COVID-19: Mealkit brands see sharp increase in demand, although longer-term impact harder to predict
While several meal kit brands have recently pivoted from an online subscription-based home delivery model to focus efforts on retail meal kits, COVID-19 has prompted a sudden interest in home deliveries, with Blue Apron CEO Linda Findley Kozlowski telling FoodNavigator-USA via email that the company had experienced “a sharp increase in consumer demand” for its services over the past week.
“We believe we are positioned to support home cooks across the country during this time and we are doing everything we can to serve our customers. We believe home cooking is important now more than ever," added Kozlowski, who told investors last month (amid plummeting sales) that Blue Apron could not execute a turnaround strategy without raising more capital.
“We are increasing our capacity for future orders and expect to fulfill this increased demand by the next available weekly cycle, starting on 3/30. As a result, we have had to make changes to recipes and box orders for a small portion of volume next week. We are grateful for our customers’ patience during this unusual time.”
Blue Apron experiencing ‘a sharp increase in consumer demand’
She added: “We are hiring for temporary and permanent positions in our Linden, NJ and Richmond, CA fulfillment centers and hope to create employment opportunities for individuals who may have been displaced by the restaurant or foodservice industry.
“We are carefully monitoring our supply chain and are in contact with our ingredient suppliers. We are not aware of any significant disruption to our supply chain to date as a result of coronavirus.”
As for food safety concerns, she said: “As a food facility regulated by the FDA, we have a comprehensive food safety program in place including Good Manufacturing Practices (GMPs) at every step of our operation.
“In addition to adhering to FDA’s Food Safety Modernization Act, we have also achieved third party certification to the Safe Quality Food (SQF) Food Safety Code two years in a row, widely considered one of the most rigorous and comprehensive food safety standards in the world.”
Sun Basket: ‘We have seen a dramatic increase in demand’
Sun Basket, a San Francisco-based online subscription-based meal kit service, has also seen a significant rise in demand as consumers hunker down, said Vanessa Meyers, SVP of growth.
“As restrictions are tightening in certain areas and more people are choosing to remain indoors, we’ve seen a dramatic increase in demand.
“We are fortunate to be able to help those who are homebound and don’t want to compromise on healthy food and restaurant-quality meals. Beyond our weekly meal plans and recipes, customers can order oven-ready meals (in select markets), breakfast items, snacks, proteins and pasta – all are great solutions for customers looking to stock-up their fridges and pantries with nutritious food.
“We are not experiencing any delays at this time, related to inventory or delivery. If this changes, we will of course modify and evolve however needed."
On safety, she said: “We’re closely following best practices set in place by the CDC, WHO, FDA and local authorities. We also continue to follow our existing strict standard operating procedures, in addition to increasing sanitation frequency in our office and distribution centers.
“In addition, all Sun Basket deliveries continue to be non-contact, and are placed on doorsteps when they’re dropped-off by our carrier partners.”
HelloFresh: 'We have prepared for a variety of scenarios'
A HelloFresh spokesperson told us that the firm had seen an uptick in demand, adding: "We have prepared for a variety of scenarios, some of which include planning for fluctuations in demand.
"The health and well-being of our customers and employees is our highest priority. All HelloFresh facilities have the highest level of food safety certification and we follow a rigorous process to maintain the safety and quality of our meal kits. We have implemented additional safety measures such as more frequent handwashing and sanitation of our facilities along with limited access to our production site."
Will the recent surge in demand be sustained?
Whether the current surge of demand for meal kit services will be sustained is hard to predict. While it’s likely that consumers will be hunkering down at home for some time, driving a sustained increase in at-home consumption, meal kits are not cheap, and the market has not proved as large as some commentators originally predicted.
At Home Chef, a meal kit brand acquired by Kroger in spring 2018, chief revenue officer Rich DeNardis said he had seen a "material increase in the number of orders this week vs last week" with the team "working around the clock" to increase production, although the just-in-time nature of the business (which deals with fresh foods) meant it wasn't possible to simply build inventory to tackle rising demand.
As for how the meal kit industry will fare longer term, it's so new that "it hasn't lived through a downturn before," he said, noting that while some existing customers may drop off as budgets become constrained, new consumers could enter the market if restaurants are off limited for any length of time.
But he acknowleged, at times like this, "All bets are off."
