Households have re-discovered the joys of home cooking and the throwback days of families having meals together at the dinner table. Unfortunately, it took a global pandemic to accomplish this. This means that meal prep companies that use an online subscription payment model with home delivery are perfectly positioned to capture this market. Blue Apron was an early leader when meal prep was in a growth stage several years ago. Then meal prep sales faltered. Many in-a-hurry U.S. consumers still preferred eating out or getting take-out on their way home. Restaurant meal delivery also became another popular option for households. Grocery stores ramped up their online ordering and delivery as well. Now everything has changed. The Covid-19 shutdown has people cocooned at home with a lot of time on their hands. But post-pandemic, households will still be looking for convenience and added value in food purchasing. Meal prep firms have now been given a second chance to prove that they can still deliver the goods at the right price.
The following Wall St. Journal article reports more on this topic which is excerpted below:
Meal kits are making a comeback after years of faltering sales. People stuck at home because of the coronavirus pandemic are cooking more. Some are avoiding supermarkets. That dynamic is juicing up demand for the packs of pre-apportioned fresh ingredients, reversing a period of slower growth for the decade-old industry that was seeming like a fad.
Keeping pace with the new demand is testing operations at meal-kit companies like Blue Apron Holdings Inc. which is producing more kits and limiting the variety of its menu. Some companies are putting new customers on wait lists and simplifying ingredient lists. Restaurant chains including Shake Shack Inc. and Chick-fil-A Inc. are adding meal kits to delivery menus, too, as they seek to replace some sales lost to the pandemic.
A flurry of meal-kit makers launched around 2012, promising to make cooking at home easier for time-starved consumers. Some, like Blue Apron, went public and others, like Kettlebell Kitchen and Chef’d, folded or were acquired after they struggled to find a path to profitability. Investors largely turned on the sector, and venture capital dried up.
Overview provided by Raymond Pucci, Director, Merchant Services at Mercator Adisory Group.