How Does the Meal Kit Model Work and Are They The Future of Food?

Meal Kit

While the more imaginative amongst us may picture “the future of food” as eco-friendly lab-grown meat that tastes like chocolate, contains zero calories and represents 4 of our 5 a day, the reality is that that kind of food utopia ain’t coming anytime soon. However, more feasible is that the buzzing meal kit industry will continue to thrive and begin feeding even more and more of us. Let’s take a look.

Meal Kits – The Full Lowdown

If you are new to the concept, meal kits are essentially food subscription boxes that get sent right to your door. They contain all of the perfectly measured ingredients you need to make a meal, along with an easy-to-follow recipe sheet. Meal kits come in all shapes and sizes, from low calorie and weight watchers varieties to vegan and even keto ones. Meal kit subscriptions can be tailored to feed singletons or entire families and generally, a pack will contain between 2 – 5 meals per week.

They are proving especially busy in North America and Western Europe where working families and busy single professionals need some help eating healthily. However, the market is also growing in Australia and the more affluent parts of South Asia. They are proving particularly popular amongst the nouveau-riche hustling hard in the tech sector.

The biggest meal kit company globally is Hello Fresh who now serves more than 7 million customers worldwide, and some other big names are Freshly and HomeChef. While companies like Hello Fresh now feed hungry mouths in 11 different countries, some stick to one country or even particular states or regions.

The Advantages of Meal Kits

Meal Kits have proven very popular with those who struggle to find the time both to cook and to plan and shop for meals. Perhaps Meal Kits’s single most significant advantage is that somebody else does all of the thinking and shopping for you, saving untold time and energy. 

With a big emphasis on fresh ingredients and balanced recipes, they also make it easier to eat healthily. If you want to get more veg in your diet or lose some weight, a meal kit subscription can be individually tailored to your needs. They are a lot healthier than relying on take-outs and oven-meals and are also, on balance, more environmentally friendly in terms of packaging waste (though we will touch on this further in this post).

Meal kits are also a big hit with lousy cooks as their easy-to-follow recipe sheets are kind of hard even for terrible chefs to mess up!

How It Works

While every provider is a little different, the business model of meal kit companies is broadly very similar. Customers sign up to a plan and state how many meals they want to be delivered per week and how many people they need to feed. For example, you can have 2 meals sent just for yourself, or you can have 5 meals sent to provide you, your husband and 4 growing kids. Once you sign up, make your payment and place your order, your first food box generally arrives within a few working days. Once you’re signed up, you will keep receiving a new package of fresh goodness each week until you cancel.

The cost per meal varies depending on which company you use and your subscription. Scale of economies dictates that the more meals you order per week, the cheaper they work out individually. When I was signed up to Hello Fresh, we paid around $5 per portion for 4 meals per week. 

If you were to go out and shop for the ingredients yourself, you could do it for a lot cheaper, but of course, your money is going towards the logistics of postage and packaging and paying for the service.

All in all, customer satisfaction in the sector is growing, and a recent poll confirmed that HelloFresh’s satisfaction score increased to 26, giving it the edge over its rival BlueApron, whose score bucked the industry trend and dropped to 13.

Difficulties of Meal Kit Companies

Despite an ever-increasing market share and growing customer demand, the meal kit industry is harsh. HelloFresh is currently not profitable despite considerable growth and customer satisfaction, and as we saw, BlueApron has seen a dip in its approval rating and its customer base.

A big problem faced by Meal Kit companies in the short customer lifespan. Many households are open to giving Meal Kits a try, but few tend to keep their subscription for too long. One reason is that despite making reasonable attempts to mix up the weekly menu and keep the ideas as fresh as the ingredients, the reality is that Meal Kits get kind of repetitive; I ate more sweet corn and more lentils in my 1-month using Meal Kits than in the entire previous year.

There are also logistical difficulties, and in 2021, several providers were hit by the HGV driver shortages and supply chain issues. 

Another challenge faced by the sector is that the excessive use of packaging tends to “turn off” a lot of their environmentally friendly middle-income customers. While a lot of the packaging used is recyclable, there is still work to be done, and the industry knows it.

Still, despite the challenges and limitations of Meal Kit providers, according to Meal Kits Canada, the industry kept growing month on month throughout 2021, even as supermarkets and restaurants reopened post lockdown.

The Bottom Line

On balance, the Meal Kit industry has a lot of reasons to be optimistic. The world doesn’t seem to be slowing down anytime soon, and as long as there are hungry, busy people to feed, Meal Kits will be in demand. Ultimately, the industry is still in its relative infancy and can only improve and refine itself over the years to come. Indeed, some commentators have even projected the market to grow by over £11 billion between now and 2025, which suggests that HelloFresh, Freshbox and HomeChef can hope to be feeding more and more of us.

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