BUS 345 Spring 2021 Prof. Srabana Dasgupta Group Project Description INTRODUCTION Since its launch 13 years ago, the meal kit industry has rapidly adapted to changing customer appetites and has become a multi-million dollar segment of subscriptions. The industry has seen its share of ups and downs; lows like with meal kit giant Blue Apron losing nearly 14% of its customers in a single quarter and highs like Hello Fresh anticipating revenue to increase as much as 70% this year. With buying habits significantly shifting in 2020, the question is whether these changes are here to stay and whether there are opportunities to take advantage of. What are meal kits? Meals kits are a type of meal delivery service, often subscription based. They typically include fresh ingredients, sometimes pre-chopped and/or with premade sauces and spice blends, along with recipes to prepare home-cooked meals. Initially, meal kit services grew in popularity with older millennials in urban areas who had more disposable income. As of late 2019, however, nearly 64% of meal kit buyers were among millennials and Gen X’ers with high incomes, high levels of education and with a full-time job. In North America, some of the top meal kit companies include Blue Apron, Hello Fresh, and Chef’s Plate. What are the pros and cons? Meal kits offer convenience to consumers – no planning, no trips to the grocery stores, and often minimal effort to make a home cooked meal. In addition, meal kits have been shown to cut down on waste as they are pre-packaged with only the amounts needed. Finally, customers tend to perceive meals kits to be healthier and/or more cost-effective than take out. However, most subscription-based meal kit services find that there is high customer churn; customers tend to cancel within a few months to try another meal kit or take a break as they don’t want to be locked in. The packaging in which the meals come has also been criticized for being environmentally unfriendly. Finally, customer eating habits are constantly evolving, adding a complex layer to such services, requiring brands to adapt and work to understand their audience’s ever-changing preferences. How has COVID-19 changed things? While the long-term impacts of COVID-19 on the meal kit industry are still unknown, there are several trends that have been seen during the pandemic that will affect the meal-kit industry in the months and years to come:
