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When the meal kit subscription fad started several years back, I approached it with a healthy dose of skepticism.
Why not find a better way to help people learn to cook better, healthier food? Something with a smaller carbon footprint. Something that creates less packaging. Something without pre-measured packets of basic ingredients. Something that didn’t provide a challenge to small businesses. To be clear, I don’t know what that solution is, but I felt like meal kits were definitely not it.
But then, I received a pitch about Sun Basket and all the innovative work they were doing around treating food as medicine. When we met, CEO Adam Zbar impressed me with his vision and tenacity. He made it clear that he’s doing this because he believes in it. I tested his boxes, which were delicious, comparatively unwasteful (the ice packs are even biodegradable), and customizable. I asked him about worker equity, carbon emissions, shipping networks, and supply chain problems. And he had an answer for everything I threw at him.
Which is why I’m so conflicted about this news. Today, Sun Basket is closing its Midwest packing facility because it has discovered that by investing in automation and skilled workers, the company can still deliver its boxes to 97% of the country with just its West Coast and East Coast plants, even as it is rolling out ready-made meals and on-demand delivery.
When I spoke to Adam yesterday, he noted that “We’re seeing the largest disruption of food in the past hundred years… For the very first time, restaurant sales are eclipsing grocery sales. Takeout and on-demand are the fastest-growing segments. [Customers are looking for] health, ease, and personalization. For us, that sets the stage: We want to not just survive in the space, but thrive.” Zbar went on to say that since most American women come home from long days of work only to be confronted with an oversized share of housework, worrying about what to put on the table can feel insurmountable. As such, higher-end, healthy ready-made meals are becoming popular with the affluent customers Sun Basket markets to. As on-demand services with “dark stores” grow, he sees an opportunity for expansion. But becoming profitable in the midst of that diversification presented a challenge.
As such, Zbar says, “We’ve made the hard but necessary decision that we’re going to be shuttering our Midwest facility… It has a big impact on our overall costs… We already have the best unit economics in the business, but this will basically restructure our operating expenses so that we also have an evened out profitable business.” Achieving that profitability is important to Zbar because he believes it will ensure the longterm life of his company: “We believe profitability is key, that growth and growth alone is not sufficient. Growth is great, investors reward growth, and food is a category where you can grow extremely quickly. But profitability will give us the financial freedom to complete our mission of food as medicine for both the hundred million people who are part of these “food tribes” and the hundred million people who need food as medicine.”
When I spoke to Zbar before, he mentioned how his 50% employee discount on boxes had changed the lives of the hourly workers in his packing facilities, folks who could otherwise not afford to eat the product they were providing. His pride in that choice was obvious, and Zbar definitely cares about taking care of his people. But who those people are presents an interesting question.
Zbar stated: “Over time Sun Basket is moving from less skilled labor to more skilled labor. More of a knowledge economy. We’re adding automation to our facilities very consciously… As you do that, the type of worker changes. It’s someone who has to understand how to run machines, how to run systems that basically are designed to allow us more complexity within the experience. We’re taking the manual labor out and adding more decision-making in.” Zbar didn’t mention if Sun Basket has any plans to train existing workers at their remaining plants for this new, knowledge-based system, and avoided the topic when I asked him to expand on how these changes would impact his workforce. But if he cares about his employees the way implied in our previous interview, I hope he continues to employ those who want to learn these new systems, protecting his people while increasing efficiency.
June 7, 2019 at 09:08AM
Forbes – Entrepreneurs