Is the pandemic sparking a meal kits comeback?

The meal kit industry, once under fire for having unprofitable unit economics, seems to be doing better than ever.

Meal kits seem to be a product designed for current times: Ingredients are home-delivered, letting customers avoid a trip to the supermarket. The kits take a color-by-number approach, which is perfect for the hordes of beginners new to the world of home cooking.

As a result, meal kit sales have been surging during the pandemic. And they may be poised to find a stronger niche in the marketplace by adding variety with promises of fresh ingredients, convenience, and unique recipes.

More than half of Americans say they are cooking more now than they were pre-pandemic and plan to continue to do so once life reverts back to normal, according to a survey by Hunter, a food PR firm.

Changing consumer needs during the pandemic has allowed meal kit companies to reintroduce themselves:

HelloFresh grew its U.S. customer base to 2.6 million subscribers this year, while overall sales increased 66% to more than $600 million. 

Blue Apron reported that sales were up 9% to 1.7 million meal kits in the first quarter of 2020, while Sun Basket said weekly sales have almost doubled, as regular customers placed orders more often and for more meals.

As consumer behavior and preferences change post-COVID, every industry will be required to adapt. Customers will welcome heightened culinary experiences to their dining tables, with a broader range of cuisine offerings and prep times.

More from last week

Matt Wallaert, a behavioral scientist, shares three techniques to manage your mindset during these challenging times:

• Accept that we’re not at 100%. It’s okay to continue at 80% instead of crashing to 0%.
• Use distraction intelligently. This isn’t the sign of a weak mind, but rather an acknowledgment that everyone needs rest.
• Part of being normal is acting normal.

Pete Flint shares four trends that will empower labor marketplaces to get people back to work quickly, efficiently, and at scale:

• Marketplaces are moving to onboard standardized and attributed human capital with greater complexity of service.
• Marketplaces are evolving toward increased verticalization and taking over more of the value chain.
• Startups that can use their tech to add value to human capital will be able to unlock latent supplies and offer a better experience to both sides of the market.
• Education and labor have always been closely associated, but they will increasingly start to happen on the same platform.

Henry Ward, CEO of Carta, shared the "bias to action" internal memo he sent to his team. It details five ideals his company strives to live by:

• Ship value faster—but don't confuse velocity with haste.
• Accelerate learning by shipping MVPs of just about everything from internal memos and presentations to product iterations.
• Take an iterative approach to product building and business growth. Focus on the next best step.
• Bureaucracy is a death trap. Avoid gatekeepers at all costs.
• Don't be afraid to try new things. Have a bias to action. Talk about what could go right.

Justine and Olivia Moore, Partners at CRV, share five keys for success in vertical social networks:

• Users post things that they can’t (or won’t) share anywhere else.
• Solves a core, utility-oriented need with a new tool or feature.
• Enhances a user’s status within an existing community.
• Develops and supports its group of platform-native stars.
• The platform is a “system of record” for identity within the vertical.

Turner Novak, Partner at Gelt Venture Capital, wrote a deep dive into how TikTok suddenly became the most culturally significant product in the world.

It rode the wave of AirPods and audio memes to over 1 billion daily active users and is now the best way to create and consume short videos on mobile.

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Funding and Acquisitions

Amplitude, a startup that tracks online user behavior announced it had raised $50 million in Series E funding at a valuation of more than $1 billion. Demand for its product has spiked as the COVID-19 pandemic forced companies to work out how best to engage customers on their online platforms.

American Well, which offers virtual medical visits, raised $194 million to keep up with skyrocketing demand. Prior to the coronavirus outbreak, telemedicine was growing slowly because of the patchwork of complex state-by-state regulations. Since then, states have loosened many of these regulations to encourage medical providers to conduct their visits online, letting patients avoid unnecessary exposure to the virus. 

MasterClass, a startup that sells celebrity-taught classes to people, has raised $100 million in Series E funding at around $800 million valuation. The new fundraising comes as MasterClass has been seeing a boost due to COVID-19 as consumers look for new skills and hobbies they can pursue from home.

Mindstrong, a healthcare company focused on improving mental health has raised $100 million in Series C funding. Mindstrong has developed a digital platform for providing therapy to patients with severe mental illnesses ranging from schizophrenia to obsessive-compulsive disorders. It is looking to tackle a problem that costs the American healthcare system $20 billion per month.

Aspiration, the fintech startup that’s brought a socially and environmentally conscious twist to digital banking has raised $135 million in Series C funding. With the coronavirus pandemic disrupting traditional commerce around the world and keeping many indoors, present-day circumstances appear to lend themselves to tech-enabled, online-only neo-banks like Aspiration, Chime and Varo.

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