Tech investors have poured billions into the craze for meal kits — those handy boxes of premeasured fresh ingredients a consumer can cook at home according to the included recipe, saving on time, labor, and mental energy. But even industry leader Blue Apron has struggled to handle subscriber burnout, and industry experts seem to agree that the market for home-delivered food is cooling.
So what's behind Chick-fil-A's announcement this week that it is entering the meal kit market? The fast food chain said that starting August 27, customers in Atlanta can pick up a variety of two-person meal kits for just under $16 a pop.
"We asked [our customers] what else are you eating when you're not with Chick-fil-A," said Michael Patrick, an innovation program lead at the company. "People said they cooked at home three to four times a week and eight out of their top 10 recipes revolved around chicken."
Did someone say chicken? The company saw a market opportunity and decided to test the waters. And they're not the only ones: Amazon started to pilot meal kits after its Whole Foods acquisition. Walmart offers kits through partnerships. Traditional grocers like Kroger and Albertson's have bought meal kit startups.
The competition is rough, however, with some newer companies already closing shop. As fast food (called by the industry QSR for quick-serve restaurants) and eventually other restaurant chains get involved, things will get tougher than ever.
The traditional model started out based on the thought that convenience, probably for a millennial audience, would be the key to riches. But many people don't know what they will want for dinner tonight, let alone next week. Convenience crashed headlong into flexibility, and instant satisfaction was impossible.
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There have already been casualties. Chef'd, which had received $40.5 million in investment according to the site Crunchbase, closed shop last week. Unlike its competitors, it didn't require people to sign up for subscriptions, which made keeping customers even harder.
"It's really difficult to retain people past a month, past six months, or past a year," Natan Reddy, an analyst at CB Insights Intelligence, told NBC News. "Very few of the original customers last that long." Finding replacements is costly and makes it difficult to become profitable.
Home Chef wanted to sell kits through Kroger and ultimately agreed to be acquired. "If you look across the [consumer packaged goods] landscape, there's a really proven model of [companies] focusing on manufacturing, branding, and convincing people to buy, and companies that are good at distribution," said Home Chef Chief Revenue Officer Rich DeNardis. The grocery chains already have consumers coming in to get dinner. They hope this is another way to get them to buy.
That's what attracted Chick-fil-A. It seems a natural move, given that some chains like P.F. Chang's have branded frozen food offerings. "Is it going to be a $5 billion category? A $10 billion category?" said Patrick. "It depends on who you talk to."
But shifting from restaurant production into meal kits is trickier than it might sound.
Chick-fil-A first started considering meal kits three years ago. Two years back it invested in specialized packaging equipment, just in case. Recipe development began early in 2017. Staff winnowed an original slate of 35 possible recipes to five. Each had to extend the brand.
Flatbread with chicken was one of the final five. "How do you take a flatbread that has a huge Italian overtone and make it Chick-fil-A?" said Patrick. "[We used] pimento cheese, which is very southern. It's a completely new taste on a flatbread." Chicken enchiladas was an easier stretch because the chain already offers a chicken breakfast burrito.
Chick-fil-A also focused on other ways to stand out. One was having steps that kids could help with. The availability by drive-through was also a plus. The company is considering how it might do delivery as well.
So, who will be next? Starbucks has popped up in some conversations. "It's a grab-and-go type of place," Reddy said. Maybe Panera Bread.
And you thought choosing where to go out for dinner was tough. The new challenge: picking where to cook in.