When the farm-to-table movement unfolded in the early 2000s, it was an inspiration that changed the way a lot of us shop for and eat food. Today, however, many of us are still just as likely to obtain food from a cardboard box or from a bag delivered to our door as from the market.
We’re gaining access to food in ways never before imaginable. Take, for instance, the stratospheric early success of DIY meal-delivery kits containing prepackaged, pre-measured ingredients that allow busy people to tap into their yen to easily cook at home. Don’t want to cook? Online apps allow restaurants and drivers to streamline the food-delivery process. And for those who cook from scratch, shop-at-home delivery services bring groceries right into the kitchen.
The entire food system has changed—and quickly—and this calls for reflection about how to be socially and environmentally conscious about the way we eat. We may be eating at home, but are we eating better? And how is this trend affecting businesses and their workers?
The Consumer Experience
In-home dinner options can be categorized by cost, convenience and quality of the meal experience. In option one, we shop for our own groceries and cook them ourselves. Studies show that cost is approximately $4 per meal, and this option allows us to eat any way we want. While 98 percent of Americans say they prefer to cook at home, only about a third say they do so daily. If you’re too busy to shop, online services, such as Instacart and Burpy, deliver groceries and other items to your door in as little as an hour via a personal shopper. The surprising part about this ultra-convenient service is that, while it comes at a price, that price isn’t hefty. Depending on the company, size of the order and number of stores, delivery fees range from free to $9.99, with applicable surcharges during surge hours. These services focus on personal interaction between client and shopper via email, text or phone. The drawbacks are no returns and no alcohol sales in most markets, and some reviewers report significant price hikes on certain products. Another drawback to option one is that a lot of food that’s brought into our homes is wasted. Analysts say that as much as 40 percent of food produced in America is discarded. Fortunately, home cooks can easily remedy this with careful planning, prepping and storing.
Option two has prepared food delivered to our door, aka takeout. The approximate cost per takeout meal is $12.75 per person, but some restaurants require minimum orders, and delivery fees may apply, depending on the service. Despite these added costs, the online delivery industry is booming—mostly propelled by interactive apps that showcase local menus and allow consumers to peruse and choose their food online. With credit card and address info saved in the app, it’s as easy as a few clicks for the consumer. Analysts attribute most of the growth in home delivery to millennials who don’t mind spending more money for the convenience. Key players in the Austin market are Favor and Postmates.
Pizza delivery accounts for more than $10 billion of the $30 billion home-delivery market, followed by Asian food, sandwiches and Italian food. These four types of foods are popular for delivery mostly because they travel well. Plus, businesses have capitalized on making packaging part of the appeal and experience. (Think: the pizza box or the iconic Chinese takeout container.) But market shares are shifting fast as a wider variety of restaurants and cuisines enter the mix—spurred on mostly by independent delivery services. Of course, the main issue with eating prepared/delivered foods is poor nutrition, because the consumer has no control over what they’re eating. Studies show these foods typically have more fat, sugar, cholesterol, sodium and calories than home-cooked meals. However, locally prepared-and-delivered food alternatives in Austin, from services such as ChefATX, Lucky Lime and Snap Kitchen promise healthier options.
Option three is to get on the meal-delivery-kit bandwagon. Everything needed is delivered right to your doorstep, but you can still prepare the food yourself and eat a “home-cooked meal.” While costs average between $10 to $13 dollars a plate, according to Fortune, this doesn’t include delivery fees, membership or surcharges such as desserts or special drinks. Most dietary options are available, and reports indicate that consumers rate the ingredients as high quality, making meal-delivery kits a far healthier choice than ordering takeout. However, prep times can range from 30 to 90 minutes—cutting into the convenience. Packagedfacts.com reports that nearly 20 percent of American adults use meal-delivery kits, and 97 percent stay with the company they first signed up with—indicating high satisfaction with the service. And not all meal-kit services are national; Austin-based Farmhouse Delivery’s Supper Club meal kits delivers packages containing recipes with fresh, seasonal and local produce and proteins to the Austin, Houston and Dallas markets.
While meal plans such as Blue Apron and HelloFresh originally targeted dual-income professionals, there are now meal plans marketed to working parents of young children. After all, who has less time on their hands, but more motivation to eat healthfully? Newcomers such as Kidstir, Scrumpt Fresh and Kidfresh offer parents healthy, kid-friendly dinners, fresh-made lunches and, in the case of Kidfresh, frozen meals. And Freshly, a 2015 startup, delivers microwave-ready, healthy meals to professionals with or without kids who are too busy to do anything more than wait three minutes. Of course, among the many pluses of meal-delivery kits, one major concern is the oodles of plastic, dry ice, foam and cardboard it takes to ship all the food. Though most of it’s recyclable, it’s up to the consumer to take care of this.
The Business-Owner Experience
The changing food economy is a mixed-bag for restaurant owners, too. For all but high-end restaurants, foot traffic is down, according to marketing research firm NPD Group. But opportunities abound for those restaurants willing to participate with the aforementioned independent delivery services, even though this generally means forking over between 12 and 30 percent of the take. Although delivery only accounts for 2 percent of current restaurant profits, this number is projected to grow 15 times faster than the rest of the restaurant business through 2020. According to estimates, online delivery is a $210 billion untapped market, which is currently doing only $30 billion worth of business. This could be a field day for savvy restaurant owners who participate with tech apps to serve up their food.
Yet, it can also be a quandary. A priority for most restaurants is attractively plating their food—something in-house diners expect and servers deliver. Restaurants still want to ensure quality of presentation and freshness for home delivery, but control is lost as soon as the food leaves the establishment. “Often, food quality and order accuracy can be compromised,” says Amanda Kuda, director of marketing for Austin’s high-traffic Kerbey Lane Cafe. This is why some restaurants choose to work with only one specific delivery service to get orders to their customers.
Also, different types of foods offer unique challenges for delivery, such as highly perishable ice cream. Austin’s popular Amy’s Ice Creams has been using the UberEATS service to deliver from most of their local locations, as well as their San Antonio and Houston shops. The app’s diagnostic site, Restaurant Manager, allows them to track both sales and customer reviews. They can now gauge preparation and delivery times, as well as determine which menu items are the most popular. Gathering this valuable information is just one of the ways restaurants and delivery apps can help each other. According to Amy’s Ice Creams’ operations manager, Val Gonzales, the feedback obtained from Restaurant Manager has allowed them to more accurately set the delivery radius, therefore shortening the time frame from product creation to when the customer enjoys their ice cream, thus better mirroring the in-store experience.
A tech startup can be the parent company of a delivery service, such as Uber with UberEATS. Other delivery services, such as Instacart, Blue Apron or FreshDirect, are powered by technology apps that are privately owned (though some are public) and valued in the billions, or even tens of billions of dollars. The leader of the online menu and delivery industry is Grubhub, which went public in 2014. It has nearly 9 million active users, and anticipates growth by 2 million new users each year.
In March 2017, Blue Apron made a bold move by acquiring BN Ranch, one of its meat suppliers. BN Ranch, a sustainable producer of free-range beef, lamb and turkey, was originally founded by Bill Niman, who has now joined Blue Apron as president. With Blue Apron’s initial public offering (IPO) in June 2017, and its unanticipated 26-percent price-per-share decline, those in the industry are taking a hard look at what will make meal-kit delivery profitable. Analysts say the only way to be profitable is to expand on a very large scale because operating costs are so high.
And, in early November 2017, German-based competitor HelloFresh executed their own IPO in Europe, two years after they cancelled their first IPO. The company, which delivers meal kits in 10 countries, has a goal to break even by January 2019, according to Reuters.
Of course, a competitor for all these services is prepared/delivered foods from local (and not-so-local) supermarkets. Indeed, Amazon’s recent acquisition of Whole Foods Market has positioned the online behemoth to become what may be the largest home-delivery-food service in the United States.
The Worker Experience
A “cog in a wheel” refers to someone who is necessary but of smaller importance within a larger operation. Delivery drivers are the cogs that keep all of these services running. Most drivers are self-employed, enjoying what some have deemed “The Gig Economy”—a nod to the world of musicians where workers retain autonomy and set their own hours. The upside for the employer is that they pay low wages and don’t provide benefits, but this leaves workers without basic protections, such as unemployment benefits, sick days or workers’ compensation. According to Business Insider, companies claim that drivers can earn as much as $100,000 a year, but many drivers say they’re making below minimum wage after tolls, gas, phone data charges and business expenses.
They’re fighting back in court, too. Many cities have recently passed labor laws intended to raise wages and mandate worker
benefits, and some states have formed workers’ guilds where drivers are allowed to buy roadside assistance. One point seems clear: As revenue rises for those at the top, working conditions shouldn’t be so adverse for those at the bottom, especially when they are integral to the system.
Where We Go from Here
Many Americans play a part in the new tech-to-table food system, whether it’s as a food producer, business owner, delivery person or consumer. If technology has allowed Americans to free up their time and perhaps even eat more healthfully, have we simply changed with the times? Or is the tech-to-table movement taking us farther afield from the movement that originally brought us back into the kitchen? Have we lost sight of the original goal of choosing our own food by feel, smell and sight, then taking it home and cooking it? Are we drifting off course and simply reverting back to our old couch-potato, Americanized ways again? Whatever the answer, it’s clear that the home-delivery and prepared-foods market is huge, rife with potential and rapidly expanding. With a glut of meal-delivery companies offering a wide range of plans and options, it’s still a mystery as to which of them will succeed in this turbulent market. Analysts say the key will be to focus on existing customer retention, as opposed to reliance on the more costly new-customer acquisition. And it remains to be seen which facet of the new food economy will end up being successful, and which might end up being just a flash in the pan.
By Michele Jacobson