The Meal Kit Craze
Chicago, Illinois, October 16, 2017 – A recent online search of the term “meal kits” resulted in an excess of responses ranging from trial discounts on kits to business sites analyzing the value of companies who sell them to consumers offering opinions about their satisfaction with a recent purchase. The depth of meal kit information that can be instantly accessed might guide us toward the belief that the category is experiencing astounding success. In some regards, it is. According to industry estimates from MarketResearch and others, meal kit companies sold between $1 billion and $1.5 billion during 2016. Piper Jaffray published information in June 2016 that predicts the market will reach $4 billion near term. (techcrunch.com, April 16, 2017)
But the consumer response to meal kits tells a bit of a different story. Only about 30% of consumers have ever tried a meal kit delivery service and of those consumers who have, more than 60% of them cancelled the subscription within the first year, according to a recent study by Datassential (Foodservice @Home, June 2017). Among those subscribers who cancelled within the first year, more than half actually opted out quickly during the initial six months. This suggests that “consumers treat their meal kit services much like a New Year’s resolution to join a gym.” (CNBC, May 27, 2017)
Speed of Abandonment Among Those Who Cancelled Their Meal Kit Subscription

Source: Foodservice @Home, Datassential, June 2017
Consumers likely believe that a meal kit service will help them create a better meal experience than they can accomplish on their own. Data shows that the most frequently identified reason consumers are attracted to meal kit subscriptions is to try new ingredients without buying large amounts (Foodservice @Home, Datassential, June 2017).
So, they give it a try. But meal kits companies are struggling to translate that initial exploration into a longterm, satisfied customer. Many current subscribers to a meal kit service pause their subscriptions which makes them more likely to eventually cancel the subscription all together.
Current Meal Kit Subscriber Engagement Level

Source: Foodservice @Home, Datassential, June 2017
A Different Expectation
People who subscribe to meal kits eat a bit differently than other consumers. On average, they spend 38% of their total food budget in casual dining restaurants, while other casual dining consumers spend about 26% of their budget. (Cardlytics and CNBC, May 27, 2017)
Those meal kit consumers also think about food differently. Consider, for instance, those customers who purchase meal kits from Blue Apron. According to Crimson Hexagon, a social analytics platform, the Blue Apron conversation is made up of a mixed audience of Twitter users. When the online conversations of these consumers are scrutinized, they tell us they are 51 times more interested in the Food Network, 46 times more interested in chefs, 17 times more interested in recipes, but only 7 times more interested in cooking. (www.crimsonhexagon.com/blog/are-meal-kit-start-ups-creating-the-food-of-the-future) Customers who order Blue Apron love cooking shows and chefs but aren’t actually that much more interested in cooking than anyone else. All this data generally tells us that the meal kit customer is a foodie—but not necessarily a foodie who wants to cook a meal that still requires multiple ingredients and time in the kitchen.
The initial expectation among consumers is likely that a meal kit will bring an away-from-home eating experience with interesting ingredients and flavors right to their dining room table. But meal kits still take planning and preparation. What if someone has a craving that’s different from this week’s meal kit menu? What if the meal kit shipment can’t be picked up and unpacked into the fridge quickly? What about all the packaging the food requires? With these challenges and others, meal kits aren’t a simple alternative to the dining-out occasion.
There is much discussion in the industry about the entry of Amazon into the meal kit category and how that will impact the foodservice operator. But the data suggests that the meal kit brand or source is not the most significant factor in driving long-term use and commitment to a meal-kit subscription. Rather, it’s the lack of satisfaction with how meal kits fit within consumers’ daily lives.
Moving Beyond Meal Kits Delivered by Mail
According to industry sources, it appears that Amazon is going a step beyond the meal kit and considering the market opportunity for fully prepared, shelf-stable dishes created using new technology. If Amazon does bring these fully prepared items to the marketplace, they seem to be moving toward addressing at least a few of the meal kit challenges consumers currently have, including planning and preparation time.
As Amazon expands its presence in the food market with meal kits or fully prepared dishes or something beyond that, it brings expertise in providing marketplace access in a highly satisfying way. But a gap remains. Amazon is not a food and flavor expert or an expert at creating a dining experience. When consumers consider options on where to spend their food dollars, there is still an expectation for what that experience should deliver.
Consumers have emphatically shown that they will seek out what best meets their expectations. With the proliferation of options, Kinetic12 does not anticipate that meal kits as they are currently offered, especially those delivered via mail, will experience ongoing growth. There are simply too many barriers to success with the consumer. Instead, other meal-oriented categories appear to be more effectively positioned to appeal to consumer needs, including fully prepared and delivered heat-and-serve meals, ready-to-eat meals delivered via third-party services, store-brand meal kits available at retail or fully prepared meals accessed via grocerants.
Kinetic12 will continue to explore issues and provide relevant, impactful perspective on those of greatest importance to the foodservice industry.
Disclosure
This article is the express opinion of Kinetic12. Kinetic12 has no business relationship with any meal kit company or with any publicly traded company mentioned in this article.
About Kinetic12
Kinetic12 is a management consulting firm operating at the center of the food industry. With a diverse team of accomplished industry experts, they are a resource for all things food-offering an in-depth range of services for manufacturers, operators, distributors and private equity firms. They have developed best practices in category management, operator collaboration and joint-business planning, supply chain optimization, and are regularly featured speakers at key food industry events. For more information contact Jeff Schroeder, Managing Partner at jeff@kinetic12.com