It’s been a rough year so far for the meal-kit delivery industry.
After seeing a brief surge in demand during the pandemic as customers sought convenient, home-cooked meals amid lockdowns, some of the biggest players and pioneers in the sector are struggling financially. Blue Apron, the New York City-headquartered meal-kit company (and seemingly perpetual podcast sponsor), reported a net loss of over $109 million for 2022; a year later, the company sold itself to Wonder Group for $103 million after selling its operational infrastructure to California-based meal provider FreshRealm for $50 million and laying off significant swaths of its workforce, as CNBC reported.
Market analysts are also increasingly negative about the financial outlook of HelloFresh. In March, the German company’s shares plunged 42% after it warned its earnings for 2024 and 2025 would fall below expectations, citing a "very different operating environment” than anticipated. The environment is certainly different than when meal-kits first took off in the United States in the mid-2010s. For one, it’s significantly more crowded.
In 2023, the Wall Street Journal reported there were 3823 meal-kit delivery companies operating on both a local and national scale in the United States. In 2013, there were 13.
While it's tempting to attribute the financial struggles of the meal-kit industry's stalwarts solely to the plethora of alternatives available, the true cause is simultaneously both more straightforward and more multifaceted: Meal-kits fail because they are boring.
While Reddit posts about big-brand companies can often quickly become an echo chamber of anonymous complaints, some of the more specific subreddits also serve as an interesting microcosm of consumer behavior. Take for instance, r/MealKits, a 22,000-member online community for people to “discuss and compare all meal kit services, from Blue Apron to Plated to Marley Spoon to GreenChef and more.”
The posts vary. On the homepage today is a picture of the Home Chef shrimp campanelle primavera someone made last night, a question about what meal kits are “reliable,” a few people griping about the amount of calories in Factor meals and a complaint from a Marley Spoon customer saying that they didn’t receive recipe cards in their latest box.
However, one of the most consistent types of posts on a day-to-day basis is from members who are weighing whether the cost of meal-kits is worth it in order to make recipes that have lost their novelty, a problem only amplified by reports of diminishing ingredient quality (another constant on the subreddit is a steady stream of photos of subpar box inclusions, like some dull, wispy carrots from Hello Fresh, or Italian sausage from Everyplate that allegedly contained shards of plastic).
Some customers, initially enticed by the promise of curated ingredients and step-by-step instructions, report eventually finding themselves in a repetitive cycle. Maybe they started as an inexperienced cook and learned the ropes thanks to one of these kits, but the allure of experimentation wanes as the available dishes become familiar, stripping away the excitement that once distinguished meal kits from mundane meal planning. Now, how much of this is in customer perception versus reality is really up for debate.
HelloFresh has over 2,500 recipes in their archive and, depending on location, allow users to choose from dozens of potential meals per week, while Blue Apron offers nearly 70 rotating recipes to try from on a week-to-week basis. Even with that amount of variety, though, some subscribers end up dropping the service because the types of ingredients, and the techniques used to prepare them, eventually become repetitive — a problem many grocery sellers like Kroger, Whole Foods and Target are seeking to solve by now offering one-off meal kits for purchase.
“We've reached a point where the novelty aspect has worn off,” Android-and-Ale, a member of the r/MealKit subreddit, wrote when the topic of canceling services came up in a recent post. “These boxes have been around long enough that folks who enjoy surprise/subscription boxes have soaked up all the dopamine they're going to get from grocery kits and moved along to something new. No shade. I love shiny new things, too!”
To better understand the customer behavior at play here, it helps to compare the meal-kit industry to how streaming services operate because they mimic each other in several key ways. While streaming initially started with only a few big players, like Netflix and HBO Now, there are now actually over 200 services available worldwide, meaning that there is now a lot of varied competition for customer attention.
To address this, many of the paid services offer steep discounts or free trial periods in hopes that viewers will like what they see enough to eventually keep paying the monthly cost (or at least forget to cancel their subscription before being charged again).
However, retention is always a challenge — especially with more people becoming experts in the art of trial-hopping, or shifting from one paid service to another with a trail of canceled free trials in one’s wake. Even after the free trials run out, with advertisement-free plans for Netflix and Hulu now over $14, it’s also really common to see customers sign up for a service for a single month in order to binge an exclusive series or two, cancel and then move on to another.
This behavior has definitely infiltrated the meal-kit industry — which is somewhat notorious for its very hefty new subscriber discounts — and while some level of churn is certainly accounted for in a company’s financial predictions, a business can only take so much. As the Wall Street Journal reported in 2023, approximately 90% of new subscribers to major meal-kit delivery services cancel within the first year.
Returning to r/mealkit, there are hundreds of posts with titles like: “I’ve been rotating meal kit subscriptions to score insanely cheap food,” “Slowly working through trial boxes of meal kit companies to find the best fit for our family” and “How many people here try to churn out the most discounts/promotions?”. These offer a little more insight into the trend.
“I always cancel after the discount ends,” one commenter explained in response to a question about whether people in the subreddit “have a systematic way of getting all the discounts from every company out there.”
“I like to do a meal kit for a bit every now and then, but don’t want to actually do them year-round, so the 4-5 discounted weeks a few times a year is perfect for my partner and I,” they continued. “We keep the recipe cards and remake the recipes we liked on our own all the time, so for us it’s just a fun way of trying new recipes we may not have thought to try on our own.”
Another commenter wrote on a separate post: “I use them to diversify my menu. When we get in a rut eating the same stuff month after month we order a week or so of blue apron or hello fresh and the recipes we like we add to the rotation. We haven’t done it in a while. We'll do it again soon!”
This is where streaming services have a real advantage over meal-kits. If, for instance, someone wants to watch “The Sopranos,” they can only do that by subscribing to Max (formerly HBO Max, the successor of HBO Now). The series is not currently offered on any other streaming services and, while there are some series and films that occasionally migrate from service to service, original content is one way these streamers attract and retain customers.
Most meal kits come with recipe cards — or even have an archive readily available online — which means subscribers can simply go to the supermarket and remake those recipes, often at a cheaper cost. Does it address the convenience aspect of pre-portioned ingredients being sent directly to one’s door? No, but based on the financial situations of the former darlings of the meal-kit industry, some customers decided the cost of the service wasn’t worth the convenient meals that have also become boring.
So, what’s next for the industry? Recent months have shown that meal-kit companies can’t survive mass exodus after mass exodus of churn-and-burn customers with any kind of financial sustainability, which means those who want to thrive will need to find their niche.
That potentially means rethinking who their customer base is; rather than “everyone with a coupon code,” it might be time-strapped families who need more flexible options for picky eaters, neurodivergent cooks who value really clear step-by-step recipes and pre-measured ingredients, or working professionals who will pay for a higher-priced meal-kit if it comes with luxury or non-traditional ingredients.
