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Meal kits have become a prominent consumption channel, offering consumers the convenience of prepackaged portions and recipes, often delivered to their homes, such that they can enjoy a home-cooked meal that is nearly guaranteed to turn out well. But their popularity also has led to what some observers believe is an oversaturated market, with more than 100 companies competing to get hungry shoppers to sign a contract for weekly service.

For Plated, currently the fourth largest meal-kit delivery provider, the threat created by such tough competition prompted some thinking about how to ensure it could survive. When the grocery store chain Albertsons came calling, it agreed to a subsidiary partnership, in the hope that the new channel for its products will truly set it apart. Specifically, Albertsons will stock Plated meals in stores, where shoppers can grab them and go or pick up previously ordered meal kits, even while they may continue to have them delivered from the service.

The pricing for meal kits puts them somewhere in between the average costs for cooking at home and eating out. For example, at Albertsons, the kits will be priced around $10–$12 per serving. Market research shows that the average meal out costs $17, whereas traditional home cooking runs around $4 per person. By leveraging Albertsons’ existing facilities and purchasing scope, the Plated meal kits should gain a cost advantage over other kits. That is, Albertsons already is buying and manufacturing huge quantities of food products, so it can establish economies of scale for the products contained in the Plated kits too.

In turn, the grocer hopes that its acquisition of Plated will create a new flow of consumers. If people already subscribe to the service, they might be more likely to visit an Albertsons store, where they know they can find the quality and style of meals that they current enjoy through the mail.

Some other grocery retailers offer meal kits in stores too. And as noted, there are plenty of other meal-kit subscription services. But the Albertsons–Plated collaboration is unique, in that it leverages both channels. Consumers can subscribe, or they can grab a kit at the last minute. As the only ones combining these offers, the partners believe they have a strategy for success in this competitive arena.

Discussion Questions:

  1. Will other supermarkets begin offering meal-kit services?
  2. Do you think the meal-kit service will help bring customers into stores?
  3. How will being owed by a supermarket improve Plated’s supply chain management?

Source: Heather Haddon, “Albertsons to Buy Meal-Kit Company Plated,” The Wall Street Journal, September 20, 2017

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