Foodservice vs Meal Kits

Maintaining a Competitive Edge: Foodservice vs Grocery Meal Kits

 

With an estimated $1.5 billion in annual sales, the meal kit industry is a food revolution that’s creating new competition for foodservice operators.

Meal kits contain raw, pre-portioned ingredients and instructions that consumers follow to prep and cook a complete meal. Meal kits should not be confused with heat-and-serve meals from grocery stores that are sold by serving or weight. However, grocery retailers have also adopted the kit concept, offering kits comprised of pre-portioned ingredients and instructions on the shelves of their stores. Albertsons, the second-largest grocery chain in the country, was the first supermarket to purchase meal kit startup Plated in 2017 for an estimated $200 million, representing retail’s growing aspiration to get their foot in the meal kit industry and creating drive for foodservice to consider their next step with this increasing demand.

A leading element that draws customers to grocery meal kits is the need to save time. With the range of meal selections and pre-portioned ingredients, meal kits eliminate several aspects that expend customers’ time including meal planning and prepping. Restaurants can compete with these services by improving upon and enhancing their takeout selections, offering a wider variety of custom to-go meals that still save their customers time.

 

SERVING YOUR RESTAURANT EXPERIENCE

The restaurant business is about the experience, a feature that meal kit services and supermarkets can’t replicate. Danny Meyer, restaurateur and Chief Executive of Union Square Hospitality, stated that when it comes to supermarket competitors and meal kit companies, “Restaurants must compete for people’s time.” Meyer also claimed that “Dining out is something that has always worked for people for three major reasons: they don’t feel like cooking or doing the dishes, and they want to have a social environment that transports them to a place other than their home.” By serving top-quality offerings  along with superior hospitality and customer experiences, restaurants can capture what the new competition can’t and keep customers returning for more.

CAPITALIZE ON MEAL KIT DISADVANTAGES

One drawback to the grocery-style meal kit is the lack of customization. Sixty-two percent of consumers believe grocery stores don’t offer customizable options, creating an excellent opportunity for restaurants to capitalize on the build-your-own concept when it comes to takeout. Differentiate your operation from this competition by providing ready-to-assemble, customizable, restaurant-quality meals that represent your brand and communicate the same quality dining experience customers would have in your restaurant.

Affordability is another big drawback to meal kits. Morning Consult, a market and research company, found that 49 percent of those previously subscribed to a meal kit canceled their subscriptions because they found the kits too expensive. And while it may seem like kits translate to quickly cooked meals, some can take an hour or more to prepare depending on the company, minimizing the benefit of efficient cooking and making fast restaurant takeout an attractive option.

The NPD Group found that consumers eat more dinners at home, but supplement home cooking with restaurant purchases. In 2017, 18 percent of in-home meals included at least one ready-to-eat item from foodservice, up from 15.5 percent in 2015. Along with noteworthy takeout entrées, offer customers functional sides and components to enhance their home-cooked meals. While meal kits are also thought to help enhance culinary skills, some argue that the structure of meal kits actually limits the user’s ability to get creative, building more appeal for restaurant takeout meals.

As grocery retailers and meal kit services gain traction and popularity, restaurants must consider these developments, reevaluate their takeout items, and implement similar concepts that will meet customer demand. Quality ingredients, unique and intriguing options, convenience, and customization are factors operators must maximize to ensure they stay ahead of the competition.