Dhruv Sood was 22, and entering the workforce, when he says he put on his “freshmen 10,” those extra pounds more often associated with a university student’s first year.
To blame, he said, were long days working in his chosen career in the field of finance, which left him little time to cook and eat healthy.
The realization led the Burnaby, B.C., native and two of his high school friends to found Fresh Prep, a subscription-based meal kit delivery service for people who want to cook at home but don’t want to shop for food or chop vegetables.
The company is now one of Canada’s largest meal kit providers, said Sood, competing with Quebec-based Good Food — but still a rung below Hello Fresh, the German-based meal kit company that dominates markets in Europe and North America.
“Our goal was to solve ‘what’s for dinner?’ having just entered the workforce a year prior,” said Sood, “and recognizing how health deteriorated quickly with a busy lifestyle.”
That was in 2015, a year before HelloFresh entered the Canadian market and when Sood, together with co-founders Becky Brauer and Husein Rahemtulla, thought meal kits were a “novel” idea.
This year, however, Canadians are projected to spend $1.59 billion on meal kits, nearly four times the amount from 2017, according to Rocco Lo Re, an analyst in e-commerce at Statista, a German market research company. And that figure is expected to grow to more than $2 billion by 2030.
Meal kits are getting more popular, said Lo Re, a trend driven in part by a strong subscription culture developed through music and television streaming services, which are now so normalized they have spread to other parts of our lives, especially post-pandemic.
Figures for Canada show that around 35 per cent of millennials have tried meal kits compared to 30 per cent for Gen Z, 20 per cent for Gen X and 15 per cent for Baby Boomers, according to Statista.
In North America, the meal kit sector is expected to grow eight per cent this year, said Lo Re. And Fresh Prep is looking for a bigger piece of that pie.
In 2020, the company expanded from out west to Quebec, where it bought out meal kit company Cook It, which had struggled to maintain subscribers.
Now, as Fresh Prep expands into Ontario, Sood said that success is giving them the “confidence that it’s just a matter of finding people and having them try Fresh Prep.”
But back in 2015, when the trio started the business, they didn’t have that same assurance.
Brauer was working for a major telecom provider when she saw a pitch for the company on Facebook by high school friends Sood and Rahemtulla, who met at aged 11 on Sood’s first day of school in Canada after immigrating from India.
“I happen to be really passionate about food and home cooking,” said Brauer, and told the friends she thought she could help. “They agreed and that’s where Fresh Prep was born.”
Brauer put in her two-weeks notice right away.
“I had a lot of people telling me don’t do it,” she said. “And I didn’t listen to them thankfully.”
The industry, however, was so foreign to the partners that they didn’t realize they could rent space in a commissary, a shared kitchen, to prepare meals. Instead, they rented a cafe in west Vancouver, thinking they needed a physical store to sell their meal kits out of even though they already had an online site.
“We didn’t know that was a thing and so we just got a shop,” said Sood.
The cafe though was in a good location in the affluent Point Grey neighbourhood on the western edge of Vancouver, and near a stop on a major bus route taking students in and out of the UBC campus. The plan was to sell coffee and juice out front to help pay for the rent while the trio worked on Fresh Prep in the back.
Sood said they sunk their life savings into the company and the money ran out within two weeks.
Rahemtulla’s father gave them a “little bit of capital” that allowed them to continue, but Sood said the partners did everything themselves including recipe development, prep, packaging, delivery and cleaning.
The biggest hurdle though wasn’t the manual labour. It was explaining the concept of meal kits to customers.
“That was the hardest part,” said Sood. “There was a lot of pitching in the store. And a very patient crowd in Point Grey.”
But the experience was just what the trio needed.
Customers would come back to the cafe and give the owners invaluable feedback on what they liked or didn’t like about the meal kits or the packaging. And the cutting and chopping was so laborious that the friends were quick to turn to automation.
Online orders for meal kits began to dominate their business and the company was papering over the cafe windows by March 2016 so they could use the space as a warehouse to serve about 150 customers a week. By December of that year, that number had grown to 850 and they had to rent a warehouse.
The trio were still doing all the deliveries themselves, but had hired staff to help with the meal kit prep, including friends who had to make deliveries on the way home from their jobs.
“The nice thing about Point Grey is it’s at the edge of town so you have to cross the whole town to get home, which opens up a lot of opportunity,” joked Sood about the deliveries. “They still aren’t too happy about it.”
The business expanded rapidly in 2017, from about 1,000 deliveries a week to 5,000 by the end of the year.
Meal kit companies experience a lot of churn, as in lost subscribers, if customers don’t feel they are getting value for money, or are dissatisfied by the waste from the food packaging, the insulated cardboard box the food comes in, and even the cooler packs necessary to keep the food cold.
Subscribers may also opt out after the large discounts and free boxes, offered to new subscribers, run out.
Brauer said the company has always been concerned about sustainability and at one point, tried to deliver meals in mason jars, a concept which was quickly abandoned because the jars were “very heavy and cumbersome.”
But the trio persevered, working for a decade on a design for a cooler that can be opened up flat so it can be cleaned and reused, as well as introducing reusable trays to deliver the prepped ingredients for certain types of meals.
The coolers and trays are picked up when deliveries are made. Fresh Prep has also brought in a lot of automation for food prep and packaging, which lowers labour prices. And the company owns its own delivery logistics company because it couldn’t find one that could offer the type of delivery service they wanted at an acceptable price.
The result, said Brauer, is a loyal customer base out west that the company hopes to find here.
“We’ve spent so many years perfecting that experience and the product and our operation,” said Brauer, “that we just feel really confident that now, coming into Toronto and Ontario, that we can replicate that and continue to deliver that value and that experience across the country.”
