Meal-Kit Customers Dine And Dash

Companies like Blue Apron, Plated, and HelloFresh like to pitch their services as a solution for busy consumers who want an easier way to plan their meals, but a new spending analysis shows that the vast majority of customers don’t stick with these services over the long term.

The research firm 1010data analyzed consumer-spending data that represents millions of consumers, revealing a significant retention problem for the major meal-kit delivery services—which ship recipes with pre-portioned ingredients to customers on a weekly basis. After the second week, only about 50% of customers stick with Blue Apron, 1010data found. Six months into their subscriptions, only about 10% remain. The firm found a similar pattern for HelloFresh and Plated.

The findings are a contrast to what the companies themselves say about their own customer loyalty.

“Our customers who stick with us adapt Blue Apron to their lifestyles. They order week after week after week, and it becomes the way they cook dinner for their families,” Blue Apron CEO Matt Salzberg told Fast Company earlier this month.

Spokespeople for Blue Apron, Plated, and HelloFresh all said that the 1010data analysis is inaccurate, but they declined to provide accurate data.

The firm, meanwhile, stands by the data. “While there is no way to test specifically how these metrics compare to companies’ actual performance, spending trends in our data compare strongly to publicly reported comparable metrics from companies,” Natalie Seidman, 1010data’s senior vice president of data insights, said in an email. “[W]e have many clients of our data products who are confident enough in the representativeness of data to incorporate the insights we provide into their decision-making.”

If a large number of people drop their subscriptions, it is a problem for meal-kit companies because they often spend a lot of money to encourage customers to sign up. Blue Apron, for instance, offers a $30 discount to first-time customers, the equivalent of about three meals. HelloFresh offers a $15 discount to new customers. Plated offers two free meals with the first order. If customers don’t stick with their subscriptions for long, these companies don’t recoup that marketing spend.

Despite the retention problem, 1010data found that the meal-kit industry has grown over 500% since 2014. A food-consulting firm estimated that category will account for $3 billion to $5 billion of the online food shopping business in 10 years.

Blue Apron, according to 1010data, generates three times the sales of HelloFresh and about 12 times the sales of Plated.

HelloFresh recently postponed its initial public offering after investors balked at its 2.6 billion pound valuation (article is behind paywall). Blue Apron is also reportedly exploring an IPO, at a $3 billion valuation.