Meal kits, which contain pre-portioned ingredients for cooking meals, are popular alternatives to takeout and delivery food. But the overall market penetration remains low: 93% of Americans still don't subscribe to meal kits, according to a recent survey by online organic grocer Good Eggs.
However, 23% once subscribed but canceled their subscriptions. Consumers' top complaints were high prices, small portion sizes, and the hassle of managing subscriptions.
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Those frustrations may have factored into the rapid decline of Blue Apron (NYSE: APRN), which reported a 24% drop in revenue in 2018 as it lost a quarter of its customers. The meal-kit maker went public at $10 per share in mid-2017, but the stock now trades for less than a dollar.
Blue Apron's downfall has been further hastened by competition from rival meal-kit makers like HelloFresh, as well as meal kits from Amazon, Walmart, and Kroger. Kits also aren't much cheaper than pre-cooked, takeout, and delivery options, all of which require less work.
The meal-kit market won't collapse anytime soon, but it remains a niche one. Companies that overestimated the growth of the market -- like Blue Apron -- could be in deep trouble.
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