How to Start a Meal Prep Business From Scratch
Written by KitchenFuel Team | Business Advice | Read Time 18 min
Before learning the steps of how to start a meal prep business, it’s important to understand the basics of this emerging industry and what you are getting yourself into. If you already know the industry and are just looking for steps to launch the meal prep business then you can skip ahead.
We’ve answered your burning questions below on the best ways to approach this new venture or how to optimize your existing business. Get in touch here to learn more about the meal prep industry and see how meal prep software can help you achieve your goals.
What is meal prep?
First, let’s understand the difference between meal prep and meal kits. In the name “meal prep”, the “prep” stands for “preparation”. Think of getting pre-cooked meals made by chefs. Meal kits contain everything you need to make the meal yourself. This consists of all the ingredients (sauces and spices included) and a recipe for you to follow to cook it yourself. Check out another simplified article on the differences between meal prep and meal kits.
Both of these business models rely heavily on distribution to your customers through a combination of at-home delivery and in-store pickup (think at the restaurant, kitchen or gyms).
There are many styles of cooking in restaurant cuisines and it’s no different in the meal prep delivery industry.
Some of the most common styles are:
- Healthy: Many health-conscious individuals rely on businesses to provide macronutrient information so that they can be sure to stay within a certain range and not consume too much of a certain nutrient, that is some might want more protein less carb or some might more carb less fat and combinations as such.
- Diet-based: There are new diets coming out each year and the ability to offer meals that suit the preferences of a lot of your customers is a great strategy to make sure no one gets turned away. These can include meals following any number of diets including keto, athlete (lean), vegan, vegetarian, and more!
- Premium: Some customers really value the quality of their meals using higher-end ingredients and cuts of meat and want to have the restaurant experience in the comfort of their home can demand a higher price point.
- Custom: You can order and customize the meals the way you like them, choosing the sides, sizes, spices, and more! This option is obviously much more time-intensive for the chef to track and cook individual meals so be warned!
Is starting a meal prep business right for you?
If you’re reading this, you’re already considering starting a meal prep business. Or maybe you run a restaurant and are trying to find alternative income opportunities within the food and beverage industry. Whatever your starting point is, it’s always important to stop and evaluate if starting a new meal prep business is a good decision for your individual circumstances. Below are some of the key criteria to keep in mind.
Profit: Yes, this might be the first thing on your mind – You’ve already got some cooking experience, let’s put it to good use and make some money! Right?? This is a great opportunity for an additional revenue stream!
- Flexibility: Running a meal prep company offers a lot of flexibility in your schedule to determine which days you want to cook and which days you want to deliver. The company can start small with just a few customers and grow as your sales demand it. You can do all the cooking or hire a chef (and delegate the cooking) so you can focus on the marketing and sales aspects of the business.
- The point here is that YOU are in control. KitchenFuel can save you the pain of manually working on everything at the cost of your own precious time and efficiency.
- Customer Feedback: You get to be in the kitchen, creating your ideal menus and hearing customer feedback on how much they love your cooking!. There’s nothing more rewarding than having those repeat customers that begin to rely on your meals as a part of their day-to-day lifestyle.
- Competition: Some cities have high competition. Make sure to google “meal prep near me” to see other options and try to differentiate yourself with different branding, cuisine types or overall customer experience.
- Overhead Costs: High overhead costs which, if left unchecked can have a serious impact on margins and ultimately on profitability. You can minimize this by starting small and cooking out of your home kitchen or simply using existing restaurant space to manage this new aspect of your business.
- Logistics: Meal prep is an operations intensive business and will require a lot of planning and high management skills unless you have software to support you on these time consuming logistics tasks. Check out our back-end technology if you want to automate all manual processes and let analytics drive your profits.
The Meal Prep Opportunity
In 2017, the meal prep industry was valued at $4.65 billion with an impressive growth of around 300% compared to the previous year. The market is projected to reach $11.6 billion, an increase of 100%. Two of the top market leaders currently in North America are Blue Apron and HelloFresh. Blue Apron saw a revenue growth of 758% and HelloFresh’s revenue grew by 1,738% . Now this is just an example of the mega players in the space, but there is a TON of opportunity in local markets to dominate and be successful!
Meal prep businesses continue to grow at an explosive rate year on year fueled by Covid-19 sentiment changes and the shift to working from home. By 2028 the meal prep delivery industry could reach $28 billion according to a new report from Grand View Research, Inc. That’s a compound annual growth rate of almost 13%, the report said.
COVID-19’s Impact on the Meal Prep Industry’s Growth
COVID-19 has had a very positive impact on meal kit services due to a large number of people staying indoors after stay-at-home orders were implemented globally. This changed consumer behaviour towards favouring at-home delivery and getting used to the time-saving aspects meal prep delivery creates. While there will be a spur of restaurant dining around the world as restrictions lift, this is now an ingrained part of society and a trend that will continue into 2022 and beyond.
This increase is predicted to continue to growing with more meal kits sold each day. This period has solidified that meal prep delivery is an affordable, healthy and convenient option in the minds of consumers and this demand is predicted to be continuing strongly even after the pandemic is long gone. The pandemic has lasted well over a year and has built strong habits and emotional connection with meal kits, but consumers are always looking for more tasty options!
Homemade meals have always been considered a good option, but Covid-19 forced consumers to view their cooking habits in a different way. The spike in the interest in meal kits is primarily due to simplicity in the cooking process and the enhanced freedom created by not spending hours in the kitchen each week. Homemade food is also considered more economical and time saving than eating at a restaurant, so why not have a chef prepare your meals and deliver them to you? Some consumers prefer meal kits with exact ingredients delivered that they’ll have to cook, while others prefer chef-made meals ready to heat and eat.
Meal prep delivery is highly concentrated amongst the millennial generation and Gen X, with these two groups comprising 64% of all the buyers. Target consumer base makes meal prep business a very lucrative business.
Planning out your meals in advance significantly reduces consumer stress on what to cook and has had a very positive impact on allowing consumers to spend time with family sharing a great meal together – without the hassle of cooking or cleaning up.
Learning how to start a meal prep business the right way from the beginning will drastically help provide your customers with the best ordering experience possible!
The meal prep business has attracted a plethora of companies and some of the major ones are listed in this section. You can use the list to understand the competition and the niche that you want to play in.
The large players in this space consist of companies like HelloFresh, Chef’sPlate, Blue Apron, Freshly and more. These companies spend thousands of dollars on marketing their meal kits to the masses with investors’ money, trying to be the dominant leader in the space. The reality is that these days, consumers will eat up those promo discounts to get extremely cheap meals and then quit the subscription the next week!
Consumers want to support local and favour googling “meal prep near me” or “meal prep ” to find smaller companies that are going to focus on tasty healthy meals. These independently owned meal prep businesses are thriving because they create a connection with their customers and provide the additional value of a community.
Want tools to run your business like these giants without the crazy costs? Schedule a demo today to learn how their logistics work!
How to get started
So you’ve made the decision to start a meal prep business, great news! Here are some things to consider as a first step on your meal prep journey:
- Write a business plan. Get an idea of what your business will be, what meals will you sell, who will your customers be, how much staff you might want to hire immediately and how you plan to sell your products.
- Make a financial plan. Determine how much money you will start with, how you will increase the funds when the demand increases and set aside a budget for getting started.
- Work out logistics. Determine what kitchen you are going to use, what delivery area you’ll service and how you will get your products to your customers.
- Create a Marketing Strategy. Think in advance about your marketing and sales strategies that will help get the word out about your new business. No ideas for this? Keep reading to get inspired!
Start with a business plan
The following is a comprehensive guide to creating a great business plan. We’ll start with an overview of key concepts. Then we’ll look at each section of a typical business plan on our journey discovering how to start a meal prep business.
Briefly outline what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company’s leadership team, employees, and location.
Products and Services
Describe what meals you’ll sell and explain how it benefits your customers.
Sales and Marketing
Your goal in this section is to describe how you’ll attract and retain customers. You’ll also describe how a sale will actually happen.
Provide information on competitor weaknesses and strengths and show how you intend to improve on what they’re doing. Tips on how to make your meal prep business stand out from the competition can be found here.
Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets.
- Calculate set-up costs: Research and list all the items you need to start your business to get a good idea of upfront costs and whether you’ll need to borrow funds.
- Forecast profits: Estimate your sales and expenses on a monthly, quarterly or yearly basis. This will help you develop sales targets, pricing and likely profit margins.
- Find your break-even point: Try to understand how many meals you have to sell each month to cover costs – anything above this number can be counted as a profit.
When looking for your workplace, find a suitable establishment that has separate areas for the following:
- Kitchen – This is the most important room of your business. There should be enough room in this kitchen for the size of the operation you will handle, as well as all of the necessary amenities to recipe test or prepare your meal kits.
- Don’t worry, if you get overwhelmed and have too many customers while cooking out of your home kitchen… you can always upgrade your space. Start small and grow with the needs of your business. Have a look at a complete guide to ghost kitchens for another option.
- Packaging Station – A specific place for packaging and putting together your meal kits is needed for proper organization, handling, and keeping track of orders. You’ll need a meal management system to help with that tracking to streamline the process and make it as easy as possible for you and your customers.
You’ve got two things to cover here, “Who” and “How”. Do you have any local delivery partners that you can rely on to deliver or will you start off delivering each meal yourself?
Next is how you’re going to deliver which refers to the containers. Some things to consider include shelf life, perishability window, packaging, ice packs and dry ice. Check out A Small Business Guide to Shipping Perishable Food for some more information.
Shipping and Distributing
Make sure you have optimal refrigeration storage space to keep your meal kits cold before loading them onto the truck or taking it to a shipping center.
A designated place for desks, computers, and phones for your accounting, marketing, and customer service teams. Luckily, with the trend of working from home, you can run the numbers out of your bed if you wanted to!
Plan your suppliers and purchases
One of the steps in starting a meal prep company is to decide where your ingredients are going to come from and who will be your major suppliers. You will have to strike a deal with them even before you start your kitchen so that once your meal prep website and products are up online, you do not have to run around figuring out a deal and negotiating with the suppliers for the best quotes.
Starting a meal prep business will require a lot of supplies. If all goes well, you will need a constant influx of fresh food, packaging and shipping materials. Since your business will be so dependent on having the right ingredients around, you’ll need to find a way to keep your costs down. Buying your food in bulk from a wholesale supplier is a smart way to save on your supplies.
Hiring and Training the Staff
Hire employees to prepare ingredients, supervise customers during meal prep and clean the kitchen and work stations after customers leave. The training of the staff should also include making employees understand the culture and the goals that the business is trying to achieve.
Consider checking out the legal side of setting up your business by referring to your local or national food safety authority.*
- For a full list of FDA requirements to get your food business set up in the US, read more here.
- Canadian resources:
*Please refer to your local resources to acquire the necessary licenses, permits and insurance as required.
How much does it cost to start a meal prep business?
Costs to start a meal prep business can vary based on many factors, but the main one is your kitchen space (i.e. where the magic happens). If you’re cooking out of your home kitchen to start off you can save a lot of money upfront and start renting once your scales start requiring more space and help cooking to meet demand.
You can take things in a step-by-step fashion, increasing your spending as your business grows.
Things to Consider:
- Company Registration: This cost generally runs into a few hundred dollars in most areas.
- Domain: Name your website! Generally extremely cheap and can be under $20.
- Bank Accounts: Typically you can find free online accounts for small businesses so make sure to do your research and find one that suits you! You can find Stripe’s pricing for transaction fees by country here.
- Website: No-code website creators have become so powerful so depending on your technical skills it’s very possible to create your own website for free these days! Obviously this will be more expensive when hiring a design agency to create for you so make sure you get a couple quotes to figure out the best cost!
- Packaging/Labels: Starting small at local retailers will have more flexibility, but also more cost. Try to find a local supplier that can provide bulk buying discounts.
- Meal Prep Software (optional): We’ve spent years analyzing restaurants and meal prep businesses first hand. After a lot of testing and thorough checking, our engineers have built a super software for meal prep businesses.
Start with a meal prep software that can scale with you.
Launching your meal prep business
Planning the basics
Deciding the menu – Choose meals that fit the cuisine preferences of your target customers.
Creating the website – When it comes to the website of a meal prep company, your website’s landing page (“home page”) is your digital storefront that will encourage customers to buy your meals. Ensure that the landing page of the website is user-friendly and attractive as possible to showcase that not only the meals will be great, but also the customer experience as well!
An online ordering system is a must these days so make sure you plan ahead and find a company to help you create an engaging user experience along the way.
Payment Gateway – These allow customers to securely make a payment online through various cards or netbanking. Some of the common ones are Stripe and PayPal.
Creating a Marketing Strategy
The only way to start a business venture with confidence is to develop a good marketing plan. Contrary to popular belief, a marketing plan is not a one-time effort destined to sit in a binder on your desk. On the contrary, it should be updated on a regular basis to reflect the changing needs of your business and customers.
There are many different models for marketing plans. Here are five essential ingredients:
Complete a situation analysis
Many companies start with a SWOT analysis, looking at their firm’s strengths, weaknesses, opportunities and threats. This involves identifying your competitors, understanding exactly how they operate and becoming familiar with their strengths and weaknesses. Analyze who else is offering meal prep delivery in your area and try to determine what’s making them successful and how to differentiate yourself.
Develop a target market profile
Demographics: Here you want to demonstrate that you know your customers inside and out, including their expectations and their whims. Your profile should include basic demographic portraits that paint a clear profile of your clients. Look at characteristics such as age, sex, profession or career, income level, level of educational attainment and geographic location. Most importantly though, where do these potential customers go out to eat and what types of cuisine do they like?
Purchase motivation: It’s also important to understand exactly what motivates customers to buy. Are your clients looking for savings or a way to simplify their lives, or are they just shopping for pleasure and looking for tasty meals?
Ask yourself why they would buy your meals over your competitors. Is a low cost per meal important to them? How about helping them achieve their diet goals? You can craft your menu to fill their unique needs.
Define 4P’s of Marketing
- Product: Identify which cuisines people in your target market love to eat. This will be very unique to your area, but be sure to check out your competitors to offer slightly different meals.
- Price: This depends on your target market you identified earlier. Once you understand what drives them (price or quality), you can then create a menu that has options in their price range to maximize sales. Consider food costs, tax, packaging and delivery fees before setting your price.
- Place: ONLINE. All the best meal prep companies have grown by selling meals online and allowing customers to place orders from the comfort of their own homes and get the meals delivered straight to them.
- Promotion: More options are covered in the next section, but you’re really trying to find out how to get some awareness about your brand out to your delivery area.
Now that you have a clear understanding of which consumers will like your food and how they are going to order from you, let’s take a look at some key strategies to launch your meal prep business effectively.
1. Tell your friends and family
It may seem obvious, but getting your friends and family to be your first customers is the easiest way to start getting feedback on the quality of the meals and better understand your ordering process from start to finish. Think of it as a test run with lower customer expectations because they’ll likely be more forgiving than a paying customer that has never met you.
2. Word of Mouth:
Use your happy customers to get more! Give them an incentive to talk about you with their friends. People love to talk about themselves and the great deals they’ve got or the new things they’ve tried – use this to your advantage!
3. Offer First-Time Discounts:
Encourage new customers to sign-up with coupons that expire after their first use. Get them to taste your food and let your cooking do the talking!
4. Create a Referral Program or Rewards System:
Creating a referral program or a rewards system will incentivize customers to share their positive experiences with others. Studies show that the lifetime value of a referred customer is 16% higher than non-referrals and 92% of consumers trust referrals from people they know. Here are 80+ statistics showing how impactful referral marketing programs can be.
5. Email Marketing:
Use popups to collect the email addresses of interested customers. Additionally, you can even give them a coupon code to encourage them to sign up! Once they order you’ll always have a way to contact them about promotions, new meals or to invite them to order again if they haven’t in a while.
6. Gift Cards:
Running contests for new customers to win gift cards is a great way to get them in the door trying your food and falling in love with it!
7. Google Ads:
You’d be surprised how many customers search “meal prep near me” every day looking for tasty, pre-prepared meals. Google Ads will give you the ability to snag all those searches and direct them to your website. By offering meal subscriptions, every customer that starts ordering will more than pay for the advertising cost. What are you waiting for?!
8. Social Media:
Instagram is a great way to show off your tasty-looking meals and let others know about your company. Create shareable posts to encourage your followers to send them to their friends. You can also use hashtags to show up in local searches for meal prep to find new customers daily!
43% of people are more likely to buy a product if their friends recommend it on a social network! Run contests that require sharing experiences or pictures of your meals to help encourage new customers to place orders.
9. Facebook Ads:
These will allow you to get super detailed on who you market to. Want to target vegans in your city that already follow you? Easy! Want to target your best customer’s friends? Easy! Get as granular as you want to target people on Facebook and Instagram. Seek the support of experts in social media advertising to amplify your success!
10. Text Message Marketing:
Optimize sales with direct messaging and reminders. Everyone’s on their phones all the time – reach them at the right time to convert to a sale!
11. Postal Code/Zip Code Targeting:
New to the area? Great! Let’s let everybody know with some direct mail with some first-time order promotions! Find the right local provider to support your outreach and you can send pamphlets or coupons out to everyone in your delivery range.
12. Content Marketing:
Stand out and get noticed by your customers by sharing experiences and insights into your business. Blog posts or videos showing your cooking process, how you create your menu items and select behind-the-scenes opportunities can create a lasting impression on your consumers and also help increase your website traffic.
Check out our blog on how to get more customers for your meal prep delivery business here.
So you got your first customer. What now?
Congratulations on making your first sale!! This is an exciting milestone with many more to come. Now that a customer has placed an order on your website, you’ve now got to cook the meals and deliver them to your customers.
One tip any experienced meal prep owner will tell you is that having the right systems and processes will save you SO MUCH time in the admin stages. Meal prep software is relatively new and it’s customized specifically for your purposes to make your life easier. These softwares can provide cooking reports telling you how many of each meal to make and where you’ve got to deliver it to.
Now it’s time to follow up, get feedback and make sure they have a very positive first experience! Remember, we’ve already heard above all about the power of referrals and word-of-mouth advertising when it comes to meal prep delivery!
If you’ve made it this far by learning how to start a meal prep business from scratch, you’re in luck! We’ve got a ton of great tips coming up outlining how to stand out and become the owner you’ve always wanted to be.
Becoming a Professional Meal Prep Operator
How to differentiate your business from competitors
- Everything you create has to have your customers at the center of any changes you make. This is short and sweet, but the MOST important criteria.
- Show your customers you want them a part of your community by offering first-time order discounts. Now every company does this, so you might be thinking, “how does this differentiate me?”. The answer is quite simple: have your existing customers share those discounts with their friends and family.
- Having a solid referral strategy is the missing link. How many times have you downloaded a 10% off coupon from a website, just to never use it? It feels so different when a friend hooks you up with a discount alongside a glowing recommendation to try out some delicious meals.
GREAT Meal Photographs!!!
- Learning how to take better meal pictures (Photo tips article link) is crucial for growing sales and getting customers excited to buy your meals! Ever heard of the “Seefood Diet”? People see food, and they want to eat it! Make their choice easier with mouthwatering meal images sure to make them drool.
- Amazon has set expectations for delivery so high these days that it can be tough to compete. Show your customers you care with personalized messages giving a heads up that their delivery is on its way, or better yet, provide custom tracking links so they can collect them off their doorstep right away.
- Second, a crucial tip is to make the experience unique with custom inserts with a personal message from the chef! People love hearing directly from the chef or owners of the company.
- Finally, ask and you shall receive! (Or at least you have a way better chance) We’ve talked a lot about referrals and what better way than to ask your customers to share a picture of them enjoying their meals on Instagram? Could be a post of their meal selection, them happily taking a bite or even a story post of them opening up the meals and explaining why they love your brand and food!
- Plastic bags? Paper bags? No bag at all? These are things of the past for top meal prep providers. Delivering your meals in cooler bags or insulated boxes gives your customers a sense of relief that the food won’t go bad when left outside for an hour in the heat while they’re out at soccer practice.
- This is yet another opportunity to brand yourself. For instance, put some logos on your boxes, use labels with nutritional info on each meal and remind your customers what’s inside each tasty container.
How do you continue to engage with customers?
- Newsletters communicating new promotions or just flat out asking your customers for feedback are two great ways to keep an open conversation going.
How do you balance your time?
- While other meal prep owners spend time in spreadsheets tracking orders, make good use of your time speaking with your customers, creating new menu items, and coming up with new partnerships to add value. Use tools to automate your kitchen’s admin tasks and spend more time creating value for your customers.
How do you get feedback from your customers?
- A big pitfall of companies as they grow is that they continue doing things thinking they’re the reason sales are growing, when in reality it was something else. You’d be surprised how many customers would love to provide feedback on your meals, pricing, delivery, and more! All you’ve got to do is ask.
- This is even easier when you’re using a meal prep software that enables subscription ordering because you already know your subscribers love your food enough to keep coming back each week.
Tips & tricks to get customers to order again, and again
- Cater to different diet preferences to keep options open
- Create more distribution or pickup locations
- Keep a variety of meals by rotating your menu every week
- Enable subscription orders so customers don’t forget to order
- Get on social media and talk to your customers! Ask questions. Listen!
- Buy more containers than you need immediately to take advantage of bulk pricing with your suppliers
- Make the delivery experience fun for the customer (ex. QR codes, feedback surveys, contests, Instagram post requests, etc.)
Optimize Operations – Time is Money
We’ve already talked about how important the customer ordering experience is, but it’s also important to ensure that you get their delivery right and provide the correct information to them each time. Using a meal prep software can help generate cooking reports, assist in label printing, macronutrient calculations, shopping lists, and more!
Consumers these days love to know that their meals are healthy and prepared with the highest quality levels and showcasing this data can really help with brand loyalty. All these unique nuances take time out of your day to manage.
In conclusion, the pros know that running a meal prep business at peak effectiveness takes work. There are many business aspects that can be neglected based on wasting countless hours doing monotonous tasks. Instead, we can spend that time coming up with new menu items or handling marketing activities to grow your business.
Knowing when the right time is “to do it all” vs. either handing off responsibilities to another person or finding a software to complete your tasks is the true test of an owner’s time management. Here are 3 Reasons Why Meal Prep Companies Need Automation Software.
KitchenFuel is an e-commerce platform that enables restaurants and caterers to automate and scale a meal prep subscription business. Our meal prep software incorporates a full suite of backend tools to automate non-cooking admin tasks with integrations to support customer acquisition and retention.
Learn more with a KitchenFuel Specialist here.
Resources to supercharge your meal prep business with:
- Project Management: Asana, Monday.com or Trello
- Payments: Stripe
- Email Marketing: MailChimp, MailerLite, Constant Contact
- Meal Prep Software: KitchenFuel
- Nutritional Information: Nutritionix, ReciPal
- Delivery: TyltGo, OptimoRoute
- Route Planning: RoadWarrior, Circuit, TyltGo
- Inventory Control: Optimum Control
- Accounting: Quickbooks or Wave
- Design: Canva, SnapSeed
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