For years, companies like Blue Apron and Plated have been delivering ingredients and recipes directly to customers in the United States.
But the so-called meal kit just hasn’t caught on quite the same way here in Canada.
It’s not for lack of trying. Several Toronto startups have tried with mixed results. Dinnerit, which delivered “meal bags,” appears to have gone out of business shortly after its launch in 2013.
Fresh Canteen, which also launched in 2013, has done much better—it’s still around—but it doesn’t seem to have made quite the same impact as similar companies south of the border. That might, in part, be due to the fact that it has yet to expand outside of Toronto.
At first glance, it certainly seems like there should be a market for meal kits in Canada. After all, ready to eat (or almost ready to eat) meals are the fastest-growing segment of the grocery business. And that segment is worth over $2.4 billion.
It makes sense, people are working long hours; for the far majority of young urban couples, both partners work and there’s an increasing trend, especially in large urban centres, away from car ownership which can make it harder to shop for groceries.
There’s also another factor: food is really trendy right now. Chefs are in and quality ingredients are something people are looking for.
And for some people that’s made home cooking a little intimidating. For others, they just didn’t grow up in homes were meals were regularly made and never learned. But a new wave of meal kit startups seems to be getting some early traction.
The other week, I told you about Chef’s Plate which appears to be growing fast and recently raised what was described as a “significant” seed round. But now, for the first time, it seems that the meal kit business is expanding beyond Toronto.
Ottawa startup Chefx recently raised $4,765 on Kickstarter to start delivering do-it-yourself ingredient kits. Meanwhile in Montreal, a similar startup, Cook It, launched in early January. And Toronto’s Fresh Canteen issued a release saying it will now be delivering across Ontario.
One of the big challenges for these food startups might be differentiation—they all promise chef-designed recipes and high quality ingredients. But it goes beyond that: many of them have similar logos, websites and price points.
There’s also the question of whether, once people get back in the kitchen, they’ll want to get a little more creative.
And there are an increasing number of startups ready to take advantage of that too. Montreal’s Lufa Farms, for instance, which delivers baskets of fresh local food to customers, also offers convenience over the grocery store by allowing customers to make selections online.
But food is a fickle thing and the last mile problem—the high cost and logistical challenge of delivering directly to customers doors—is a big one for any business that wants to deliver at scale. For a lot of meal kit startups, the solution has been weekly deliveries but if you’re hungry now and didn’t plan ahead, that’s not going to do a lot of good.
That’s probably part of the reason traditional grocery stores have been so resilient – but they’re going to have to adapt too. Here in Montreal, many grocers offer deliver but you still have to physically go there. And that’s a huge opportunity. Canadians buy less than one per cent of their groceries online. In the U.S. it’s somewhere between two and three per cent while in other countries it’s even higher.
After all, that time crunch isn’t going anywhere and if the other choice is takeout, there are a lot of people who would prefer to do it themselves and many of them don’t want to wait in line to do it.