Youfoodz targets time-poor Millennials with new meal kits

A Queensland food group is taking on global competitors in the home delivery meal-kit market but it has added a twist to appeal to time-poor millennials who still want to cook.

Brisbane-based Youfoodz has expanded into meal kits, tapping into the fastest growing segment of the online grocery market.

Overseas rivals HelloFresh and Marley Spoon have been dominating this market segment with their online weekly subscription service that allows customers to choose from a range of meals, all of which can be cooked within 30 minutes. All ingredients and recipes are home delivered.

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However, Youfoodz said time-poor Millennials are demanding even more convenience, so it has entered the market with $19.95 Meal Kitz that can be turned into meals for two in half that time.

Youfoodz chief marketing officer Adam Coward said the privately-owned company, which has made a name for itself in the ready-to-eat meal market, hopes to set itself apart with its utlra-convenient approach.

“We didn’t want to just do groceries in a box, that had been done before,” he said.

“So what we wanted to do, to value add, was actually pre-chopped, perfectly portioned vegetables, fresh sauces and we pre-marinate all our proteins as well.”

The question is whether they can compete in an ever-growing market, with Brisbane-based home meal delivery company FivePointFour Holdings going bust earlier this year.

But, Mr Coward said the company is confident it will be able to maintain its existing customer-base and appeal to a new one.

Youfoodz chief marketing officer Adam Coward. Picture: AAP image, John Gass

“At the moment, we have an index on the younger market, so the 20-30 year old market, but we’re expecting a lot of new customers to come from this (meal kits) Australia wide,” he said.

Started in 2012, Youfoodz ready-made meals are now stocked in 3000 IGA’s and petrol stations around the country and it delivers online orders of $50 or more to customers in all metro areas in Australia.

Mr Coward was not prepared to share specific figures around the growth of the business, but said the majority of the company’s growth happened over the last two years when Youfoodz advertised with Channel Nine’s popular home renovation show The Block.

He said the the company’s expansion was a win for the local economy with all of Youfoodz products, including pre-prepared meals, meal kits, juices and snacks, being manufactured in Queensland. “We’ve got 80-100 people here that are working on customer service and we’ve got the menu development team that has all the chefs and dieticians on top of that,” Mr Coward said.

“The investment from the business back into Queensland, and Brisbane especially, is quite vast when you consider where it started - with one small kitchen.”

A recent IBISWorld report shows meal kits have become the fastest growing area of online grocery sales over the past five years, and are expected to make up 10 per cent of Australia’s online grocery sales industry and turn over around $320 million this year.

IBISWorld senior industry analyst Bao Vuong said as the major players expanded, he expected more competitors to enter the market.

“Seeing the surge in growth of HelloFresh for example will encourage many new operators to enter the industry,” he said.

“I can also see the large operators in this industry seeking investment to continue expanding their scale.”

Youfoodz chefs Aaron Collins and James Demos. Picture: AAP image, John Gass

Berlin-based HelloFresh’s Australian entity will likely be Youfoodz strongest competitor. It posted financial results for calendar 2017, showing it earned a $5.4 million profit off $126 million in revenue.

In a bid to keep up, the market’s other major player Marley Spoon, also from Germany, released its low cost meal kit range last year, offering meals from $4.95 a serve.

QUT retail expert, associate professor Gary Mortimer, said he also expects to see supermarket giants enter the meal kit market over the next few years, with select Woolworths stores already stocking a similar product.

However, he said Youfoodz’ ultra-convenient approach to meal kits may not work for a market who enjoys cooking.

“The risk is meal kits are attractive to consumers who actually want to cook and participate in that experience,” Dr Mortimer said.

“So if you make it too easy or too difficult, people won’t buy the product.”

According to ASIC records, Youfoodz shareholders are Karl and Arthur Giles, Jermaine Chambers and Jennifer Dowrey.