Meal kit model meets retail reality

As meal kit operators have increasingly turned to retail distribution, such partnerships have appeared to be a potential path to success for the troubled meal kit segment.

The captive base of frequent shoppers that supermarkets attract addresses one of the biggest challenges subscription-based meal kit companies have encountered — attracting and retaining customers.

But transferring the online meal kit operating model to the brick-and-mortar merchandising format requires a different approach to the meal kit business, from sourcing to ingredient preparation to marketing, said Sean Butler, managing director at supply chain consultancy LIDD.

Butler had been with Purple Carrot when that meal kit company partnered with Whole Foods to begin offering in-store meal kits in 2016.

“The process of creating, say, 10 retail SKUs at high volumes week after week is very different than the process of creating six different direct-to-consumer recipes, and changing those over on a weekly basis,” said Butler.

As a result, meal kit companies have reduced the variety they offer at retail, and for the most part have reduced the frequency of new menu introductions.

In addition, meal kit operators also need to to adjust to creating meal kits that have some degree of shelf life, said Butler.

“When you're selling in-store, shelf life becomes a major consideration, whereas when you're producing on demand for an e-commerce audience, it's not a consideration at all,” he said.

One of the meal kit companies seeking to address the shelf-life issue is True Food Innovations (TFI), the Newport Beach, Calif.-based company that acquired the assets of meal kit provider Chef’d in 2018. Chef’d previously had rolled out meal kits to Tops Markets and other retailers before it went out of business last year and was subsequently acquired by TFI.

The company said it is using high-pressure processing (HPP) technology — a cold-pasteurization technique that extends the shelf life of fresh products — to create meal kits that can remain on the shelf for 55 days. The kits feature “restaurant-inspired recipes with no artificial flavors, preservatives, colors, or additives,” TFI said in a statement.

TFI has begun supplying the extended-shelf-life kits to a handful of retailers, including Los Angeles-based Gelson’s Markets. The meal-kit supplier recently said in a statement that it was rolling out the meal kits under the True Chef and Chef'd brands to all 27 Gelson’s locations, and that it expects to begin supplying retail locations “nationwide” in 2019.

“Our strategy is to provide retailers with a multi-brand offering with the ability to provide meal kit options based on price, demographics and geography,” said Robert Jones, president of True Food Innovations. “Gelson’s agreed with us and has built a destination with both the True Chef and Chef’d brands for its consumers.”

Merchandising for retail

Merchandising meal kits at retail also poses unique challenges, according to operators. At Plated, the meal kit company acquired by Albertsons in 2017, the company switched to transparent containers for its in-store merchandising, for example.

“The packaging for the in-store product is designed specifically for the retail shopper, with clear containers so customers can see the ingredients inside,” said Pat Brown, head of Plated and global VP, strategic business initiatives at Boise, Idaho-based Albertsons. “We still wanted that ‘what's in the box?’ curiosity with our in-store kits, but we knew that in a retail store, customers would need to see both the ingredients and the completed vision of the cooked meal, so to speak.”

Plated is currently offering six recipe choices that change seasonally. The recipes were adapted for retail based on some of Plated’s customer favorites, and cover a range of dishes, including chicken, beef and vegetarian options, said Brown.

He said Albertsons is currently looking at opportunities for expanding the Plated line of meal kit solutions to other dayparts, and both in-store and online.

“How can we leverage meal kits plus a retail store … to offer customers solutions they're looking for?” said Brown. “Plated provides a great cooking experience that's mainly a dinner solution, and we think there are opportunities to expand that vision.”

While traditional-style meal kits “will always be part of our core,” he said, other offerings, such as snacks and lunches, and add-ons such as wine pairings “all become possible when you consider Plated plus a retail store.”

Kroger expands Home Chef

Home Chef, the meal kit company acquired last year by Kroger Co., Cincinnati, recently said it was expanding the line’s in-store availability to more than 700 Kroger-owned locations and has begun offering customizable meals online for the first time.

Brian Irwin, VP of retail at Home Chef, said the company otherwise maintains “consistent but not identical” menus for the meal kits in each of the two channels.

Home Chef has seen meal kit sales continue to grow since the Kroger acquisition, he said.

“We are seeing growth on the e-commerce side of our business and we are very encouraged by the early enthusiasm that customers have about our meal kits in stores,” Irwin said.

Home Chef has been partnering “very closely” with Kroger’s marketing team to promote the meal kit brand, he said.

“We’re looking forward to continuing to grow our brand within the Kroger store environment and reach our customers through a variety of different platforms,” said Irwin.

He also said Home Chef is the only brand offering a weekly rotation of menus in stores.

According to LIDD’s Butler, the frequent rotation of menu items available in-store could provide a “considerable competitive advantage” for retailers that can master the logistics of doing so.