HelloFresh CEO: Coronavirus has transformed how we think about dinner, these 3 trends will stick

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Hundreds of second-quarter public company financial results have laid bare the business impacts of COVID-19 during the months of April to June.

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What was already known has now been quantified: the coronavirus pandemic has in short order disrupted the global economy, impacting every industry and consequently forging new consumer behaviors.

Shoppers stocked up on food, sending retail supply chains into a frenzy to fulfill heightened demand. Product shortages caused people to look beyond their usual grocers.

As consumers considered new ways to get their food, social distancing needs led many to experiment with digital food retail channels for the first time. While grocery store shelve shortages were resolved in a couple of weeks, they set in motion lasting changes.

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For better or worse, this global health crisis has accelerated changes in how households think about dinner.

Even through coronavirus reopenings in states across the country, many consumer habits formed during quarantine – like cooking – have continued and likely will in a post-pandemic world.

HelloFresh CEO Dominik Richter

It’s already becoming clear that the coronavirus accelerated certain trends that were underway pre-pandemic and transformed the way we think about meals.

As the founder of the largest global meal kit company, I’ve been studying these trends to ensure we can seize this moment.

As the founder of the largest global meal kit company, I’ve been studying these trends to ensure we can seize this moment.

To do so, we have explored whether growth is a short-term need that will recede when the world returns to normal, or if it is an acceleration of consumer habits that had been propelling our growth for a decade. With operations in 14 countries across North America, Europe and Australia, here’s what we’ve discovered over the last four months.

1.  Habits formed in quarantine, like at-home cooking, will continue

More eating occasions inside the home present an opportunity for deliver-to-your-door food players to take share from struggling out-of-home food options.

As of July, the National Restaurant Association notes a majority of restaurant operators continue to report lower same-store sales and foot traffic. Yet the wealth of delivery and curbside carry-out options must also compete with homebound consumers who have turned to cooking more frequently at home.

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A study from food industry association FMI found one-third of respondents cooked at home six to seven days a week during March and April when stay-at-home restrictions were in effect nationwide. Looking ahead, nearly one-third of U.S. adults plan to continue cooking more at home, led by more than 40% of Generation Z respondents, according to a recent survey from Bloomberg and Morning Consult.

Meanwhile, meal kits, like those we produce at HelloFresh, where I am CEO, have been thriving.

According to Earnest Research, online meal-kit sales grew 63% in the week ending April 15 from the same period a year ago. Early indicators suggest retention levels for meal kit customers are on par with those before the pandemic, a trend HelloFresh has experienced.

We’ve also seen new customers cook their first five meals with HelloFresh more quickly. More food consumed at home and higher adoption in a compressed span of time suggest these habits will continue.

2. Supply chains must adjust to new levels of e-commerce activity – and quickly – before consumers look elsewhere

E-commerce platforms across the food landscape have given consumers a valued alternative to leaving their homes to shop for food. Yet early in the pandemic it became clear that traditional food retail supply chains need to solve for the logistics of fulfilling increased e-commerce orders, reducing the time between purchase and delivery and improving order accuracy.

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Of note, FMI found 84% of respondents reported problems with online grocery shopping; 40% complained of delays after ordering.

As the virus sees a resurgence in many parts of the U.S., consumers may lack the patience for an online grocery transformation and turn instead to delivery from more established online retailers, or transition to more convenient – and affordable – alternatives, like prepared meals and meal kits: shifting from a novelty pre-pandemic to a necessity for consumers.

3. Newfound demand from at-home consumers has staying power as working from home normalizes

Several months of stay-at-home guidelines have accelerated consumer discovery of new brands, products and industries. Gaming and streaming, for instance, found new subscribers by getting in the hands of recently homebound customers who otherwise may not have considered them – especially leading into the summer.

Meal kits could be the same – with the pandemic proving to be a push for rapid adoption in a way that has staying power.

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Our early data shows that is true. We grew our U.S. customer base 47% year over year and delivered more than 63 million meals in the second quarter – nearly doubling our total from a year ago – and experienced even more rapid growth in our global business.

Increased cooking at home is here to stay – it is not a pandemic-era fad that will simply drop off after six months.

Consider the long-term implications: work from home will continue through this year and beyond, led by first-mover decisions from leading tech companies like Google, which just extended working from home until June 2021.

Tech titans previously fashioned the major corporate campus approach, with everything you need so you never have to leave. Facebook has since bucked that trend, announcing that 50% of its employees could permanently work remotely within the next five to 10 years, and Twitter empowered employees to work from home on a permanent basis.

All of this points to more occasions for consumers to cook at home – and more demand for products and services to fill that need.

Meal kits offer a convenient solution delivered straight to your door without squeezing in a grocery store visit, which our customer feedback clearly shows is a reason orders remain strong.

The bottom line

Across all industries, e-commerce adoption has been pulled forward in a very short amount of time.

As the CEO of a meal kit company, I’m confident that our sector’s accelerated growth isn’t just a short-term spike from being a much-needed solution in what is hopefully a short-term pandemic.

All the data points to changed consumer behavior that has made the meal kit and other new offerings a mainstream dinner option for the long-term.

Dominik Richter is the founder and CEO of HelloFresh, the largest meal kit company in the U.S. and globally, with operations in 14 countries across North America, Europe and Australia.

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