Disruption is the name of the game lately — and just as ride sharing shook up the taxi industry and room renting invaded the traditional hospitality model, the meal kit industry is now serving as that disruptor for food. The appetite for on-demand food, in the form of a subscription or per diem ready-to-assemble recipe and ingredient box, is enough to make any investor’s stomach rumble.
While the market overall is huge — projected at $1.5 billion in 2016 and set to grow to multi-billions over the next few years — there are also a lot of players in a space where it’s difficult to stand out. More than 150 meal kit delivery services currently operate in the U.S.
These businesses have to contend with major overhead costs as they scale — think packaging, packing and preparation employees, and warehouse and transportation costs. This isn’t like scaling adoption of an app or a software suite.
It’s a high-stakes game also, especially for a younger company where one bad batch of ingredients or delayed shipment can make or break their entire product for the week. And once you’ve lost those customers, it’s hard to get them back — food is not something to play around with.
All of this has led to questions of whether the meal kit business is actually even profitable, despite market demand. Many of the major national services still operate on huge sums of initial capital — in total, U.S. meal-kit companies have drawn over $650 million in venture capital. Many won’t comment on their profitability.
Yet in the midst of this evolving industry, one Georgia company has quietly staked a claim for itself, making national headlines, reaching markets across the entire country, and achieving profitability, all with a very small influx of initial capital.
PeachDish was started by the head of an e-commerce shoe business and an organic farmer with restaurant experience. Together, they built the company from literally the ground up; three years after joining forces, they ship hundreds of thousands of meals nationally and saw 400 percent growth from 2015 to 2016.
Hype spoke with Judith Winfrey, PeachDish’s President and Co-Founder, about their secret sauce for success.
Make the product (food) the center
My background is food, not technology. My husband and I have an organic farm and I ran restaurant operations for many years.
We have really focused from the beginning on quality and sourcing — the integrity of our ingredients and the sourcing of our ingredients. We pay attention to providing transparency throughout the supply chain so our customers know exactly where there food is coming from. And the quality of the recipes — we spend a tremendous amount of time making sure the food is going to be delicious, it’s going to be easy, and it’s going to be healthy. We have a registered dietitian on staff to do nutritional analyses on all of our dishes. We were the first meal kit service to employ an RD.
This is all important because if you think about it, food is the only thing you’re ever going to buy that literally becomes who we are — it becomes your eyeballs, your hair, your skin. So it’s literally the most important thing you’re ever going to buy.
Find your niche
We do keep the southern flair in all our food; I made that decision when I came on to make us a little bit different from the average meal kit business. But it’s not only as a point of differentiation, because I also think that southern cuisine is one of the few regional cuisines in the United States that is identified, not just in the U.S., but throughout the world. I felt, as a native Atlantan who is the daughter of a caterer and the granddaughter of a sharecropper, like I had a qualified voice to help tell the story of what southern food is and share it with others.
Keep it lean where you can
We don’t compromise on food quality — at all. We have high standards and they are articulated in our procurement guideline. But where we have been able to keep costs down is mainly just keeping it super lean. Up until a year ago, we had only four full-time employees on the office team and a couple of “helpers” (this doesn’t include our packing team, since their salaries are part of our cost of goods). We also didn’t commit to a permanent space until we found a really good deal. We had a very small funding contribution early on from an angel investor, but that has been all since then.
What we have to do, and what any business should be doing, is constantly analyzing supply chain and partners to make sure we’re getting the best quality product at the best price. We’re not afraid to change it up if we find either a better product, or a better deal.
Take pride in your work — and always stay fresh
We just brought on four new contributing chefs, all really renowned southern chefs whom among them have written something like 50 books. Our culinary director has been leading that effort. We’re excited about our new team of dietitians, all phenomenal and really committed to health and wellness. We’re partnering with the American Diabetes Association this year to be one of their preferred partners, where our product will be offered to their members with different dietary restrictions. We’re also going to become a certified B Corp. this year. For me, this is exciting because it certifies that we’re the kind of business, according to a third party, that we say we are.