Two separate pilot tests in the US developed by the National Association of Convenience Stores (NACS) in conjunction with industry groups have revealed the challenges and opportunities in selling convenient, affordable meal kits at convenience stores.
In both meal-kit pilots, the intent was to address some downsides to many popular meal-delivery kits, such as cost, packaging waste, requiring a subscription, and the need to plan a day or more in advance to order them.
The NACS says the convenience-store channel served as a good retail testing ground for dinner meal kits because of its fuelling offer, with 80 per cent of the fuel bought in the US being sold at a convenience store.
The organisation added that consumers were most likely to fill up their vehicles during the evening rush, with 36 per cent of drivers filling up between 3pm and 7pm. An even higher proportion of millennials (41 per cent) filled up during this time frame, according to NACS consumer data.
The tests were set up to examine if the appeal of one-stop shopping – whether for fuel customers or others visiting stores in the afternoon and evening – could increase sales for a dinner meal kit.
Square One Markets
The first pilot test was in September 2015 at Square One Markets (Bethlehem, Pennsylvania) in cooperation with The Six O’clock Scramble cookbook, which includes “healthy and easy-to-create” recipes and meal plans for busy families.
Meal kits were developed for four people at US$5 ($6.20) or less per person. While the sales did not match expectations, NACS says the test attracted considerable attention in the media and the nutrition community. It also uncovered several challenges, primarily that small chain stores such as Square One Markets often struggle to procure certain fresh ingredients directly from suppliers and distributors. There were also marketing challenges, especially because convenience stores were not thought of as a dinner-meal destination in the market.
The second test, launched in March 2017 at the Shaw’s 88 Kitchen store at Utah State University (USU), examined whether consumers (both students and faculty) would embrace a “healthy meal” kit that could be bought on campus and prepared at home. The meal kits – Chef in a Box from Aggie Eats – offered students and staff a variety of two- and four-person “healthy meal” options, including vegetarian and meat choices.
The NACS says USU received mostly positive feedback from faculty and students, but ultimately the meal kits presented too many logistics-related challenges, resulting in USU shutting down the test before the planned end date.
NACS Vice President of Strategic Industry Initiatives Jeff Lenard says both tests demonstrate the marketing, merchandising and sourcing challenges convenience stores face in producing and selling meal kits to customers.
“While consumer surveys and trends may point to opportunities, it’s also important to examine execution, especially in small-format stores where every square foot of floor space is critical,” he said.
“Dinner meal kits may be a concept that is still ahead of its time for smaller convenience stores. However, it still may be appropriate for larger convenience-store chains that have their own distribution centres, bakeries and commissaries, or those that operate highly evolved and dedicated foodservice programs.”