Chef’d CEO: Why The Existing Meal Kit Model Doesn’t Work

Get ready for a shift in the meal kit landscape, according to Chef’d CEO Kyle Ransford.

In the latest Topic TBD with PYMNTS’ Karen Webster, which explored the preparation and delivery of food rendered as a service, Ransford predicted that “I think the subscription meal kit as it’s been known will be vastly diminished in the next two years. It won’t be something that you hear a lot of or get marketed to a lot. I think you’re going to have a lot more choices.

“The meal kits will be like the beer aisle” one finds in supermarkets, he continued.

In a world where consumers look for cheaper, faster and better quality – a trifecta that proves elusive when meal kits deliver only one or two of the elements, said Ransford – choice and flexibility are key differentiators.

Thus, a different business model may prevail out of necessity, one dictated in part by the consumer.

The giants in the meal delivery space (think Blue Apron and others), said Ransford, have brought innovation to a concept where traditionally, consumers sign up for a subscription, pick a few items and receive them (with variations of choice, of course) – until they decide to cancel those very same subscriptions.

He offered Chef’d as a template for a more choice-driven model – functioning, as he termed it, as an eCommerce-oriented company that serves customers across a variety of platforms, from delivery to in-store availability at a number of grocers.

The crucial differentiators for the company lie in the fact that the meal kits are customizable, with no mandatory subscriptions in place.

Ransford stated 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.

Chef’d, as Ransford explained, partners with chefs (as the name implies) and brands to assemble recipes that are in turn chosen by consumers. The company ships pre-portioned ingredients to the door. Chef’d also offers a personalized feature that provides recommendations to users based on their preferences, ranging from, say, vegan to Paleo.

Taking its cue from the grocery and in-home prep experience, the company offers roughly 2,000 recipes, as Ransford noted, with 150 partners currently in place to help develop those recipes. The firm’s kitchens test roughly 100 recipes each month.

“We generally have seven or eight things that we eat at home or make at home, and we have a few things we do [besides cooking],” he told Webster in terms of the general consumer meal experience – and no one has a subscription to their grocer. “We get takeout, we go to restaurants, and usually we go back to the same restaurants and the same food again because we like it. [Chef’d is] making it cheaper to buy the exact same ingredients that you want, and making it more convenient by sending it to your house.”

According to Ransford, the average amount spent in person at the grocery for the ingredients needed to make a number of meals stands at $119, while the average expenditure for a Chef’d customer comes in at $82 – for the same building blocks.

It is the range of flexibility, choice and familiarity that ties into the efficient experience of getting precisely the items needed, in portion format, to make dinner, as he told Webster.

“It becomes a much easier way to both discover food and become educated on how to make it,” he said. Even without subscriptions mandated by the model, Ransford pointed out that 94 percent of Chef’d customers have said they plan to reorder.

Recent offerings and options by the company include the ability to re-order items and to offer “thumbs up/thumbs down” ratings on recipes that, in turn, inform Chef’d about individuals’ preferences. The firm also offers its meal kits through the Innit app.

There have been surprises as consumers in rural areas have been ordering from the company, a finding that ties into the fact that many of these individuals can be, say, 20 miles from Walmart and 200 miles from Whole Foods.

Sunday and Wednesday remain the biggest order and ship days for Chef’d, with consumers using the end of the weekend to mull what’s for dinner through the first few nights of the week, and with Wednesday being a demarcation point for the weekend.

Ransford said that against the backdrop of flexibility and a wide range of demographic uptake, Chef’d has seen inbound calls coming from companies that are interested in making food part of their own corporate identities and experience.

Consider the pharmaceutical company that sells a cancer drug with side effects that can be mitigated by a specific, tailored diet, which in turn ensures effectiveness in seeing treatment through to its end. Or the Chef’d model may appeal to the household, complete with elderly parent or grandparent, that may wish to continue making their own favorite recipes, altered a bit to meet health needs (or according to the ability to get to the grocer to gather ingredients).

In the end, Ransford said, the meal delivery model is one that, while evolving, does not necessarily represent a wholesale shift in how we get and prepare dinner.

“It doesn’t mean you’re not going to go cook on your own or go to a farmer’s market,” he told Webster. “This is just a piece of your food lifestyle. You’re still going to dine out, you’re still going to get takeout. Chef’d just becomes the convenient way to get a couple of really nice meals that you know you can make quickly and easily … wherever it fits in your personal kitchen.”