Why Fully Prepared Meals Are Going to Be Infinitely More Popular Than Meal Kits
Meal kits like Plated and Blue Apron and the dozen or so others came onto the scene seemingly out of nowhere. Before we knew it, meal kit companies had raised several billion dollars in funding. They were the topic of every conversation in the tech and consumer space, promising a new type of experience for people: home cooked meals without the hassle. It was the early days of the “experience economy,” and aspiring home cooks rejoiced at the opportunity to whip up gourmet meals turning us into world-class chefs.
The problem was, people just don’t have time to cook three to four times a week. And while the grocery store is certainly part of the hassle, the bigger problem was the hour or hour-and-a-half of prepping, cooking, and, oh yeah, dishes. For people like me, meal kits never really solved a core problem: I wanted the benefits of eating a healthy, home cooked meal, but I didn’t have time to do it and, equally important, I didn’t want to do it.
It just so happens that many Americans are like me. Despite a recent opinion piece in the New York Times, only 10% of people love to cook, 45% of people hate it, and 45% of people are lukewarm about it, according to a Harvard Business Review study. In that study, cooking was likened to sewing: “Today the vast majority of Americans buy clothing made by someone else; the tiny minority who still buy fabric and raw materials do it mainly as a hobby. If that’s the kind of shift coming to the food industry, change leaders will have their hands full.”
Meal kits never really solved a core problem: I wanted the benefits of eating a healthy, home cooked meal, but I didn’t have time to do it and, equally important, I didn’t want to do it.
And this study isn’t an outlier: Other research published in 2014 found that less than 60% of dinners were cooked at home, down from 75% in the mid 1980s — and that’s expected to decline to less than 50% in the next 10 years. No surprise there, with most parents — including at least eight-in-ten mothers (86%) and fathers (81%) — saying they feel rushed to carry out life’s daily demands. Put simply, a lot people don’t have the desire or time to cook a meal every night. People needed a solution to their core problem, and meal kits provided a short term yet insufficient one: They do the grocery shopping and recipe sourcing for you. But you still prep, cook, and handle the clean up, and that’s a lot of additional work to take on multiple days a week. This is exactly why I cofounded Freshly.
Giving Credit Where It’s Due
The meal kits did get a few things right, though. They recognized that people wanted to buy food in the same way they bought other things — why go to the grocery store, when the grocery store can come to you? While estimates of online grocery market penetration vary, from 2% to 4.3% according FMI-Nielsen, it’s the next major retail sector to be disrupted by e-commerce. It’s estimated that by 2024, 70% of consumers will be grocery shopping online, spending $100 billion annually.
Meal kits also understood that consumers were looking to eat real food — they want healthy, all-natural, additive-free ingredients with transparent labels. In a survey by the International Food Information Council and the American Heart Foundation, 43% of Americans claimed to always be on the lookout for healthy options when shopping, while 52% said they were at least sometimes scouting for healthy foods. Meanwhile, 51% of millennials claim to “always” be on the lookout for healthy foods — and this is the demographic with the strongest purchasing power in America.
It turns out, not only is ordering your food online better for you, but it’s also better for the environment.
Finally, while they originally took a lot of heat for their packaging, a study by the scientific journal Resources, Conservation and Recycling found that direct-to-consumer meal and grocery delivery businesses actually had a 33% smaller carbon footprint than traditional grocery shopping. So it turns out, not only is ordering your food online better for you, but it’s also better for the environment.
Winners & Losers
It is important to remember that every major disruptive movement has winners and losers. Think Palm Treo vs iPhone, MySpace vs. Facebook, Plaxo vs LinkedIn. Sometimes winning comes down to better execution, getting product-market fit a little better, being at the right place at the right time, and even a little luck.
But we can’t forget that without the losers — the ecosystem they help build, the early energy and passion they bring to new markets, their ability to take risks, their part in changing consumer behavior and challenging industry norms — we likely don’t ever get to benefit from the winners. In other words, without the Palm Treo, we may never have had the iPhone.
There will be more online food ordering, not less. There will be more interest in transparency and supply chain, not less.
So while some VCs and early investors will be big winners and losers in the food space, the real winner of all this rapid innovation is the consumer. Disruptor brands and investors are raising the table stakes, which has a positive impact on the food system as a whole (and one could hope, it’ll also improve the health of our nation). Thirty years ago, no one would have ever thought that Walmart would become the biggest seller of organic foods in America — but they are, because they had to play catch-up with Whole Foods. Disruption in the food space should be welcomed and available for all consumers. With more players in the space, the industry will democratize good, real food — step by step, competition will pave the way for more affordable and accessible food for everyone.
Regardless of your thoughts on the food system and the business behind meal kits, one thing I know is that convenience and the desire to eat better are not going to go away — they’ll just continue to take different forms. There will be more online food ordering, not less. There will be more interest in transparency and supply chain, not less. Younger people will continue to cook less than previous generations. That means consumers will demand more from the food companies they support. And that means the next 10 years in food will look drastically different from the last 50 years. I personally am looking forward to it and proud to be one of the businesses driving this evolution.
