The new food retailing boom

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Meal kits are sweeping across North America. It’s the perfect trend for consumers who want to be empowered by cooking but still need convenience.

Canada has just under 20 significant players already. In Canada, the meal kit segment is estimated to be worth around $200 million and growing.

Instead of takeout, consumers choose a meal kit that brings them pre-shopped, pre-measured, pre-everything, so they can whip up an appealing dish in minutes, even with little or no cooking experience.

Costs, however, are anywhere from $9 to $12 a meal, which makes this service prohibitive for many.

The other problematic issue is packaging. For assured freshness and food safety, ingredients must be thoroughly wrapped, making environmentally-conscious buyers less enthusiastic about their purchases.

This is likely the biggest hurdle that meal kits must overcome: the waste is astronomical.

Another issue is profitability.

Goodfood is one of Canada’s largest meal kit providers. It has tripled its active subscribers, to 76,000, but is still losing money. Most providers aren’t making profits and that’s peculiar for a new growing segment.

Despite the challenges, meal kits face relatively few headwinds.

The food service and hospitality sector in Canada has been booming over the last few years, with growth exceeding five per cent in 2017 and forecasted to grow more than four per cent this year. Compared to food retailing, these numbers are spectacular.

Grocers want into the food service game and meal kitting is one way to do it.

People are eager to eat more at home while forgoing the worst of cooking. Canadians are still buying cookbooks in droves and watch a record number of cooking shows. But meal kits are increasingly popular.

For the business owners, they solve the issues of extra labour costs, helping to mitigate risks related to higher minimum wages and, most important, the risk of choosing the right location.

But meal kits still don’t resolve one age-old issue: you still need to clean your dishes after you’re done. Technology hasn’t solved this problem yet but surely someone will come up with something soon.

Sylvain Charlebois is a Troy Media columnist.

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About Author

Sylvain Charlebois is dean of the faculty of management and a professor in the faculty of agriculture at Dalhousie University. She appears courtesy of Troy Media.