BOISE, Idaho — More companies are embracing alternative meal kit strategies as consumer interest in subscription services decline. The subscription model is increasingly at odds with the on-demand mentality of many consumers, according to Packaged Facts. While subscriptions are designed to drive purchases, the idea of being “locked in” can cause consumers to cancel their subscriptions or never become a customer in the first place.
Meal kit companies have struggled to attract new customers and maintain existing ones under the subscription model. Along with the retention problem, the high costs of shipping fresh ingredients directly to consumers makes attaining profitability a growing challenge.
Retail giant Albertsons Cos. recently announced plans to shift its Plated platform from a subscription-based meal kit service to an in-store brand.
Blue Apron, has also faced declining sales and customers. It hasn’t made a profit since going public in 2017. Earlier this year, the company announced it could be dropped from the New York Stock Exchange after its closing share price remained under $1 for most of May. Its third-quarter customer base was 386,000, down 59 pecent from 646,000 a year ago.
Other meal kit companies have struggled recently. Home Chef was acquired by Kroger last year, while Plated was acquired by Albertsons in 2017. After abruptly closing last summer, Chef’d was acquired by True Food Innovations, a California-based fresh food company. True Food continued selling Chef’d meal kits in retail locations but suspended the brand’s e-commerce offerings.
Albertsons joins a slew of other retailers putting meal kits on the shelf, including Walmart, Kroger, Whole Foods, Publix and Walgreens. Retail stores accounted for 60 percent of all meal kit growth in 2018, according to Nielsen. By the end of the year, retailers introduced more than 200 new meal kit items.
Meal kits still provide solutions to the same consumer problems even when purchased in-store instead of online, Packaged Facts said. They save time, make cooking easier and provide food tailored to individual needs.
Consumer data suggests these concerns are becoming increasingly relevant. Nearly 60 percent of US adults said they enjoy new recipes, compared to 53.9 percent a decade ago, according to Packaged Facts. The number of people favoring easy-to-prepare foods is on the rise, as is the number of people who favor cooking at home to eating out.
Albertsons said its decision to bring Plated into the Own Brands lineup came after extensive tests of the meal kits’ in-store performance. Shoppers who purchased Plated products were more likely to have families and have a larger basket than the average customer.
“With a broader scope of offerings, we see Plated solving customer demands around convenience, lifestyle, and cooking experience, while adding yet another layer of interest to our in-store journey,” White said. “Plated’s brand appeals to our most loyal and highest value customers, especially those that skew toward convenient, fresh and organic products.”