- A study by market research firm Fluent found that price and commitment to a subscription plan are the two biggest barriers to meal kit adoption, reports Food Navigator. Out of the more than 1,300 consumers surveyed, 75% said they were not interested in subscribing to a meal kit service.
- Millennial consumers showed the most interest in purchasing a meal kit subscription, but the overwhelming majority of these individuals (64%) said they were not. In addition to price and subscription commitment, these users also cited “Will not work for my family” (29%), “I don’t need cooking instructions” (29%) and “Meal kits are for those who cannot cook” (15%) as reasons for not wanting to sign up.
- According to Fluent, meal kit companies need to broaden their appeal by offering more convenient solutions for everyday eating occasions, and by adding in more flexibility to subscriptions in terms of cost and subscription terms.
After booming early interest from consumers, meal kit companies like Blue Apron have been humbled by competitive pressures and a business model that’s proving very difficult to translate into profit.
As Fluent’s research reveals, a lack of consumer interest is yet another barrier to growth. The firm’s survey found that while many people knew names like Blue Apron, Purple Carrot and Hello Fresh, three out of four reported they flat-out are not interested in purchasing a subscription. Just 21% of consumers age 35 and older said they were somewhat or very interested, while 37% of millennials — meal kit services’ bread and butter audience — said the same.
Solutions to this problem are evident in the research: Meal kit companies need to broaden their appeal. Right now, they resonate with young shoppers who have limited cooking skills. Outside of that range, interest drops off precipitously, with more advanced home cooks choosing to buy and arrange their own meals, and kitchen novices opting for prepared foods and restaurant fare.
Flexibility is key. Meal kit companies could vary the degree of difficulty in meal preparation, from step-by-step instructions to kits that just include ingredients and no directions. Additionally, companies should offer more flexible pricing and subscription models, according to Fluent, with plans that cater to everyone from the diehard to the occasional user. Many companies do offer this flexibility, but may need to more clearly market these options.
The current market bellwether, Blue Apron, has been plagued by high customer acquisition costs and declining spending per customer. The company’s stock, which debuted at $10 per share last month, is hovering around half that amount currently. With staff shakeups and a recent plant closure, speculation has swirled that Blue Apron could be headed for disaster — or at least an acquisition. However, many see potential in the model and believe Blue Apron will be able to adjust its offerings as it goes along. Last week, it was revealed that Jana Partners, the firm that shook up Whole Foods before its sale to Amazon, had a 2% stake in the meal kit company.
Oppenheimer & Co. research analyst Rupesh Parekh believes the company’s strength of brand and early growth will eventually steady the business.
“Longer term, we see value in the Blue Apron brand, supply chain, the company’s first mover advantage, and ability to monetize a large and growing customer base,” he wrote in a note to investors this week.