The percentage of subscribers to meal box services in Canada, such as Goodfood or HelloFresh, decreased to 8.4% in 2021, compared to 12.8% in 2020. Thus, the meal box industry in Canada has possibly reached its peak.
Posted yesterday at 7:30 p.m.
The lunch box concept has the same connection with food that IKEA has with furniture. The assembly of the elements remains the only step to be carried out, which gives the buyer the impression of being the prime contractor, or almost. Home-delivered meal kits make consumers feel like chefs, for a moment. Throughout the pandemic, this meal solution has seen unprecedented popularity, providing ideas for families looking for culinary inspiration.
However, sales in this sector tell us that the lunch box industry may have reached its peak in Canada in recent months.
Most Canadians have returned to a normal life, becoming nomads again and spending less time in the kitchen. According to a recent survey conducted by Dalhousie University, in partnership with Caddle, 8.4% of Canadians now subscribe to a box lunch service. This represents a drop from the 12.8% recorded in November 2020, just a few months after the start of the pandemic.
While 69.1% of Canadians have never subscribed to a meal box service, 22.5% stopped using such a service after trying it. Only 3% of respondents now plan to use the service for at least another year. Only 9.8% of people think they will use such a service in the future, but remain uncertain. These percentages are very low, and customer retention is truly becoming an issue within this industry.
The highest users of lunch boxes are Gen Z at 14.5%, followed by Millennials at 12.1%, and Gen X at 7.9%. Baby boomers bring up the rear with a meager 3.2%. Among the provinces, the highest current utilization rate is in British Columbia at 10.4%, followed by Quebec at 9.3% and Alberta at 9%. Ontario follows the national average at 8.4%. The lowest rate in the country is found in Manitoba, at 4.5%.
Among Canadians who use lunch boxes today, only 15.8% had never ordered these kits before the pandemic. Considering that the market has been flooded with discounts and coupons for months to get consumers hooked on some of these services, this percentage turns out to be surprisingly low. Indeed, for a time, many meal kit suppliers were partially subsidizing their own demand.
Of those who use these services, 66.1% order these kits daily or weekly. Among the main motivations for placing an order are convenience (57.7%), saving time (30.4%) and avoiding meal planning (15.4%). Lunch boxes are said to encourage households to waste less food, but the facts are often anecdotal. HelloFresh remains the most popular service with 32% of people surveyed, followed by Goodfood with 24.6%. Chef’s Plate, owned by HelloFresh, is third with 14.9%.
By some estimates, the meal kit market in Canada is probably worth around $1.1 billion today, compared to just $5 million more than 10 years ago. At its peak in 2020 and 2021, the market exceeded $1.5 billion. Quite a feat achieved for this market segment, even if we note that demand is contracting.
However, relatively high prices and environmentally unfriendly packaging seem to be driving consumers away from meal kits. The average price per meal is usually between $8 and $13 per person. Despite that price, these kits still require work, and you still have to wash the damn dishes. In total, 78.1% of consumers abandoned the service because the prices were too high and 67.5% stopped using the service because of the unsustainable packaging.
A real threat to these services is emerging with the large distribution companies. Grocers have improved their delivery. Some chains also offer meal boxes in different forms. The retention rate of online grocery sites is also found to be much higher. Online grocery shoppers will return for a second order more than 80% of the time, according to Nielsen IQ. Loyalty unquestionably works in favor of our grocers. We could see more meal kits offered by the grocers themselves or by restaurant chains using the distribution network of our grocers to reach customers, physically or virtually.
Some Canadians will stick with box lunch services, but the industry faces major challenges. The economy is normalizing, causing consumers to spend less time at home, and the cost of food is likely to drive up prices. The concept remains excellent, but the formula requires a new approach.