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A Foolish Take: Why Americans Don't Like Meal Kits

By Leo Sun – Jun 10, 2019 at 12:08PM

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High prices, small portions, and confusing subscriptions are alienating consumers.

Meal kits, which contain pre-portioned ingredients for cooking meals, are popular alternatives to takeout and delivery food. But the overall market penetration remains low: 93% of Americans still don't subscribe to meal kits, according to a recent survey by online organic grocer Good Eggs.

However, 23% once subscribed but canceled their subscriptions. Consumers' top complaints were high prices, small portion sizes, and the hassle of managing subscriptions.

Chart showing consumers' top frustrations with meal kits

Data source: Good Eggs. Chart by author.

Those frustrations may have factored into the rapid decline of Blue Apron (APRN -2.45%), which reported a 24% drop in revenue in 2018 as it lost a quarter of its customers. The meal-kit maker went public at $10 per share in mid-2017, but the stock now trades for less than a dollar.

Blue Apron's downfall has been further hastened by competition from rival meal-kit makers like HelloFresh, as well as meal kits from Amazon, Walmart, and Kroger. Kits also aren't much cheaper than pre-cooked, takeout, and delivery options, all of which require less work.

The meal-kit market won't collapse anytime soon, but it remains a niche one. Companies that overestimated the growth of the market -- like Blue Apron -- could be in deep trouble.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Leo Sun owns shares of AMZN. The Motley Fool owns shares of and recommends AMZN. The Motley Fool has a disclosure policy.

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