Prepared food vendors are honing in on a sizable portion of U.S. consumers: They are turning their attention to food tribes, or the 35 to 40 percent of the population who have specific dietary preferences. These customers might be on restricted diet, such as Whole30, keto, vegetarian or gluten-free. Territory Foods, among other health-optimized services, seeks to serve this market by creating an offering that fits its customers’ lives, diets and tastes – and fills a void in the market.
“The food system as it stands is optimized for scale and taste,” Territory Foods Founder and CEO Patrick Smith told PYMNTS.com, yet his company is designed around nutrition.
To design a service with this focus, Smith had to rethink the whole production side of the supply chain from the ground floor up. The company works on a micro-production model that is based on multiple independent chefs who cook out of commercial kitchens and utilize their excess capacity. While each of those chefs cooks a relatively small number of meals in aggregate, Smith said their combined efforts can create a huge variety of meals.
The Distribution Model
To distribute finished meals to customers, Smith partners with various wellness-minded businesses, such as gyms and doctors’ offices (think chiropractors and physical therapists). Then, Territory Foods installs commercial refrigerators so its customers can visit those businesses and pick up their food instead of relying on a delivery-only business model. While customers can choose to have the meals brought to their homes, less than half opt for delivery.
Smith’s distribution model comes with several advantages for the company – and a big advantage for its partners. For one, the model allows the service to carefully control the entire cold chain for its products with real-time monitoring. Secondly, the model makes the last mile affordable to the customer, as that option is free. The third benefit, which applies to Smith’s partners, is that local retailers can attract increased foot traffic as people come in to pick up their meals, and could become potential prospects.
The Customer Experience
To order a meal from Territory Foods, customers start by selecting one of the four regions – Washington, D.C.; San Francisco or Dallas-Fort Worth – as the menu options are tailored to each market in which the company operates. In fact, 90 percent of Territory Foods’ meals are driven by local chefs who concept them from the ground up. As Smith noted, the menus “reflect local tastes, local flavor profiles and local ingredients.”
Next, customers they choose a meal size based on a caloric target. They also choose the number of meals and when in the week they would like them. While many customers order breakfast, lunch and dinner five days a week, Smith noted that others might just order lunches at the beginning of the week. The minimum order size is two meals, but the average order size is well over five meals.
Customers then select their dietary preferences to customize their meals. Territory’s default option is based on an anti-inflammatory diet of no added sugars, no refined sugar, no gluten and no dairy, but customers can set additional restrictions and select specific ingredients they want to avoid. When a customer is done with their selections, they can choose to pick up their order or have it delivered.
Territory offers subscription options and one-time purchase options. According to Smith, the rationale behind that decision was “the more we can give customers the options they want, the more that works in our benefit over the long term.” Plan options are a key subscription service feature, as the PYMNTS Subscription Commerce Conversion Index found that 95 percent of the top subscription services offer plan changes.
When it comes to prepared foods, Smith sees a potential in the market for meals specifically designed for certain dietary needs. “The opportunity for personalized nutrition is massive,” he said, adding that the need for such services doesn’t represent a trend, but something much larger, more like a “macro shift.” Will other companies in the industry adopt this model? Future offerings will tell.