Are Meal Kits a 'Threat' to Restaurants?

Are Meal Kits a 'Threat' to Restaurants?

01/01/2018

We understand the basic appeal of delivery meal kits: They’re a sensible replacement to the hassle of searching for a recipe, then going to the grocery store and buying all the ingredients only to have a bunch of leftover flat leaf parsley that wilts before you can use again. But given the choice, would you opt to replace a trip to an actual restaurant with a meal kit? A new report suggest not only could meal kit delivery services could cut into visits to dine-in restaurants, the growing meal kit market could actually be a major “threat.”

Food industry consulting firm Pentallect has suggested that though the current impact of meal kit delivery services like Blue Apron is small, the ongoing growth trend in the sector, which is about 25 to 30 percent per year, could eventually lead to a significant impact on the already sluggish dine-in restaurant business – stealing away as many as “millions of occasions” from more traditional eateries.

Bob Goldin, a partner with Pentallect, laid out the many reasons why sit-down restaurants may want to take notice. Both sectors like to target the same demographic of higher-income, 25- to 44-year-olds, but at the same time, meal kits are actually the less expensive option. Whereas meal kits usually come to around $10 per person, “the number in a restaurant is $17, $18, $20, $22,” Goldin said, according to Nation’s Restaurant News. “They’re meeting a lot of consumer need states… They’re bringing some of the experiential advantages that restaurants have enjoyed, with an at-home experience for relatively good value.”

Additionally, one of the meal kit delivery industry’s most intimidating upsides is also one of its biggest wild cards: Its room for growth. Pentallect found that though only 3.8 percent of households had tried one of the services, 27 percent expressed an interest. If companies like Blue Apron – who spent over $60 million on marketing in the first quarter of 2017 alone – can translate that interest into repeat customers, it could represent a major shift in how people eat. That’s a big “if,” though.

Meal kit delivery has been a hot topic this week as Blue Apron became the first US company in the sector to go public. Apparently for now though, investors seem more apprehensive than the restaurant industry: Blue Apron’s IPO sold for just $10 per share, significantly below original estimates.

Source: Mike Pomranz for Food & Wine

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  • Do your research...find out which Meal-Kits sell the best for companies like Blue Apron, run these as specials.

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