Marley Spoon just solved one of the biggest issues with meal kits

Key Points
  • Marley Spoon is launching Dinnerly, a cost-conscious meal kit that costs $5 per serving and was designed with families in mind.
  • The company cut meal kit costs by decreasing the number of ingredients, shedding excess packaging and spending less on marketing materials.
Dinnerly Meal Kit Box from Marley Spoon
Marley Spoon

Marley Spoon just eliminated one of the biggest barriers to using meal kits: price.

Meal kit delivery service Marley Spoon said Tuesday it will be selling a more cost-conscious box aimed at helping families cook up an inexpensive, but quality dinner.

"The current meal kits you have on the market, unfortunately, nobody can afford them," Fabian Siegel, CEO of Marley Spoon, told CNBC. "The problem is that they are all $10 a portion and the American family on average doesn't spend $10 per portion, they spend $5."

Enter Dinnerly, Siegel's remedy to the affordability issue plaguing the meal kit industry.

At $5 per portion, Dinnerly strips away the frills of the traditional meal kit, opting instead to provide more basic ingredients in an attempt to appeal to picky eaters. So, you won't see any red snapper, green tomatoes or purple carrots in this box.

Instead, the company will incorporate recipes for meals like spaghetti and meatballs, cheesy chipotle beef tacos and pan roasted chicken with potatoes.

Siegel said kids don't appreciate the fancy special ingredients in Marley Spoon's other box. Replacing those items with kid-friendly foods makes the meal kit a better fit for families with younger children.

Cheesy Chipotle Beef Tacos from Marley Spoon's Dinnerly meal kit
Linda Pugliese

Customers will pay $5 per portion. That means two people can order three meals each for about $39, including an $8.99 shipping charge. To feed a family of four, it will cost about $69.

That puts Dinnerly well below the price of its competitors. The majority of meal kits on the market cost $65 to $85 for three meals for two people. Family boxes, which contain two to three meals for four people, are even more expensive.

Marley Spoon's other box, a collaboration with Martha Stewart, costs about $62 for two people and around $107 for four.

"Many customers who try meal kits, they get the box at a discount," Siegel said. "But realize that they cannot pay $60 to $80 a week."

Siegel told CNBC the company is able to reduce the cost of the meal kit by decreasing the number of ingredients as well as cutting down on excess packaging and spending less on marketing materials.

The company's current box has about 10 ingredients per recipe and includes specialty items such as ras el hanout (a North African spice mix), medjool dates or Persian cucumbers. Dinnerly has six to eight ingredients and sticks to more traditional items.

Dinnerly Meal Kit Box from Marley Spoon
Marley Spoon

To help cut down on packaging, Dinnerly is ditching the recipe cards and will provide instructions digitally.

According to Darren Seifer, food and beverage industry analyst at NPD Group, too much packaging is another of the major factors that consumers cited when abandoning their meal kit subscriptions.

Siegel said Dinnerly also will keep marketing costs to a minimum, a rarity in the meal kit space.

Blue Apron, which recently went public, has seen its shares plummet more than 12 percent since it first started trading as investors worry whether the meal kit company can cut its marketing costs and retain customers.

Siegel said Dinnerly will rely heavily on word of mouth but will also implement some digital marketing that will pop up when customers search for the box online.

"When people use our product and love our product, they share it with friends," he said.

Dinnerly's service will start in California, Washington state, Oregon, Nevada, Utah and Idaho before expanding to other regions by the end of 2017.

(Correction: Dinnerly is a meal kit from Marley Spoon. An earlier version of the story incorrectly stated it was part of its Martha & Marley Spoon collaboration.)