Secrets to Developing Successful Meal Kit Solutions

February 6, 2018

Since bursting onto the U.S. market in 2012, online meal kit delivery services have been multiplying across the country. By 2017, the industry had grown to an estimated $5 billion business, reports research firm Packaged Facts. In an effort to garner their share of the market, a growing number of national grocers and discount retailers are also getting into the business. But as both online and brick-and-mortar retailers are beginning to learn, simply offering a meal kit option doesn’t guarantee success.

According to Daymon Category Solutions Senior Manager Jill Tomeny, developing a strong assessment of a retailer’s customer base is critical before jumping into the meal-kit fray. She notes that in general, “men, younger generations and families with children tend to be heavier consumers [of meal-kits] while Millennials also express heightened interest.” Understanding consumers’ motivations for buying meal kits is also key. According to survey firm Nielsen, the most common reasons include saving on meal planning time, shortening preparation and cook time, saving time in-store, trying a new recipe and eating healthier.

Beyond this, retailers should consider several other factors, says Tomeny—namely format and assortment, value, placement and marketing.

Format and Assortment

There are four main meal kit formats retailers have to choose from:

  • Assembly kits—individually packaged, pre-portioned ingredients (not individually labelled for retail sale) that are pre-packed into a bag or box with contents fully-prepped for cooking.
  • Curated ingredient displays—store displays that provide a recipe card and all ingredients needed for the dish.
  • Ready to cook kits—all raw ingredients are precut and assembled together in a ready to cook tray with no clean up or prep work.
  • Mix & match—components such as sauces, protein, vegetables, and starches are individually packaged for retail sale, allowing the customer to choose their combination at shelf.

“In addition, retailers must consider other factors to make the appeal of the assortment worth it,” adds Tomeny. These include things like: ls there a good range of recipes with something for everyone (such as vegetarian, meat and seafood options)? Will special equipment be required to prepare them? Do the recipes have “foodie” appeal and encourage shoppers to “stretch” themselves as a cook?

Value

Saving time and money is important to shoppers in this category, but retailers must also consider: What is convenience worth? The consumer may be making comparisons to a number of choices, such as frozen or prepared foods, eating out, getting takeout or even buying the ingredients themselves. “From the retailer perspective, the cost of packaging is critical and it must be transparent,” Tomeny explains. “Many customers want to see the ingredients, know the portion sizes and be clear on preparation all by reading the label.”

Placement

The next consideration is where in the store should a meal kit go? “The most common locations we’re seeing are dedicated displays near front entry ways, in produce or prepared foods/deli,” says Tomeny. “You want to make sure they’re positioned to drive awareness of the program in general, and in a location that reinforces their ability to solve an immediate ‘what’s for dinner tonight’ dilemma.”

Another option is to bring the selection online, directly competing with independent companies like Blue Apron, Plated and Hello Fresh. In fact, some national grocers only offer their meal kits online.

Marketing

Whether targeting a planned purchase or an impulse buy, retailers need to have a marketing strategy behind their meal kit efforts. “Offering the meal kit online certainly takes the guesswork out of the consumer experience as they can read about all the particulars,” says Tomeny. “But there are also opportunities to market in-store—for example, through demonstrations, distinct signage and the use of local, sustainable ingredients.”

In the end, retailers need to remember that meal kits aren’t necessarily a silver bullet. They also need to have the right mix of fresh grab-and-go meals, prepared products and convenience ingredients. As Tomeny puts it, “It’s all about focusing on being there for the broader segment of meal solutions.”

To learn more about developing retail-based meal kit solutions, contact Jill Tomeny, Daymon Category Solutions Senior Manager, at jtomeny@daymon.com.

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