Chefs
 

KANSAS CITY — There is Blue Apron, HelloFresh, Plated, Chef'd and Sun Basket out front with more than 200 others following behind, all seeking share of the meal kit delivery market, a market reportedly valued at approximately $1.5 billion in the US. The attraction to become a player is tantalizing even when potential movers and shakers know that front runner Blue Apron saw sales zoom from approximately $80 million in 2014 to $800 million in 2016 — only to have its initial public offering hopes dashed when its stock plummeted from $10 at open to $4 just five months later. Meanwhile, increased competition abounds from retail grocers selling branded meal kits as well as their own in-house meal iterations.

E-commerce within the food and beverage industry is seen to be in its early stages but is growing quickly, according to LEK research, a London-based global management consulting firm with US headquarters in Boston.

“E-commerce was 2 percent of sales in 2017 and estimated between 9 percent to 20 percent in 2025, so it’s the start of a seismic shift of consumers ordering food and beverage with meal kits a part of it,” said Rob Wilson, the company’s managing director.

Profitability is seen as the main meal kit problem. However, Wilson is optimistic the concept will survive because it’s unarguably “a great offering for busy consumers who want to learn to cook.”

Retailers on the move

Supermarket chains see an opportunity to sell their own kits on-site or online, or sell and deliver another company’s kits online.

Kroger Co., Cincinnati, Ohio, launched its own meal kit service, Prep+Pared in select stores in January. Offering fresh, measured and prepped ingredients for meals that may be ready in 20 minutes or less, the kits do not require subscriptions and are available in the deli department. Plated (ranked No. 3 in meal kit sales, behind HelloFresh and Blue Apron, which jointly account for 85 percent of the market) was purchased by Boise-based Albertsons in September. It is expected to offer Plated kits in stores as well as online. Amazon has gotten into the business via AmazonFresh and its collaboration with Tyson Foods on Tyson Tastemakers meal kits.

The meal kit consumer, who typically must order three in one delivery, will find a lower ticket cost in the grocery channel. However, one major advantage the meal kit company has is the sales, Wilson said.

“It’s a pull system — ‘pull’ means from fulfillment, so there’s little spoilage vs. the spoilage component is great in grocery.”

As he sees it, grocers have to figure out the costs of the contents of the whole kit — the center-of-the-plate plus sides — and if one item spoils when it’s not sold, they have to dump the whole thing.

“As a meal kit provider, you fill it, ship it, and you’re done with it — you don’t have the real estate [of a market].”