Ready-to-make meal kits surged in popularity when COVID-19 hit, as more Canadians had to rely on their own cooking for sustenance. But it's unclear whether those new habits will stick.
Montreal-based meal-kit and grocery-delivery company Goodfood says it saw new customers pour in when the pandemic began.
"The pandemic was really just this big push, this huge tailwind behind the business," said Goodfood CEO and co-founder Jonathan Ferrari, at the company's micro-fulfilment centre in Toronto, where the company boxes and ships orders for customers in the city's downtown.
According to market research firm the NPD Group, before the pandemic, less than one out of every seven households had ordered a meal kit. But in 2020, that rose to nearly one in four — a 50 per cent increase.
The household penetration rate of online grocery orders increased even more, from about 11 per cent in 2019, to 26 per cent in 2020. And online orders of restaurant meals jumped from 39 per cent of households to 50 per cent.
"We've all gotten used to ordering food online, and I think that's a pandemic habit that's going to stick long after the pandemic has gone," said Vince Sgabellone, food service industry analyst for the NPD Group.
WATCH | Why summer takes a bite out of the meal-kit business:
But as COVID-19 public health restrictions were lifted in the summer, Goodfood reported a loss of 19,000 subscribers, going from 317,000 in the third quarter of 2021, to 298,000 in the fourth quarter.
Germany-based meal-kit company HelloFresh, which delivers in Canada and elsewhere in the world, also lost thousands of subscribers recently, dropping from 7.7 million in its second quarter this year, to 6.94 million — though that's still up nearly 40 per cent from the same period in 2020.
HelloFresh also owns Chefs Plate, which only delivers in Canada, but the company doesn't break down subscriber data by brand or by country.
"Within the meal-kit business, we've always had a seasonality that's the opposite of the restaurant business … as customers tend to go out to patios and spend more time outside [in the summer]," said Ferrari. He added that the company has already seen a rebound in business over the fall months.
Goodfood recently opened its first two micro-fulfilment centres, in Toronto and Montreal, to offer customers delivery of meal kits and grocery items in as little as 30 minutes. Its on-demand delivery service is free for a limited time, but will eventually have a fee of $5.99 per month.
Treating meal kits as a luxury
One Toronto-based marketing firm questions whether fewer Canadians will find value in meal kits in the future — unless the marketing ultimately shifts.
"As the pandemic has gone on, the product of meal kits has gone from a necessity and a convenience item, to a luxury, to a treat," said Mo Dezyanian, president of Empathy.
In September, Empathy partnered with consumer research firm Vividata to poll 294 Canadians who currently subscribe to, occasionally use, or have tried and rejected meal-kit services in the past 12 months. The survey was sent to a nationally representative sample of Canadians aged 18 or older, excluding those who have never tried meal kits.
It found that 82 per cent of respondents said the pandemic played a role in subscribing to meal kits, and nearly half said it was due to restaurant closures during lockdowns.
The survey also found that 79 per cent of people who tried and rejected meal kits did so because they are too expensive.
"That was true across the board, regardless of financial situation, regardless of household income," said Dezyanian.
WATCH | Why being seen as a 'luxury' item isn't necessarily a bad thing:
Most of Goodfood's current selection of on-demand meal kits range from about $11 to $18 per serving. HelloFresh advertises its meal-kit subscriptions as priced between about $9 to $12 each, depending on the number of recipes and servings ordered, whereas Chefs Plate meals cost $9 to $10. Montreal-based Cook It ranges from about $10 to $12 per portion. Any applicable shipping charges are additional.
While that doesn't mean people won't dish out the cash to buy them, Dezyanian says it may require a shift in marketing going forward.
"It's much like a Starbucks latte, where it's an accessible treat to you; you treat yourself and it makes you feel better," said Dezyanian.
Canadians cutting costs
The recently released Canada's Food Price Report estimates that the price of food will increase between five and seven per cent next year — or an extra $966 a year for the typical family grocery bill.
Food that comes in the form of delivered groceries or online meal kits is forecast to go up by slightly more, up to an additional eight per cent.
Lead author of the report, Sylvain Charlebois, suggests some people will trade the convenience of meal kits and grocery delivery for fully do-it-yourself solutions that cost less.
"People are going to become more frugal as a result of higher inflation," he said.
Meal-kit companies often spend a lot of money to get customers hooked with coupons and promo codes, but Charlebois says that can't continue forever.
"They were basically giving money to their own customers in order to generate business, and so now, they're going to have to rely on loyalty," he said.
But Sgabellone says, so far, the overall level of meal-kit usage in Canada is holding onto its pandemic boost.
"We've had 18 months or so to develop these new habits. That's a long time to get used to something. And if we've enjoyed it, we're going to continue it," he said.
https://news.google.com/__i/rss/rd/articles/CBMieGh0dHBzOi8vd3d3LmNiYy5jYS9uZXdzL2J1c2luZXNzL21lYWwta2l0cy13ZW50LW1haW5zdHJlYW0tZHVyaW5nLWNvdmlkLWJ1dC1pcy1pdC1hLWZvb2QtZmFkLW9yLXRoZS1uZXctbm9ybWFsLTEuNjI5NjYxMNIBAA?oc=5
2021-12-26 09:00:00Z
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