One of the trends emerging from the COVID-19 shutdown is a reintroduction of families to their kitchens. More than half of Americans are cooking more and predict they will continue after the pandemic ends. This new group of at-home chefs nearly doubled monthly meal-kit sales year over year. With meal-kit market growth predicted to reach almost $12 billion within the next two years, the answer to “what’s for dinner?” is changing. Consumers are skipping the trip to the local big box retailer and opting for more food delivered to their doorstep. That is turning up the heat on logistics to deliver fresh and frozen meals – fast.
Many of the most popular meal-kit providers tout organic, fresh ingredients. Delivering perishable foods in pristine condition means companies must source locally. This involves hundreds of small suppliers regionalized throughout the United States. Blue Apron, the second largest meal-kit provider, plans their menus a year in advance to contract with enough local suppliers before the growing season. The company’s more than eight million monthly customized meals require precise inbound logistics planning and contingency procedures when ingredients cannot be harvested as ordered.
Micro-Fulfillment and Kitting
Meal-kit providers are deploying micro-fulfillment centers staged between large urban areas home to most customers and local food suppliers to reduce spoilage and increase delivery speed. This localized approach requires dedicated refrigerated truck fleets. At the centers, teams combine human and robotic power to prepare, pack, and ship orders in less than seven days. Each fulfillment center turns nearly 100% of its inventory weekly, which means round-the-clock restocking to meet outbound order demand.
Unlike ecommerce fulfillment, meal-kits require significant upfront portion preparation. If a recipe requires two cloves of garlic, a worker must peel them from the bulb and package them separately. This applies to between five and 10 ingredients per kit and more than 100 ingredients per week. With recipes only used once annually, the variety of products, portions, and packaging changes constantly. This amount and variety of kitting requires sophisticated warehouse management systems, highly trained staff, and expedited shipping.
The Perfect Packaging
Every delivery must arrive to the consumer with each ingredient at the right temperature. Adding another layer of complexity to the fulfillment process, each kit gets insulated with thermal liners and refrigerated or frozen gel packs. However, even those are not standard issue. They change based on the kit’s ingredients, season, weather conditions, and destination. Plus, boxes get packed strategically to guard temperature sensitive products while ensuring delicate ingredients stay protected from heavier items during transit. While many companies focus on improving final mile deliveries, meal-kit providers most worry about the last 10 yards from the delivery truck to the doorstep. Here the companies have the least amount of control over keeping ingredients safe and edible until they hit the consumer’s refrigerator.
The Delivery Dilemma
Most meal kits operate from a subscription model, which makes demand planning more predictable. However, the industry is plagued by a sizeable issue – customer churn. Among the major meal-kit players, customer turnover averages nearly 80% within a subscription’s first six months. This requires a constant reoptimization of delivery routes. That is achievable for standard delivery drops, but significantly more difficult for companies meeting customer-selected appointment windows.
The current logistics model for meal-kits also allows for ample planning as consumers select their meals several days in advance. As customers seek more on-demand options, analysts predict the window from order to delivery will shrink to 60 minutes. That is just one hour to prepare, pack, ship, and deliver a fresh meal. Inventory must be accurate, a fulfillment center adequately staffed, and a delivery vehicle ready to go. There currently are about 150 different meal-kit providers. Not all will survive. The ones who do will be those that master fast deliveries – a skillset only the world’s best logistics providers can supply.
Langham Logistics: An Appetite for Solving Shipping Challenges
The meal-kit market is cooking up significant logistics obstacles as it continues its double-digit growth. Langham Logistics is a pro at serving up solutions. Our global team manages perishable products every day with cold-storage warehousing, expedited kitting, and dedicated fleets. Contact Langham and discover our recipe for success.