'This isn’t a novelty, it’s serving a fundamental need.'

Meal kits are becoming part of modern lifestyles, says Sun Basket CEO as organic meal kit co raises $15m

By Elaine Watson contact

- Last updated on GMT

Adam Zbar: 'This isn’t a novelty, it’s serving a fundamental need...'
Adam Zbar: 'This isn’t a novelty, it’s serving a fundamental need...'

Related tags: Sun basket, Organic food

Meal kits – which enable consumers to cook restaurant-quality meals at home without having to do any of the legwork – could easily be a $60bn dollar market as consumers build them into their weekly routines, predicts the CEO of San Francisco based Sun Basket, who has just raised $15m in a Series B funding round.

Founded in 2014 and launched in 2015 by Adam Zbar and Chef Justine Kelly, Sun Basket​ has gone from 10 employees to 400 in a year, and now serves consumers in 34 states from two distribution centers. The $15 cash injection – which comes on top of $13m it has already raised – will help fund a third distribution center that will give it access to 98% of the population.

Sun Basket – which is carving out a niche in the market with its organic positioning – has also transitioned all of its packaging to recyclable or compostable materials, CEO Adam Zbar told FoodNavigator-USA.

The size of the meal kit delivery prize

While there are always winners and losers in every market, Sun Basket has been told by investors that it has industry-leading customer retention rates, a critical metric given the nature of the business model, claimed Zbar.

“We talked to a lot of investors during the latest funding round and we were told we had the best retention and the best engagement of any of the players in this space.

“I think what also sets us apart is quality and freshness. We are offering consumers a more efficient way of getting organic food from farm to table because we’re not going via retailers' we’re talking about getting food in some cases from farm to table in three to four days instead of two to three weeks.”

Meal kits aren’t a novelty, they are serving a fundamental need

As for the sustainability of the business model, people always ask whether the meal kit trend is a fad, he said, but meal kits are just designed to make life easier for people that enjoy cooking, but don’t always have the time and energy to find new recipes and shop for all the ingredients, which is arguably a pretty ‘mainstream’ proposition, he said.

“What we’re seeing is that meal kits are fitting into people’s lifestyles. This isn’t a novelty, it’s serving a fundamental need, and once you’ve started using them, it’s hard to go back.

“We’ve had people that have stayed with us from the outset, so we’ve got over a year of data, and as long as you keep refreshing the offer and keeping things flexible so people can substitute dishes or skip a week here and there, they are happy. We just have to keep offering more choice and more add ons to stay relevant and valuable, just like restaurants and grocery retailers do.

“Look at the restaurant space – it’s a $600bn market. If meal kits can capture just 10% of this, that’s a $60bn opportunity. It’s huge. We’re on track to grow revenues by 10 time this year while maintaining strong margins.”

Sun basket landscape

FINANCING​: Sun Basket has raised $28m to date. The latest financing round ($15m) is led by Accolade Partners, a leading venture capital and growth equity investment management firm, but also includes investment from new top-tier investors, Founders Circle and Shea Ventures. Existing investors, including Paul Allen's Vulcan Capital, PivotNorth Capital, Relevance Capital, Filter14, Baseline Ventures and other high profile investors, also joined the round.

As part of the Series B round, Silicon Valley veteran Drew Hamer has also joined the company as CFO. 

sunbasket-packaging
sunbasket-packaging

ZERO WASTE​: As part of its mission to generate zero waste, Sun Basket now uses recyclable insulation liners from PET fiber, and fully compostable ice packs (from cotton and water rather than petroleum-based ingredients), ingredient bags and clear containers.

While users have always had the option of returning their packaging, 90% of users were not doing so, prompting a rethink, said head of user experience Tyler MacNiven. "With our new solution, which makes it easy for users to recycle and compost at home, we solved this problem without compromising the freshness of our food."

The economics of meal delivery kits

While $11.49 a meal might sound a little steep for something you’ve still got to cook for yourself, there is zero waste as everything is pre-portioned, while you are also paying for someone else to do the planning and the shopping for you, said Zbar.

Blue Apron

According to NPD Group, around 3% of US adults have tried a meal kit service in the past 12 months, with the top reasons being saving time, variety, freshness and the experience. They also reported high levels of satisfaction.

While ultra-efficient shoppers could buy the ingredients from the store and use the leftovers for other meals during the week, meanwhile, most of us are not this organized/efficient, and end up wasting a lot of fresh food when we purchase ingredients for a particular recipe/meal, he said.

“We had a team go to the grocery store to buy the ingredients to make one of our organic meals for two, which we’re charging 22.98 for ($11.49x2) and it cost them $39 just to buy the ingredients using conventional products. If you are an expert shopper, you can use the leftovers, but unless you’re making the same thing all week, you’ll probably end up throwing food away.”

Sun Basket box

HOW SUN BASKET​ WORKS​: You choose your meals from the website (the recipes are developed by Chef Justine Kelly, former head chef of the James Beard Award-winning The Slanted Door restaurant) and Sun Basket does the rest: collating and delivering the ingredients for three organic meals-for-two to your door once a week, so all you have to do is cook (that’s $11.49/meal/person or $68.94/week).  There are vegetarian, gluten-free and paleo options and users can skip weeks as desired.

Who uses Sun Basket?

As for the customer base, as an organic meal provider, Sun Basket appeals to more affluent shoppers than some of its rivals, but it’s not a service that just appeals to affluent urbanites, he said, noting that a high percentage of users are suburban, with the heaviest users females in the 35-44 age bracket.

“We’re targeting busy couples, empty nesters, newly married couples, and recently divorced males, but we’re also developing a family plan next year to broaden our customer base.”

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1 comment

DON'T EAT CARDBOARD!!!

Posted by Phillip Glanville,

sorry mate, but I don't eat cardboard!!
your intro video would have been 100% better, if it had of shown what the meals are like.
so, sorry, I don't eat cardboard, even if it is recycled!!

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