Meal-Kit Companies Are Gearing Up for Competition or Getting Out

On this episode of The Barron Report, Paul Barron interviews Brittain Ladd, a Supply Chain Management expert and Logistics Consultant for the world of meal kits.  

When the meal kit first came into existence, customers lined up to try this new and innovative system that fulfilled the desire for a high-quality meal without the restaurant price tag. Once the idea gained popularity, meal kit companies began popping up, claiming to have the best meal kit on the market. Slowly but surely, these companies starting shutting down as the market became oversaturated.

“The meal-kit industry is still the wild west. The industry is going through a lot of growing pains...,” says Brittain Ladd.

He believes one of the main reason these companies are unable to stay afloat is they just don’t have enough capital to keep going. One of the biggest challenges for the meal kit is the delivery model and its cost. Known in the restaurant industry as  “the last mile,” these start-ups are struggling to find a location that puts them close enough to a customer in order to keep costs down.

Bigger, established companies like Starbucks or Subway have the most distribution potential with access to resources, real estate, and capital.

Meal kits are a great product–unfortunately, they’re not enough to start a business. Brittain found that many founders of these companies did not have enough business expertise to evolve the idea into a full-fledged business. Consequently, companies faced the harsh reality of high cost-low retention. And although acquisitions may seem like the only light at the end of the tunnel, Brittain sees other opportunities for success.  

“If they’re not going to be acquired, they absolutely should be reaching out to restaurants chains and offering them a branded product or ask them to sell their meal kit exclusively in their store…,” says Ladd. Meal kit companies need to brainstorm a way to close the gap between the product and the consumer.

Listen to this episode of The Barron Report for more insights on the meal kit industry and his recommendations to founders in order to stay afloat!

SHOW NOTES

  • 12:33 Top 5 Companies To Watch

  • 15:34 Restaurants Co-utilizing Space and Meal-kit Delivery System

  • 18:10 Chef’d Biggest Flaw

  • 21:25 Misconceptions Of Success

  • 24:00 Fast Casual New Delivery Systems

  • 30:00 The Future of Meal Kits

  • 33:52 Deliver as Close to the Customer as Possible

  • 00:18 Introductions

  • 01:57 The Demise of Chef'd

  • 02:06 Current Status of the Meal Kit Industry

  • 04:23 Ready-to-eat Meal-Kit Development Ideas

  • 08:08 The Problem with the Meal-kit Industry as a Whole

  • 11:03 Convenience Stores as Distribution Points

 
 

Craft Producers Are Changing The Way Restaurants Buy Products

Craft producers are shaking the big-box purveyors as the grab for restaurants’ food dollars are always in play. These specialty creators are delivering on the mania of being connected to the community, giving back, sticking with environmental responsibility, and running with old-world values.

In that same vein, Catherine Seisson’s shop is a shrine to traditional French baking. Genuine ingredients, iron-fisted adherence to classic preparations, and an unbroken commitment to quality; the strictest of standards for the esteem of a real French bakery. Except, the bakery is in a suburb of Philadelphia.

Renaissance Woman

Source: Becca Mathias

Source: Becca Mathias

The Lyon native dropped apron in West Chester, PA with only a few months to launch her shop. With a French baker father and flour powering through her marrow, Seisson is an ass-kicking, fierce redhead with a huge smile and craftsmanship to match.

“It’s in my blood; I wanted to make bread,” Seisson says proudly.

And her brioche trappiziane will make you cry tears of bliss and wonder. Those tears are turning into dollars as small-scale merchants, like Seisson’s La Baguette Magique, are making a huge difference on the food scene. Seisson supplies select area restaurants with bread and pastries. Not a lot of restaurants, mind you. But enough to be a contender.

Mammoth Amazon is hawking paper products, smallwares, and appliances. The next frontier will, most certainly, drill into staples and commodities. While Amazon, Sysco, US Foods and other big-rig vendors are looking at the hefty spends, small-scale producers are taking up menu items, one at a time.

Macro Trend: Our Customers Have Feelings

When millennials look to join a team, they frequently want a connection to the community, some form of giving back and environmental awareness. Why wouldn’t the same be true for vendors partnered with restaurants? Having a craftily produced array of products to supply the demands of mission-sensitive restaurants makes sense. Where some larger producers keep, for instance, preservatives, less-than-favorably sourced ingredients, and anonymous origins coursing through their product lines, smaller merchants are able to deliver with a friendlier approach. On trend with consumers digging into the responsible sourcing but not willing to give up flavor and appeal, many smaller vendors are seizing opportunities and profits. Like La Baguette Magique, other crafty producers are juggling the supply chains.

Big On Growth, Small On Changes

La Colombe Coffee has been around for a while. The company is the love child of JP Iberti and Todd Carmichael, the duo who has brewed the once eastern Pennsylvania-only coffee roaster into a coast-to-coast darling, all while sticking to their values, fair sourcing, and unabridged quality. La Colombe has changed very little since its earlier days. Still rocking a roastery in Philly and packaging their workshop roasts by hand, the microastery is disrupting the status quo of traditional coffee distributorship by staying in their lane. Distribution to restaurants, bakeries, and cafes is duty-bound. The beans still come from farms known to be responsible growers, the production standards are inexplicably calculated for quality, and, most importantly, their market growth has been conservatively restrained. Despite a fiscal injection from Chobani’s Hamdi Ulukaya, the reach of La Colombe to the west coast has only included a few retail spots and limited distribution of the coffee for retail brewing. The result? The brand is maintaining its original identity while offering a true craft approach to coffee grounded in everything that brought the company to life.

The Spicy Rebel Upstart

Source: Spiceology

Source: Spiceology

In 2013, a chef’s collaborative was struck—Spiceology. Started by partners Pete Taylor and Heather Scholten, the chef-centric perspective of building a direct-to-industry spice company was founded. “We do it for the chefs, right down to how we package,” said Taylor. Spiceology was cast of the same craft approach by targeting cooks that are really, really, into their trade. Very intentional marketing, clean lines, and a rebel yell that appeals to living-out-loud culinary types, Spiceology brings color to the otherwise standard staple of sticky containers of generic seasonings sitting in every kitchen.

Why do it? The chef owned and operated off-spring started with an initial retail presence. “We are all chefs; we all think that spices for foodservice is a screwed-up industry, getting jacked on pricing with inferior product, and poor packaging, so Spiceology was born,” said Taylor. “Compared to the broadliners, they don’t put themselves in the chefs’ clogs. Depth and a story have a meaning and purpose that are important. Chefs supporting chefs is customer-centric.”

The approach puts the necessary elements at the forefront. “Our Periodic Table of Flavor keeps the chef’s spice rack organized. It’s modernist! We eliminated the distributor by shipping direct, and built a loyalty program,” said Taylor. The burgeoning business rewards support with a points program that further builds a bond with the culinary community. “With the [loyalty points] you can get cool shit that we, as chefs, know we would want.”

Has this flavor worked for the brand? Spiceology has been rated one of the fastest growing spice companies by "Entrepreneur Magazine."

Growing The Buzz

Produce is a happy place for most chefs. Seasonal changes mean new play toys. New play toys mean new dishes for customers. Growing specifically for exacting chefs has been the crux of The Chef’s Garden for a very long time. A veteran operation by today’s benchmarks, the Jones family of farmers swap big boxes of Romaine for their Painted Oak and Ruby Crystal lettuce varieties. The gain? Customary farming being reinvented to bring collaborative growing practice between kitchens and farms. This is true farm to table. Farmer Lee Jones and company are grounded — literally — in supplying restaurants with produce that is innovative and exciting while endearing to the roots of traditional farming, packed by the ‘each’ versus the case.

Using Smaller Vendors Is Not A Pickled Idea

Money is money, and often the tractor trailers deliver better prices than the little pickup trucks. Being selective in which boutique purveyor gets the dollars seems to balance the sweet and sour proposition of when to spend bigger on smaller purchases. Warehouse vendors are not going away. Instead, they are sharing the food cost spend with less assuming manufacturers, farmers, and creative vendors.

The allure of knowing the origins of the food we are serving is more than a chef’s novelty; it is the power to market. The smaller, more dialed-in merchants, are making products that fill that space, while small, runs deeps with customers looking forward to hearing from operations that are using products that match their values.