Meal Delivery Services Fight Back Against Stiff Competition

Sarah PritzkerBySarah PritzkerJul. 10, 2019
Meal Delivery Services
In 2020, food consumption will come in many and varied forms. For the traditionalist, you have your pick of grocery stores laden with a huge variety of foods, both prepared and not. For the uber-busy eaters, there's always dining out. And if you're looking for a happy medium between the 2, meal delivery kit services are the answer.

Saving you time, money, and effort, meal delivery kits are a huge trend today. According to a recent study released by Packaged Facts, the US meal kit market climbed to 22% amounting to a whopping $3.1 billion industry in 2018. Today, approximately 20% of adults have meal kits delivered to their doorsteps. Companies like Blue Apron are publishing improved net losses year-over-year, and showing profitability in this majorly competitive market. And according to Technomic, a firm that consults companies in the food industry, we can make a wide prediction that the meal kit delivery service market will expand to as much as $5 billion over the next 10 years.

And what’s more, the vast majority of these kits come with healthy, well-balanced, and weight-loss promoting meals. So, you're getting the best of all worlds.

Highly Competitive Market Space

Meal delivery kit services are starting to feel the pressure of competition though, and not just from other services in the same industry. Anxious to hold on to their current business clientele, restaurants, grocery stores, and even personal chefs are starting to up their game in an attempt to combat the declining sales that have occurred since successful meal delivery services like HelloFresh and Blue Apron have entered the scene.

After all, the food industry is an $800 billion market, and meal kit deliveries only account for a small fraction of that. But the grocery chains are certainly starting to feel the threat, as is apparent by the fact that so many have begun buying up these small but nagging threats to their profit margin. Albertsons Cos. acquired Plated, Kroger Co bought out Home Chef, and that’s just the beginning.

But experts in the field say that mass acquisitions aren’t the answer to the problem and that there are other solutions to this growing industry. Here are a few ways restaurants, grocery stores, and meal kit delivery services are impacting one another today.

Teaming Up for Better Business All Around

In classic American fashion, some entrepreneurial grocery chains have embraced the idea that 2 heads are better than one. Forging partnerships with successful meal kit services, prominent supermarket chains are bringing these meal kits to the grocery store floor. HelloFresh can now be found in Ahold Delhaize-owned supermarkets, Plated kits are being sold in Albertsons, Blue Apron kits are rampant among Costco Wholesale Corp. stores on the West Coast, and Kroger Hannaford Supermarkets are selling Home Chef kits. And more alliances are being formed as we speak.

This concept helps both parties: meal kit services get greater publicity and reduced overhead costs, and supermarkets maintain the customer base.

Not All Cooperative

Though some supermarkets and wholesalers are only too happy to partner with meal delivery kit services to keep customers in-store rather than searching elsewhere, some chains have bigger ideas. Walmart, for example, announced that the major chain store would be launching its own in-house meal kits. With a brand this big, it might be more profitable for Walmart to just do everything itself. Only time will tell if this is true.

Whole Foods is another supermarket trying to outdo the competition by offering more competitively-priced in-house meal kits. This version is really bare bones, though. You pick a recipe card from The Dinner Table (WF’s meal kit display within the supermarket). All the ingredients you need for your recipe are displayed and bundled ready for you to collect them. Since Whole Foods doesn’t have to worry about packaging or delivery, these meal kits can be sold at a more competitive pricing tier.

Restaurants Getting Competitive Too

Equally concerned about this expanding industry, restaurateurs are doing their best not to lose their customers to an easier, more convenient, and often cheaper alternative. One thing meal kits can’t give you is the eating-out experience. The ambiance, the socialization, and the fact that you’re getting pampered by having someone else cook your food for you are strong motivating factors that keep driving people back to cafeterias, coffee shops, and dining establishments.

Restaurants are also attempting to increase their appeal by improving the overall experience diners have in their establishments. Some places are opening cooking stations where consumers can add toppings to their pizza or stir fry in their own woks, while others are offering the ability to watch a chef cook up a storm in front of them, adding entertainment appeal.

Other restaurants are focusing on delivering healthy menu options. One of the main reasons people opt for meal kits is the increasing awareness of how unhealthy most food establishments are. So, restaurants are trying to combat this bad rep by offering healthier alternatives.

Meal Delivery Kits Fighting Back

While restaurants and supermarkets are scrambling to keep up with this new competitor, meal delivery kit services aren’t taking things lying down. Companies across the industry are coming up with various ways to bolster sales and promote customer retention as well. Here are a few examples of how meal delivery kit services are fighting back with tenacity worth praising:

Speed

Not too long ago, Blue Apron signed a contract with Jet.com. Why? So, this inventive meal kit delivery company could offer same-day kit deliveries. This added convenience is an excellent way for meal kits to compete with restaurants that offer on-demand nourishment. One of the factors negatively impacting meal kit deliveries is that you can only subscribe weekly or monthly. If you’re in the mood for something right away, you’re out of luck. This new partnership hopes to alleviate this issue for consumers.

Niche

Another way meal kit delivery services are keeping the industry alive is by catering to specific niches or dietary requirements. For example, meal kit delivery services like Green Chef and Sun Basket concentrate their efforts on vegans, providing meals that are suitable for this lifestyle. Purple Carrot teamed up with Tom Brady to encourage a more athletic clientele. And One Potato, Plated, and HelloFresh have kid-friendly family plans.

A Niche That Can’t be Touched

Supermarkets and restaurants are doing their best to keep customers in, and reverse the declining trend toward other food options. But meal delivery kits are still filling a niche that you can only reach by combining both of these services. Meal kits provide a service to those who want to eat (and even cook) in their own homes without the hassle of going to the store, picking out ingredients, finding recipes, and lugging groceries home.

The average meal delivery kit saves you money because it’s significantly cheaper than eating out at restaurants all the time. At the same time, meal delivery kit services save you the hassle of going to and from a supermarket. Not to mention the time factor that you save not having to choose recipes, find appropriate supplies, and portion out each one.

So, the best meal delivery kit services are really the happy medium for most people today, and it doesn’t look like restaurants or grocery chains are going to be taking that edge away from them anytime soon.

Sarah PritzkerBySarah PritzkerFeb. 27, 2019
Sarah Pritzker is a content writer with years of experience and a keen interest in the vast world of online consumer products. She enjoys helping readers make sense of the options on the market in financial industries including credit reports, business loans and car loans.