The once-thriving subscription meal-kit business is losing another player as Albertsons Cos. said it will phase out the online subscription aspect of its Plated business and de-emphasize its dinner meal kits in favor of using the brand name to lead an in-house culinary private brand.
The change comes a little more than two years after the Boise, Idaho-based retailer acquired the online meal-kit company and subsequently tested the sale of meal-kit products in stores. Albertsons said the strategic shift would bring a “sharper focus on how the brand can deliver a differentiated experience,” with new product offerings available in more stores starting next year.
“Our vision for Plated includes an expanded set of products that goes far beyond a dinner-based solution and into a comprehensive in-house culinary brand,” said Geoff White, EVP and chief merchandising officer of Albertsons, said in a statement. “With a broader scope of offerings, we see Plated solving customer demands around convenience, lifestyle and cooking experience while adding yet another layer of interest to our in-store journey.”
Plated’s subscription service will be phased out at the end of this month, leaving little more than a brand name from a business that at one time was reportedly doing $100 million in annual sales. Meal-kit companies deliver portioned fresh ingredients and recipes for consumers to assemble to prepare easy home-cooked meals, and they initially benefitted from trends favoring convenience, fast iteration developed through online relationships and what Plated founder Josh Hix once described as a shift among consumers to think about food shopping in terms of meals and not ingredients.
These concepts drew heavy backing from tech investors but proved difficult businesses in the real world, struggling to acquire and retain customers and ship efficiently, while branded kits in stores have been met with mixed success. Plated competitor Blue Apron is attempting a turnaround after heavy losses made it one of the biggest public-company flops in recent memory. Chef’d, which began as subscription site that shifted to in-store meal kits, abruptly shut down a year ago. The brand was subsequently acquired but has been heard from little since. Hello Fresh has continued to show growth in store placements and online sales, but it appears to be an exception and not the rule. Chicago-based meal-kit company Home Chef was acquired by The Kroger Co. in 2018.
Albertsons at one time had eyes on expanding Plated meal kits to hundreds of stores but earlier this year considerably scaled back those ambitions, concentrating instead on a test in certain Safeway stores in Northern California. Albertsons said Plated products appealed to its best shoppers, typically those with families and larger basket sizes than the average shopper.
“Plated’s brand appeals to our most loyal and highest value customers, especially those that skew toward convenient, fresh and organic products,” White said.
The kits didn’t appear to resonate with all shoppers, however. Sources said at least some stores experienced heavy shrink during the initial rollout.
Albertsons said the marketing and product development team behind the company’s own brands will manage the expansion of Plated into a “holistic home meal solution.”
Kroger appears to be taking a similar approach to Home Chef, expanding beyond the original meal kits to include oven-ready kits and ready-to-heat sides and entrees as the brand grows in stores. Speaking at the retailer’s investor conference, Kroger Merchandising SVP Joe Grieshaber said Kroger saw “double-digit growth in fresh meals in 2019 and expected that would continue next year.
Albertsons has made private brands a focus of its growth, seeing sales penetration increase from 23% to 25.3% in the recently reported third quarter.