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Daily news and analysis about the food tech revolution

Blue Apron

Wirecutter Picks its Best Mail Order Meal Kit

Whenever I need to buy something — well, anything really — the first place I turn is The Wirecutter. From big-screen TVs to blenders, I’ve never been disappointed by something the review site has recommended. So when The Wirecutter ran its meal kit recommendations today, I knew it would be worth reading.

And it was! The site only looked at mail-order meal kits, so nothing you can buy in the store (which is where most meal kits are headed), and they only considered more general meal kits (sorry, vegan-only meal kits). Having said that, it is still a thorough list that was tested over a period of four months, so they got a chance to try an assortment of menus.

What was interesting is that in general, The Wirecutter echoed many of the same concerns about meal kits that we’ve had here at The Spoon: they take a lot of work, they are expensive, and they use a lot of packaging. In their defense, The Wirecutter pointed out that meal kits can help you learn to cook and help you to climb out of your eating ruts.

So, with those caveats in mind, which meal kits made The Wirecutter’s Best Meal Kit Delivery Service? It’s not broken down in a strict first, second and third place, but Blue Apron, Martha & Marley Spoon, Plated and Sun Basket all earned a spot for various reasons.

In what is turning out to be a good week for Blue Apron, The Wirecutter found that it was the best meal kit for getting started. This follows the announcement from earlier this week that Jet.com will be selling Blue Apron’s kits for same day delivery in New York.

You should check out the full list to see why each one was picked. Do you have a favorite meal kit? Tell us which one(s) in the comments.

Will Jet.com Help Blue Apron Meal Kits Take Off?

Blue Apron announced today that its meal kits will be made available for delivery in the New York area through a new partnership with Walmart-owned Jet.com. For Blue Apron, which has seen its stock price tumble since it went public last year, the Jet partnership marks another way the company is looking to revitalize its business through new and different retail avenues.

According to the press announcement, starting today, households across “most of” New York City, Jersey City and Hoboken can get Blue Apron meal kits delivered same or next day. The inclusion of Blue Apron’s meal kits is part of Jet.com’s recent site revamp and enhanced shopping experience for New Yorkers.

Blue Apron pretty much kicked off the mail order meal kit craze a few years back, but that particular business model is tough to sustain — for consumers, it’s not particularly convenient, it’s still a lot of work to prepare, and for companies, it’s logistically expensive. Blue Apron’s competition has pretty much all moved into grocery store aisles. Home Chef was acquired by Kroger. Plated was acquired by Albertsons. And while HelloFresh had it’s own IPO, it too is now selling through grocery stores.

For its part, Blue Apron began selling its kits in Costco earlier this year. Earlier this month, Blue Apron also started offering meal kits through food delivery service GrubHub (also only in New York). Now on Jet, Blue Apron will feature a rotating menu of two-serving recipes that range in price from $16.99 to $22.99.

With its stock price hovering at little more than a dollar, Blue Apron is able (or perhaps forced) to experiment more wildly with different approaches to moving more of its meal kits. Blue Apron’s recent moves are reminiscent of Chef’d, which we lauded here at The Spoon for its uninhibited approach to retail. Chef’d struck deals to put its meal kits in drug stores and office fridges… before it shut down. But its assets were picked up and Chef’d was re-born without the mail business to focus on retail outlets.

Along those lines, it wouldn’t be surprising to see Blue Apron announce even more partnerships across even more retail outlets before the end of the year.

HelloFresh Jumps on Bandwagon to Sell Meal Kits in Grocery Stores

HelloFresh will start selling its meal kits at 600 Giant Food and Stop & Shop locations starting this week, The Wall Street Journal reports, as the meal kit sector’s migration from mail order to brick and mortar continues at a furious pace.

The first half of this year has seen a flurry of activity from meal kit companies going into grocery stores. Chef’d and Blue Apron started selling in Costcos. Plated is rolling out nationwide at Albertsons. And just a couple of weeks ago, Kroger bought Home Chef for $200 million to put that company’s product on store shelves. And that doesn’t even count the meal kits WalMart and Amazon have available in their own stores.

It’s not hard to see why. According to Nielsen, last year in-store meal kits generated $154.6 million in sales, and grew more than 26% year-over-year. It’s a hot sector, and in-store meal kits are something customers want.

Last month, Pat Brown, Albertsons Vice President of strategic business initiatives told CNBC: “Our internal research told us that 80 percent of our customers would love to see a meal kit option in the store. And what was more surprising was that 85 percent of customers that were already subscribing to meal kits wanted to see meal kits in the store.”

Customer churn has been a big issue for meal kits in the past as the cost and inconvenience of waiting for your meals to arrive by mail have been stumbling blocks for maintained meal kit subscriptions. Having meal kits in stores offers customers more convenience and more choice closer to when they actually make meals.

HelloFresh CEO Dominik Richter told The Journal that online subscription will continue to drive sales, and that going into grocery aisles was a way for the company to find new customers. He also said that HelloFresh is in talks with other retail outlets.

HelloFresh recently surpassed Blue Apron as the top meal kit company by market share in the U.S.. The Berlin-based company went public in the fall of last year, and in April the company acquired organic meal kit provider Green Chef.

This is a big and fast retail move for HelloFresh, which will start selling meal kits on store shelves starting this Wednesday. For comparison, Chef’d has done deals with numerous regional chains as well as Costco, Blue Apron is in 17 Costcos, and Plated will be in “hundreds” of Albertsons by the end of the year. Kroger, which had already rolled out meal kits to some of its regional chains such as QFC in Seattle, is planning to put meal kits in most of its 2,800 stores nationwide.

Clearly HelloFresh needs to act fast as the window of opportunity for meal kit companies in grocery stores appears to be closing rapidly. While it may be rolling out judiciously, Albertsons still owns Plated, so that will be its preferred meal kit provider. Same with Kroger and Home Chef. Amazon, of course, has Whole Foods, and WalMart has… itself. To stay alive in retail, and by extension alive as a business, HelloFresh will need to get into a lot more grocery stores.

Food Tech News: Celebrity Meal Kits, Beer Delivery, and UberEats Drones

This was a pretty thrilling week for food-related innovation in big data and AI. We wrote about a patent that lets Facebook see inside your fridge and recommend personalized recipes. Google debuted its Duplex technology, which allows it to hold freakishly realistic-sounding phone conversations (listen to it make a restaurant reservation, it’s insane). Perhaps most importantly of all, we wrote about a man who cracked the code for perfect chocolate chip cookies.

And now it’s time for our weekly food tech news roundup. We’ve got stories featuring clean meat labeling, drones, beer delivery, and Chrissy Teigen — let’s dive in:

Photo: Wikipedia.

Uber tests food delivery drone
UberEats has launched a trial program in San Diego testing food delivery via drone, reported Bloomberg. The world’s largest food delivery program could now theoretically drop off your pad thai in as little as five minutes, according to UberEats CEO Dara Khosrowshahi. Of course that’s presuming that the food you’re ordering is already made, but still — that’s quite a bit speedier than even the fastest average food delivery wait time (from, you guessed it, UberEats).

 

Photo: Blue Apron.

Blue Apron teams up with Chrissy Teigen
Just a week after meal kit service Blue Apron announced they were putting their wares on Costco shelves, they revealed more news: they’re collaborating with model/cookbook author/Instagram celebrity Chrissy Teigen on a six-week lineup of recipes and ingredient boxes. The series will start on June 4th and, despite their launch into retail, will only be available via online delivery.

 

Photo: Pizza Hut.

Pizza Hut expands beer delivery
Pizza Hut launched a test program in Phoenix in December to deliver beer and wine alongside their cheesy crust-stuffed pies. Now they’re rolling out that test program in over 100 locations in Arizona and California, with plans to continue expansion later this month. It’s also adding beer partners; the original test was with Anheuser-Busch, but the pizza chain has reportedly added MillerCoors as a partner in brews.

 


Congress might approve lab-grown meat regulation
Quartz reported that a proposed spending bill approved by a congressional subcommittee includes a provision that would give the U.S. Department of Agriculture (USDA) the power to regulate how lab-grown meat is labeled and inspected. It’ll go next to the full, 46-member House Agriculture Committee, and, if passed, would have huge implications for a hotly-contested issue: the labeling of cultured meat.

Did we miss any interesting, thought-provoking food tech stories from the week? Tell us in the comments or tweet us @TheSpoonTech.

Do Blue Apron’s In-Store Plans Mean Death for Mail Delivery Meals?

Blue Apron will start selling meal kits in stores, in a move that isn’t just a reflection of the company’s continued troubles, but could be a bellwether for the overall health of the meal-kit-by-mail sector.

Blue Apron helped kick off the whole meal kit delivery boom, promising a variety of fresh ingredients delivered right to your door. But since launching in 2012, the company has faced increased external competition and internal troubles.

After Blue Apron, the meal kit delivery space quickly filled up with other mail order players like HelloFresh, Plated and SunBasket–all vying for your dinner table. Then companies sprouted up and started to specialize, offering things like only proteins, or kids meals or meal services tied to specific appliances.

But as we wrote last year, mail order meal kits all faced the same basic issues:

“The other challenge that the entire meal kit industry faces is the stickiness of their basic product. Meal kits are often easy for consumers to try – companies make it simple to sign up and offer quick delivery and attractive new customer promotions. But they are a huge departure from the way we have been taught to shop for and purchase our food – and while they might be more convenient in some ways, they are inconvenient in others.”

It was convenient to get a box of ingredients delivered to your door, but you still had to do all the work of cooking whatever was sent. And you had to cook whatever you received before it went bad, whether you wanted it or not.

All of these external pressures have taken a toll on Blue Apron. According to The Wall Street Journal, the company reported 750,000 subscribers last month, which is down from a high of 1 million last year. Blue Apron’s stock price has tumbled since it went public last summer, laid off six percent of its staff in October and replaced its CEO in December.

Blue Apron was light on details about the forthcoming in-store meals to the Journal and didn’t provide pricing, saying only that they hoped to have their kits in stores by the end of this year. But by then will it be too late?

You can see why they’d want in on the in-store action. According to recent Nielsen research, “in the year ended 2017, in-store meal kits generated $154.6 million in sales, posting growth of more than 26% year-over-year. For context, total brick-and-mortar sales for center store edibles (grocery, dairy, frozen foods) dipped 0.1% last year to $374 billion.”

Retailers like Amazon and Walmart are already in the meal kit game. Amazon, with its logistical superpowers, provides same day meal kit delivery, and owns Whole Foods, which can serve as another sales channel. Additionally, at its model Amazon Go store here in Seattle, meal kits were displayed prominently, and Amazon is set to add more Go stores, all of which are aimed at making shopping convenient and frictionless.

Walmart partnered with meal kit services at the end of last year and earlier this month announced their own line of Walmart meal kits available for purchase in store. Even Weight Watchers is rolling out a line branded in-store meal kits.

Shifting to in-store provides a number of efficiencies for both the businesses and consumers. First, setting up and running external centers to prepare, process and ship meals to individual houses around the country is expensive. Partnering with a grocer reduces the shipping complexities, and if you’re a grocer, you can prepare meals at your own store.

Being able to prep food in stores can also translate into less work for the consumer. Having chopped vegetables in a kit reduces their shelf life, but also decreases the amount of work home cooks need to do. The less work consumers need to do increases the attractiveness of a meal kit. And they can pick up that meal kit as an impulse to suit their mood during their existing schedule of going to the grocery store (or have it delivered same day).

Not everyone sees it this way, however. Forrester analyst, Sucharita Kodali, told AdWeek that Walmart is three years too late entering the meal kit market, and thinks the meal kit industry isn’t that attractive as a segment. “Everyone in that grocery industry is terrified, and the investment banks and VCs are all goading these poor retailers to do things they’d never do otherwise,” Kodali said to AdWeek.

Meal kits aren’t entirely dead. Venture Capitalists invested $273.9 million in the space last year. And startups like Suvie and Tovala are using unique hardware/meal kit combos to make preparing meal kits easier.

But that may not mean much to Blue Apron. We’ll have to wait and see what’s in store for their in-store plans.

Blue Apron Swaps Out CEOs. Founder Salzberg Replaced by CFO Dickerson

Blue Apron announced yesterday that its board of directors has replaced Co-Founder Matt Salzberg as President and CEO with Brad Dickerson, the company’s CFO.

Dickinson joined Blue Apron in February of 2016 after spending 11 years at UnderArmor, including time as that company’s CFO. In an interview with Recode, Dickinson said that Salzberg was the “driver” of the decision to switch up CEOs at the company, as Salzberg wanted to focus on longer-term ideas.

Maybe.

But yesterday’s move move caps off what has been a tumultuous year for the prepared meal kit delivery service, which has seen its stock price tumble since going public earlier this year, and layoffs of six percent of its staff last month.

As we’ve written before, the whole prepared meal kit space is experiencing growing pains. Companies are increasingly specializing, and Amazon threatens to upend the whole industry with customizable same-day meal kits.

Blue Apron Laying Off 6 Percent of its Staff

Blue Apron, one of the early pioneers of prepared meal kit delivery, today said they would be cutting 6 percent of its workforce, equaling more than 300 positions (hat tip to Recode). The move impacts jobs across both the corporate offices and fulfillments centers and was described in an SEC filing as “a company-wide realignment of personnel to support its strategic priorities.”

Given the rough start the company has had since going public in June of this year, one imagines the most important strategic priority is to make more money. But it was always going to be tough going for Blue Apron for a variety of reasons:

External
The meal kit delivery space is crowded. Blue Apron faced competition from straight up competitors such as Hello Fresh and Home Chef, device makers such as ChepSteps and Nomiku, as well as an 800 pound Amazon gorilla which launched its own meal kit service and bought Whole Foods shortly after Blue Apron’s IPO.

Internal
Making money in meal kit delivery is hard. Blue Apron lost money for years as it headed into its IPO, and the company had to slash its valuation before going public. It was expensive getting and retaining customers. And if that wasn’t enough, a Buzzfeed report from last year painted a pretty grim picture of worklife at its fulfillment centers.

Existential
Perhaps the biggest threat to Blue Apron is its own raison d’etre. Does it need to exist? My family tried Blue Apron a couple of times and we discovered that it was… too much work. Despite all the portioned ingredients, making an actual dinner still took a lot of time.

Plus, dinners are more of a day-of kind of decision (see: Amazon’s meal kit). What am I in the mood for that night? Not, what will someone send me next week that I’ll have to eat because I paid for it and I don’t want to throw away food.

No one is celebrating these layoffs, especially for an innovative company that legitimately paved the way for others to follow. But Blue Apron needs to do something (other than a barrage of podcast ads) to turn things around.

Another Benefit of Amazon Meal Kits? Less Landfill Clogging ‘Goo’

Last week, I ordered and cooked an Amazon meal kit.

While my main focus was on presentation, cooking experience and, of course, taste, I also paid close attention to the packaging included with the kit.

And yes, like other meal kits, Amazon’s include plastic wrapped ingredients that will inevitably make their way to landfills. But I also noticed one major difference with Amazon’s meal kits: they use fully recyclable freezer packs.

While this may not seem like a big deal, I think it is. Just a couple weeks ago, Mother Jones ran a piece on the freezer pack problem that highlighted just how much landfill result from these goo-filled packs.

According to the piece:

If you figure that each box contains about three meals and two six-pound ice packs, that’s a staggering 192,000 tons of freezer-pack waste every year from Blue Apron alone. To put that in perspective, that’s the weight of nearly 100,000 cars or 2 million adult men. When I shared those numbers with Jack Macy, a senior coordinator for the San Francisco Department of the Environment’s Commercial Zero Waste program, he could scarcely believe it. “That is an incredible waste,” he said. The only reason he suspects he hasn’t heard about it yet from the city’s trash haulers is that the freezer packs end up hidden in garbage bags.

One thing that struck me with Amazon meal kits is how polished and thought out the entire presentation seemed. Recyclable freezer packs were a part of that assessment.

I hope other meal kit companies start to offer recyclable freezer packs, but I wonder if their delivery infrastructure allows them to do so. The Amazon meal kit was ordered and shipped to my doorstep in about an eight hour window. While I am not sure of the entire packaging and delivery window for each Blue Apron box, it may be longer than that and require a freezer pack that stays cold longer.

Of course, Blue Apron and other meal kit companies encourage reuse of their freezer packs and offer pick up programs. But, as was the case with us, they sometimes found their way into the garbage.

Sure seems making them recyclable would solve that problem.

Coca-Cola Jumps On Meal Kit Bandwagon With Chef’d Beverage Pairing

Amazon entered the meal kit delivery game and Blue Apron’s stock doesn’t look great, but that hasn’t stopped other competitors from continuing to diversify their offerings and partner with big names. The newest brand to jump into the fray is Coca-Cola, partnering with self-described “online gourmet meal kit provider” Chef’d to send consumers meal kits that include pairings of Coke or another Coca-Cola owned product with the meal.

According to an interview with Beverage Daily, Coca-Cola has dipped its toes into the dinner space before but the partnership with Chef’d is the first official commercial activity. The meal kits, called “Daily Meal Inspirations” include meals like Beef Short Ribs paired with a bottle of Coke to roasted chicken with Dasani sparkling water. The meals range from $27-$42 for two people (not the cheapest meal kit offering out there) and can be ordered on the Chef’d site.

Given a number of meal kit companies trying to capture consumer mindshare, it’s not surprising to see brands like Coca-Cola try to capitalize. But this partnership isn’t the most robust in terms of delivering something truly unique – and do consumers want a can of soda sent with their meal for a premium price? Maybe. It seems like Coke and Chef’d are trying to recreate the convenience of a restaurant experience – a meal and a drink – but instead of being delivered, fully prepared and cooked, by a waiter, it’s being shipped in a box in ingredient form to your front door.

Chef’d’s big claim to meal kit fame is their lack of a subscription model, allowing consumers to choose from over 300 online recipes and have them shipped to their doorstep as soon as the next day. The meals come portioned for two or four people and the company has offerings from gluten-free to vegan.

They do offer a meal plan – aka a subscription service – for customers who want a regular box delivered, but the on-demand style gives people who don’t want the commitment but do like the convenience or variety a meal kit service offers. So the new Coke meals will be available to consumers without a subscription attached, which may be one of the reasons the brand chose Chef’d as its first meal kit partner.

Chef’d has attracted other name brands in Big Food, including receiving a recent Series B investment round from Campbell’s for $10 million. Their total funding raised to date is just over $27 million.

I Made Dinner With An Amazon Meal Kit. Here’s My Review

Amazon can be kinda cruel.

Think about it: Blue Apron, arguably the biggest name in meal kit delivery, works for years to create a new way for consumers to make dinner, eventually becoming the most successful meal kit company in a crowded field and, just after they have an initial public offering to pay back investors and employees for all their hard work, Amazon waltzes in with a meal kit service of their own the same exact month to send Blue Apron’s stock tumbling downward.

Brutal. But hey, this is Jeff Bezos we’re talking about.

Bezos Prime

Does that dude look like he means business? Yes. Yes he does.

But Blue Apron’s bad fortune is my luck since I live in the Seattle market, where Amazon tends to roll out new food initiatives first. When I read yesterday the company was already shipping its meal kits, I decided to order one.

So here is my review. Before I start, it’s worth noting I will be comparing my experience with Amazon’s meal kit to that of Blue Apron. Why? It’s what I know. I subscribed to Blue Apron for about seven months last year and, as a result, Blue Apron is my main point of reference when it comes to meal kits.

The Order Experience

When I learned that Amazon is already shipping their meal kits in the Seattle market, I went to the site and checked out the meals available. And while I didn’t expect to eat an Amazon meal kit for dinner last night, when I saw the company offered same day delivery on their meal kits, my dinner plans suddenly changed.

A few observations about the order experience. First, I counted a total of sixteen available meal kits. I liked having the choice of that many meals, something I didn’t get with Blue Apron in a specific week, which gave me the choice of four meals to choose from every week, two of which they would ship to my house.

Second, same day delivery is a big deal. With Blue Apron, I needed to pick my meals roughly a week in advance to give the company enough time buy, prepare and ship the meal to me by early the next week. With Amazon’s meal kits, I ordered that morning before 10 AM, and it was on my porch before 5 PM.

For those of us who often don’t plan that far in advance, this is a nice feature. It also gives me more flexibility since I can order one meal or five meals in a given week. Blue Apron subscriptions offered only two options: a two-person meal plan with three meals per week and the family plan, which is two meals a week.

One advantage of Blue Apron is they offer family meal kits (a serving of four). All of Amazon’s meal kits, at least currently, are portioned to serve two people. While this could be a problem if I want to cook for my family of four, I figure it’d also be easy enough to order two Amazon meal kits for one meal. But more packaging means more mess, so I suspect Amazon will offer more portion options in the future.

Pricing is similar to Blue Apron on a per-meal basis. Blue Apron advertises meals priced at less than ten bucks per person, and that in line with all of the Amazon meal kits, which came in at $8-9 per person.

The Unboxing

This is where things got exciting.

The meal kit arrived at my home in an Amazon Fresh bag, inside of which there was a package wrapped in an insulated bag.

The Amazon Fresh bag with insulated meal kit inside

When I opened the insulated bag, I saw a single box with multiple ice packs.

Inside the Amazon Meal Kit delivery bag

When I pulled the box out of the insulation bag, I was surprised at how small the package was. Granted, it was a serving for two, rather than the family meal four-person servings I would get from Blue Apron, but I was surprised nonetheless at the small size of food box.

Below is a video of my “unboxing” of the meal kit.

Let me emphasize that the packaging and presentation of the Amazon meal kit was probably the most impressive part of the whole experience. I liked that all the food was packed tightly in a well-designed box. Contrast this with Blue Apron, where ingredients are, for the most part, packed loose in the big insulation bags.

Another small observation, but possibly an important one. The chill packs in the insulated bag were fully recyclable. The plastic exterior of the chill packs had a giant recycle symbol. Verbiage below that said the contents inside is plain old water and that I could empty and recycle the bags. I like that idea because other meal kit services (not just Blue Apron) often have some chemical concoction inside that is not recyclable.

Amazon meal kit chill packs are filled with water and are recyclable

The Ingredients

Next, I assessed the ingredients. Much like Blue Apron, the number of ingredients I had to work with always surprises me. I guess this is in part because if left to my own devices, I often cook simple meals and when I do cook with recipes and a bigger meal plan, I find it it’s a lot of work to assemble everything I need. With a meal kit – whether it’s Amazon or Blue Apron – the hard work of shopping and assembling ingredients in the right portions is already done.

You can see below what my unpacked box looked like:

My meal kit ingredients

The main difference I noticed with my Amazon meal kit and a Blue Apron meal kit is Amazon has done more of the work by chopping the vegetables. Blue Apron kits come with whole vegetables, and you chop them according to the recipe instructions. Some meals had me chopping five or six vegetables to prepare a meal. For this meal, which included sweet potato fries, a bacon jam with onions and a cole slaw, all the vegetables with the exception of the pickle were already chopped.

Whether this is good or bad comes down to personal preference. If you prefer whole, fresh food or like doing more of the prep work for your meal, Blue Apron makes sense. If you want to save a little time or find chopping veggies tedious, then I would suggest Amazon’s meal kit service is better in this regard.

Time To Cook

With my ingredients ready to go, it was time to cook.

Much like Blue Apron, Amazon includes a good looking instructions and ingredient card with their kit. The card, with ingredients on one side and cooking instructions on the other, was smaller than the Blue Apron cards.

Here’s the Amazon instruction card for my Wagyu beef burger meal:

The Amazon meal kit recipe card

At first blush, the meal I chose looked really simple. After all, how hard can making a burger be?

And while it was straightforward, I found the extra flourishes Amazon put into the recipe to make this, as they put it, a “burger for a true gourmand,” enjoyable. They had me make a bacon jam with onions and maple balsamic, finish the burger in the oven, and toss the sweet potato fries in a delicious seasoning blend. In general, it wasn’t too much work, but enough to make me feel like I could say I cooked something.

Making bacon jam

And just like Blue Apron, I found the 30 minutes of promised cook time was action packed. Once I finished one thing, I was onto the next and, all along the way, I was using timers (Alexa, naturally) as I orchestrated the cook.

In 30 minutes or so, I had the meal ready to plate.

The Meal

Here’s the plated meal:

The finished meal

I was feeding my son, who isn’t a fan of onions or cole slaw, so his was more basic. Mine was, more or less, as pictured on the instruction card.

It was good. Wagyu is high-quality beef and, add in the artisanal bun, the bacon jam, and the premixed burger sauce, and it was one tasty burger.

It was also a very big burger. The meal kit included a full pound of ground beef for a two person meal. I normally don’t make half-pound burger patties, but I decided to go for it, and it resulted in a very fat burger that was hard to get my mouth around (that’s a good thing).

While I think one meal is too small a sample size to generalize about Amazon’s meal kit portion sizes, if my meal is any indication, Amazon is not scrimping. Blue Apron four-person portions sometimes felt a bit light when it came to the main course, but satisfying.  One thing I will be watching for as I sample other meal kits is if generous portions as part of Amazon’s overall strategy.

Despite the size of the meal, I will say it was good enough to finish the plate in its entirety.

Summary

Bottom line, I was happy with my Amazon meal kit and will be trying other meal combinations and recipes.

Last night’s experience tells me Amazon has put in a lot of time to fine-tune this product. The purchase experience, delivery time, packaging and presentation, cooking experience and quality of meal were all high-caliber.

Combine that with company’s strength in online commerce, customer loyalty, delivery infrastructure and – as of last month- their move into brick and mortar grocery delivery, and Amazon’s move into meal kits should be worrisome for Blue Apron and any other company in the meal kit space.

Join The Spoon editors and folks creating the future of the kitchen at the Smart Kitchen Summit. 

Tovala Pairs Smart Appliance Innovation With Meal Kit Convenience

Last year at the Smart Kitchen Summit’s Startup Showcase, David Rabie stood next to a black box, one that resembled a microwave of the future or maybe even a toaster oven. Rabie’s company Tovala was making a smart steam oven that was connected to an app and able to perfectly cook certain meals with a catalog of food data and recipes. But the even bigger story behind Tovala wasn’t in the room at all; the company planned to launch an accompanying service designed to take on the meal kit delivery giants.

After a successful Kickstarter, Tovala is shipping to early backers and launching its flagship product offering to the masses this week. Tovala’s a smart steam oven comes with a ready-to-cook meal kit delivery subscription – focusing on drastically cutting down the time from food pickup to cooking to table. Using convection technology, a water chamber circulates heat to more evenly cook food and the oven is capable of steam, convection and broiling.

But the real innovation here is in the meal kit delivery service; unlike traditional meal kit delivery companies, Tovala sends customers their meals completely prepped and ready to stick in the accompanying smart oven. The customer scans the barcode using the connected app and tells the oven what you’re about to put inside, pulling the recipe down from the cloud to ensure your meal is cooked perfectly.

The meals might look a little like frozen dinners or airplane meals, but the results from early writeups like this one from Washington Post food writer Maura Judkis say otherwise.

Judkis writes, “I tried the Thai turkey meatballs with a hoisin glaze, served on cilantro brown rice with roasted asparagus, and was pleasantly surprised: The meatballs, studded with water chestnut, were crunchy and moist, the asparagus wasn’t overcooked, and a sambal sauce finish added a lot of kick. Another meal, miso salmon with roasted broccoli, delivered a velvety-soft piece of perfectly-done salmon”

Rabie spoke at last year’s Smart Kitchen Summit and described the target customer they are trying to lure – the ones who want even more convenience from a Blue Apron-style meal service. Perhaps the ones who stop using the service after just a few months – which according to the company’s S1 filings right before their IPO seemed to be a large majority.

“We’re trying to solve a common pain point – no time, want a delicious, healthy meal without the work. This seems to resonate across demographics.” – David Rabie, CEO, Tovala

Judkis also experimented with non-Tovala food, reporting that in general, the machine did well but (unsurprisingly) the ideal use for it was with the subscription service meals.

The Tovala Oven comes at a premium – $399 – but in theory could replace your wall oven if you subscribed to the meal service. It too has a higher sticker price than competitive meal kit delivery services, but not by much – charging $36 for 3 meals a week meals for a single person and $72 for the same amount for two people.

So far, Tovala is the only company combining a connected appliance with a prepared delivery service and is tapping into something core to our changing world. People have less time than ever but are more aware of the needs to eat healthy. For those willing to pay for convenience, the startup may be the answer.

Can Blue Apron Succeed? Five Questions With A Data Scientist Ahead of The IPO

In some ways, the meal delivery kit craze was one of the ways people started to notice major disruption happening in our food system. Technology and connectivity are finally starting to penetrate the ways we grow, cook, manage, order and think about our food – so it is fitting that one of the major IPOs of 2017 will also be the first meal kit startup IPO. Blue Apron is just a day away from being a publicly traded company on the NYSE where it will trade under the symbol $APRN. The company has already slashed its valuation ahead of the event, estimating stock prices will open between $10-$11 a share.

There’s been a great deal of speculation about the company’s S-1 filing and what their disclosures about revenue, customer acquisition costs and overall company health mean for interested investors.

We sat down with Daniel McCarthy, co-founder and Chief Statistician at Zodiac, a predictive analytics firm and data scientist at Wharton (aka he’s way smarter than us) to talk about the analysis he’s done on Blue Apron’s filing. He’s about to transition into a new role as a professor at Emory University. Daniel has written several interesting takes about the Blue Apron IPO looking deep into their disclosures and extrapolating additional info using data modelling and we wanted to ask him his thoughts about the company’s path to profitability on the eve of the IPO.

The Spoon: Given the challenge Blue Apron has with customer retention and your finding that retention actually gets worse with customer age, does the company have a path to profitability with the current model?
 

McCarthy: No, I don’t see a path to profitability if future customers are similar in retention and spend to the customers that Blue Apron has acquired in the past, especially those acquired over the last twelve months. At the same time, Blue Apron is a high-quality business. I would be optimistic that they could be profitable if they adopted a more LTV-centric way of doing business.

In particular, they should refocus and rationalize their customer acquisition spend around prospects similar to their high-value customers. This could (1) substantially reduce their CAC, which has moved up considerably over the past year, and (2) increase the quality of their subscriber base from a retention and spend standpoint. The downside to this strategy is that it will naturally be smaller, so there is less of a “sky is the limit” growth story to tell. Still, that seems better than being structurally unprofitable.

The Spoon: Blue Apron is reporting “active customers” in their filling as opposed to their subscriber base numbers, which you’ve noted is an unusual way for a subscription service to report their users. Do you have a sense of why?

McCarthy: I think they are reporting active customers instead of subscribers for two reasons.

  1. Active customers will always be a bigger number than total subscribers, so it makes them look bigger. Who doesn’t like to look bigger?
  2. I think that a part of them likes to think of themselves as more like a retailer than a subscription offering. If their customers come in and out periodically over time, they could argue that churn doesn’t matter as much, because the churners will come back at some point.There are a few issues with this line of reasoning. For one, churn matters at retailers too, even though we do not get to observe exactly when customers churn. For two, I think many of their periodic customers are strategic, only showing up when they are able to get a new promo discount. Finally, Blue Apron doesn’t provide us with meaningful data points about how periodic behavior (if there is any) affects the unit economics of their business.

The Spoon: You’ve reported that the revenue that Blue Apron is generating from more recently-acquired customers is less than from customers acquired in the past. Why is this?

McCarthy: They introduced the family plan in 2015, which has a lower price point ($8.99/serving versus $9.99/serving). It could be that we saw a mix shift in 2016 towards people with this plan, and that people on family plans are simply not generating as much revenue than the rest of the subscriber base.

The Spoon: Blue Apron turns a profit on 30% of its customers but their break-even point is moving farther away with each cohort due to declining revenue and growing customer aquisition costs (CAC) for newer customers according to your analysis. Can you tell how fast that percentage is declining?

McCarthy: It’s a great question, and it would be pretty risky to do a simple extrapolation off what we’ve seen over the past twelve months, especially since the rise in CAC has been very dramatic lately.

The Spoon: Subscription services for goods is a popular trend right now, both in the food market and outside. Is there an example of another subscription startup that’s getting customer acquisition right?

McCarthy: Dollar Shave Club has wonderful customer retention. While I generally am leery of relying on business intelligence firms to make absolute statements about retention, I think they are a very helpful tool for making relative comparisons across firms. This chart was very striking in that regard. It really highlights how much better customer retention is at DSC relative to Blue Apron. And that Blue Apron’s retention, while not good, is nevertheless better than their competitor, Hello Fresh.

We’re interested to see what happens to the Blue Apron stock tomorrow as it hits NYSE and how the first meal kit delivery IPO will shift the still growing market. Stay tuned.