Maslow &The Meal Delivery Business

When Maslow created his Hierarchy of Needs, he cited Physiological, Safety, Belongingness, Esteem and Self Actualization needs. He left out convenience. These days, most people couldn’t survive without their basic conveniences that allow to juggle overwhelming and poorly balanced lifestyles. Inevitably, people have to eat and most have to prepare something for dinner for others. Where are people turning for convenience? The growing availability of meal delivery kits.

Blue Apron (APRN:NASDAQ) pioneered the concept in 2012 and recently went public. Shortly before their stock began trading, Amazon (AMZN:NYSE) announced that they were going to get involved in the meal delivery space. That, my friends, is the sucker punch of sucker punches. With their vast distribution system in place already, it would be reasonable to think that Amazon would thrive. The stock of Blue Apron has been under pressure since the start, and this is no doubt partly attributable to Amazon. Two other meal delivery services, Plated and Hello Fresh, have also been rumored to be considering an initial public offering of common stock. Hopefully, they fare better. According to research firm, Packaged Facts, there are more than 100 meal kit delivery services available, in one form or another, from those that deliver pre-cooked microwaveable meals to ingredient and recipe services.

The cost of these services ranges quite a bit, but the average is around $60. It depends on what service you use and how many nights  per week you use them. I’m sure that price will come down if Amazon moves forward vigorously with their service. Some of the services actually claim to save money for a two person box. Convenience and value is hard to look away from.

Cost and quality are not the drivers that I am interested in. I’m more interested in determining exactly who should be viewed as the competition for these services. The way I see it, a pizza delivered is a meal delivery at its most convenient I don’t think that these companies are competing against each other, but rather against the relative convenience of their services. Everyone is different but the idea of coming home to a box of ingredients and instructions is not very appealing to me. With the launch of delivery services like Grub Hub (GRUB:NYSE), almost all smaller restaurants can offer delivery services. Granted, these delivery services cut into the company’s profit margin, but its better than being out of business.

I don’t know what the future holds for the meal kit delivery business. It could carve out a niche among people that like to cook but not shop. There are also organic meal kit options that would serve a need. I just don’t know that these services can fill that one additional basic need that Maslow omitted.

 

Sources: Megan Leohardt. This is the Best Meal Kit Service on the Market Right Now, Time Magazine, July

 

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