Meal Kits or Meal Crypts?

More customers are opting for meal kits, but are they a good idea for c-stores?

Meal kits aren’t fool proof. They often take longer than advertised. Or, in the hands of faux chefs, don’t turn out as intended.

By Gary Stibel

Meal kits are the latest in a long line of food and beverage misadventures, from clear cola to diet wine that could have been prevented if more discussion in the marketing board room had taken place.

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On the surface, the concept of meal kits is straightforward and logical. In these days of busy, everyday lives, many Americans don’t have time to prepare meals. And even if they did, a portion of Americans don’t know how.

It was in this spirit that the meal kit was born.

Companies such as Blue Apron and HelloFresh, in the last few years, have increasingly carved out territory among U.S. consumers by offering another option to cooking. These meal kits are typically mailed once a week to subscribers as boxes containing pre-portioned ingredients and basic instructions on how to turn them into different meals.

JOIN THE CLUB
Moreover, fast casual and quick-service restaurants are joining in.

Earlier this fall, the fast-food chain Chick-fil-A announced that it will test a meal kit service through mid-November. Customers can pick up the kit at about 150 participating locations in Atlanta. The meals include chicken flatbread, crispy Dijon chicken, chicken Parmesan, chicken enchiladas and pan-roasted chicken.

So if you can make it tasty, inexpensive, healthy and convenient, how can anyone resist, at least seven days a week?

But humans don’t behave in the real world the way they do in market research. Chick-fil-A’s pilot program shows a fundamental misunderstanding of what fast food is all about: convenience and instant gratification.

And, while the meal kit concept appears universally appealing, past experience indicates that it has limited appeal to a limited audience for a limited period of time. That’s a sign convenience stores should heed.

BUT WHY?
Even meal kits aren’t fool proof. They often take longer than advertised. Or, in the hands of faux chefs, don’t turn out as intended.

And while the quantities may be perfect for the average American couple, we haven’t met many average American couples recently.

True, meal kits may be more convenient than home-prepared meals, but they are less convenient than restaurant or store takeout, home delivery or frozen food.

And there’s less variety too. Next, the appeal of meal kits in the marketplace is far smaller than in market research.

Add to this an overpopulated competitive landscape.

There are already more than 200 meal kit brands on the market today. During the time it takes to read this post, another will have launched.

In addition, there’s the novelty effect—in everything from fashion and electronics to food and beverages. Humans can’t wait to try something new once, or even twice.

But then they return to tried-and-true foods like hamburgers and French fries, which continue to be mainstays, even after centuries.

Perhaps a close look at the meal kit business model is warranted: High investment capital and consumer acquisition costs weighted down by low consumer retention and subscription rates.

The players best positioned to win a meal kit war are not the freestanding companies that must rent space, buy equipment and hire personnel, or small footprint stores with limited assortment. They are the restaurants and major grocery chains that can easily add meal kits to their current assortment because of the wide array of food options they have already at their disposal.

Beyond commercial companies, another difficult competitor is the woman or man of the house, who can whip up something in minutes that she or he knows everybody likes, and can serve as many as are present as much as they want.

Meal kits are a great business, with two exceptions: too little demand and too much supply.
Fortunately, those of us who have been in the business more than a few years have seen this movie before—many times.

The next time you think about chasing after a shiny new object, like meal kits, first, listen to the advice of those of us who know how such trends are likely to play out. How do we know? Like those Farmers Insurance commercials state, “We know a thing or two because we’ve seen a thing or two.”

Gary Stibel is the founder and CEO of the New England Consulting Group. His career spans more 30 years of management consulting.