On the other end of the ambition spectrum, serial entrepreneurs like Santiago Merea are also throwing their hat into the subscription ring. A behavioral economist whose last company was acquired by recipe app Yummly, Merea’s now all-in on food for babies. His company Raised Real delivers flash-frozen, plant-based “supermeals” for kids aged six months to two years.
Where Parkes presents himself as a Luddite, Merea is fluent in tech-startup buzzwords. From day one, he’s conducted surveys and led focus groups to research the perfect subscription model, with the goal not of maximizing the number of customers (like many startups) but rather becoming profitable as soon as possible.
When Merea and his wife had twins a few years ago, he realized how out of sync most baby food is with our current cultural norms: The traditional purees are uber-processed and sold in plastic pouches. Millennials, who make up more than 50 percent of current parents, with numbers quickly rising, instead want those buzzwords Merea loves to use: “super clean, super unprocessed, super transparent.”
When he says “transparent,” he means it literally: The meals come in clear, recyclable plastic pouches as whole foods (well, whole foods diced into tiny pieces) so that you can literally see the ingredients, whether they’re butternut squash and bananas or white quinoa and sacha inchi oil. Heat them up with a splash of water in the microwave for a minute or so and serve them as finger food for older kids, as a puree for true babies or as a mash for anyone in between.
As a subscription business, Merea sells the kind of product that’s both needed regularly and can be pulled out of the freezer without a second thought.
I thought only annoying foodies on the coasts, like me, were buying turmeric, lucuma powder and coconut butter, but Raised Real says most of its customers come from parts of the country like Texas and Florida, with an average household income of $80,000. They might eat meat and potatoes for dinner, but they want their children to get the most nutritious food possible.
As a subscription business, Merea sells the kind of product that’s both needed regularly and can be pulled out of the freezer without a second thought. The company offers customizable subscriptions with different amounts of food, so it can can cater to six-month-olds as well as two-year-olds, meaning that as some of Raised Real’s customers age out of its program, more babies are aging in. This is quite different than a subscription to chocolate, which is often given as a gift and not necessarily renewed. The company has tried to optimize for profits by breaking with the subscription-industry standard of offering trials, discounts and free products — thus attracting fewer customers overall, but more who will pay for an average of 110 meals.
So far Raised Real has been working with its investor Schwan, which acts as a national distributor for its frozen meals. In March, Raised Real saw an increase in business as families stockpiled food for a few weeks. “This is another advantage of having a frozen product and supply chain,” Merea said. “Things stay good for a long time.”
Merea is currently exploring other ways to expand, including selling his products at hotels and grocery stores. That doesn’t mean he’s abandoning the direct-to-consumer model; rather, he sees these placements as a way to attract new customers who will test out a meal and then subscribe.
According to Wolf, that’s the hardest part of the direct-to-consumer route. “Growth is the biggest challenge,” he said, because discovery is more difficult when products are going straight to consumers’ mailboxes. There’s no chance that someone will happen to see it in a store and try it out.
Of course, not that many people are hanging out in stores, at the moment, or going out to a nice restaurant for date night. It might be that regularly delivered food to the doorstep is more vital right now than these subscription services first anticipated. Melanie Bartelme, a global food analyst at Mintel, also thinks that as people are increasingly limited in their ability to go out due to the coronavirus, subscriptions that “help consumers feel like they are getting a special experience at home” will be successful. “Subscription services can give consumers a sense of fun and something to look forward to,” she said. “Especially in uncertain times.”