Instacart Aims to Compete with Delivery Services, Adding Ready Meals Offering
Instacart announced yesterday it would launch a service selling ready-to-make meals. The move is intended to help the platform better compete with food delivery services, which have increasingly diversified to offer grocery delivery.
“With our new Ready Meals Hub, we’re dishing up inspiring, more affordable and nutritious food alternatives to restaurant delivery,” Daniel Danker, VP & head of product of Instacart, said in a press release. “We’re also helping retailers drive more sales and increase their ‘share of stomach.’”
The new program will roll out with retail partners including Publix, GIANT, Food Lion, Hannaford, Stop & Shop, Martin’s, and Kroger. Depending on the retailer, customers will be able to purchase deli department staples such as fresh soups, salads, meat and seafood entrees, pizzas, rotisserie chicken, take-and-bake casseroles and pasta dishes.
While Instacart already allowed grocery shoppers to purchase prepared food offerings, options were sorted by retailer. The new service acts as a single hub so that customers can browse by meal choice. The program also offers 30 minute delivery, something that the company says is as fast, and at a cheaper price, than ordering takeout.
The launch follows Instacart’s October acquisition of Foodstorm, a software that powers the catering order management system used by many grocers. The pickup allowed Instacart to better integrate with retailers’ prepared foods departments which, unlike other parts of the store, typically have variation in the SKUs sold from day to day.
Instacart argues that for retailers, there’s a clear upside to the Ready Made service. According to Instacart, the U.S. chilled and deli food market is projected to reach more than $108 billion by 2026, and prepared foods and “order ahead” options” are also generally more profitable than traditional grocery items. Instacart customers who purchase prepared foods items, the release noted, generally shop more frequently than customers who do not.
Selling more prepared food options is especially appealing for retailers that keep some production in house, because it allows them to utilize produce, meat or grocery products that might otherwise be culled for reasons such as fast approaching expiration dates or blemishes. Regardless of production, because many prepared food options are sold wholesale (think loaves of bread, pre-packed salads or gallons of pre-made soup) this part of the store can offer retailers strong margins.
Instacart is trying to avoid losing customers to what were previously food delivery services, such as Ubereats or Doordash, or to other rapid delivery providers such as GoPuff or Foxtrot. These services have diversified their options and, depending on the platform, offer everything from ride hailing to grocery delivery. In order to also be a “one stop shop,” Instacart is now trying to do the same.
“[We’re] creating new ways… to give busy people and families across the U.S. more ways to shop smart, eat healthy and feed their cravings faster than ever before,” Danker said.