Craig Tractenberg of Fox Rothschild.

The lyrics to the song “Money for Nothing” by Dire Straits talks about the “rock star” life as having “custom kitchen deliveries.” Now everybody can live like a rock star. In the future, you will have food on demand and you will have franchised meal kits as “custom kitchen deliveries.”

A meal kit contains the ingredients to prepare a meal and are intended to be somewhat balanced and healthy to provide protein. Not just for dinner, now meal kits are being marketed for all occasions to provide freshly prepared meal options. Kits answer not only the question of “What's for dinner,” but also, “Do I have everything I need?” Kits also provide a solution to those who want to eat healthy, so they can customize their order.

The growth rate is staggering. From 2018 to 2019, the kit market has grown by 36 percent, with most of its customers having incomes of $100,000 or more, and tend to be 25 to 44 years of age. Many meal kits are ordered on a subscription basis, for a week, primarily for the 35- to 44- year-old demographic. But that is changing rapidly. Only 12 percent of consumers bought meal kits last year, but 23 percent say they will buy meal kits in the future. Sales are shifting from online ordering to in-store sales. Combine that with third-party meal deliveries on demand, expect exponential growth merely because of convenience.

Test of Franchised Meal Kits

Chick-fil-A test marketed “Mealtime Kits” at 150 restaurants across the Atlanta, Georgia-area in 2018. The pitch was that it makes it easy to cook your own meal at home in 30 minutes using a recipe card and fresh, pre-measured ingredients. The meal kits could be picked up at any participating Atlanta restaurant. The kits do not include freezer or ice packs to keep them cool, so they should be refrigerated. Each kit serves two people and you need to purchase multiple kits to feed additional people. Mealtime Kit recipes take approximately 30 minutes to prepare. Chick-fil-A tested five different Mealtime Kit recipes.

Customers were able to choose from two of these options at a given time: chicken parmesan, chicken enchiladas, Dijon chicken, pan-roasted chicken and chicken flatbread, all of which feature Chick-fil-A chicken. Mealtime Kits cost $15.89 per kit. The recipes are not considered vegetarian, vegan or gluten-free, but each ingredient is individually packaged so a customer could customize the meals at home to exclude unwanted ingredients. Consumers could order a meal kit at a local restaurant in the drive-thru, inside at the counter or via the Chick-fil-A mobile app, Chick-fil-A One. No need to call ahead to place an order. The meal kits do not replicate Chick-fil-A menu items, though they do include some ingredients you'd find in a restaurant, such as the chicken.

According to their SEC filings, operating only six days a week, Chick-fil-A reported $3 billion in revenue in 2018, more than a 13 percent increase over 2017. With systemwide sales increasing over 16 percent to $10 billion in 2018, the average mall store reported over $2.2 million in sales and nonmall stores reported over $5.7 million averages.

Convenient Pick-Up and Delivery of Meal Kits

Chick-fil-A has a catering program that will bring ready-to-eat Chick-fil-A to you. But the Mealtime Kits fulfill a different need as they are convenient to prepare and as convenient as visiting the drive-thru at a Chick-fil-A. Given that the best part of the day for Chick-fil-A is lunch, picking up a meal kit for dinner seems even more convenient for your evening meal. But let's get futuristic. Availability of meal kits is shifting from a subscription model ordered online, to in-store supermarket space. Online subscription companies have partnered with brick-and-mortar groceries and supermarkets offering their own packaged options. You will see supermarkets making space or “stations” of in-store meal kits. The next step in supermarkets is not only the offering of franchise-branded sauces, soups and ingredients, expect to see franchise-branded kiosks offering franchise-branded meal kits.

Coupling Meal Kits With Delivery

Market leaders in food delivery, DoorDash, Postmates, Caviar and UberEats, partner with restaurants to show incremental sales increases, while their fees continue to erode restaurant margins. Today, the restaurants pay the majority of the expense of third-party deliveries, but this will shift to the consumers as the costs currently are not sustainable for restaurants. It could be through digital ordering and delivery, with increasing competition, that the delivery expense could be driven lower. There also may be some savings or revenue opportunities through customer data-sharing and point of sale system integration that will make delivery even more ubiquitous. But look for delivery of meal kits.

Today's under age 45 demographic are all about taste and convenience. They not only want their MTV, but also fresh, customized meals now, delivered to their kitchens. Look for franchise companies once again to fulfill that need.

Craig R. Tractenberg is a partner and co-chair of the franchise practice group at Fox Rothschild where he handles complex business disputes involving intellectual property, licenses, business torts and insolvency issues. He focuses his practice on franchise companies' development and expansion. Contact him at [email protected].