Pricing Teardown: Gobble

Saturday, December 6, 2014

Disclaimer

This article is part of a series of pricing teardowns for companies and their products. I have no private information about their profitability, no knowledge of their business goals and (possibly) no particular background in their industries. I intentionally avoid performing research on what others have said as well as writing in the companies' blog posts and twitter feeds. I do this so as to ensure that my evaluation is based entirely upon their websites. As such, this analysis may contain invalid assumptions and plenty of guesswork. Fortunately, this makes the resulting analysis much more fun.

The Product

Continuing our tradition from the previous pricing teardown, we're going to be examining another Y Combinator-backed startup. Given the recent Thanksgiving holiday, I felt that there was little choice as to which company should be selected. I present my review of startup Gobble.

Gobble is an interesting company in that it is turning the culinary industry on its head. Whereas we once had two choices for fresh cooked meals at home: takeout and home-cooked, we now have a third choice. Gobble proudly sells "farm fresh 10-minute gourmet dinner kits with 3-step instructions delivered to your door."

Intrigued? I know that I am!

A Common Theme

I attempt to investigate company websites as best as I can - far more thoroughly than the average consumer. I read almost every single word, examine each picture and philosophize upon the products being offered.

So it should raise many a red flag that I remain confused as to the many particulars of Gobble's offering. Throughout my analysis, I felt like a detective piecing together a story full of contradictions, rather than like an informed customer evaluating a coherent business offer.

As I pointed out in my review of fellow Y Combinator startup Beacon Reader, it makes little sense for an honest business to put forth an offer that a potential customer does not understand. I'm beginning to wonder if this lack of focus on communication fundamentals might be a common theme among companies associated with the famous tech-focused accelerator.

What Do They Want Me To Buy?

Upon visiting the site for the first time, I felt like I had an excellent handle on the company's aims.

I saw a picture of a plate loaded with fancy-looking food and the phrase "FROM ZERO TO DINNER HERO IN JUST 10 MINUTES" right below it. The phrase was big. It was bold. It took up my entire screen.

The next line said "Dinner kits designed for 10 minutes with 1 pan. Starting at only $11.95/person."

It was a thing of beauty, I thought. At least until I realized that there was a typo. They had forgotten the typical marketer's asterisk. You know the one that leads the reader to some tiny fine print that disavows every statement that the business has made up until that point.

But I'm getting ahead of myself! Intrigued by the concept presented, I clicked the most obvious call to action, a green button labeled "Let's Get Started."

I was taken immediately to an ordering screen where I was shown a list of meal kits that could be purchased. The entire sales pitch thus far was a mere two lines. As a careful consumer, I wasn't quite ready to part with my hard-earned cash just yet. I felt like I needed to learn more.

I had so many unanswered questions. I would imagine that most buyers would evaluate food-related products using a mental matrix based upon varying weightings of the following criteria:

Is it filling?
Does it taste good?
Is it easy to prepare?
Is the cost reasonable?
Will I impress people?

Since I wasn't yet ready to buy, I decided to examine each in turn.

Is It Filling?

I was already on the signup page, which featured beautifully plated examples of the meals available for the week. While they were great at giving my eyes plenty to consider, my stomach felt rather empty. The plates and bowls had much of their surface uncovered by food and I immediately wondered if the portions would be ample to satisfy my hunger. Smaller (but fuller) plates would have helped to alleviate my concerns, at the cost of appearing less visually pleasing.

As far as I could tell, I had no means of determining portion sizes. Certainly there was no mention of calorie counts (information that would be easy to gather and yield significant value to their customers) and no measurements of food weight. In fact, the only information that I could find about the quantity of food in each "dinner kit" was on the gift card ordering page.

The "gift amount" drop-down list implied that four portions would be equivalent to either two full meals for two people, or four meals with some additional leftovers for one. My brain proved unable to figure out where the leftovers come from when eating by oneself. I'll assume that this non-equivalence comes from a clever sociologist who found that solo diners are simply less interested in eating than are couples.

Does It Taste Good?

It's difficult to say with any certainty how the meals taste. There were pretty pictures of six different prepared meals, ranging from "Japanese Chicken Curry with Jasmine Rice" to "Mediterranean Platter With Falafel And Tabbouleh." The descriptions and pictures provided on the menu were sufficient to whet my appetite.

Although I did not realize upon my first viewing of the site, mousing over each picture revealed a brief description emphasizing the characteristic of the meal along with a list of ingredients. The ingredient list was appreciably short and contained only the types of ingredients to be found in real home cooking. There were no mentions of food dyes, chemical thickeners or artificial flavoring agents. This would be beneficial to many and a detriment to none, so it probably should have been highlighted more strongly in their pitch.

Point of fact, I had to read their 3,942 word terms of service document in order to find the following sentence "Gobble is a new concept in meal delivery, and is built around easily preparing quick and nutritious meals at home." I couldn't find the word nutritious anywhere else on the site. Those who don't believe me are free to ask Microsoft. I know that many companies hide text that they don't want their customers to read in the terms of service, but putting text that makes your product look better in there? Not a great idea!

A bit more information would have been helpful to demonstrate the delicious taste of the meal kits. A few snippets from grateful customers would have gone a long way in accomplishing this task.

It should be noted that it's possible to try too hard to convince potential customers about the characteristics of your product. This line, for instance: "create Michelin-worthy dinners in your very own kitchen" is an overly bold statement. For those not in the know, Michelin rated restaurants are considered the best of the very best. In all of New York City, there were fewer than seventy establishments that received even a single star in 2013. Yet, the company is stating that their "kits" which cost less than a sawbuck each will propel you to the tippity-top of the culinary industry. I suddenly began to wonder about the veracity of their other statements.

Is It Easy To Prepare?

It was clear from the outset that ease of preparation was a big focus of this business. Despite the fact that there was no video demonstrating any meal being cooked, the ease and speed with which their kits could be constructed was mentioned throughout their site. Their headline pitch "dinner kits designed for 10 minutes with 1 pan" sounds fantastic. It's almost too good to believe.

Actually, that's not quite true. Near the very bottom of their main page is a sample recipe card, accompanied by text that says "thoughtfully design every dinner kit for you to easily prepare in under 10 minutes with 1 pan (and occassionally a pot)." So there's a pot now too? Well, I suppose one pan and possibly one pot still isn't too bad. I was just glad that I wouldn't need anything else.

I was so excited about the idea of simple cooking that I started reading the recipe card at the bottom of the main page. As far as I can tell, it's the only recipe card on the site. They must have chosen it because it either represents the simplest meal preparation that they offer or is a good proxy for the average complexity of their dinner kits.

Imagine my shock when I realized that the sample card either mentioned or implied the use of a strainer, tongs, a ladle, and a pot. This seemed to conflict with the promise of "cooking with only one pan" in big print on the homepage. Suddenly my evening of a simple cleanup started looking like more work than I had predicted. It's not that the cleanup represents a huge undertaking, but when their sample (the case that they chose to feature) involves more cleanup than the big print on the top of the page seems to suggest, customers might just question many of the other promises made.

But cleanup is a relatively painless task. I was very eager to find out how I could cook a Michelin-quality meal in just three steps. My eyes went back to the recipe card. I really wanted to see this three step process!

Add contents of package into pot
Put water in pot
Boil
Stir
Add noodles
Stir
Remove heat
Strain noodles, saving the broth
Portion out noodles
Add tofu to pot
Heat pot
Put vegetables into bowls
put broth and tofu in bowls
Sprinkle seasoning on top.

This is not a three step process. I will admit, this is not an exceedingly complex recipe, but each time that a site's promises failed to deliver, I lost a lot of faith in their pitch.

Is the Cost Reasonable?

Maybe. That's the best I can say.

For reference, an eighteen inch pizza from the locals' favorite Dean Anthony's would cost a mere 55¢ more than a single portion of food from Gobble (assuming the purchase of four poritions at a time).

My point is that their price per meal is not necessarily cheaper than purchasing takeout for a given meal. It is more expensive than cooking from scratch. This creates a very narrow niche of customers which includes people who are willing to pay a premium for quality meals but don't want professional cooks to cook them. Does such a market exist? Probably, but I have serious doubts about the concentrations of such demand.

Those who are unable to cook, but are willing to put forth an effort can find easy recipes on the web for free.
Those who don't mind packaged, but healthy food can buy premade kits at stores like Trader Joes at a lower cost.

As an aside, I understand that it is in common usage, I will reiterate that I strongly dislike the use of phrases like "starting at only $11.95/person." Every time I see "starting at $x," my mind immediately replaces the phrase with "you will probably spend more than $x." Such phrases garner interest, but many will lose interest when learning about the "real" prices at time of order. In a sense, using such phrases is anchoring your products at lower values and then somehow expecting to be able to magically raise the very values you dictated later on.

As in my review of Beacon Reader, I became very confused when looking at the section for purchasing gift cards.

My initial expectation was that I would select a certificate for a number of meals and the system would multiply that number by a cost per meal. What I saw was much more complex.

There were two options at the same exact price point. Why should the buyer of a gift certificate need to specify whether he was buying "four meals for one person" or "two meals for two people"? It was the exact same dollar amount and the same number of meals.
The site was artificially limiting. It was clear from the website that meals always had to be sold in an even number, but there was no simple means of purchasing ten meals. One could purchase a card for eight or twelve, but not ten. I use ten as an example, because that would provide a full workweek-worth of cooking for a couple of two. This would probably be a great use case.
"Enter a Custom Amount." The system did allow me to select a custom gift amount, but once I selected this option, there was no means for me to determine the equivalent number of meals for the amount I entered, or whether I was entering an amount that did not leave a remaining balance when divided by a number of meals. As the per-unit pricing on the gift card page depended upon quantity and ranged from a high of $15.00 per meal to a low of $12.50, I had no means of determining the per unit pricing for my custom gift amount.
Kits purchased via gift card were more expensive at every price point than kits purchased directly. While some companies will achieve success selling gift cards at a premium, I don't think it will work as well in this case.

Will I Impress People?

I think there's a big perception risk here. There's an implicit assumption that someone will be more impressed with this hybrid-style of cooking over takeout. I think some of the people preparing the meals might feel as though they are not "really" cooking, and thus the result will be less impressive. Many would take issue with that fact, so I'll just point them to an article about describing why Betty Crocker's recipes require fresh eggs rather than including powdered eggs. It has nothing to do with the taste, cooking time or quality of the result. Should customers see themselves as constructing kits rather than cooking, they may very well choose to order takeout.

Some of the word choices will likely prevent customers from impressing themselves:

Gobble seems like an odd choice of name. Given the meal selections and descriptions, the company seems to want to target the gourmet crowd. Gobbling doesn't go with the word gourmet. It is a better fit for the word gourmand. Gobbling is for pizza or sandwiches. Gobble.com is selling food that's quick to prepare. Their meals are events that should be for friends and family to gather around and savor.
While many will pardon their name as a bit of whimsy - indeed, I could certainly make that argument, the word "kits" made me cringe each and every time I saw it. A kit does not sound appetizing and certainly does not sound gourmet. A kit is a tool you'd buy from Walmart, not high quality food like you'd buy from Whole Foods. I would have much rather seen "Gourmet food that you can prepare in just ten minutes" rather than the existing "Dinner kits designed for 10 minutes with 1 pan." While the meaning is similar, the imagery is quite different (and for reasons already addressed more accurate.)
The FAQ explained that the packaging could be reused for "cleaning up after pets!" Although trained as an economist and not a copy writer, I'm fairly certain that scatelogical references are best removed from sites promoting the sale of high quality food.
The most egregious misuse of words referred to the "recipe cards" aka the recipes. The FAQ mentions that kits come with a "gorgeous recipe card." However, when I zoomed in on the only one that I could find, I saw references to non-standard items, such as "Add contents of dashi package." While technically this would occur in a recipe, I expected the card to be reusable after I had eaten the contents of the kits. That means that I would expect both measurements and common ingredients to be listed. A more appropriate term might be "instructions," but I suppose that wouldn't sound quite as good.

One of the most shocking chances to impress is through the use of fancy food titles. Those of you with a culinary background may be familiar with the phrase "sell the sizzle, not the steak." In other words, if something costs you very little, but is valuable to your customer, you should certainly add it to your offerings!

Why do I bring this up? Well, the sample recipe card on the the website didn't list the title of the recipe. As a non-foodie, I'm going to refer to the particular dinner as tofu soup, because that's what it looks like to me. For those of you not in the know, this is a problem. If you're charging more than ten dollars for a product, you should be able to afford a name that's more impressive than tofu soup.

What Am I Getting Into?

In my book on how to price software, I make the point that recurring charges are a great way to make money. This fact was surely not missed by the people at Gobble.

While I did not see any mention of subcriptions on the signup page, the FAQ and terms of service mention subscriptions. Microsoft confirms that the only other page on the site that mentions subscriptions is the "press" page - which I intentionally avoided.

I know a person who runs a business with a business model that involves tricking consumers into signing up for recurring billing. I'm not saying this is Gobble's plan, but it certainly feels like a huge misstep to me. If you want to have a subscription plan, that's fine, but be upfront about it. For instance, Netflix's front page clearly states "Plans from $7.99 a month." My eyebrows raised at the following statement in the terms of service "when you sign up to become a Subscriber, your subscription will automatically renew."

Shipping

Although the front page does not mention it (it should!), the signup page states that prices include shipping. Unfortunately, that's about all the average visitor to the site will learn about shipping. I had to really start digging around to learn more. I'll say one more time that if you're making your customer work to figure out what you sell, you're frustrating the very people that you want to be happy.

The site mentioned weekly delivery and I became instantly concerned. With a minimum weekly order of 4 units at $13.95 a piece ($55.80), I'd hate to risk having my order spoil before I was able to refrigerate it properly. The FAQ states that the order will arrive "between 8AM - 8PM on your selected delivery day". But I'd be very worried about whether I was home at that time.

Fortunately, the FAQ stated "with our insulated liners and ice packs, your ingredients will remain cold and fresh for several hours." Of course the nitpicker in me immediately became worried about the fact that the package would stay fresh for only several hours. Many people need to go to work and won't be able to return every few hours to check on the status of their delivery.

I'm not sure how they plan to address this issue, but it looks like a potentially business-killing problem if left unchecked.

The Packaging

I'm going to go out on a limb that if people are buying nutritious meals that don't include any artificial additives, they are more likely to have an environmental bent. I immediately became concerned that these folks would be turned off by the amount of waste involved in individually wrapping ingredients, rather than finished products (as would be the case for takeout). The FAQ does mention that the firm uses biodegradable liners and recycled materials, but again, I have to ask why they are hiding this fact. I shouldn't have to search for this information if it places the firm in a positive light.

I was only able to find a single picture of the kit packaging - it was on the twitter feed on their homepage. This is a big mistake. The company understood the need for professional pictures of its finished meals on its homepage, but left the picture of the shipped kits to amateurs? This is a mistake that needs to be addressed immediately. I suspect that one of the biggest objections that this company will face is the assumption by customers that this isn't "real" cooking. Any picture that makes their product look less like home cooking and more like a manufactured product will reduce customer interest.

The Target Niche

So who is the target niche for this product? The company never came out and said whom it is targeting, but I think I've been able to figure it out.

Lives in California or Nevada - Are you impressed by that? I only know because the FAQ states that their products are only available in those two states. You'd never be able to guess that from the front page or the signup page. I'm very curious what happens if a person thinks that this product is available nationwide and buys a gift certificate for someone in one of the other 48 states.
Semi-Environmentalist - In addition to the biodegradable and recycled packaging, the site states that "every dinner kit contains locally-sourced ingredients." While many economists have questioned the logic behind the locavore movement, many environmentalists do not.
Urban outlook - The foods that they are selling would appeal mainly to the refined, urban palate. I see products like "Petrale Sole with Leek Beurre Blanc," but I don't see comfort foods like mac and cheese or pizza.
Minimal culinary training - The idea of kits would appeal most to those without the ability to prepare meals from scratch. Many chefs (the very same ones who squeal in horror when I use my kitchen knife to open packages of food) would be horrified by the use of meal kits.
Desiring of praise without having to work for it - The phrase "from zero to dinner hero" was my first hint. The real clue was that these kits do not appear to teach folks how to cook, so much as assemble, so self-improvement will be hard to come by.
In a serious relationship - All meals are sold in pairs and single folks are less likely to put forth the effort to cook a double-serving with these kits when takeout is easier. For those who would point out that it might impress a date, I ask you to remember that a minimum order is four units per week (auto-renewing).
Either single, with very small children or empty nesters - The types of food are unlikely to appeal to younger children, and it would seem odd that a parent would use these kits and then prepare another meal in addition for their children.
Middle to upper class - Let's be honest, few working class folks will know what the phrase "Michelin-worthy" means, fewer still will be willing to pay the minimum weekly cost of $55.80 for four meals (nearly $3,000 per year) and fewer still will share the palate for which the meals are designed.

I would also add that two subgroups that would be great targets are either folks who are constrained by time or energy.

Time-constrained - Busy professional couples who recently had kids might not have the time to go out to eat, or to cook complex meals, but would enjoy simple homemade meals.
Ability constrained - Older folks who don't have the stamina and who used to cook, can feel like they are still cooking, but without the difficulty of prep work or cleanup.

Conclusions:

My biggest piece of advice to Gobble is that they need to work on their communications. They are hiding many things that they should display proudly. I shouldn't have to read the terms of service document to learn that "all of our meals are backed by a 100% customer satisfaction guarantee." Other important facts like the fact that they only deliver to two states and that they work on a recurring billing model need to be front and center too.
Don't be afraid to mention the benefits of the product. Yes it's fast. Yes it's tasty. But are there other benefits too? How about having more time to enjoy a home cooked meal with your significant other? That's a benefit that costs the company absolutely nothing, but valuable to many couples.
Add pictures of people eating and enjoying the food. The more people can envision themselves using (and enjoying) the meal kits, the more likely they are to buy.
If the meals are so easy to cook, demonstrate the process! Show a video of one being prepared.
Consider allowing people to order for a single week at a time. It's a lower risk from the consumer standpoint and some people might only want to use the service for a week at a time.
Consider creating (and labeling) plans for picky, but wealthy consumers. I am confident that vegans, paleo-adherents and gluten free groups would pay a premium for food that is safe for them to eat. A paleo-eater would probably love to be able to pick "the paleo plan" and automatically get a package every week without having to do any more work.
Consider creating a weight-loss specific plan. With the New Year's resolutions right around the corner, many folks will be ready to lose weight and be willing to throw money at the problem. If Jenny Craig can offer meals, why can't you?
Consider repositioning the product from "meal kits" to "meal classes." While folks will compare Gobble's products to takeout and frozen foods, bundling meal kits with cooking instructions would provide added value. I can certainly see a future in providing kits with instructions and different levels of difficulty. American martial arts schools have learned that people are willing to pay large sums of money to take part in gamified educational lessons. "Become a great chef and receive meals for $50 per week" sounds a whole lot more tempting than "receive meals for $50 per week."
Consider making the site more social and allow people to post pictures of their accomplishments. Seeing professionally staged pictures is one thing, but seeing what other people are doing might help get borderline customers excited and convince them not to cancel.

Blatant Commercialism

Would you like a private teardown of your very own company? We can do that! Send us a note so we can get started! Also, my book on how to price software makes a great stocking stuffer!