When meal kit companies first started springing up – and attracting sizable amounts of investment capital - Hilton Davis told FoodNavigator-USA, he was “amazed, because I just don’t see the convenience, you’re spending all that money for something where someone has just picked up some produce, picked up some meat and then put it in a box with a recipe card.”
If grocery stores got their act together and collated the same meal components at a more affordable price, they could ultimately capture a big share of this market, given that people buying meal kits still visit grocery stores (they don’t cook with meal kits 24-7), argued Davis.
“I’m amazed at the amount of money that’s been invested in these companies, to be honest."
However, many players in pre-prepared meal delivery (as opposed to kits) have also failed or shuttered, he said, citing Freshology, The Fresh Diet, Spoon Rocket, and Dinner Lab.
"There are some really smart people setting up these companies, but they often have a tech background, not a food background, which is in part why some of them have run into problems. This is also a very capital intensive business.
“When I started in this [meal delivery] business, I had already been working in the food industry for 15 years, and had been doing wholesale distribution - we’d just done a meal program with Safeway – so I knew what I was getting into.”
The average customer spends $125 a week
At Diet to Go, which generated revenues of $15m last year (up c.10% year on year) and has no outside investors, customers receive pre-prepared meals that require no preparation, and have the flexibility to dial their commitment up and down on a weekly basis, he said.
Unlike some weight management oriented meal delivery services, Diet to Go has always been focused on fresh healthy food, he said. “We do compete with NutriSystem to some degree but they rely far more on packaged bars and shakes, so it’s a very different service.”
Some of our customers have been with us on and off for two decades
Despite the name (which was coined a while back), Diet to Go is not exclusively catering to ‘dieters’ (many brands in this space now talk about weight management and healthy eating, rather than 'dieting') but is really about “healthy eating made easy,” said Davis, who said the average customer spends around $125/week [the equivalent of lunch, dinner and sides, five days a week].
“Some of our customers have been with us on and off for two decades, because we provide so much flexibility that we can fit into their lifestyles. If you’re away for a long weekend, on vacation or just taking a break we can work around your schedule, so people stay with us.
“So some people that want to lose weight might want three meals a day, seven days a week, until they reach their goal, whereas many of our customers are just busy people that want five dinners a week but get lunch at work, or diabetics trying to get more control over their diet or manage their weight.
"We launched our diabetic meal plan in early 2016 and it already accounts for a significant percentage of our sales because so many people are diabetic in this country.”
Calorie-controlled, nutritionally balanced and heart-healthy
While some of the new entrants to the meal kit and delivery space have homed in on specific niches such as Paleo or gluten-free, Diet to Go has adopted a less “faddish” approach, he said.
“We have meal plans for vegetarians, and people on a carb-restricted diet as well as the diabetes plan, but our most popular plan is called balance, which is calorie-controlled, nutritionally balanced and heart-healthy.”
Most customers are single or in couples, although a significant minority are in families but following a Diet to Go regime because they are determined to lose weight.
As for gender, the ratio is skewed 70:30 in favor of women, with a core age range of around 35-60 years, he said.
Customer acquisition and retention
So what’s kept Diet to Go in business for 26 years, during which time Davis has seen many rivals come and go?
“This business is all about customer acquisition and retention,” said Davis, who fulfills orders from USDA-approved kitchens in Los Angeles and Virginia, using delivery trucks covering most of the east coast and all of California and ground shipping for customers in the rest of the country (customers can also pick up their meals in certain locations).
“If those two metrics are in line you’re fine, and it they’re not you’re in trouble.”
On the customer acquisition front, around a quarter of new users claim to have heard about the service via referral (ie. word of mouth), he said, which today can be face to face but in many cases via social media, which as a result is where most of the company’s marketing budget now goes, he said.
“In the early years, we used to use TV, radio, print, but now it’s almost exclusively online.”
As for customer retention, the flexibility of the service is key, along with regular, but constructive contact with customers via weekly emails, facebook or via the platform directly, he said. “When you build a community people become your advocates, so if someone complains or says something negative on social media you’ll see eight people defend you, which is amazing.
“It’s the customer experience that makes or breaks you, so you have to keep working at it, you have to get the price right and you have to have something that fits with people’s lifestyles.”