Barry Skown
November 9, 2016
Fresh Food Subscription Programs – Boom or Bust?
Fresh Food Subscription Programs – Boom or Bust?

Let’s face it, the pace of life gets faster and faster every day.  We constantly struggle to reclaim personal time in a world where “instant” and “now” describe just about everything we do in our lives. And dining trends and purchasing habits in the US are no exception.  A faster pace of life means eating-on-the-run more often during the week and, yes, even the weekends as well.  Soccer Moms haul their “teams” 3-4 nights per week and professional adults work all day only to then hustle to community meetings in the evening.  Which means little to no time for a family to sit down together for a lengthy home cooked meal.

What’s Trending?

Luckily, new trends have cropped up to help people combat the frenetic pace of life and carve out time for what we fondly remember as family meals.

New foodservice terms like Grab-n-Go, Drive-Thru, and Home Meal Replacement (HMR) have become a part of our everyday vocabulary. In the past couple of years, a new trend has come onto the scene and increased in popularity—Fresh Food Subscription—a service that delivers fresh ingredients directly to the home, along with recipes to follow, to create a complete meal.  Companies such as Blue Apron, Chefday, and HelloFresh (all based in New York) sprouted up in 2012, and marketed their product to the fast-paced family who wants to cook at home, but has no time to choose a recipe or go grocery shopping.

Fresh Food Subscription in the Workplace?

With all of these new foodservice trends increasing in popularity, and most of them having the goal of making dining easier for families with two working parents, most people would think that a natural progression of these new services would be through the workplace and the on-site employee café facility.  But the B&I/employee dining segment of the foodservice industry has struggled (and in some instances, abandoned) to offer either the HMR or Fresh Food Subscription service with any sustained success at all.

HMR programs began cropping up with the major foodservice management companies (e.g., ARAMARK, Bon Appetit, Guckenheimer, Eurest, Sodexo, etc.) in the early 2000s, as the employee dining segment exploded on both coasts with high-tech and other large companies building on-site cafés as an employee benefit as well as with the hope of increasing productivity.  As employees worked later into the day/evening, the choice for dinner increasingly became fast-food and unhealthy dining choices.  Human Resource departments at some companies requested that their on-site foodservice management company provide a Home Meal Replacement program for employees to place their dinner meal order during the day, pick up before leaving the office, and re-heat once they got home.

Sound Logic?

The logic appeared sound. The HMR’s would consist of healthier dining options than a greasy burger, deep-fried-whatever, or pizza.  And the convenience of the employee picking up the item before leaving for home seemed like a no-brainer.  Initially, the HMR program at many companies received decent-to-good patronage and high praise from employees. But for some reason, the programs began a steady decline in sales and patronage.  The Fresh Food Subscription service has met with similar ambivalence from the employee dining segment.  Why is that?

Pros and Cons of Subscription Services

Technomics released a study saying that subscription foodservice will grow from $1 Billion in 2015 to $10 Billion in 2020.  Is this really possible?  Will consumers see these services as an elixir to the daily what’s for dinner conundrum facing us all?

Speaking with an industry colleague (who has 4 children) about why, or why not, these two dining programs have not been as prevalent, or successful, as logic would dictate, some interesting points were brought up.

This colleague stated that their family is often out of the house 4-5 nights a week and, as a parent, they don’t want to feed their kids fast-food or take-out.  Besides being expensive, it is unhealthy.

Grabbing food on the go can also set an unhealthy habit of allowing children to pick what they want to eat versus eating what they are given.  They believe having the kids try what they are given makes them open to food they might not order if they were able to pick what they want at a fast-food establishment.

Additionally, thinking of which menu items to make/serve 5 days a week is challenging.  They don’t like to serve the same meals every week, and the meals also need to be either easy-to-prep, fast-to-prep, or be totally prepped-in-advance to be finished when they get home.

And finally there is grocery shopping.  When does a parent find the window of time to do it while on the go with 2-4 kids?

The Pros

Given the challenges stated above, the “Pros” of the Fresh Food Subscription (FFS) service from the customer’s side, and from a family’s perspective with 2 working parents, include:

  • Feeling good about feeding kids healthy meals
  • Not having to go grocery shopping
  • Not having to think about what to cook and menu variety
  • Encouraging my kids to try new food items
  • Encouraging family time (a huge factor for this colleague)
  • Building cooking skills and confidence in the kitchen and parent can include the kids in prep
  • Providing balanced, nutritious meals (another huge factor)

 

The Cons

But certain questions linger in the consumer’s mind, especially in the area of logistics.  The potential “Cons” of a FFS program might include:

  • Costs – How often can a family afford to do this?
  • The food arrives in a box at my home.  Can I trust that the food did not go bad during the holding/transport process?
  • Is the food still locally sourced?  Or shipped from out-of-state?
  • If my company provided this option on-site, would the cost be better than ordering from an outside provider?
  • Can the food still be picked up if I am at work past 6:00 pm?

 

The Foodservice Management Company’s Point of View

In order to gain a better picture of the “pros” and “cons” of offering one or both of these two programs in an employee dining facility, the same questions were posed to two of the major foodservice management companies to get their views.  One Operator said that there are no programs of either type in place right now, and nationally there are very few, if any, accounts, where they operate one of these programs.

When asked “Why?” the District Manager seemed to be a little at a loss as to why these types of programs don’t turn out to be as popular once actually implemented as they are in theory.  As stated above, logic would make a person think it would be very convenient for the working parent to pick up their HMR or ingredient package from the café on their way home.  But for whatever reason, people don’t utilize the program.  In the end, this Operator determined that the only reason was the fact that Blue Apron (and other grocery-delivery programs) deliver their foods directly to the home.  So there is no picking-up from a café or making a 2nd stop at a grocery store for a specialty ingredient or other household items required in home delivery.  Everything is delivered to them so they don’t have to go anywhere to get what they need.  The ultimate convenience.

I also spoke with a second Operator, posing the same questions I asked the first company.  This Operator stated several possible reasons, including:

  • Employees don’t think about the dinner meal early enough in the day until it’s too late to order a HMR or Ingredient delivery.  They don’t think about it until 1 or 2pm or later.
  • B&I Cafes don’t stay open late enough (in most situations) to allow an employee to pick up their HMR or Ingredients if they work later than 5pm.
  • Clients often think that the Blue Apron’s of the world are actually making money at what they do, so if they offer the same concept in-house, this can be a profit center for the corporation as well and partially offset a subsidy that is being paid to the Operator.  In reality, most FFS companies aren’t even making any money yet, so that is a fallacy. For example, a TV commercial was just on the other day that advertised one company’s products and service for “less than $9/meal.”  How can they make money on that with labor and quality, fresh ingredients in the equation?
  • The reason the HMR programs at the grocery stores are successful is two-fold.  First, the customer can actually see the end product in the display case and knows what they are getting before they pick it up (and most stores do an attractive job at merchandising their foods). Second, since they’re at a grocery store, they can also get any other food or household item they need all in one-stop shopping.  If they pick up their HMR or Ingredients at work, they still might have to go to a grocery store on the way home anyway to pick up beverages, or another household item.
  • Operators don’t feel the need to compete against every restaurant concept out there that delivers food, HMR’s, or Ingredients to the home directly.  And there is no way they can compete with them on a menu-variety basis because the Operator can’t offer 6 different types of cuisine every day of the week for an HMR.
  • And finally, in this Operator’s case, their internal Quality Control division will not allow any account to sell raw protein to a customer to take home and prepare at home.  It’s both a food safety issue and a liability issue for the Operator.  There is no way for the Operator to control how long it takes someone to get home from their office, where the food may not be held at temperature, causing a potential foodborne illness to break out.  Who is to blame?  For Blue Apron, the ingredients are held at temperature during the delivery process and then delivered right to the home, so the liability for Blue Apron goes away after the delivery is made.

 

Additionally, I was speaking with friends, a married couple, who commute by train on a daily basis.  This couple said they would likely never participate in the ingredient delivery program if it was offered through the workplace because it would be a huge hassle to take the products on the train—heavy and bulky—and then carry them from the train station to home as well.  While this situation is specific to mass-transit commuters, it is further validation of the challenges these programs face when offered through the workplace.

Both Operators interviewed have very few accounts nationally where these types of programs are in existence.  And one company mentioned that they are not even in pursuit of offering these programs at any accounts unless specifically requested by the client and only in specific circumstances (i.e., a “management fee” account that reimburses the Operator for operating losses).

Possible Just Not Probable?

But that is not to say that either the HMR or FFS program could not work in the right application and employee environment. If the employer is willing to invest in the program, and drive the culture to participate in the program, then there is a chance that either program could become successful in terms of participation and possibly reach break-even status as well. But in order for either program to succeed, it will require the commitment of both the Employer and the Foodservice Operator to market, incentivize, and execute the program to their maximum potential.  Without firm and sustained commitments from both partners, either program will be destined to (literally) “die on the vine.”

But What About Home-Delivery Programs?

One thing is certain, everyone wants to experience their dinner meal as just that, an experience, not a refueling.  The jury is still out on whether these programs will become the norm for most households.  That will really depend on how consumers prioritize all the different variables affecting their daily schedule, dining habits, and pocketbooks, and how a food subscription program fits into their unique equation.

By:  Barry Skown

Senior Associate | Management Advisory Services

Portland

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