Pilot Tests Prove C-stores Can Become Players in Meal Kit Space

ALEXANDRIA, Va. — Recent pilot tests show that convenience stores have considerable opportunities in the meal kit space, but that there are also notable challenges, according to NACS, the Association for Convenience & Fuel Retailing.

Two separate pilot tests were developed by NACS in conjunction with the Project on Nutrition and Wellness and the Cornell Food and Brand Lab. Both were intended to address downsides to existing popular meal-delivery kits, such as subscription requirements, cost, packaging waste and the need to plan a day or more in advance to order them.

The c-store channel served as a good retail testing ground for dinner meal kits due to its fueling offer, as 80 percent of fuel purchased in the United States is sold at a c-store, and consumers are most likely to fill up their gas tanks during the evening rush, according to NACS.

This is particularly true of millennials, 41 percent of whom fill up between 3 p.m. and 7 p.m. The tests were designed to determine if the appeal of one-stop shopping, either for fuel customers or others who visited during afternoon and evening hours, could grow sales for a dinner meal kit.

The first pilot test took place in September 2015 at Square One Markets in Bethlehem, Pa., in cooperation with The Six O'Clock Scramble, which offers healthy, easy-to-prepare recipes and meal plans for busy families who seek to cook family meals in 30 minutes or less.

Square One Markets' Six O'Clock Scramble Fresh & Fast Family Dinner Kits, which were reviewed by a dietician, were developed for four people and priced at $5 or less per person. Although sales did not match expectations, the test gained considerable attention from the media and the nutrition community, NACS said. The test also revealed multiple challenges, including that small chain stores such as Square One Markets often struggle to obtain certain fresh ingredients directly from suppliers and distributors. There were also marketing challenges, particularly because c-stores were not thought of as a dinner destination in the market.

Some of the first pilot test's challenges were addressed in the second, which began in March 2017 at the Shaw's 88 Kitchen store at Utah State University in Logan, Utah. This store did not sell fuel. The test examined whether student and faculty consumers would purchase a healthy meal kit on campus to prepare it at home. The CHEF-in-a-BOX meal kits, by Aggie Eats, offered a variety of two- and four-person healthy meals, with both meat and vegetarian options.

While the university received mainly positive feedback, the meal kits ultimately carried too many logistics-related challenges, which prompted the end of the test before its planned conclusion.

Despite the fact that 77 percent of consumers surveyed in 2015 said that they would be interested in purchasing an all-in-one meal kit from a store and 85 percent of weekly c-store customers said they would purchase a dinner meal kit, sales for the pilot tests did not reflect stated interest, according to NACS. Both tests demonstrated marketing, merchandising and sourcing challenges faced by c-stores in producing and selling meal kits. The Utah State challenge also noted that for the average c-store, it would be a more complex challenge to produce a meal kit, considering the resources a large university campus has.

"While consumer surveys and trends may point to opportunities, it's also important to examine execution, especially in small-format stores where every square foot of floor space is critical. Dinner meal kits may be a concept that is still ahead of its time for smaller convenience stores. However, it still may be appropriate for larger convenience store chains that have their own distribution centers, bakeries and commissaries, or those that operate highly evolved and dedicated foodservice programs," said Jeff Lenard, NACS vice president of strategic industry initiatives.

These case studies are part of six case studies that look at strategies to grow sales related to better-for-you snacks, meals and beverages. The "Healthy Dinner Meal Kit Pilot Test" from the Square One Markets test is available to download here, while the "Healthy Meal Kit Pilot Test" from Utah State can be downloaded here.