Dinner as we know it has changed. Sunday trips to grocery stores followed by countless hours of meal prep are dwindling. With the rise of meal kit delivery services, cooking for convenience has never been so easy.
To better understand the rise of meal kit delivery services and their potential effect on restaurants, let's answer a few key questions before deciding what your restaurant can do to bring hungry customer back.
What do diners really want from their restaurant experience? See for yourself in our latest report.
What are meal kit delivery services?
Meal kit delivery service says it all in the name. The companies like Blue Apron and HelloFresh ship all of the ingredients necessary to prepare a meal directly to your home. With instructions for preparation so that you never have to set foot out of the house, you can have a tasty, home-cooked meal.
Different services offer vegan, nut-free, or dairy free options. Meal prep complexity and time ranges based on the type of service chosen.
Blue Apron was one of the first to the market, meaning that it maintains a large amount of the market share with $800 million in revenue in 2016 and 40.3% of the market share in 2017, according to Recode. Comparatively, HelloFresh has been on the rise in the recent past, growing 5x faster than Blue Apron, gaining 10 percentage points in market share as of September 2017.
Meal Kits vs. Grocery Stores
When subscribing to a meal kit service, the average cost ranges generally averages out between $10-12 per serving.
Compared to DIY meals, the prices are surprisingly similar contingent upon the recipe at hand. For simple meat and vegetable recipes where the cost is generally between $2-4, diners will probably lose money if they go with a meal kit service.
However, for recipes that involve investing into things like herbs, spices, sauces, etc., the price nets out fairly evenly (or within a 10% margin of the meal kit cost).
Who is Buying Meal Kit Delivery Services?
According to a research study done by MONEY, “Meal kit services seem to resonate best with millennials, men, and wealthier Americans — although the companies are making a big push to also capture the interest of young couples, families with young children, and empty-nesters.”
Millennials, who make up an increasing amount of the dining out population, are the focused on convenience. According to the International Food Information Council, 55 percent of millennials say that convenience is a top driver when buying food. And when it boils down to it, compared to traditional grocery shopping and meal prep, meal kit delivery services are certainly convenient.
How Meal Kit Delivery Services Affect Restaurants
I’ll start by saying it's hard to know exactly how much of a threat the meal kit delivery service is for the dining out industry.
Food & Wine notes food industry consulting firm Pentallect’s comment on the topic as, “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.”
Still, Americans are consistently spending more more on food from non-grocery establishes than on groceries. In a recent study by the NPD Group, “Consumers reported that less than 60 percent of dinners eaten at home are actually cooked there,” which indicates the growing influence of takeout, delivery, and taking home leftovers from meals.
While the gravity of the impact is still up for debate, there’s no doubt that meal kit delivery services are picking up steam and therefore should be taken seriously as you think about your restaurant's strategy to compete.
4 Ways to Drive Restaurant Sales in the Midst of Rising Meal Kit Popularity
#1) Focus on Convenience with Delivery & Online Ordering
If you don’t have online ordering and/or delivery, your restaurant’s convenience factor is likely lacking.
Convenience includes both the speed of being able to place an order, the ability to have it delivered instead of picked up in store, and how easy it is use to use the online ordering platform itself. In general, consumers want to wait less than 60 minutes from order time to eat time.
The technology that you choose to host your online ordering also plays a factor in the convenience. While consumers are familiar with third party vendors like GrubHub, having an integrated in-house online ordering platform has the benefit of being more customizable to fit your needs and you won’t get slammed with percentage of sale fees.
No matter what technology you choose, not having online ordering and delivery will significant hurt your ability to compete with meal kit delivery services.
#2) Hype up Your Health & Food Sourcing
Meal kits often flaunt the sources of their ingredients, the calorie count, and the health benefits included in every meal. Healthy eating is certainly a growing interest across the food industry, and there’s no reason why you can’t emphasize the same for the items on your menu.
If everyone is looking for an experience, give it to them.
While the experience of dining out may be enough for some, there are other exciting ways to spice up your restaurant’s offerings.
Boston local restaurant Mei Mei offers dumpling classes. Tickets include a two-hour class that covers dumpling folding and cooking, a recipe card, a Mei Mei sauce bottle, and all of the dumplings to eat and take home after the class. While this might not be the traditional night out, it gives restaurant goers the experiential learning aspect similar to meal kits.
#4) If you can’t beat em, join em.
If you’re struggling to beat them at their own game, why not join them?
Restaurants like the Strip House in New York City have started offering their own meal kits. The “Steak to Go” Kit includes filet mignon, ribs, and other “raw” materials so that diners can whip up the meal themselves, but still enjoy the high quality ingredients that they’d get in the restaurant setting. You already have the ingredients, so packaging and writing instructions are the main additional steps you’ll have to take.
Serving the Meal Kit Delivery Service Companies
Meal kit delivery services are certainly making a splash in the business of dining, but that doesn't mean it's time to close your restaurant's doors. Focusing on convenience, promoting the use of healthy ingredients, making your restaurant more interactive, or even taking a share of the meal kit delivery service market yourself are all ways to re-capture the affection of your guests.
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