NEW YORK — Meal-kit companies have exploded in the past four years, shipping boxes of raw meat, seafood, fresh vegetables and other ingredients to busy city folk who want to skip the supermarket and still cook at home.
Now they want to tempt even more people to give them a try.
But the companies face several challenges as they grow. They need to hold onto customers they already have, figure out how to ship uncooked food further outside of cities and continue luring funds from increasingly tight-fisted investors. The industry is growing quickly in the U.S., after first gaining popularity in Europe, and competition is heating up as more players join the fray.
Because of that, meal-kit companies are doing all they can to stand out. Blue Apron started to ship wine last year to pair with its meals. HelloFresh began airing TV commercials in November featuring celebrity chef Jamie Oliver. Gobble promises that its meals can be cooked in one pan within 15 minutes. And Purple Carrot, which ships vegan meals, brought on cookbook author Mark Bittman to come up with recipes like tofu fries and onion-stuffed crepes.
Even Martha Stewart wants in. The CEO of Sequential Brands, the brand management company that bought Martha Stewart Living last year, said in December that the company is considering a meal kit by the home goods mogul that would be similar to the Blue Apron model.
Meal kits are shipped to people’s doorsteps, and the raw ingredients come in an insulated cardboard box. Customers then cook the meals using included step-by-step recipes. Each kit comes with enough food to make several meals, which average about $10 each. Subscribers can get a new box every week.
People around the world spent $1.5 billion on these kits last year, with less than half of that coming from the U.S., according to the Technomic research group. It was the first time the company measured spending on meal kits.
The market in the U.S. is expected to grow faster than in any other country in the next five years, to as much as $6 billion by 2020, Technomic says.
“We don’t know how the market will shake out in five years, but there’s going to be some big winners and there will be some folks that won’t make it,” says Erik Thoresen, a principal at Technomic.
Holding on to customers may prove to be particularly challenging. Jumping from one meal-kit service to the next is tempting, since many offer free meals or heavily discounted boxes for new subscribers, says Thoresen.
To help fund their expansions, the companies also depend on investor cash, which has showed signs of tightening. Venture capitalists raised $28.2 billion last year from clients to invest in startups across all industries, down 9.5 percent from the year before, according to the National Venture Capital Association.
Shipping raw food isn’t easy, either. Currently, many customers live in cities, where it’s easier to get boxes delivered, says Darren Seifer, a food and beverage industry analyst at NPD Group. But expanding into more suburban areas may be tough, since homes are more spread apart, he says.
“I don’t believe we’ll see mainstream adoption of home meal kits,” Seifer says.
Keith and Sharon Robinson in Evanston, Illinois, began using meal kits from Blue Apron and Plated about two years ago after finding discounts at daily deals websites Groupon and Gilt City. The kits let the high school vice principal and his pediatrician wife cook healthy meals for their two daughters without having to shop at the grocery store.
“It literally comes to the door,” Keith Robinson says. “Everything is right there.”