Where Will Subscription Food Services Go From Here?

Are you a “meal kit person?”

If so, you can count yourself among a surprisingly select group. It may seem like ads for subscription food services are everywhere, but recent studies show that just 17% of Americans have ever subscribed to a meal kit.

It’s a fickle industry, and one that’s often propelled by endless churn. Still, subscription food services generate billions in income every year, and the market is only expected to grow.

Where does the food subscription industry stand? Let’s take it back to the beginning.

The early days of food delivery

Let’s be clear what we’re talking about here. Blue Apron. Hello Fresh. Ready meals or ingredients delivered in a subscription box format for a one-time or recurring fee. You could call it the meal kit business, although some boxes go beyond that label.

This industry is relatively new, but it has its roots in multiple centuries-long histories. After all, the subscription business model has its roots in insurance schemes, which became popular during the Enlightenment. Food delivery, meanwhile, was recorded as early as 18th-century Korea.

The other key element here is the internet. From its very inception, food delivery was part of its history; the first item bought and sold online was pizza. Pizza Hut’s PizzaNet launched in 1994, making it one of the first public websites, period.

The modern day meal kit

The first true meal kit service was Middagsfrid, launched in Stockholm in 2007. Much of Middagsfrid’s model is still used by subscription food services today. These include regular delivery, weekly menus, subscription payments, and delivering ingredients for users to prepare recipes.

The path from then to now is basically a straight line. The Swedish food box concept expanded through Europe and came to the U.S. in the early ‘10s. Three American subscription food services—Blue Apron, HelloFresh, and Plated—all launched in 2012, setting the stage for a colossal new industry.

The boom years of subscription food services

As is often the case with “rise and fall” stories, the rising and falling were kind of happening at the same time. By 2017, the industry was raking in billions. Over 150 U.S. subscription food services had been established, and Blue Apron became the first such company to go public.

At the same time, Blue Apron’s IPO proved to be a disappointment. The year it went public, only 5% of U.S. households had tried a subscription food service. Trendy marketing and special offers only went so far; one poll found that just 6% of new subscribers to food services were still subscribed three months later.

The market continued to grow overall, but it didn’t come close to the revolution it hoped to be. The only thing that could save subscription food services is if, by some miracle, everyone suddenly became more interested in cooking at home.

The other boom years of subscription food services

These services always catered to a certain niche. They’ve expanded plenty, but the audience that first bought into them was well-to-do young adults living in major cities. These people, often men, have enough money to buy meals, but don’t have great access to grocery stores.

While the U.S. never fully locked down, the pandemic expanded that demographic. Everyone’s access to grocery stores declined, so interest in subscription food services skyrocketed. Blue Apron saw record profits, HelloFresh soared, and Goldbelly grew 300%.

An uncertain future

In 2021, subscription food services were a $6.9 billion industry, and it’s still projected to grow. The thing is, the conditions that brought the industry back from the brink have all but faded away.

HelloFresh stock dropped over 60% this year. Blue Apron returned to its pre-pandemic lows, selling for just $3 per share. This industry has faced lean times before. How will they bounce back now?

Here’s the big challenge: the economic effects of the pandemic haven’t gone anywhere. The market for meal kits is shrinking quicker than the supply chain issues. It’s a churn-heavy industry whose market remains narrow.

Some companies have responded to these concerns with specialized subscriptions. People on unique diets (vegan, keto, kosher, etc.) can find a meal kit that’s right for them. Others are specializing in pre-packaged foods such as snacks, condiments, and heat-and-eat meals.

Since Amazon got in the meal kit game, it’s clear that consolidation is in the industry’s future. Expect big boxes to eat little boxes, as well as crossover with food delivery services like Grubhub and DoorDash. It’s not clear what’s next for subscription food services, but if “meal kit people” are to be believed, there are still reasons to get excited.