eMeals' Shoppable Recipe Model Dramatically More Profitable Than Meal Kits: Study

LAS VEGAS, Oct. 29, 2018 /PRNewswire/ -- eMeals offers significant financial sustainability advantages over meal kit companies like Blue Apron according to a study presented this week at GroceryShop by Dan McCarthy, Assistant Professor of Marketing at Emory University's Goizueta Business School. Dr. McCarthy compared the unit economic health of eMeals' subscription-based meal planning service that leverages the existing in-store and online grocery supply chain for ingredient fulfillment to meal kit companies like Blue Apron that deliver pre-portioned ingredients to subscriber's doors. After analyzing both models in detail, Dr. McCarthy concluded that the eMeals' model is considerably more profitable, delivering a 152% return on investment per customer acquired compared to Blue Apron's 1%.

The analysis is based on a new customer-based corporate valuation (CBCV) methodology that utilizes unit economics to calculate the financial value of subscription businesses. Instead of solely focusing on revenue growth as a primary driver of financial valuation, the CBCV framework assesses company value by tying it to five customer-related drivers of the unit economic health, including customer acquisition volume and cost, customer churn, order rate, basket size, and contribution margin.

In applying that framework to quantify the long-term financial viability of eMeals' shoppable recipe and Blue Apron's meal kit businesses, McCarthy concluded that:

• eMeals' customer acquisition cost is 56% lower than that of Blue Apron
• eMeals' one-year retention rate and expected customer lifetime are double that of Blue Apron
• eMeals' customers are 10% more profitable after they have been acquired than Blue Apron's
• eMeals' contribution margin is 90% versus Blue Apron's 28%

Those differences and the resulting gap in customer-level ROI reflect substantial differences in the operating costs, meal options, and fulfillment strategy of the two companies' business models.  In the case of eMeals, the results are based on their historic consumer subscription revenues and do not account for additional revenue opportunities the firm may enjoy from partnerships with grocery retailers and food brands.

eMeals provides seven new dinner recipes for each of 15 eating styles every week for $5-10/month, allows subscribers to choose from any of the 100+ weekly options, and automatically generates a shopping list based on those choices that can be self-shopped or sent to AmazonFresh, Walmart, Kroger, Instacart or Shipt with a tap. This eliminates ingredient pre-portioning, bagging, boxing and delivery required with meal kits, cutting the consumer's food price per meal in half.

Blue Apron provides a choice of 8-10 recipes per week and charges $48-$120/week for recipes, ingredients and delivery, depending on the plan selected. That in-house fulfillment strategy increases overhead and limits both recipe variety and meal plan personalization by dietary preference because of the need to order and stock ingredients for each week's meal selections.  Other meal kit companies face the same impediments to controlling expenses and offering broad recipe choice.

"Every company in the traditional subscription-based meal kit industry confronts the same sort of unit economic headwinds that I identified in my Blue Apron analysis – a high cost to acquire customers, and to varying degrees, difficulty retaining existing customers and less than stellar margins. I do not believe selling meal kits in grocery stores will significantly change the per-customer profitability picture for these companies," McCarthy said. "eMeals' shoppable recipe model is a novel approach that delivers similar convenience to customers but removes most of the operational costs and inflexibility of the meal kit model, resulting in a striking difference in customer-level profitability."

"Our business model lends itself to profitable unit economics, in large part because we rely on the existing grocery channel for fulfillment. Grocers and food brands also benefit because our subscribers do their food shopping either physically or online through our grocery partner integrations instead of receiving pre-packaged ingredients acquired from wholesalers," said eMeals CEO Forrest Collier. "This study clearly validates our approach to the market, the sustainability of our model, and why we've been in business for more than a decade."

For more information, please see McCarthy's LinkedIn post regarding the analysis.

About eMeals
eMeals is America's leading meal planning service and meal kit alternative. Offering 15 food style meal plans with 100+ new easy-to-follow recipes every week that can be mixed and matched from plan to plan, the service automatically generates a weekly shopping list based on the subscriber's meal choices that can be self-shopped or sent in one click to AmazonFresh, Walmart, Kroger, Instacart and Shipt for fast pickup or home delivery. eMeals has helped more than 1 million families put healthy home-cooked meals on the table quickly, affordably and creatively. Life is hard, make dinner easy.  Visit www.emeals.com to sign up for a two-week free trial.

SOURCE eMeals

Related Links

http://www.emeals.com