others are aiming at lower price points. Still cold hard logic of making the whole Rube Goldberg operation pencil out while delivering an experience the consumer will keep coming back for years and years is proving challenging to say the least. Blue Apron, the leading company in this space, has been “spending more than $400 to recruit each new customer, despite making only $236 a customer a quarter.”

Blue Apron’s second quarter marketing spending fell 43% from the first quarter in what the company called a planned reduction resulting from its current marketing strategy. That resulted in a net decrease in the total number of customers and orders. Blue Apron had 943,000 customers at the end of June, about a 9% decline from March.

The decline shows customers are dropping the service and Blue Apron isn’t able to replace them and grow without spending heavily.

THE MARKET IS NOT GOOD AT SOLVING SPIRITUAL PROBLEMS, BUT THAT DOESN’T STOP US FROM TRYING

My intuition/hot take is that for most customers in this target demographic, spending $20-$30 a meal for a couple to cook at home without the hassle of grokking recipes and shopping for ingredients is going to sound like a good idea for a few months, then it will be a nice luxurious indulgence for a few months more, and then it’s going to feel like a waste of money that could be better spent on eating out.

Still, there’s a need to be filled. Whether it’s better frozen vegetable lasagna, or Amazon/Wholefoods bigfooting everyone or meal kits being a regular thing at every grocery store or meal kit delivery services turning into services that deliver a mini-pallet of groceries and toiletries every week, this market is going to largely sort itself out in 2018.

But it’s going to be tricky. America’s middle class is dissatisfied with the food culture that a hyper-commodified marketplace has delivered. They want something, but they don’t know exactly what. This is you see them lurching from farmer’s markets to home meal delivery – the polar opposite of a farmer’s market. They are trying to solve a spiritual problem by voting with their wallets, which is unlikely to fill that hole, and while the market will be happy to keep trying, it’s unlikely to succeed. By the end of 2018 this current iteration will be a lot more sorted out.


• Americans in Cars, Eating Badly: Scale and Scope
• Americans in Cars Eating Badly: Why We Need Better Convenience Foods

 [Please consider supporting Food and Farm Discussion Lab with an  ongoing contribution of $1, $2, $3, $5 or $10 a month on Patreon. Or make a one time donation via PayPal. ]

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