Ninety percent of meal-kit customers unsubscribe within six months of signing up for the service, says Fast Company, after analyzing data gathered by the market-research firm 1010data. The firm’s data indicated that only about half of customers of Blue Apron remain in the program after the first week, with numbers falling off quickly from there. The dropout rate is similar for other meal-kit companies, like Plated and HelloFresh.
“Spokespeople for Blue Apron, Plated, and HelloFresh all said that the 1010data analysis is inaccurate, but they declined to provide accurate data,” says Fast Company.
“Growing rapidly despite such low retention rates is extremely costly,” says Mother Jones’ Tom Philpott. “To entice new customers, these companies maintain perennial ‘limited-time offers’ like this one from Blue Apron: ‘Get 3 Meals Free With Your First Order!’ If the 1010data report is accurate, loads of consumers are taking these deals and then quickly bolting, perhaps moving on to the next meal kit dangling free food with no obligations.”
And yet, meal-kit companies have received enormous support from venture capitalists attracted to the sector’s growth of over 500 percent since 2014 (based on 1010data). “[M]eal-kit startups have drawn $650 million in venture capital over the industry’s short life span,” says Philpott, who suspects that in order to stay competitive, the companies will have to resort to the kinds of industrial-sized market strategies they said they intended to counter with seasonal ingredients and nutritionally-minded home cooking.
“[F]ar from ‘disrupting’ Big Food,” says Philpott, “it seems likely that the surviving meal-kit services will start looking a lot like the rest of the industry: huge, highly consolidated, and pinching pennies to turn a profit.”