With such a high churn rate among subscriber (again, exceeding 70 percent!), providers have been forced into a war of escalation, tripping over themselves to offer the best deals and spending untold capital on celebrity endorsements. These offers, made on seemingly every podcast on the planet, bait price sensitive customers who have become savvy enough to jump to a competitor once prices increase. So far, so good.īut subscribers, we have come to understand, bounce from service to service, capitalizing on introductory offers and canceling once full prices set in (much like your humble blogger did with Tidal when Lemonade dropped). So, clearly consumers like meal kits and more subscribe rather than picking them up in grocery stores on-demand. Although grocers’ meal kit sales pale in comparison to the industry leaders, at $155 million last year they saw 26% growth over last year. Last year, the two biggest meal kit providers, HelloFresh and Blue Apron, combined for $1.5 billion in sales, up from $1.1 billion the year before. The Trouble with Subscribing to the Subscription ModelĪny passing glance at the meal kit industry would seemingly reveal a thriving business that is consistently adding new customers. Indeed, if we put in the market research to open the box up and see what’s inside, we find an industry plagued by churn in excess of 70%, logistical issues related to supply chain and shipping, and, most frighteningly, impending competition from grocery store private labels and the biggest baddie on the block, Amazon. Yet there is something rotten in this Danish. The industry has greatly proliferated since these early days with options appealing to healthier lifestyles, dietary restrictions, and particular ethnic cuisines-heck, even Chick-fil-A is getting in on it. Appealing to foodies’ adventurous desire to take a guided exploration of unfamiliar cuisine while streamlining the multiple steps required to prepare a home-cooked meal, Blue Apron and the like utilized the subscription model that has served so many industries well (except for you, MoviePass ). With 80% of meals (and half of restaurant orders) consumed at home, meal kits were potentially a perfectly timed hybrid.
When meal kits became a thing around 2012, their approach seemed as fresh and timely as the food they provided.
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