Meal So­lu­tions

Gro­cers must con­sider val­ues, va­ri­ety, com­mon goals and more when look­ing to part­ner with meal-kit ser­vices.

Progressive Grocer (India) - - Front Page - By Randy Hof­bauer

What all should gro­cers look for when part­ner­ing with meal-kit ser­vices?

Meal kits are a big busi­ness, rock­et­ing to $5 bil­lion in sales to­day, ac­cord­ing to mar­ket re­searcher Pack­aged Facts. And the Rockville, Md.-based firm ex­pects solid con­tin­ued growth in the space. But with an over­sat­u­rated mar­ket for de­liv­ery ser­vices and gro­cers rolling out kits of their own — along with Ama­zon in­tro­duc­ing its own kits and likely to sell them at Whole Foods Mar­ket, which it now owns — it’s be­com­ing vi­tal for de­liv­ery ser­vices to seek added ex­po­sure and cap­tive au­di­ences in­side brick-and-mor­tar stores, es­pe­cially as shop­pers seek to pur­chase products wher­ever, when­ever and how­ever they de­sire.

This has made the mar­ket ripe for ac­qui­si­tions. In Septem­ber, Boise, Idaho-based Al­bert­sons Cos. ac­quired meal-kit ser­vice Plated, ad­vanc­ing a shared strat­egy to rein­vent the way con­sumers dis­cover, pur­chase and ex­pe­ri­ence food. Ad­di­tion­ally, the CEO of Green Chef has said that he’s open to ac­cept­ing of­fers for his com­pany, while an­other ser­vice, Home Chef, has hired bankers to ex­plore a pos­si­ble sale, sig­nal­ing an op­por­tu­nity for it to be snatched up by an in­ter­ested re­tailer. Fur­ther, Blue Apron re­cently shed­ding 6 per­cent of its work­force has left in­dus­try spec­u­la­tors won­der­ing if it, too, will soon be scooped up.

How­ever, more strate­gic part­ner­ship deals be­tween gro­cers and meal-kit ser­vices have been inked in re­cent times, in­clud­ing South­ern Cal­i­for­nia gro­cer Gel­son’s with Chef’d, and Whole Foods with Blue Car­rot (the lat­ter of which wound down ear­lier this year). More­over, emeals — which

doesn’t in­di­vid­u­ally pack­age por­tioned in­gre­di­ents in kit for­mat, but still es­sen­tially func­tions as a meal-kit ser­vice — has added Wal­mart, Kroger and Ama­zon­fresh to its list of gro­cers will­ing to of­fer click-and-col­lect (and, in Ama­zon­fresh’s case, de­liv­ery, too) shop­ping for its meal-building pro­gram.

Con­sider Care­fully

But with so many meal-kit ser­vices out there to choose from for a part­ner­ship, how should gro­cers know which one to team up with?

“It’s … crit­i­cal for gro­cers to re­al­ize that while they may see sim­i­lar­i­ties in look­ing across mealkit brands, there are crit­i­cal dif­fer­ences that can ma­te­ri­ally al­ter the cus­tomer ex­pe­ri­ence,” says Rich De­nardis, chief rev­enue of­fi­cer of Chicago-based meal-kit ser­vice Home Chef.

When look­ing to part­ner with meal-kit ser­vices, food re­tail­ers should look for these six things:

1) The com­mon, clear goal of a part­ner­ship: Work­ing with a meal-kit ser­vice can’t be a oneway street. For the part­ner­ship to be suc­cess­ful, both par­ties must get some­thing out of it to make every­thing worth­while. These goals will usu­ally re­side in the driv­ing of ei­ther rev­enue or profit, says Mike Mcde­vitt, CEO of Bal­ti­more-based mealkit provider Terra’s Kitchen. Un­der­stand­ing what’s ex­pected of a part­ner­ship — for ex­am­ple, how one de­fines suc­cess — helps en­sure that all par­ties are head­ing in the same di­rec­tion.

Ad­di­tion­ally, “the left hand needs to un­der­stand what the right hand is do­ing, and look for ways to as­sist and learn from that process while al­low­ing each party to fo­cus on, and be ac­count­able for, their core com­pe­tency,” Mcde­vitt notes.

2) Their own fresh pro­gram: Ar­guably, the most im­por­tant qual­ity of a meal kit is its fresh­ness. There­fore, the gro­cer must first be trusted to have a top-notch fresh pro­gram, says Ni­cole Peran­ick, di­rec­tor of global thought lead­er­ship with Stam­ford, Conn.based brand strat­egy and con­sult­ing firm Day­mon.

“The suc­cess of a meal-kit pro­gram is closely linked to the over­all strength and rep­u­ta­tion of fresh foods at the re­tailer,” she stresses. “If I don’t trust the fresh­ness of your meat or pro­duce, I’m go­ing to be very leery of a meal kit.”

3) The ser­vice’s abil­ity to pro­vide choice: Michael Lip­pold, founder and CEO of Freshrealm — a Ven­tura, Calif.-based plat­form that helps gro­cers de­liver fully prepped meals and meal kits on­line or in stores — notes that he has seen how im­por­tant choice is to con­sumers in driv­ing suc­cess and re­ten­tion of meal-kit pro­grams: As peo­ple be­gin to adopt meal kits as a reg­u­lar part of their lives, they want va­ri­ety in the menu to main­tain in­ter­est and avoid prod­uct-se­lec­tion fa­tigue.

“In ad­di­tion, con­sumer tastes vary sea­son by sea­son, re­gion by re­gion, even com­mu­nity by com­mu­nity,” he ob­serves.

Bring spe­cial di­ets and al­ler­gies into the mix, and va­ri­ety is even more ne­c­es­sary. emeals pre­pares recipes with in­gre­di­ents ne­c­es­sary to cre­ate meals that are di­a­betic-friendly, heart-healthy and vege­tar­ian. But when a gro­cer part­ners with a ser­vice that of­fers many choices, it must make sure that the ser­vice has the req­ui­site so­phis­ti­ca­tion in its in­fra­struc­ture and sup­ply chain to be sus­tain­able. Many cur­rent meal-kit com­pa­nies of­fer limited to no choice in their menus, due to this com­plex­ity.

4) The ser­vice’s abil­ity to keep things sim­ple: When a gro­cer looks at a meal-kit ser­vice’s of­fer­ings, in­gre­di­ents shouldn’t be too many; recipes shouldn’t be too vague or com­pli­cated; and the dish that re­sults should re­flect its pic­ture and de­scrip­tion.

Ad­di­tion­ally, if a gro­cer is one that truly seeks to em­power its cus­tomers — even those who aren’t kitchen-savvy — then it needs to make sure that the ser­vice of­fers kits that can be pre­pared by any­one, re­gard­less of skill level. For ex­am­ple, Home Chef’s De­nardis notes that his com­pany en­gi­neers its recipes for easy prepa­ra­tion and ap­peal to cooks of all ca­pa­bil­i­ties.

“As con­ve­nience is crit­i­cal to the meal-kit cus­tomer, a great deal of ef­fort is re­quired to test and hone recipes that are sure to be easy to ex­e­cute,” he says.

5) The ser­vice’s ex­pe­ri­ence with mak­ing re­tail­ready kits: Mak­ing meal kits for brick-and-mor­tar re­tail dif­fers from mak­ing them for a sub­scrip­tion mail-or­der ser­vice, notes Kyle Rans­ford, founder and CEO of El Se­gundo, Calif.-based Chef’d. From tiny things such as cre­at­ing bar­codes and SKUS, to greater things like in­ven­tory man­age­ment, mak­ing meal kits to sell at re­tail can be more dif­fi­cult to plan.

“Most of the peo­ple in the meal-kit space have very limited in­ven­tory man­age­ment, be­cause they bring it in on a Mon­day, they pack­age it up on Wed­nes­day, and they ship it out in that ca­dence,” Rans­ford ex­plains. “They don’t in­ven­tory that stuff. If it’s left over, they send it to the food bank or throw it away.”

They also have to have the abil­ity to con­tin­u­ally look at and man­age the meal-kit cat­e­gory at store level ac­cord­ing to what’s sell­ing well and what isn’t. For in­stance, while a kit with meat­balls might sell well at one store, one with tuna might sell bet­ter at an­other lo­ca­tion.

“Re­tail­ers should be look­ing to con­tin­u­ally change, up­date and re­fresh what is in this cat­e­gory, and they should be think­ing about it [in] a store-level way,” Rans­ford sug­gests. “There­fore, do they have a ful­fill­ment part­ner that can help them there?”

6) Sim­i­lar val­ues and cul­ture: Suc­cess­ful com­pa­nies of­ten have their pil­lars, the prom­ises they make to their cus­tomers that they’ll al­ways ful­fill, Terra’s Kitchen’s Mcde­vitt notes. Each party must un­der­stand and agree with its part­ner’s pil­lars.

“At Terra’s Kitchen, we prom­ise health, con­ve­nience and sus­tain­abil­ity,” he as­serts. “This is what our cus­tomers ex­pect of us, and this is what we would look for in a part­ner to be able to en­hance these val­ues for both brands’ cus­tomer base.”

An­other ex­am­ple is Gel­son’s part­ner­ship with Chef’d. The En­cino, Calif.-based su­per­mar­ket chain, al­ready known for its gourmet, foodie-fo­cused model, chose to work with Chef’d be­cause of the ser­vice’s com­mit­ment to pro­vid­ing gourmet meal kits with recipes de­vel­oped by renowned chefs and or­ga­ni­za­tions.

It’s … crit­i­cal for gro­cers to re­al­ize that while they may see sim­i­lar­i­ties in look­ing across meal-kit brands, there are crit­i­cal dif­fer­ences that can ma­te­ri­ally al­ter the cus­tomer ex­pe­ri­ence.” — Rich De­nardis Home Chef

BET­TER TO­GETHER Pur­ple Car­rot, which makes kits for plant­based meals, and Whole Foods Mar­ket com­ple­mented each other’s bet­ter-for-you im­age by part­ner­ing to sell the kits in Whole Foods stores.

STORE SPECIALTIES So­cal gro­cer Gel­son’s chose to part­ner with Chef’d due to Gel­son’s fo­cus on high-qual­ity gourmet foods, and Chef’d’s part­ner­ship with renowned chefs and or­ga­ni­za­tions to de­velop kits for gourmet meals.

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