Meal Kit Companies Struggle to Manage Scale, Consumer Needs

Meal delivery services may experience a shake-up in 2016 due to the launch of too many concepts trying to grow too quickly. The segment still has room to expand, but many services are too expensive for the average consumer.

Companies like Good Eggs, which had to lay off 140 of its 300 employees and limit its service to just San Francisco, noted the importance of scaling up slowly. Managing logistics is important, and understanding the customer base is also imperative.

The problem a lot of services face is that it is too expensive for the average customer. The key is specializing in a niche, such as vegetarian, vegan, or gluten-free, according to Food Institute CEO Brian Todd. It is also helpful to consider new markets outside of New York or San Francisco that are underserved.

Analysts agree the opportunity for meal delivery services is real, as Americans are looking for healthful, convenient options for dinner. The sector could generate U.S. sales of $3 billion to $5 billion by 2020, according to Bob Goldin, executive vice president of Technomic, reported Entrepreneur.

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