02/16/2018 Rochelle Tishuk

Trend or timeless: Will the meal-kit industry last?

You come home after a long day at work dreading having to cook dinner. You’re not sure what to make, let alone whether you have all the ingredients. Is it time to surrender to a bowl of ramen? Then you remember that meal-kit delivery at your front door. All you have to do is open that lovely box, unpack the ingredients and follow the instructions. Ta-da, dinner is served!

If you haven’t tried a meal-kit service yourself, you’ve no-doubt heard of this trendy food-prep segment that allows subscribers to select menus,  meal sizes and delivery frequency for kits containing gourmet ingredients and instructions. The main motivator is convenience, allowing people to cook wholesome meals at home with everything they need right in that box.

When these companies arrived on the scene, they touted they would revolutionize how people used grocery stores. With everything for tasty meals delivered to their doorstep, consumers would change their grocery shopping habits.

Spoiler alert: That hasn’t really happened.

While the meal-kit market is still grabbing plenty of attention, companies struggle to retain costumers long term. According to a Fast Company article, the average subscriber retention for companies like HelloFresh, Blue Apron and Plated after 12 months sits at around 8 to 18 percent.

Meal kits are sort of like that trendy toy your kid just had to have for their birthday last year. For a few weeks or even months, it’s exciting and well-used. But after a while, it becomes another forgotten relic in the toy bin.

So, is the meal-kit industry sustainable? With such a struggle to retain long-term customers, one wonders if this market can maintain interest and growth, despite the massive social media campaigns and promotional tools. (I mean, when’s the last time a Facebook friend announced they have codes for free meals to hand out? It happens all the time for me.)

Rather than hypothesize, we dug into LinkUp data for the truth. By looking closer at top segment competitors Blue Apron, Plated, HelloFresh and Sun Basket, we hoped to gain insight. We searched each company’s job history to see who’s growing and who’s declining, as well as the reason behind it.

The chart below shows monthly unique job counts for the past two years along with some key activities in 2017. Blue Apron and Plated have decreased their number of job openings in 2017 while HelloFresh and Sun Basket have increased job openings since we first started capturing jobs for these two companies in July 2017.

The below chart shows that all four Meal Kit companies have job openings in the Restaurant & Food Service category, such as Food Production Team Member at Sun Basket or Test Kitchen Associate at HelloFresh. Blue Apron, Plated and HelloFresh have job openings in the Supply Chain & Logistics category, such as Sourcing Manager at Plated or Fulfillment Team Member at Blue Apron.

HelloFresh, Blue Apron and Plated all have their U.S. headquarters in New York City, so that’s where most of their job openings are located. Sun Basket is headquartered in San Francisco and has most of its job openings in the Bay Area.

A few years into this trend, we’re fairly certain the meal-kit industry won’t replace grocery shopping, though Amazon’s prospects on that front are looking good. To remain successful, meal-kit services are going to have to find ways to keep our attention spans after the boxed meals lose their luster. My thought is they must go beyond convenience to focus on a differentiated value proposition, such as unique nutritional goals of target audiences. We’ll keep an eye on hiring activity at these companies and will deliver any updates as freshly as possible!

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