Meal-kit Companies Thrive During the Coronavirus

Kris Estrella  | 

As many consumers forgo long lines or crowded grocery stores during the COVID-19 pandemic, meal-kit companies are enjoying a surge in demand. Until recently, such services were most popular among burgeoning home cooks looking to improve their skills or working families and busy millennials drawn by the convenience of having easy-to-follow recipes and pre-chopped ingredients delivered to their doors. At times, especially as the meal-kit space became more crowded, some struggled to retain customers—but those woes are now a worry of the past. Nearly 100 million Americans reported wanting to try meal-kit services in 2019 and numbers are only increasing during this stay-at-home time, especially among three of the most popular services.

HelloFresh
Founded in Berlin in 2011, HelloFresh now makes over half of its sales in the United States while remaining active in 12 global markets. It’s long been popular with customers for its generous portion sizes plus helpfully tagged recipes denoting specific food allergens. Recently, however, the company reported record-high shares following an uptick in demand due to the coronavirus outbreak. Stocks soared by 70 percent this year, rising from $20 on March 16 to $30 by March 25, according to Google Finance. At the end of March, HelloFresh reported expected first-quarter sales between roughly $750 million and $770 million, up from $456 million in 2019. To allay potential customer concerns, the company recently introduced additional safety measures in facilities where food delivery boxes are prepared. These include extensive handwashing and rigorous cleaning, plus contactless delivery in all markets. Consumers are responding, drawn to the speed and ease with which HelloFresh can put food on tables during this trying time.

Blue Apron
Blue Apron launched in 2012, worth close to $2 billion. Its market value dropped after going public five years later, but stocks skyrocketed from $2 in February to almost $30 in late March as restaurants shuttered and millions took to sheltering and eating at home. On March 18, the day stock markets plummeted to record lows, Blue Apron shares were up by 140 percent. New customers have joined in recent weeks, with the company reporting increased web traffic plus spikes in app downloads. In fact, the added engagement posed an unexpected challenge. “Within the span of 48 hours, we saw an increase in orders that surpassed the staff we had in place to fulfill this higher-than-expected demand,” said CEO Linda Findley Kozlowski. In response, Blue Apron pledged to hire new workers at fulfillment centers in New Jersey and California and increase capacity by the end of March to meet all orders. The company is further taking advantage of avid consumer interest by interacting creatively on social media through instructional cooking videos on using pantry staples, a crash course on throwing a virtual kids’ pizza party and digital wine tastings. Because meal-kit companies like Blue Apron pride themselves on responsibly sourcing ingredients from 100-plus family-run farms, fisheries and ranches then assembling delivery boxes in their own kitchens, they’re able to prevent some of the panic-buying that emptied grocery store shelves and disrupted supply distribution during the early coronavirus days.

Splendid Spoon
Splendid Spoon is plant-based, which may be among the factors contributing to its recent demand. Launched over seven years ago by CEO Nicole Centeno, the variety of ready-to-eat smoothies, soups and grain bowls are attracting new customers among those looking to stay healthy while quarantined indoors. To accommodate customer calls for action, Splendid Spoon recently created bulk-order boxes that allow for larger purchases to be placed at any given time. Interactions on social platforms is likewise leveraging the company’s power to reach numerous viewers who are hungry for engagement and information. A recent Instagram “wellness week” featured experts chatting about issues like gut health and probiotics, plus yoga instructors leading a class. Such efforts seem to be paying off: the company saw roughly 20 to 25 percent growth from mid-March to mid-April. And as speculation grows about possible meat shortages in the U.S., interest in vegetarian meals may fuel additional growth. Splendid Spoon is giving back by pledging to supply 4,200 smoothies and 720 wellness shots to New York City hospital and frontline workers through mid-May.

Americans could emerge from the COVID crisis with permanently altered methods of purchasing food, as online ordering continues to win favor over in-person shopping. Given the $1.2 trillion grocery market, any slice of that pie could be significant to these types of businesses.

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