It’s notoriously difficult to find the right recipe for a meal kit business, and meal kit provider Chef’d has struggled: The startup, which was valued at about $160 million last year, reportedly burned through its cash from venture capitalists and food companies. The situation seemed to recently come to a head, as the company told employees that it was shuttering its operations.
Chef’d Founder and CEO Kyle Ransford reportedly told employees of its decision to close late on Monday (July 16): “Due to setbacks with financing, unfortunately, we are ceasing operations for all employees,” Ransford reportedly wrote in an email to employees.
Despite the struggles of Chef’d, the announcement came at a surprising time: The meal kit startup said in June that it had inked a deal to sell the kits in Walgreens and Duane Reade stores in the New York area. In addition, Chef’d announced in May that it had partnered with Byte Foods to bring its meal kits into 100 of Byte’s unattended retail locations in California. And, in a more traditional brick-and-retail sense, Chef’d also announced in May that it has entered into distribution deals with several grocers.
Chef’d isn’t the first meal kit company to struggle to keep customers coming back in a marketplace that is crowded and costly: Facing membership churn amid other challenges, Blue Apron, for example, is putting its kits in Costco. Beyond Costco, other big-box stores and grocers are seizing the opportunity to offer meal kits in their stores for customers who don’t want the commitment of a subscription service. Walmart, for example, has begun selling meal kits and “one-step meals” in more than 250 of its brick-and-mortar stores.
Unlike traditional meal kit delivery services, Walmart does not require its customers to purchase subscriptions. But those commitments are pivotal to traditional meal kit providers, as they tend to rely on subscriptions to support their business models, which often involve costly and complex delivery processes.
Still, Chef’d had actually taken the opposite tack: The meal kit company didn’t have mandatory subscriptions in place. Ransford said in an interview in April that only a small subset of the meal delivery consumer base covets the subscription aspect of the general meal kit experience – to the tune of 10 percent, while 90 percent want to make their decisions on a case-by-case basis.
It’s not too much of a surprise, then, that the Food Marketing Institute (FMI) said that only 22 percent of consumers have tried meal kits, while interest in meal kits purchased from stores is 51 percent. And, while the struggles of Chef’d shine a light onto the difficulty of operating in the meal kit industry, some observers think there is a successful recipe for the meal kit business.
“Although Chef’d experienced difficulty, there is enough ingenuity among retailers and suppliers to eventually meet consumer demand and build a fundamentally sound business model,” FMI Vice President of Fresh Foods Rick Stein told Supermarket News.
In Other Brick-And-Mortar Retail News…
A little more than one week after John Schnatter resigned his position as chairman of the board at Papa John’s, Forbes published a story that the former CEO had allegedly engaged in inappropriate conduct and spied on staff at the company. Forbes said that 37 current and past employees of Papa John’s were interviewed for its story.
Gymboree is revamping its digital presence, along with a refreshed product and personality. The changes include updated websites and an app with augmented reality (AR) functionality. Even so, Gymboree Group Chief Executive Daniel Griesemer believes that brick-and-mortar stores still have their place.
Shoppers in focus groups had said that they do like to shop through eCommerce websites, but “they prefer to shop in stores, because they want to touch and feel and look at quality and sizing,” Griesemer told CNBC.
Pop-In@Nordstrom has partnered with Casper, the global sleep company, to launch a pop-up store. The store will feature the original Casper mattress, the Casper Wave mattress designed with ergonomic technology, Casper’s soft and supportive pillow, crisp and cool sheets, and even a dog bed made specifically for consumers’ four-legged friends.
This is not Nordstrom’s first run at pop-up shops. Last year, the Pop-In@Nordstrom concept showcased the fashions for Everlane. The in-store shop launched in select brick-and-mortar Nordstrom stores, and the pop-in items were also available online for purchase.