Plated should be able to lower costs by participating in Albertson/Safeway's purchasing system. Everything that they pack in a meal kit is also an SKU for a grocery store.
Then, there's lovely marketing synergy. On the one side, people going through the store looking for the stuff they need to cook for dinner, are going to see how "oh, I could have all this packaged up for me and sent to my door and I wouldn't have to futz with this list."
While on the other side, people who are stopping by the store to pick up their Plated box -- which they would be incented to do because the subscription price would be lower for that mode -- will take a few extra seconds to buy a bottle of wine or a dessert to go with it.
But one issue is that the quantity might not be a sellable SKU. Quite often in Blue Apron, I'll get a tiny amount of say, smoked paprika. A grocery store would sell that in a container containing many servings probably costing $5-$10.
Safeway also has their own grocery delivery service, so there's more synergy for you. I do think by far the biggest bonus here is gaining access to Safeway's experience, and supply chain. It's not an easy thing to get right, and definitely easier in most cases to buy that existing expertise/system, or be bought as in this case.
I wonder if more delivery systems might go this way, instead of partying with a bunch of restaurants that mostly can't support them because of their existing terrible margins. In a sense Amazon and Whole Foods are already there now, since Whole Foods has a huge line of prepared foods, pizzas, sandwiches, etc... and they already deliver. If they expanded that a little bit, use their own supply chains and produce, and essentially set up warehouses to prepare various kinds of meals to be rapidly delivered by Amazon. Basically everything they need is already there, it's just putting it together. How often would that kind of option win out over something relatively overpriced, and often potentially less healthy like Caviar, Dining In, or Dashed?
The store will also have data that shows what items are frequently purchased together. With this, they can find out what meals are popular and market those to increase popularity. With additional monitoring, they can probably go so far as to individualize it and optimize for profit.
Of course, there are privacy concerns but I think we've established that people are quite willing to give up their privacy for a perceived benefit.
Pizza delivery chains are largely operated as franchises, from what I remember. Buying Papa John's would get you the existing relationships with franchisees and the right to use the trademark. It wouldn't get you direct access to drivers - their paychecks are paid by entities like Rain City Pizza LLC.
Curious what the value proposition would be. I mean, I can see delivery + pre-existing logistics network. Or selling better kits in stores. Or a segue to delivered groceries.
But it seems kind of antithetical to how grocery stores make money. They're low margin, high volume businesses. And this directly attacks volume.
Buying a grocery delivery startup seems like it would make way more sense as a first step.
>But it seems kind of antithetical to how grocery stores make money.
It is, but they are probably looking at what Amazon has already done to brick and mortar. Then seeing the Whole Foods acquisition. And wondering where that progression ends. So, maybe this isn't the right direction, but staying put is arguably worse.
One of the major national supermarkets here does delivery[1]. There's also a cheaper option where you can pick up but they do the shopping for you, so you can just stop by and get your cart. Both are actually a really nice service and good value for the time you save too, but I'm not sure how popular it actually is.
You do miss out on being able to select your own fruit, meat etc, but they did a good job the couple of times we've tried it. Occasionally something you ordered isn't actually in stock, and you can choose whether you'll let them sub it out or just no include it. The ordering is per-supermarket to minimise that happening - every store has a slightly different online selection to match what they should actually have.
There's no competition here either though. If there are any other grocery delivery options around, I haven't heard of them.
NZ is a bit smaller than Colorado. I'd expect it to be easier to service. It makes me wonder why it hasn't already caught on? I know it's popular/common in some parts of Europe, and that it has been for a while.
I think it's just that everyone is close enough to a supermarket, it's easy enough to just go there on the way back from work, or just pop to the supermarket. It's not worth paying to get someone to do the groceries for you.
I don't think I've ever lived further than a 15 minute walk from a supermarket.
I think that's also true in Europe. I've never lived in the UK, for example, but I've stayed there for six months while working. Food delivery was very common in London.
At the time, there was no web interface and you had to make a phone call. Still, it was pretty common.
Curiously, when I was really young (1960s America), I remember a grocery store that delivered to our house. We even had a diaper delivery/disposal service, but I digress. I'm not sure if it was a local thing, nor am I sure when it stopped. I do know that it existed in two different localities, because we moved a lot. (Military family.) I'm pretty sure it wasn't always just a grocery list, but that they had meals that came with a recipe card and the ingredients. The recipe cards still existed when my mother passed away. I have no idea if they still exist. I suspect not.
So, at one point, it was at least in use and then fell out of fashion. Now, it's coming around again.
Anyhow, thanks for the info. It seems to be gaining in popularity. Maybe there's room for you to get in on the ground floor and make some money.
>But it seems kind of antithetical to how grocery stores make money. They're low margin, high volume businesses. And this directly attacks volume.
Not necessarily. The margin on meal kits are stronger than the ingredients alone (e.g. sliced fruits & veggies). In relation to the volume, meal kit buyers still need to eat. The hungry buyer must cook at home (w/ groceries), go to a restaurant, or buy a second meal kit. To me, this sounds like an attack on the fast food / restaurant industry. Grocery stores can market these meal kits as more affordable, healthier, and 'hip'.
>Grocery stores can market these meal kits as more affordable, healthier, and 'hip'.
I did a meal kit service for a little while, and my biggest complaint was that it was not any cheaper than if I were to go out to eat, but I still had to cook the meal and clean up afterwards. If there were a cost savings versus going to eat at a restaurant, I would have kept the subscription.
I had the same experience with Blue Apron, but I also live in Manhattan, where it's about 20-30% cheaper for a single person to get takeout/delivery than it is to buy groceries and cook - and that's before accounting for the cost of time.
Comparing the prices in the suburbs, though, that's not the case. And as soon as you add a second person (or more) to the mix, of course, it becomes cheaper to cook.
I live in New York (four years in Manhattan and a couple more in Brooklyn).
I think "incredibly easy" is a gross exaggeration. I supposed you might be talking about the street carts, but street meat is questionably healthy / "good". The deeper you get into parts of Queens it's certainly possible, but I think the previous poster had in mind some sort of sit down establishment rather than street food.
I live midtown, and yes, it is incredibly easy to find prepared food for dinner that is cheaper than what these meal kit services charge, or even cheaper than the equivalent in groceries. I'm not talking about street carts either.
> If heat lamp slop is your thing, by all means. Not sure it's that comparable, though.
Not sure where you get the idea that that's what I'm eating.
High-quality prepared food is pretty cheap in Manhattan, compared to the price of groceries and compared to the price in other places in the US. When you think about the underlying economics of it and the region, it's not surprising.
People are willing to pay a premium for convenience.
Not having to travel to the grocery store, not having to wait in line, not getting mad at the person who cannot bag your groceries, and not having to buy excess amounts of ingredients, nor measuring them, I consider valuable.
Also, Plated offers meals w/ ingredients that would take me a full day of travel to source.
If somebody is already willing to travel to the store, why would grocery delivery increase their existing customer spend?
The question is whether a grocery store doing meal prep can extract more profit than they already get on selling food. And I'm not convinced people are willing to pay enough to make that worth the meal prep companies' time.
Furthermore, we already have folks who are experts at that: we call them restaurants.
So I see meal prep from grocery stores (so losing the "secret organic small farm ingredients" sauce a lot of them bandy about) as being targeted at: (1) people who want a price point lower than restaurants, (2) are willing to pay more than grocery stores, (3) derive enough benefit from "cooking light" that they prefer meal kits over restaurants.
... That doesn't seem like a huge demographic. Which makes me think most of the meal companies are Uber-like unsustainable VC-propped up businesses, except without end-to-end automation on the horizon to save them.
With grocery delivery, the key would be regularizing logistics for some portion of their stock a la Amazon subscribe and save (and thereby optimizing inventory and saving on waste).
Well, the take away salads and wraps and other to-go options have become very popular within supermarkets (and have eaten into sales at fast casual type restaurants).
Maybe a high percentage of young people go into a supermarket and are overwhelmed. Supermarkets need employees to tell people what can be done with the food they find on the shelves to remain relevant and buying a pre-packaged fresh mailed to you food company is trying to fix a symptom of that actual problem.
Regardless of feeling overwhelmed, the convenience of picking up one meal kit box vs knowing what ingredients to get, finding them, getting the right amount (often the minimum is far too much for the meal), etc. is huge.
AFAIK a lot of the margins for online meal kit companies is the shipping+packaging cost. Grocery stores don't have to pay for shipping to the customer and can keep the boxes refrigerated which would make the packaging much smaller and cheaper.
Yeah so I'm working on a pickup meal kit company and that's true. Over half the cost of a meal kit is tied up in last mile logistics. I have yet to see a company not offer door to door delivery, but in my mind that's only 1 piece of the value prop. You can reach the middle market more effectively, while offering more options and customization, by simply having the customer pick it up at a much lower price point.
I've used a meal kit once or twice. I cook multiple meals for myself a day. But even for me, a person not in a meal kit business' target demographic, I can appreciate the value of not having to spend 10 minutes looking for the butter that was moved to some other location by the elves that run the Supermarkets.
In Sweden all the major supermarket chains already have their own meal kit services. They didn't have to buy anyone up they just started them in-house. I wonder what keeps US chains from innovating themselves?
US grocery chains have no institutional expertise in building new offerings or generating demand for those offerings because the manufacturers do it for them. Manufacturers advertise the crap out of their products and rent shelf space from the grocery store to put them in front of consumers. Except for a few exceptions like Whole Foods, Wegmans, Market Basket, etc., grocery stores are pure logistics operations with no marketing capabilities.
Can you elaborate on 'with no marketing capabilities' for me?
My company started out modeling vehicular traffic and expanded into modeling pedestrian traffic. Large grocery store chains do a lot of research and marketing. The store layout is heavily modeled and optimized for marketing purposes.
It was so heavily researched that we had a mock-up store for a lab and would research the way people would navigate and where they would spend their time. These days, they are probably doing real-time monitoring by cameras and tracking your mobile device as you traverse the floor. In my day, we simply would monitor video feeds and take notes of the behavior, often from recordings of real stores and real customers.
I may not be understanding your use of the term marketing, however. From store brands to reputation management to ads and a Sunday flyer, it seems like marketing to me? It may well be that I'm misinterpreting something.
I think the disconnect to be bridged here is the quality expectations between a meal kit ingredients, and just picking up ingredients at the supermarket yourself. I don't think the kits coming out of just reassembling the existing inventory a many supermarkets would quite be as attractive unless some additional logistics are added to make higher quality ingredients available.
I've only used BlueApron and HelloFresh but the quality of the ingredients has been comparable to stuff picked up at Safeway.
The real value for me besides time saved (and the insane coupons/free meals) is using ingredients that I wouldn't have otherwise picked up. I'll just grab button mushrooms most of the time but getting some different variety is nice.
I also usually grab the store brand meat because its cheaper. It's not like the grass fed organic whatever isn't there, I just usually won't pick it up.
I’ve been subscribing to Blue Apron for about six weeks. Really enjoy it. It’s cut down on our food waste, healthier portioning (I love about 9 pounds) and I’m getting more diversity in my diet. Pre-planning your meals and grocery shopping takes a lot of time and mental work. This kind of cook-by-numbers approach takes away a lot of mental resistance that has you eating out more often. Plus, I’m learning a lot.
Grocery stores already have workers inside that prep food to make them ready-to-eat or easier-to-cook -- pre-chopped vegetables and fruits in plastic trays; soups and rotisserie chickens; cakes in the bakery section.
I think the real question is whether there is enough volume at a given grocery store on meal kits that they can afford to hire a person who just spends their day assembling and stocking meal kits by the deli section, or if this load will get shifted to existing employees.
maybe just me, I don't see meal kits going away but I think they are niche and temporary subscriptions at best. people are paying for convenience. an obligation to making a big dinner is not convenient
if they were much cheaper, and give you more choice on what says its active, and faster activation turnaround (maybe at 3pm I decide if I want the dinner kit for tonight) then it might make more sense.
I do not buy the "young people don't know how to shop and need us" argument. sounds like a forced effort to get the word millennial in your message
>an obligation to making a big dinner is not convenient
As someone who likes to cook (and has test-driven 3 or 4 of these services), I don't see them as that at all. Blue Apron, et al are paint-by-number compared to actually cooking from a normal recipe where you have to measure and prep. I liked having them as an option, but they didn't scratch my "cooking" itch at all. They were more like a convenient way to put a decent, healthier dinner on the table in almost the same time you could do Hamburger Helper or some frozen bag meal.
I'm open to trying new things, and regularly do when I'm traveling, but at the end of the day I'm a midwestern, meat and potatoes type of person.
I've yet to see one of these services that would work for me without feeling like I'm wasting my money more often than not.
I'd LOVE to have a paint-by-number, better than hamburger helper, set of options I can pick up from the grocery store on the way home. Give me a rotating choice of two or three meal kits as a regularly stocked, non-subscription item, and I'd be thrilled. I'm sure there would be some I'd really enjoy, some I'd like to try, and others I'd avoid.
I think you are the niche. my friends cancelled blue apron because the recipes were too complex, took too much time, and had too much to clean. they would rather spend the same amount of money on delivered food ready to eat and throw away the containers
Then, there's lovely marketing synergy. On the one side, people going through the store looking for the stuff they need to cook for dinner, are going to see how "oh, I could have all this packaged up for me and sent to my door and I wouldn't have to futz with this list."
While on the other side, people who are stopping by the store to pick up their Plated box -- which they would be incented to do because the subscription price would be lower for that mode -- will take a few extra seconds to buy a bottle of wine or a dessert to go with it.