There is a use case for subscription meal kits, though perhaps not as strong as once thought. A few years ago, several startups flooded the space, attracted sizable venture funding and spent heavily to acquire customers—only to discover they had a leaky-bucket problem. Subsidizing trial to acquire new customers with discounts was easy, but the model has proven unsustainable for many players.
According to a 2018 Market Force Information study, HelloFresh edged out Blue Apron (38.8% vs. 34.7%) as the most-used primary meal-kit subscription service among US grocery buyers. Home Chef followed in third place (9.3%), while other players maintained a share of 3.1% or lower. While many meal-kit companies were funded, it appears there is room for only a handful to survive.
Why didn’t meal-kit adoption achieve its once lofty expectations? According to Market Force Information, the No. 1 reason cited by subscribers who stopped using these services was value for the money spent. It was fine to use the service with discounts subsidizing the cost. But once customers were faced with paying full price, the value proposition eroded.
It also turns out that, for many customers, meal kits weren’t especially convenient. Other leading reasons for discontinuing their use included amount of prep time (9.3%), number of steps required (8.9%) and total cooking time (8.3%).
“The phenomenon of meal kits tried to capitalize on the trend of younger adults wanting convenient but healthy home-cooked meals, which is a real need for a certain segment of consumers,” eMarketer principal analyst Andrew Lipsman said. “But clearly the opportunity isn’t as big as once thought. Getting trial was easy for a lot of the meal-kit startups, but full-price meal kits carried a premium that, for many consumers, didn’t really justify such a modest improvement in convenience.”