As meal kit industry grows, Terra's Kitchen eyes expansion

Julia Denick typically handpicks the recipes she wants in her biweekly meal kit deliveries from Terra's Kitchen. Spicy honey lime chicken with edamame and the vegan power bowl are some favorites for the Mount Washington resident, who doesn't eat red meat.

When she forgot to make her selections one week, she depended on the Baltimore-based service to take her preferences into account.

"I knew I had a delivery coming and I was like, 'I'll trust what they're sending,'" Denick, 24, said of Terra's Kitchen, which offers about 50 meals at any given time. "From my past orders they were able to predict what I would like."

Terra's Kitchen got it right — there was no red meat to be found in the meal kit that arrived at her doorstep that Friday.

Following in the footsteps of larger competitors like HelloFresh, Plated and Blue Apron, Terra's Kitchen caters to health-conscious customers with a taste for convenient cooking. The company tested its concept for about six months on the West Coast before launching in Baltimore in March 2016. A year later, the Canton startup has gained a foothold in most states, where it is available to about 85 percent of the U.S. population. The company is now looking to double its staff and move into a larger office as it works to get its meals on more tables across the country.

The service allows diners to subscribe to weekly or monthly deliveries, with vessels that come packed with everything needed to prepare meals in half an hour or less.

Terra's Kitchen expects to grow its team of 15 to 30 in the next year, and it's looking for a new office — about 7,500 square feet — to accommodate its growth. Its current space is tucked above Ace Hardware in Canton. CEO Michael McDevitt said Terra's Kitchen plans to remain in downtown Baltimore and is hunting for new digs somewhere between Canton and Federal Hill.

The company's growth is a testament to the popularity of meal kit services, which add a level of ease to home cooking and eliminate grocery store trips by sending customers recipes and pre-measured ingredients. The Rockville-based research firm Packaged Facts estimated the meal kit industry was worth $1.5 billion in an April 2016 report, and the firm expects it to grow to "a multi-billion dollar market" in the next five years.

Erik Thoresen, a principal at Technomic Inc., said his Chicago-based research and consulting firm puts estimates slightly lower. He said the meal kit market grew from about $500 million in 2015 to $1 billion in 2016, with exponential growth projected to continue.

"It's cool to be in an industry with a tailwind like that," McDevitt said.

McDevitt said the founders of Terra's Kitchen looked to improve upon the offerings of its competitors by cutting down cooking time, providing more nutritious meals and reducing waste through reusable packaging.

"We were all customers first of the industry, and we just had our little things about it that we wanted to improve upon," McDevitt said. "And we promised ourselves that we could improve upon them — that's how we would differ our company and that's what we've kind of stuck to from day one."

Terra's Kitchen's menu is based on a Mediterranean diet, emphasizing low-fat meats, whole grains and plenty of greens. Guests can choose from paleo, gluten-free, vegan, vegetarian or low-calorie options, as well as recipes for weight loss.

Like its competitors, Terra's Kitchen began by providing the ingredients and instructions needed to prepare dinners. The service has gradually expanded its offerings to include salads, snacks, smoothies and sides.

Each item has a nutrition score (1-10) that rates its nutrient content, anti-inflammatory properties, fiber content and healthy fats.

"At the end of the day, we're just trying to create healthy meals because that equals healthy families," Lisa Davis, Terra's Kitchen's chief nutrition officer, said. "And if it starts at the beginning when we're feeding these meals to our children, then they learn how to eat healthfully and we have a community health intervention coming on."

For Chris Cox, 41, of Perry Hall, Terra's Kitchen has provided an avenue for his three kids, ages 4, 9 and 12, to try new flavors. But it also provides the flexibility needed to feed a family with different tastes, he said.

"My oldest isn't really into a lot of the exotic spices and flavors; he's kind of a plain-Jane guy," said Cox, a product manager for W.L. Gore & Associates Inc. "My wife and I will choose something that we're interested in and a little bit more exotic or different for us, and then we're able to supplement that with some chicken breast or a piece of fish."

His family receives a delivery once or twice a month, with a meal for two supplemented by extra protein, sides or snacks. The Ball Hawk sliders — turkey burgers with salsa, cheddar, sauteed onions and cilantro — are always a hit, he said.

Denick, a media buyer for Baltimore ad agency TBC, said she spent time researching meal delivery options before selecting Terra's Kitchen. She has been using the service for about six months and typically receives one or two Friday deliveries per month, each stocked with three meals for two people.

"It is an investment, it's expensive, but it's also saving me so much time and grocery shopping and finding recipes," Denick said.

The average Terra's Kitchen customer spends about $95 per week, and the company requires minimum orders of $62.99, chief marketing officer Jaime Elwood said.

"I think they come to us with expectations of dinner and expand from there," McDevitt said.

Meals start at $9.99 per serving for vegetarian dishes like the vegan power bowl, and run as high as $18.99 per serving for beef dishes like barbacoa street tacos. The average serving costs $12.50, Elwood said, which is slightly higher than prices of major competitors. A la carte add-ons like salads, snacks and smoothies range from $1.99 to $8.99 each, and extra proteins and sides are available for $2.99 to $16.99.

"To be a national player you really need to have your price points well-aligned with the mass market," Thoresen said.

Terra's Kitchen declined to disclose its annual revenue and the number of customers it serves.

Most customers order two or three dinners for two, with a few extra salads and sides per week, Elwood said.

"We're really trying to integrate into their lives beyond dinner," Elwood said.

Denick said it's changed her grocery shopping habits. She would frequent the frozen foods aisle at Whole Foods in the past; now she finds herself cooking more from scratch.

Unlike some competitors, Terra's Kitchen's sources from grocery store suppliers, who package the ingredients and deliver directly to customers, rather than keeping its own inventory.

"What we decided to do was just kind of go up the food chain," McDevitt said. "Rather than us try to guess what our sales are going to be and purchase this stuff, we just said, 'Hey, we'll just pick from your inventory that's there every day.' Instead of putting it on an 18-wheeler, we'll put it in our vessel and ship it to the consumer."

The same meals are available in every market, but the ingredients are sourced from local suppliers.

Each meal comes with a recipe card listing detailed instructions and photos. The cards also include suggested wine or beer pairings from blogger Alyssa Vitrano of Grapefriend, and a "Table Talk" topic.

Those cards are available on Terra's Kitchen's mobile app, too. The app offers recipe timers, cooking tips and videos, and allows customers to manage deliveries.

If a customer chooses not to customize delivery, Terra's Kitchen will send meals based on their preferences.

The average customer is between 25 and 55, married and often joins after a major life change: buying a house or having a baby, for example.

"They're looking for a solution that will make the classic what's-for-dinner question a little bit easier for them," Elwood said.

Cox said it's given his family another reason to cook together.

"My unexpected benefit when we started this was that the kids actually really enjoy taking part in the preparation of the meals," Cox said. "It expands how much we're doing as a family. When we're all involved in the preparation and the setting of the table, it makes it that much more fun and that much more of an experience for us."

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