KANSAS CITY — The meal kit business is experiencing a surge in demand as restaurants switch to takeout and delivery and grocery stores reduce hours. It’s unlikely retailers will face major problems keeping shelves stocked, but government-issued recommendations and orders to stay home are driving some consumers to avoid the potential health risks of going shopping.
Forced to make quick adjustments to their eating and shopping habits, consumers are turning to online meal kit subscriptions to keep pantries and refrigerators stocked. Investors also are turning their attention toward meal kit companies, a sign that the outbreak may help drive a potential turnaround for an industry that until recently was struggling to attract new customers and maintain existing ones.
Blue Apron’s stock price was below $2.50 during the first week of March, down from $6 at the beginning of the year and $14 a year ago. The company has faced declining sales and customers for several years. Blue Apron has not made a profit since going public 2017, and last yea rthe company announced it could be dropped from the New York Stock Exchange after its closing share price remained under $1 for most of May. In February, the company announced plans to close its facility in Arlington, Texas.
Blue Apron’s stock spiked as concerns about the outbreak grew, reaching a high of $16.25 on March 18 before falling back under $12 the day after. The company has seen an influx of orders throughout the month.
“Over the last week we have seen a sharp increase in consumer demand,” said Linda Findley Kozlowski, chief executive officer at Blue Apron. “We are increasing our capacity for future orders and expect to fulfill this increased demand by the next available weekly cycle, starting on March 30.”
The company is ramping up hiring efforts at fulfillment centers in New Jersey and California to meet the increased demand.
“(We) hope to create employment opportunities for individuals who may have been displaced by the restaurant or foodservice industry,” Ms. Kozlowski said.
Other meal kit companies, including HelloFresh, Marley Spoon and HomeChef, also are seeing an increase in orders.
“We have been seeing an increase in demand for which we have been well prepared,” a spokesperson for HelloFresh said. “We are working around the clock to deliver our boxes on time, and there are currently no major disruptions to our service. We are working very closely with our network of suppliers and partners to ensure we continue delivering fresh and reliable meals to our customers.”
Marley Spoon is increasing production for future orders and hiring more employees to meet the surge in demand. HelloFresh announced plans to expand its workforce by 50% at its factory in the United Kingdom.
The rapid rise in orders has led to minor disruptions in supply at some companies. A small portion of recipes at Blue Apron, for example, are being substituted due to increased demand. Marley Spoon is taking steps to safeguard against delays, including stocking shelves with ingredients from approved suppliers and ensuring appropriate substitutions can be made if necessary.
Companies are instituting measures to ensure delivery continuity and expect they will be able to meet demand. Several companies told Food Business News they have taken extra precautions to protect workers, including limiting access to production sites and bolstering sanitation protocols.
The outbreak has not had a significant impact on supply chains.
“We are carefully monitoring our supply chain and are in contact with our ingredient suppliers,” Ms. Kozlowski said. “We are not aware of any significant disruption to our supply chain to date as a result of coronavirus.”
Ms. Kozlowski cautioned that, like other companies, Blue Apron is operating with “imperfect information” around COVID-19 and its impact on business.
“The situation remains very fluid and various matters could affect our ability to serve our customers,” she said. “We are doing our very best to manage through these unprecedented circumstances.”
The long-term impact of the outbreak remains uncertain. Whether customers who signed up for meal kits during the outbreak will continue their subscriptions once it is contained remains to be seen.