A new trend in the on-demand food and delivery market seems to be monthly membership programs. Munchery, the on-demand food startup that delivers pre-made meals and ready-to-cook meals, is launching its second go at a membership program. Munchery’s new membership program, which costs $8.95 per month or $85 per year, lowers the price point for individual meals by up to 20 percent.
That means, instead of a $10 meal, that same meal would cost $8. Munchery’s pre-made meals range from $8.95 to $14.95. So, to make this membership worth your while i.e. actually save money, you would need to order at least six meals that would regularly cost $8.95 in a month. For the most expensive meals, you would need to order at least three to save a couple of cents, and at least four per month in order to save a few bucks.
Munchery Membership will help grow the company’s addressable market from 8 million to 23 million people across its four markets, according to the company. Any one can try the membership program for free for 30 days.
Munchery’s first membership program, which got rid of deliveries fees, shut down about a year ago because it was “a difficult program for us to make work well,” Munchery CEO Tri Tran told me. That’s because, unlike some on-demand food startups, Munchery employs its delivery people as W-2 workers, which means they pay them fair wages, reimburse them for mileage and all that good stuff.
“When you order enough, it doesn’t make a business for Munchery because then Munchery would lose money the more orders people make,” Tran said. “With this new program, we truly encourage people to order as much as they like.”
With this membership program, Munchery does sacrifice a bit of its margins, but not enough to mean that it doesn’t make its margin. Meanwhile, competitor Sprig has a program in place similar to the one Munchery bailed on. Sprig Go charges $10 a month to customers looking to avoid the standard $2 delivery fee, as well as surge pricing during times of high demand. Sprig also employs its delivery people as W-2 workers, so it’s unclear why this model works for Sprig, but not for Munchery.