It’s not entirely clear why, but some new data shows meal-kit services are struggling pretty mightily to retain customers. Analysis by market-research firm 1010data suggests the ubiquitous weeknight-dinner fad — which is estimated to pull in $1.5 billion in sales this year — could soon hit a wall because the vast majority of customers actually peace out within a few months of joining. One shocking figure is that only half of Blue Apron customers even make it beyond the first week of service, according to Fast Company’s look at the data. Slide out to six months, meanwhile, and the number left shrinks to a paltry 10 percent.
A “similar pattern” holds true for Blue Apron’s rivals like HelloFresh and Plated, too, exposing what sure looks like a serious retention problem, collectively, for these services. It’s possible customers are gaming the system by exploiting services’ sign-up incentives: Blue Apron offers a $30 break on the first order, which comes to roughly half off for two people; HelloFresh’s is $40, while Plated’s is $24. Copycat promotions exist for Terra’s Kitchen ($30 off), Purple Carrot ($20 off), Green Chef (four meals free), Martha Stewart’s new service ($30 off), Munchery (50 percent off), and basically everybody else as well. So with enough meal-kit options out there to try one every week until colonies are farming on Mars, maybe the industry’s problem is that the freebies are too easy to string out, as opposed to people burning out on meal-kit delivery altogether. Regardless, customer-loyalty issues complicate business growth and, ultimately, profitability for a business model analysts already argue faces hurdles to ever becoming “cash-flow positive.”
For now these food-industry “disruptors” can rely on the venture capital they got injected with early on, but it won’t last forever. Also, if this data about retention is true, the recent exposés of questionable shortcuts that the big players like Blue Apron have taken to cut costs and spur growth make more sense. Fast Company says reps for Blue Apron, Plated, and HelloFresh all claimed 1010data’s numbers are wrong, but they’ve so far “declined to provide accurate data.”