On the Money

Albertsons is hoping Plated brings in new customers, and pleases some existing ones

Key Points
  • Albertsons bought meal kit company Plated last year, and just began selling its kits to stores.
  • The company joins a growing number of grocers looking to leverage meal kits as a way to draw in more customers
Plated to go
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Plated to go

Meal kit delivery services have been heating up over the past few years. Companies such as Blue Apron and Plated have been offering customers convenience by delivering all the ingredients for dinner plus the recipe straight to their doorstep, taking the store out of the equation.

Now, meal kit companies are adding the store back in. In 2017, grocery chain Albertsons acquired Plated, and started selling Plated meal kits in select stores this April — with plans to be in hundreds of stores by the end of the year.

"There's a lot of people that want the product on demand or they want to pick it up on their way home after a busy day…so having a store is really the only way to accomplish that," Plated co-founder and CEO Josh Hix told CNBC's "On the Money" in an interview.

Bain and Co. partner Mikey Vu estimates meal kits comprise at least $1.5 billion of the $850 billion U.S. grocery market. He explained to CNBC that there's plenty of room for growth.

"We estimate [meal kit] awareness is as high as half the general grocery shopping population, but that trial rate is still pretty low (~6%)," Vu told CNBC in an email. "We see significant opportunity for growth over the next several years, potentially more than 50 percent market growth in the next 6-7 years."

Meal kit in delivery box.
Getty Images

Albertsons operates 20 brands, including Safeway, Shaw's, Vons and Acme, and has more than 2,300 stores across the country. With all that under its umbrella, the chain is hoping to use the Plated acquisition as a way to draw in new customers, and please existing ones.

"Our internal research told us that 80 percent of our customers would love to see a meal kit option in the store. And what was more surprising was that 85 percent of customers that were already subscribing to meal kits wanted to see meal kits in the store," Pat Brown, Albertsons's vice president of strategic business initiatives, told CNBC.

Plated is not alone in entering the grocery store space. Blue Apron announced they will be selling kits in Costco, and some grocers like Kroger's are developing their own line of meal kits to sell.

Right now, Plated's in-store meal kits are limited to six recipes that will change seasonally. Each kit has two servings, and are about $15-$20 per kit, depending on the ingredients.

Plated's subscription service is a little more expensive. It offers customers a wider variety of meal options with the menus changing on a weekly basis. The smallest subscription is 2 kits per week (2 servings per kit) for $47.80 + shipping.

"On the Money" airs on CNBC Saturdays at 5:30 a.m. ET, or check listings for air times in local markets.

Correction: Bain and Co. partner Mikey Vu in an email to CNBC said, "We see significant opportunity for growth over the next several years, potentially more than 50 percent market growth in the next 6-7 years." An earlier version misstated the figure.