Not long before the pandemic started, a new industry was emerging and becoming popular all over the world: meal prep delivery. Both convenient and healthy, meal prep services have rapidly been adopted by consumers, and the demand hasn’t stopped increasing since then.
A Grand View Research report estimates that the industry could reach $28 billion by 2028. According to a 2019 Peapod survey, 77% of Americans prefer to eat homemade meals rather than eat out, and a Harris survey has shown that “81% believe that meal kits are healthier than prepared foods from local grocery stores.”
According to Earnest Research, HelloFresh, one of the biggest meal prep companies, “has seen its sales increase over 90% year over year in 2020 from 40%.”
Why is meal prep so in demand?
Reason #1: It saves time
Between work, kids, personal projects, and activities, people have busy schedules and might find it challenging to find the time to cook healthy meals for the week. This is why meal prep services are so popular right now; customers love the fact that they can get nutritious and delicious meals without having to plan ahead, go grocery shopping, and cook them themselves.
Reason #2: It’s a great solution for inexperienced cooks
Not everybody is a Jamie Oliver in the making. Some people just don’t have any interest in cooking recipes or the skills they require. Therefore, meal prep is a great way for them to eat delicious homemade meals without having to roll up their sleeves.
Reason #3: It is affordable and economical
Eating out can be quite expensive. People realized during the pandemic that they could save a lot of money by reducing how often they ate at restaurants, especially if they used to go every day for lunch. Meal prep, on the other hand, appears to be the best option for them, as it is convenient and affordable.
Reason #4: It is often a healthier alternative
The pandemic has been a wake-up call for many people, as many have started thinking about their lives and their health. Lots of people have started training more and rethinking the way they eat, looking for healthier options.
As many meal prep offer healthy dishes, the demand has naturally started to increase. People have realized they could eat healthy in a very simple and convenient way thanks to meal prep deliveries without having to spend time planning and cooking their meals.
The pandemic also had a positive impact on the meal prep delivery industry as more people have been working from home and therefore had less options for their lunch.
Therefore, you might have been thinking about launching your own meal prep business. While it is quite the right time, many people will fail if they are not doing it the right way. Launching a business requires to be organized.
Here is some advice to help you start your meal prep business.
#1 Choose a niche and define your unique selling proposition
If you’re one of the many people looking to start a meal prep business, you may want to pick up a niche in order to stand out from the competition and find an advantage. With a niche, you will be able to offer higher-quality products and enhance your brand’s image.
Types of meals. Choose what kind of food you want to deliver, as there are a broad variety of options. You could decide to deliver healthy meals for people who are trying to build muscle or low-calorie meals for people trying to lose weight. You could specialize in a certain dietary preference, such as vegetarian, keto, or paleo.
If you have delicious recipes from your country, you may decide to offer meals from there. Anything unique you come up with could be a good idea, but make sure to analyze the market first and see if there is a demand for this type of cuisine.
Types of services. Define which kind of meal prep service you want to offer. You could deliver raw ingredients in kits, similar to HelloFresh and Goodfood, so that people can cook their meals later by following the recipe you provide. This usually targets people who want to cook but have run out of ideas or don’t have time to get groceries.
You could also deliver pre-made and fresh meals to people who just want to warm up their meals and eat them right away without having to cook at all. This option is for people who don’t have time to plan, go grocery shopping, and cook their own meals.
Who is your target audience?
All businesses must define their audience before they can begin their activities. Defining the target audience is important as you will need to determine your meals, your services, and your marketing strategy based on the needs of the specific audience.
Begin with a market study. This will allow you to see if there is a demand for what you’re offering. Once this has been established, you will be able to define your target audience. Who are the people who will be interested in eating those meals? What are they like? What do their lifestyles look like?
While defining your target audience, you can get ideas for your unique selling proposition. In other words, what makes your meals different from the other meal prep services? It could be the price, the quality of the ingredients, your nutrition knowledge, or the complexity of the meals.
Needless to say, if you are thinking of starting a meal prep delivery business, it is best to be passionate about cooking or partner with someone who is.
#2 Define your business plan
When launching any type of business, it is important to think about your business plan before you jump into your project. Here are a few things that your business plan should include:
- A business name
When choosing a business name, you should consider a few things. First, you will need to find a name that people can easily pronounce and remember. It is recommended to choose a name that tells customers right away what your business is about. Choosing a business name with the words “meal prep” or anything related to food might be a good idea.
That being said, make sure this name hasn’t been already taken by looking at your secretary of state’s website. If the name is available, don’t waste too much time before you scoop up your domain name.
Since you will probably have a website, the domain name is also important in terms of SEO (search engine optimization). You might want to use popular keywords in your domain name such as meal prep delivery, meal kit, homemade meals delivered, so that your website gets a better ranking on search engines.
- A list of the meals you will offer and their details
Once you’ve chosen your business name, make a list of the meals you will offer to customers. You don’t need to list all of them since you will most likely modify your menu, but providing examples will allow you to define what kind of meals you will be serving. This information is important as you will also need to list the ingredients in order to determine your supply cost.
In order to set prices for your business, you will need to know how much it will cost you to produce and deliver your meal prep.
You will first need to calculate the supply cost (i.e., how much you will spend on ingredients and packaging). Then you will have to evaluate the cost of the production and sales. This includes the building rent, workplace maintenance, staff salaries, website maintenance, kitchen equipment, and delivery cost). You should determine the production cost so that you can set up your prices in order to make profits. The financial analysis will help you with that.
- Competition analysis
In order to make sure you reach your target audience, you will have to look at your competitors, learn who they are and what they offer, what their strengths and weaknesses are, and their customer base. Learn about their prices, see what their website looks like, and get some ideas.
Analyzing your competitors is a great way to learn how you can stand out and offer something that they don’t or offer higher-quality products or services. The last thing you want is to be left behind and miss out on the latest industry trends. Conduct a competition analysis prior to starting your business, but regularly keep an eye on your competitors.
- Find trustworthy suppliers
Choose reliable partners to deliver your ingredients and supplies. You will need to find good partners for your recipe ingredients and also for the boxes to deliver meals. Pay attention to the quality of their products and their overall reviews.
You may want to consider buying food in bulk to keep costs down. Be mindful of food waste, though, as expired ingredients can also be a big loss for your business.
- Find the right containers
Choose quality containers to deliver your meals. In order to keep your meals fresh, you will have to consider what kind of packaging you will want to use and whether you will need ice packs or dry ice. You may even want to provide cutlery. If you would like to improve your brand image and protect the planet at the same time, you will find eco-friendly packaging ideas in this blog.
Make sure you put your brand’s logo on those containers and bags to enhance brand awareness. Don’t forget to put nutritional information on each box so that customers know about the ingredients, nutrients, and calories in their meals.
#3 Get the insurance and permits required
Launching a business involves some paperwork. You should define your location and structure to decide what kind of business you should register as. You will have to register at the federal and state levels to have permission to run your business.
As you will be offering food products, you might be asked to obtain a food-handler license, a food establishment license, a health department permit, and a sales privilege license. You might also want to consider having insurance for that in case someone gets sick from your food. Hiring a lawyer could be a good idea to deal with all of the paperwork and help you determine your duties and rights.
Take a look at the chamber of commerce guidelines to ensure you follow the right steps to set up your business legally and that you comply with all the requirements.
#4 Decide whether or not you will hire employees
You may need to hire a few people to help you start your business. Make sure they have some experience and are comfortable cooking the type of food you want to deliver. They could also help you create new recipes for your menu and make suggestions to improve your meals.
You may require a web developer to create and launch your website and ensure it looks professional and works properly. This is an important task as most of your customers will likely order online.
You could also consider hiring someone in marketing who will take care of your strategy, potential ads, social media, contests, promotion, email marketing, and website content.
In order to hire those employees, you will need an employer identification number and to register for certain business insurance policies to deal with unemployment, workers’ compensation, and disability.
#5 Define a clear financial analysis
To set up your business, you will need to know how much it will cost you and how much you expect to make in the first five years.
The financial analysis should include forecasted income, balance sheets, and an expenditure budget. It should include the set-up costs, including rent, all the required equipment, website setting, and marketing. This will give you a good idea of how much money you should have prior to launching your business in order to know if you should borrow funds or not.
Afterwards, calculate your forecasted profits. Estimate your monthly sales and expenses; this will help you set your prices. You should also determine your break-even point, meaning the minimum number of meals that you need to sell every month to cover the production costs.
#6 Find the right place to prepare your meals
Thinking about the right place to start your business is very important. Considering your budget, you might decide to rent a place with a strategic location and a kitchen that will allow you and your staff to cook all the meals.
Pick a place that will be easy to access every day so that your drivers don’t have to drive a long distance and that is not too far from your customers.
You will need a space that has a convenient kitchen with refrigerator storage space, as this is where you will prepare meals. Make sure there is also room for packaging your orders. You may also need office space for the accounting team, marketing, and customer service.
#7 Create your website
Depending on your budget, you might decide to build your website yourself or pay a developer to do it. Your website is an important part of your business as it is your online store and your customers’ first impression of you. They will see your meals on the site, so you need to make sure they look appetizing.
Investing in a nice website design is very important in the food industry. You want people to be hungry when they look at your website so that they want to order your meals. You should also make sure that navigation is easy and that the traditional path to registering or ordering is logical.
Think about how your customers will pay. The more options you give them, the better. Also, avoid asking them to fill out too much unnecessary information, as customers get annoyed when they have to answer too many questions.
#8 Select the best delivery software
While offering a good online shopping experience to your customers is essential, so is the delivery experience. Many customers order meal preps so that they can have lunches ready for the week and not have to think about it. Therefore, if you miss them during the delivery or deliver the wrong order, they will be disappointed.
This is why many meal prep companies use software to optimize their deliveries. Here are a few things you should look at when choosing your delivery software:
- Route builder. Choose a platform that will dispatch your orders efficiently so that your drivers don’t waste time on the road. Also, with a good route planner, it should not take more than a few minutes (or even seconds) to build your delivery routes.
- Real-time route optimization. Delivery software should optimize your routes in real-time so that your drivers don’t waste time in traffic.
- Delivery tracking. If you want to enhance your customers’ delivery experience and offer the best service, choose software with real-time delivery tracking. This will allow customers to know when they should expect the driver with a precise time slot and the number of stops before theirs. When the driver is on the way, the customer should be able to track the driver in real-time. This will also limit incoming calls from customers asking where the driver is. Some delivery software also allows you to send notifications to customers when the delivery will be a bit delayed due to traffic.
#9 Create a marketing strategy
In order to stand out from the competition, you need to define what marketing actions will be the most effective to reach potential customers and increase brand awareness.
First of all, you may want to do a SWOT analysis to identify your company’s strengths, weaknesses, opportunities, and threats so that you can set reachable goals. You should include the competition analysis you’ve previously conducted for your business plan, as it will help you figure out how they can prevent you from attaining your goals and how you can make a difference.
In the food industry, social media is very effective, and it might be worth running ads on Facebook, Instagram, and TikTok. If you’re a bit creative and familiar with design tools, you could even create a short video, as food videos are very popular at the moment.
Make sure to include reviews on your website as they are usually read by many people considering your services. You can collect reviews with some delivery software that will allow you to send SMS or emails to customers once their delivery is completed to ask them to leave a review.
You could also create flyers that you will distribute to some local offices in order to reach busy people that might be interested in your delicious meals.
It might be wise to start with a special offer that will attract your first customers. Let’s suppose your meals are amazing; customers may need to taste them once to be convinced and become regular customers, especially if you also offer a great delivery service.
You could even create an event for the launch of your meal prep business so that people can have their first experience with your meals, and if you manage to satisfy their tastebuds, they will most likely subscribe before the end of the event.
Email marketing is another good way to reach your first customers. You could include a coupon in the email to encourage people to order from your company.
#Enhance customers’ experience
Once you're starting to have customers, you need to make sure that they will remain loyal to your brand as the success rate for selling to existing customers is about 60-70% as opposed to 5-20% to new customers according to a Outbound Engine’s survey.
In order to do that, make sure that your meals are always delivered fresh, that your menu is diversified and that you deliver customers' meals on time. This is why having a delivery software with a tracking feature will improve the customer experience as they won’t be wondering if their order will arrive on time.
You could also decide to have a loyalty program offering discounts and special offers to loyal customers. You can create a community with your customers where you could share work out exercices if you’re focusing on healthy meals for example, nutrition information, benefits of a certain type of diets and tips for losing weight. These could be sent in a newsletter for example with high-quality images that will motivate people.
You might have a better idea of how to start your meal prep delivery business or a better view of what it requires. Launching a business can be quite challenging and demanding but if you know how to do it right, you are much more likely to succeed. Make sure you surround yourself with skilled people and equip them with the best technology in order to offer a seamless meal prep delivery service.