What restaurants can borrow from Meal Kit Delivery services

Services like Blue Apron, Chef’d, Plated have been a part of the rising tide of companies delivering the pre-set meal kit to customers since 2012. Market Research firm Packaged Facts predicted the meal kit industry would generate around $1.5 Billion in 2016. These companies have attracted the attention of investors, CPG brands, grocers and restaurants alike; each for their own obvious reasons.

Restaurants look on warily, fearing another category competitor carving away much needed traffic and revenue. We at Food and Restaurant Marketing have examined the most successful of the hundreds of meal kit brands to identify a few lessons restaurant chains could apply to their own business. It all starts with understanding why meal kits have been successful.

It is convenient

Well, sort of convenient. It’s delivered to the door of the customer, and is prepared on their schedule. But it does have to be prepared. And cleaned up. While there is convenience, it comes with a limitation that is understood by customers.

Restaurants have both of these same elements. Dining at a restaurant, getting takeout or delivery can be more convenient than grocery shopping and cooking. But waiting and other factors can diminish the value exchange of paying for the overall convenience of not cooking. Restaurants need to continue to look for ways to remove friction from their ordering experience when consumers are looking for that convenience. They don’t necessarily need to cut out all the stops for dine-in guests.

Takeaway: Focus on friction.

Restaurants can take advantage of this trend of adventurous eating by being bold.

Foodies love it

Meal kits have a tendency to feature unique or unexpected ingredients. This gives customers a chance to ‘experiment’ with a new flavor in a safe way. It also lets them explore many profiles of spice, protein and vegetable combinations than they might be able to shop for at their grocery store without guidance. The chefs at Blue Apron have already tested the flavor and assembled the kit.

Restaurants can take advantage of this trend of adventurous eating by being bold. Even if it means offering variations on successful menu items, brands can add spicier profiles and unique proteins where it makes sense. The rise in turmeric and other spices is a trend that has hit meal kits and CPG but not yet mainstream chains. This despite Technomic and others (see previous paragraph) calling for it.

Takeaway: Bring the flavor.

Balanced meals

Remember this concept? Meal kits do a great job of making sure customers get a square meal. Their meals come set with complementary fruit, vegetables and side dishes that all work together. And we’re not talking about the frozen peas and carrots that we know from TV dinners. As above, this is part of a trend of playing to foodie culture that has flourished with gourmet cooking content and celebrity chefs rising to prominence.

QSR and Fast Casual (and many, many Casual concepts) under-emphasize or else flat-out ignore meal balance. For a long time, guests looked past it and just had a meal with fries and a soda. We’re all more educated, even if the lesson is the same one taught in elementary school using the outdated food pyramid. How can your restaurant add vegetables or sides to the mix that make sense to your concept and will be embrace by your guest.

Takeaway: Side dishes can be the star.

There’s also something to be learned in where they fall short:

You can’t predict a craving.

It is great when you’ve pre-ordered that pork cutlet with green chiles, and it shows up three days later and you are still in the mood for it. Yes. However, when customers suffer multiple lapses in orders; when they pass on a meal that’s been delivered, we’ll begin to see attrition.

What most restaurants have going for them is the very thing that you cannot control. Making food that people crave. Know your guests, and continue catering to their tastes. They’ll come when they crave it.

Takeaway: Find ways to drive craving.

These along with other factors such as accurate portion size are reasons that meal kit services have blossomed in the US. But through careful study of their customers, restaurants can find keys to improving their offering, guest loyalty and new customer acquisition.

Enough about Millennials already: Can we talk about another powerful consumer group please?

Let’s decelerate the conversation about the importance of Millennials. Sure, they are 80 million strong, and seem to be the clear consumer target for most brands, but marketing efforts are too focused around Millennials. It’s time for brands to bring Baby Boomers back into the picture.

Baby Boomers’ free-spending tendencies and access to greater than average disposable income make for an intriguing, lucrative market segment for your brand to target.

Instead of focusing our attention on a potential market, we should turn to a more promising demographic- the tried and true Baby Boomer generation.

Even though Millennials represent a major potential buying force, our findings show they are reluctant to actually spend money. Millennials face an overwhelming amount of college loan debt, which keeps them from contributing economically to our society. Millennials aren’t eating out and they aren’t buying homes. In fact, one in five are boomerangs, meaning they live in their parent’s homes, and are eating at home more often than the general population.

A new lens

In 2015, there were an estimated 74.9 million Boomers. They have a spending power of $2.3 trillion, and some estimates show this demographic controls 70 percent of disposable income in the U.S.

Boomers, free of family financial obligations and focusing on new possibilities, will likely spend in ways that Millennials won’t or simply can’t. Since many Boomers have more disposable income, they are eating out more. In fact, Boomers buy an average of 193 restaurant meals a year, according to Restaurant Hospitality Magazine.

Boomers are also easier to reach and engage with as a brand, because so few brands are even targeting them. Baby Boomers spend the most across all product categories, but are targeted by just five to 10 percent of marketing campaigns, according to Jami Oetting of Hubspot.

Strategy, the secret sauce

Millennials are often praised for their tech savviness, but boomers are equally as interested in technology. A Google/Ipsos study of consumers 45 and over found that the amount of time spent on the Internet and traditional television viewing were comparable. The study found that the Internet is the top source for Boomers to gather information on topics of interest. If Boomers are flocking to the Internet, your brand better be there too.

By implementing an Internet marketing strategy, your brand can measure engagement and optimize campaigns over time. So combining the use of linear TV along with a layer of measurable tools like search and email marketing, a campaign has a precise mix to reach and motivate the Boomer audience into action.

No matter which channels you use to market your brand, you need to understand how diverse boomers are. Because of the diversity, marketing segmentation is essential. Segmentation by life stage and other factors is important to effectively get the right message to the right audience at the right time. Segmentation is key.

The Holy Grail

The holy grail for restaurants is frequency of visits. One of the most important variables to frequency is loyalty. And Boomers are brand loyal when you meet their needs.

Creating a lifetime customer is the most important reason why you should be focusing on this audience.

Completely ignoring Millennials is out of the question. Their importance to brands is clear−they represent the future for the brand. Just don’t target Millennials at the expense of Boomers.

Pretty soon you’ll hear about Gen Next and why you should target this emerging group. But until then, trust me, Boomers will reward the brands that speak to them on their terms. If you provide a level of hospitality that respects who they are, they will reward you by opening their wallets and opening them often.

How recalls create category parity

frozen food, grocery, shopping, cpg, Eggo
Consumers might freeze Eggo out in light of their recall

Last month, Kellogg’s announced a voluntary recall of their Eggo Whole Grain products due to concerns about potential listeria contamination. They deserve kudos for proactively taking that action. Especially with the knowledge that many brands never fully recover from recalls.

For example, Perrier, which built its brand on natural purity was forced to issue a wide-sweeping recall in the early ’90’s due to the discovery of benzene in their product.

Ironically, the product was being used as a control by a US government agency testing local water supplies when the chemical was discovered. Perrier was forced to recall hundreds of millions of bottles and their share price dropped by $40 after returning to the stock market.

Perrier was once the gold standard for bottled water, and helped invent the category. Though the brand stabilized after being purchased by Nestlé, it lost its leader position.

Things are just as dire for Kellogg’s. Cereal sales are ever-slowing, and all non-protein rich (or perceived) breakfast products are out of vogue. Eggo is a staple in a lot of homes, but sales have also suffered.

Like Perrier, Eggo lovers will now seek out alternate brands in the freezer case. What’s worse, the new generation of shoppers has told us in multiple research studies that they aren’t shy about switching to store brands. Millennials add a new wrinkle with this behavior.

Unlike Perrier which owned first-mover status in their category and had built the brand of a premium or luxury product (depending on the market) Eggo is essentially a commodity. Though a fine product, and well-branded for awareness over my lifetime, it doesn’t occupy a specific emotional niche.

That’s supposed to be why we choose branded products over store brands or unknown brands.

Not only are there other waffles that can fill that space in the freezer, but there are others that share the unique attribute of Eggo – the shape. That some or all of those are also produced by Kellogg’s is a conversation for another article. Once a product in this situation is replaced in the shopping cart once or twice, it is awfully challenging to reclaim that place, especially when private label waffles can be up to 35% cheaper.

That’s the biggest problem here. What did the recall trigger in the minds of consumers? Yes, this event is a literal instance of Eggo being unable to guarantee the safety of its food product. But subconsciously, it’s something bigger. That’s supposed to be why we choose branded products over store brands or unknown brands. That’s why Eggo has been advertising since its inception in the 1970.

Before brand love comes brand trust. If consumers can’t trust the brand, they won’t buy it and can’t come to love it. Young consumers have proven that they are more open to store brands, so instances like this can open the floodgates of customers straying and leaving permanently. A recall is a serious strain on trust that tests the brand in question.

What is a brand to do?

First, Kellogg’s did the right thing for its customers and brand by being proactive. They deserve credit for taking action. They have to find a way to take credit without reminding shoppers (or tipping them off in the first place) that there was a health concern. They might wait until the threat is proven null to do anything.

Since they got proactive with safety, they should get proactive with outreach. Use their owned channels to communicate as the brand returns to stores and offer other Kellogg’s product before that happens. Push complimentary products now to build favorability for those, then offer a compelling offer for Eggo as a bounceback.

Think about the box. Assuming a 6-8 week absence from the shelf, consider this a new product launch. How can Kellogg’s capture the attention of their core shoppers – and new ones – to get them to pick up the product again?

Recalls are never good. Does a health-based recall kill a food brand? Not necessarily, but it won’t be an easy road back to pre-recall sales.