The COVID-19 pandemic has had a dramatic impact on the way we all live, work, spend money and eat. Forced inside by widespread lockdowns and social distancing measures, people are increasingly turning to online services to secure their basic needs. At a stressful time like this, the value of healthy, convenient, sustainable food is more apparent than ever. For California-based meal kit delivery service Sun Basket, 2020 has been a year of unprecedented challenges and opportunity. “Our business essentially doubled in three weeks during that initial spike,” says . “We basically found ourselves in a position where we suddenly stopped being a convenience and became more of an essential service for a lot of our customers.”
Sun Basket was founded in 2014 by award-winning chef Justine Kelly and Adam Zbar, Tyler MacNiven and George Nachtrieb – a trio of tech entrepreneurs looking to marry the convenience of on-demand, subscription-based food delivery with restaurant-quality cuisine tailored to suit every diet.
“Sun Basket is a delivery-based meal subscription business, and our goal is to provide healthy food options to our customers using that model,” explains . “Whether our customers are eating gluten-free or vegan, or are on a Mediterranean diet, we find creative, delicious and healthy solutions for them.”
Creative, Delicious, Healthy
“We like to think of ourselves as the Whole Foods of the meal kit industry; we're offering a more specialized, higher end and high-quality service,” Wargocki continues. Sun Basket’s premium, health-focused offerings extend across a staggering range of dietary requirements that make for a very broad, highly-customizable menu. Customers can choose from meal plans including Paleo, Carb-Conscious, Gluten-Free, Lean & Clean, Diabetes Friendly, Chef’s Choice, Vegetarian, Pescatarian, Mediterranean, or Quick & Easy. These meals are a part of a weekly rotating menu developed by Chef Kelly and her team and shipped to tens of thousands of customers on a regular basis. The meal kits arrive cold-packed with instructions for the customer to prepare a two or four serving meal, sometimes in as little as 10 - 20 minutes.
In addition to its core meal kit offering, Sun Basket is working to broaden its scope across what Wargocki describes as its ‘share of stomach,’ branching out into snacks, lunch items and more.
“We provide the meal kits as our core product, but we've also launched our Fresh and Ready meals, which are ready-made and just need to be heated up,” he says. “We'll be further expanding those offerings in 2021, which is very exciting, as well as having a marketplace, which is a way of presenting a curated selection of snacks and juices to our customers.”
Thompson notes that, as far as a secret sauce goes, Sun Basket’s ability to combine quality, a large range of products and a high level of customizability is key to its success.
“We really want to personalize the experience for our customers. Some of our competitors will just offer two options - a basic and a vegetarian. We have 11 options to meet the different needs of different groups,” he notes.
“We work hard to offer an ever-changing menu every week. We take pride in providing a lot of variety to our customers, and many of our meals are made with unique components like sauces that we develop ourselves. We're not just buying, for example, a romesco sauce off the shelf from a third party. We're making that romesco sauce ourselves.” So, in addition to customization, quality and a broad range of options, sometimes Sun Basket’s secret sauce is also literally a secret sauce.
Executing on the Vision
Between them, Wargocki and Thompson oversee the operational side of Sun Basket. “Everything inside the four walls of the building, like labor, manufacturing and packaging, that’s all Mike,” Thompson explains. He, on the other hand, is responsible for the company’s operations outside its premises. “Everything beyond these four walls is my responsibility, from logistics, procurement and supporting services like corporate IT, to food safety and some of the other functions that enable the work that Mike does within the business' premises. We work together on lots of different projects.” Together, Wargocki and Thompson have the unique challenge of sourcing, manufacturing and distributing Sun Basket’s meal kits and other products across the United States, tackling extreme levels of customization in a way that’s not only effective, but environmentally sustainable.
From Farm to Table - A Unique Supply Chain
In order to deliver on its promise of a rotating weekly menu that caters to all manner of dietary preferences and needs, the procurement function of Sun Basket’s business is all about smart, sustainable sourcing.
“We work with the company's test kitchen about eight weeks before a menu goes out for delivery to make sure we're taking into account the time of year and the ingredients that are in season,” Thompson explains. From there, Thompson’s goal is to ensure that Sun Basket is sourcing the freshest possible ingredients in the right quantities. “We're working to ensure we're delivering as close as possible to a farmer's market fresh experience,” he says, adding that there are two major factors to consider when sourcing produce for Sun Basket’s meals: time and temperature.
“We're trying to figure out how quickly we can shorten the time from harvesting a vegetable to delivering it to a customer's table. We're fortunate enough to be sitting here in the middle of California, right next to the biggest produce-growing valley in the country. We have fantastic relationships with many farmers here, particularly the organic operators, since 99% of the vegetables we buy are organic certified,” says Thompson.
“These relationships with big farms and smaller scale operations all across the country mean that, when we can, we buy as locally as possible.” All of Sun Basket’s meal kits delivered to the East Coast, for example, utilize organic corn grown by the company’s supplier close to its New Jersey facility when it is in season. Thompson notes that, “We do as much as possible to reduce the time between a vegetable coming out of the ground and coming out of the customer's meal kit when they go to make dinner that night.”
Dealing with temperature is a uniquely difficult proposition. Sun Basket’s cold chain is an essential element of ensuring that produce not only reaches the manufacturing plant in the best possible condition, but also that the resulting meal kits arrive in the customers’ hands as fresh as they can possibly be. Thompson explains that, using individual temperature gauges on each pallet of produce received, his team can monitor the entire journey of a piece of produce from the supplier to Sun Basket’s loading dock.
“When that product arrives, I have access to a complete readout of the temperature of that product over the course of its entire journey. I can see if a product that's supposed to be held at 38 degrees was held for an hour at, say, 55 degrees, and be able to know therefore that it isn't going to hold up,” he explains. “We use that information in addition to our quality inspection process to sort through our produce and ensure we're only using products that live up to our customers’ standards.”
When the finished meal kits leave Sun Basket’s facility, ice packing plays an important role. “We also try to be smart with how we pack out our products in terms of ice, insulation and box size, taking into account the length of the journey and the temperatures at the destination,” Thompson says. “If you're sending a box to Phoenix, Arizona, where it's 95 degrees outside, you're going to need a very different packout solution compared to, say, Chicago in the wintertime.” Using a sophisticated algorithm, Sun Basket’s fulfilment team can account for travel time, environmental conditions and the contents of each individual box.
“We have a different ice configuration for, in theory, every single zip code in the country, which gives me quite a fun challenge,” laughs Wargocki.
The sheer level of customization that Sun Basket offers its customers creates a uniquely complex challenge from a manufacturing standpoint as well. “The big challenge from a manufacturing point of view is how customizable Sun Basket's service is. A lot of our competitors might send out 30,000 boxes in five or six different iterations. Sun Basket, on the other hand, might have 25,000 different iterations in a 30,000-box run. We could conceivably have a situation where every single one of our customers orders a completely different combination of meals in their box. It's really been interesting to work on developing our technology to allow for that level of customization,” says Wargocki, explaining that his own role focuses on finding the most efficient, highest-speed production options that are designed to support regular changeovers and refits with the least amount of downtime possible.
“If we're shipping those 30,000 boxes, they're going to contain 100,000 individual meals, which means approximately 300,000 individual ingredients. When you think about the touches that go into that, it's more than a million touches every week that are completely unique to that cycle,” he explains. “Seven days later, the whole process starts again with entirely new products.”
Using advanced customer analytics, the Sun Basket team can predict with increasing accuracy which foods their customers will buy each week. “We know eight weeks in advance what we're going to put on our menu and we use our analytics to predict how much of each of those meals our customers are going to want. We can predict volume and location based demand, as well as which specific meals and diets people are going to order, and we can get very granular in terms of one ingredient vs another,” says Wargocki, adding that this is essential, not only to ensuring the company can meet demand, but also its sustainability goals.
Sustainability at Scale
There are a number of factors unique to the subscription-based meal kit delivery business model that impact sustainable practice. “One of the major benefits of the meal kit subscription business model is that the amount of food waste we create is so much lower than, say, a grocery store,” says Thompson. “We track our wastage for each week and it's in the low single-digit percentage of our total food purchase, which is really low. We try not to throw anything away that's still usable. If we don't manage to sell something to a customer, we'll donate it to a food bank.”
Where meal kit companies across the industry run into problems, Thompson notes, is packaging. “Each individual ingredient needs packaging, and then all those ingredients are put in a package together, which goes in a bigger box with ice and other insulation for shipping,” he explains. While the issue is a hard one to get away from, Thompson adds that Sun Basket has taken some significant steps towards mitigating those issues.
“All of our packaging is either recyclable or compostable,” he says. “It makes our job a little harder, because sometimes it's difficult to find recyclable and compostable solutions that meet our needs regarding keeping food cold, but we really stand by our commitment that while it is necessary to have a fair amount of packaging, we do as much as we can to reduce its environmental impact.” Wargocki adds that, from a manufacturing perspective, finding ways to use recyclable and compostable materials in the manufacturing process continues to be an interesting challenge.
“Instawork is one of our suppliers of temporary laborers,” says Wargocki. “As the business grew, we needed a fair amount of people very quickly. Instawork is a tech-based solution to that problem that gives us a huge amount of flexibility.
“We have a very high demand for our products over the weekend, and then for the rest of the week we have a more level, predictable workload. On the weekends, I need to be able to have a large enough team to ensure that all of our production and fulfillment gets done. Instawork is great for that.”
Instawork uses a web-based network of contractors that can sign up for particular short-term jobs. “We can give priority to contractors we've had positive experiences with before,” enthuses Wargocki, adding that, “it also provides our contractors with a really good training process. We can upload our training materials, food safety and GMP requirements - everything those employees need to become certified to come in and work for us. It saves a lot of onboarding time for new temporary staff.”
Onwards and Upwards
Thompson reflects that, had things been different, the 2020 COVID-19 crisis could have gone in an entirely different direction for Sun Basket. “We were growing very fast, like a lot of companies in the subscription-based food delivery space,” he reflects. “Then, in 2019, the company made the decision to slow down a little bit and really make sure the economics of the business were sound. You can grow, pump more money into marketing, attract more and more customers, etc. But if those customers aren't staying for the long run as you had hoped, your company is going to burn itself out.”
Sun Basket spent 2019 shoring up its business model. This year, the results have been spectacular. “Those efforts put us in a really strong position coming into 2020, when COVID-19 started to happen and being in the business of sending food to people's houses suddenly became a very good industry to be in,” Thompson recalls. “Had we not gone through all that work the year before to make the economics sound, we wouldn't have been in such a good position to be able to help our customers and grow as much as we did.”
Now, Sun Basket is looking to broaden its offerings even further, finding new ways to take its core strength of making delicious, healthy food and find new channels to deliver it to its customers. “2021 is going to be about taking those new offerings to a wider market through new channels,” says Thompson. The company is growing rapidly, with deals on the horizon to sell Sun Basket’s food through partnerships with on-line retailers, as well as some brick and mortar locations.
In closing, Wargocki adds that, “We're looking to become very broad and diverse in terms of new ways to bring new foods to new customers at all different times of the day, whether that's lunches, dinners, breakfast or snacks. The challenge for us is making sure that we not only do a lot of different things, but that we do all of those things well. Everything that we're doing is to figure out how to grow the breadth of our offering while never compromising our quality standards.”