Customer small business financing solutions delivered through a single, online application.
Loan Types
Free access to multiple funding solutions
See funding solutions from 75+ nationwide lenders with a single application.
Apply for financing, track your business cashflow, and more with a single lendio account.
Home Blog Meal Kits Bounced Back During the Pandemic—Will They Stick?
Pre-pandemic, Americans cooked at home less and less.
In 2018, the average American household spent $3,459 per year on takeout. Overall spending on restaurants and quick-service meals—classified as “food away from home”—grew 93% since 2003. The average number of meals at home per week in North America was a measly 6.3 in 2019. (That’s not even a full week of breakfasts!)
Source: “Pandemic Could Be Recipe for More Cooking at Home,” Gallup.
That is, until lockdown forced us to confront home cooking. 54% of Americans reported cooking more. Famous restaurateurs, celebrities, YouTubers, and Food Network stars alike posted videos and how-tos to reacquaint Americans with how to cook.
Samin Nosrat launched a hotline-style podcast for pantry-based cooking. Stanley Tucci whipped up cocktails. Everyone made sourdough.
As lockdowns and restaurant closures stretched on, cooks found the at-home glow fading. “As a staff suddenly working from home, we enjoyed the opportunity to cook—to skip the salad line and make something delicious in our own kitchens before plodding back to makeshift workstations,” wrote the Bon Appetit editors in August 2020, reflecting on quarantine cooking. “But then we realized: 3 meals a day every single day is a lot of cooking! There were So. Many. Dishes. As days turned into weeks and then months, something changed: We became different kinds of home cooks.”
Those kinds of home cooks needed shortcuts, and fast. Enter: Meal kits.
The concept of a meal kit is relatively simple: sign up for a subscription, and you’ll receive a set of semi-prepped groceries with recipes for meals for a certain number of days. Consumers can pick which day the kit gets delivered and signal any dietary preferences, like vegetarian or gluten-free.
Players like Blue Apron, Sunbasket, HelloFresh, Plated, Chef’d, Whole Foods, Martha Stewart, Williams-Sonoma, and more capitalized on time-crunched millennials: the 50% of Americans who hate to cook. Blue Apron, the established market leader, delivered 5 million meals a month and was valued at $2 million by 2015, only 3 years since its start in 2012. “Pretty much from day 1 we’ve had steady exponential customer growth. I think the moment we did our first week of deliveries, we sort of knew that we had a business that we thought would be really successful,” CEO Matt Salzburg told Business Insider. Designated a “unicorn,” they went public in 2017.
But then the bubble popped.
The market became overcrowded. Blue Apron couldn’t keep customers, losing 25% of its customer base between September 2017 and September 2018. Stock prices plummeted as low as 66 cents. “This market looks a lot like the dotcom boom and bust of the late nineties [on a smaller scale],” analyst Darren Seifer told Eater in 2018. “There’s a lot of companies that are jockeying for market share. [Blue Apron] went public but isn’t necessarily making money, and at the end of the day, if you’re not making money for several years, the money’s going to run dry.”
View this post on Instagram A post shared by Blue Apron (@blueapron)
A post shared by Blue Apron (@blueapron)
Just when it looked like meal kits had become a fad, the pandemic returned them to the spotlight. On March 18, 2020—the day markets fell so fast it triggered circuit breakers and doomsday prepping—Blue Apron shares grew 140%. “What better time to try it than right now? I’m in an apartment by myself and my boyfriend is on the other side of the city. There’s only so much FaceTime you can do to occupy your time. TV is great, but at some point even TV gets old and boring,” Heather Kaufman told Eater.
With a surge in demand, the real question is: will it last?
The global meal kit market is expected to grow to $19.9 billion by 2027, if this pivot holds.
Analysts aren’t so sure. “When businesses reopen and people return to lifestyles on the go, restaurant carryout, prepared meal delivery, and other similar food options are going to keep winning out over meal kits due to increased convenience and value to the customer,” analyst Cara Rasch told the Chicago Tribune.
While meal kits began as a way for time-strapped home cooks to get a shortcut on tonight’s dinner, today’s options are more about prestige and cultivating an experience.
Part of that growth comes from new players like Omsom, launched by sisters Kim and Vanessa Pham. Their philosophy directly speaks to a new wave of home cooks, especially those looking not for a shortcut but for a sense of home. “As first-generation Vietnamese-Americans, food is not just a love language; it’s a way for us to re-engage with our identities as WOC and ‘third culture,'” Kim Pham told Food and Wine. “Growing up, we never felt represented by the ‘ethnic’ aisle in mainstream grocery stores—frankly, why do they even still exist!—so we felt inspired to build a brand that reclaims the complexity, integrity, and nuances of Asian cuisines and communities.”
View this post on Instagram A post shared by Omsom (@omsom)
A post shared by Omsom (@omsom)
Bucket-list restaurants like Girl & the Goat, Momofuku, Scarpetta, and Xi’an Famous Foods all pivoted to selling meal kits or partnering with services like Goldbelly. “If it wasn’t for this pandemic, I don’t think we would’ve ever considered offering meal kits,” restaurant owner Hooni Kim told Grub Street. “It’s the ego of the chef where the food that we create, we design—it’s best when we finish it. The seasoning, the temperature, the texture—all of that. We want to be in control.”
Starting a meal kit program as a restaurant owner isn’t easy. The key is finding a niche, since it’s challenging to compete with established meal kit programs like Blue Apron. “It’s difficult to assign a dollar amount to meal kits because it depends on the type of restaurant, what their offering is and a number of other factors unique to each business. If you’re a high-end restaurant selling baskets for the beach with a lower-end food product, you’ll need to order the new food products and the packaging to put it in—two new costs. However, if your restaurant is just making existing menu options to go, all you’ll need is the takeout packaging,” consultant Dana Zurkofsky told Upserve.
Meal kits have had a rocky road. But as long as we’re stuck at home, they’re here to stay.
Always in search of adventure, Kayla hails from Hopkinton, MA, the start of the Boston Marathon. You can find her at the summit of a mountain or digging in to a big bowl of pasta when she's not writing. Say hi on Instagram @klvoigt.
Subscribe to our weekly newsletter for industry news and business strategies and tips
Subscribe to our weekly newsletter for industry news and business strategies and tips.