Tag Archives: Millennials

Meal Kits-Sellers Having Trouble Retaining Customers

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Meal Kits, where all of a meal’s ingredients are prepacked along with preparation instructions, a topic we first talked about here, got some recent attention from Fast Company (paywall), which reported on a new study from research firm 1010data, which “analyzed consumer-spending data that represents millions of consumers, revealing a significant retention problem for the major meal-kit delivery services – which ship recipes with pre-portioned ingredients to customers on a weekly basis. After the second week, only about 50% of customers stick with Blue Apron, 1010data found. Six months into their subscriptions, only about 10% remain. The firm found a similar pattern for HelloFresh and Plated.”
All the meal kit companies say that the study data is inaccurate and does not reflect their experience.
Fast Company writes that “if a large number of people drop their subscriptions, it is a problem for meal-kit companies because they often spend a lot of money to encourage customers to sign up. Blue Apron, for instance, offers a $30 discount to first-time customers, the equivalent of about three meals. HelloFresh offers a $15 discount to new customers. Plated offers two free meals with the first order. If customers don’t stick with their subscriptions for long, these companies don’t recoup that marketing spend.”
However, the story says, “Despite the retention problem, 1010data found that the meal-kit industry has grown over 500% since 2014. A food-consulting firm estimated that category will account for $3 billion to $5 billion of the online food shopping business in 10 years.”

Growth is almost assured for this market segment, if for no other reason than the Millennial coterie is continuing to advance into independent-living adulthood (except for those who continue, for assorted reasons, to live with their parents), and the next generational group, dubbed Generation Z, is following closely on their heels.

And these are age groups comprising many (many!) who are used to having things done for them, and/or having life simplified for them via ‘apps’ and variations on that theme. And meal kits definitely are a variation on that theme.

Ah, but, as Shakespeare put it, “here’s the rub”: Meal kits actually require users to do something – to actually prepare the meal themselves, albeit from pre-portioned packets of product.

I can hear them from here: “Boo, who wants to actually cook?”

Some who’ll say that no doubt also are disappointed when, upon visiting a zoo, it becomes apparent that one not only sees the animals but also smells them!

Time (and sales figures) will tell how the ‘who wants to actually cook’ crowd’s attitude will impact the future of meal kits.

I’m reminded of the country song where a man is lamenting how, in his divorce, “she got the gold mine, I got the shaft,” and says to himself “why didn’t I just learn how to cook!”

 

 

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Coming Election Cited For Slower Fast Food Sales

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A growing number of restaurant chain executives says consumer uncertainty about the upcoming election is negatively impacting sales in their stores. Some  chains, according to a recent article in Nation’s Restaurant News, have seen sharp sales drops in recent months.

Among the latest executives to blame the election was Greg Creed, Yum! Brands Inc. CEO. Yum owns and operates KFC, Taco Bell, and Pizza Hut stores across the U.S. and, to a lesser degree, abroad.

“It goes without saying that people are trying to decide who to choose and what the impact will be on the economy, and I think people are maybe just hunkering down a little bit,” he said during the company’s third-quarter earnings call last Thursday.

Earlier this summer, The Wendy’s Co. CEO Todd Penegor also cited the uncertainty. “When a consumer is a little uncertain around their future and really trying to figure out what this election cycle really means to them, they’re not as apt to spend as freely as they might have even just a couple of quarters ago,” he said.

In August, Popeyes Louisiana Kitchen Inc. CFO William Matt struck a similar chord. “What we also see is that there is a little more uncertainty with the consumer,” he said. “We’re not too sure what’s causing that, but our speculation would be, we think there is a rather unusual election going on and we think that unusual election is causing some uncertainty.”

Well, we (at FoodTradeTrends.com) know something else that is pulling fast-feeders sales down: The growing shifts, among consumers, for healthier fare, for organic foods, and for more nutritious foods.

We’ve reported on this before – particularly on how Millennials are opting for healthier foods and for eating at home as many as six, seven nights per week – and we will be reporting on it more in coming weeks.

We’ll also be watching restaurant sales, to see if they do go up after the election – regardless of who wins!