More Munching with Munchery

muncheryMunchery offers a healthy and affordable alternative to restaurant takeout/delivery for Bay Area residents. It has partnered with dozens of personal chefs to prepare gourmet meals, offering a handful of choices for delivery Monday-Friday. Entrees approximately range in price from $9.99-$15.99, which is competitive with many restaurant delivery options. Delivery varies slightly depending on where you are located but costs in the neighborhood of $3.95 as a flat fee. Orders can be placed for same day order delivery by 4pm, and you can choose among one-hour deliver windows. There’s also an option available for cooler drop-off service if you won’t be there to take delivery. The food comes almost ready to eat, with only a quick heating in the microwave or oven required. All-in you can get a nice meal for two for under $30.

I recently tried the service myself, and absolutely recommend it. The order process was simple, delivery was seamless, and the food was tasty. I certainly plan to order again. So how can Munchery encourage repeat orders? Offer subscriptions. Now this idea isn’t new, as it was mentioned in Brenden Mulligan’s TechCrunch piece back in June. I’ll take the concept a step further and suggest some thoughts around how this might play out. I will also preface this with the fact that I don’t know Munchery’s profit margin on the dishes and what delivery costs net out to be, but I imagine that the general modeling of the meal plans could be adjusted to be net positive after a certain number of orders have been placed.

The “Prime” Model – Similar to Amazon Prime, Munchery could charge an annual fee that covers all deliveries. If a customer were to place two orders a month over a year, that would cost approximately $95 in delivery fees. For someone who is interested in repeat ordering, doing so twice monthly as a breakeven point feels attainable. There could also be a bonus item—bread, a cookie, etc—included as a bonus for these members. To limit exposure it could require a certain minimum order amount.

The Monthly Pre-Pay Model – This would involve prepaying for a minimum amount for a monthly (30 day) period and in return for this commitment you get free delivery (again with a minimum order amount) for the duration of the 30 days. Assuming that for this to work something in the neighborhood of two entrees, or around $25/order, a starting point could be a $100 monthly prepayment, which would net out at ordering once a week for two. This would be set to renew automatically.

Munchery already has a built-in group that they could test this against in VIPs from the program they launched in August, in which members get 10% off all orders. Ultimately the people that join one of these plans are going to be brand ambassadors and be the ones most likely to recommend the offering to their friends. Even if the margins get really thin, or at breakeven, Munchery will have loyal cheerleaders, more frequent regular customers, and happy chefs since it will mean more meals sold in the long run.

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