Grocery delivery service Hungryroot says it is prepared for inflation, thanks to AI-powered technology.
“Seventy percent of groceries bought on Hungryroot are chosen by our algorithm — not by the customer,” CEO Ben McKean told Yahoo Finance in a new interview.
“That’s part of the value proposition we offer. Our system gets to know our customers and can therefore be very effective in choosing their shopping for them,” he added.
Hungryroot, which has seen 35% year-on-year growth, has never seen a price hike in its seven-year history — though McKean admitted that “inflation is very real… the highest in the food industry since 1981.”
Still, “the inflation impact we’ve seen is actually much lower than the industry as a whole,” he said, further explaining how the company’s algorithm can provide solutions and alternatives, taking into account “price sensitivity and [price increases] in ways traditional grocers can’t.”
Hungryroot also benefits from bulk ordering (often seen as a more economical choice for consumers) with average orders of $120 per shipment versus the industry average of $60, according to McKean.
“That allows us to price the service competitively,” he noted.
Coupled with the company’s added benefit of combining deliveries with recipes of 10 minutes or less, the chief executive said the brand will help consumers save time, eat out less and minimize food waste.
“We believe we will perform very well in an inflationary environment,” the CEO reiterated.
Frozen products category increases due to inflation
Preventing food waste is a more and more important element for today’s price-conscious shopper.
Saffron Road, which produces clean-label frozen food products and better for your meals, noted a surge in sales in recent months as more consumers are drawn to frozen foods in the current economic climate.
“For the past six months, we’ve been crying,” Saffron Road CEO Adnan Durrani previously told Yahoo Finance, adding that the brand has seen “record months each month.”
Durrani explained that the frozen food category outgrew freshness by 230% this year — a growth the director had never seen before in his decades-long career.
Historically, “fresh usually always trumps frozen, but what we’re seeing now is a dramatic shift.”
McKean agreed that frozen food sales have increased in large part thanks to the category’s extended shelf life and ease of cooking — two benefits Hungryroot also offers “but with fresh food.”
“The vast majority of the recipes Hungryroot offers are less than 10 minutes to cook, and – because the service is designed to maximize use of the food we ship – food waste isn’t much of an issue,” said the director. .
“This allows us to offer the benefits of frozen, but in a fresh format, which is much preferred by our customers.”
Overall, recent data appears to support the shift away from traditional shopping, with more consumers embracing delivery.
According to the latest report from the mobile analytics platform data.ai (formerly App Annie), grocery delivery apps saw a 40% increase in downloads compared to the previous year, representing 25% of all downloads in the first quarter of 2022.
Engagement grew even faster, with a total increase of 70% year-over-year to 8.6 billion worldwide.
“The growth in food and beverage downloads indicates that the market is ripe for user acquisition, but competition is increasing,” said Lexi Sydow, head of Insights at data.ai, in a press release.
“The growth in the total number of sessions shows that consumers are building habits and relying on these apps more than ever to access tasty food – restaurant quality or home cooking – at the tap of the app,” she continues.