Meal Delivery Services are Cooking in Colorado

The market sector is valued at $5 billion

When chef Katie Kannen and her husband Chris launched their Denver-based meal delivery service, The Spicy Radish, five years ago, she had to explain the concept to friends.

"They would say, 'Oh, you're doing catering,' or, 'It's like Meals on Wheels,'" she says. "Some education needed to happen."

Education happened, and so did industry growth.

According to market research firm Packaged Facts, the delivered meal kit space is a $5 billion industry led by national brands such as Blue Apron, Plated and HelloFresh. These usually subscription-based services deliver boxes with ingredients in portion sizes so the consumer can prepare meals at home. Local brands are competing by highlighting their differentiators. Spicy Radish, for example, delivers the meals fully cooked.

The industry is getting crowded. Sarah Lair, owner and founder of Five Eggs, says she sees a constant stream of new entries at the shared commercial kitchen space near Stapleton, where her company has been based for three years. “There is a lot of camaraderie,” she says. “We taste each other’s food and ask if it needs more salt.”

Boulder-based Green Chef, which was acquired by HelloFresh this year, differentiates itself by selling natural and organic foods. “The meal kit industry has seen a great deal of change in the past year and I anticipate more change will come,” Green Chef COO Brian Popper says.

Technology is driving some of the growth. “What the technology provides is at the core a direct relationship with the end consumer,” says Tom Balderston, co-founder of Denver-based SupperBell. With the post-purchase feedback loop, the customer lets the company know how they experienced the service and product, and SupperBell uses the information to make improvements. Also, Balderston says, logistics software optimizes the routing for delivery drivers, and customers can see how close a driver is to their homes.

Although New York-based Blue Apron had a well-publicized disappointing IPO, Packaged Facts predicts robust growth for the industry.

“It’s a huge space,” says Shannon Sawyer, managing director of operations for Marley Spoon, a German company that launched U.S. operations in New York in 2015. “As customers move from offline to online retail, the portion of online grocery sales grows.”

Categories: Companies to Watch