How Did All These Look-Alike "Healthy Meals" Catch On? | Market Inventors

Most companies selling healthy meals refuse to limit their customers to people who work out. They are after anyone "pursuing a healthy lifestyle."

Italian braised vegetables, black pepper steak with seasonal vegetables, grilled chicken breast with a tropical salad, corn salad;

Mexican breakfast wraps, steamed chicken with two kinds of mushrooms over oat rice, couscous salad, smoked brown rice with deep-sea fish, cherry tomato salad;

These are one-day menus from Chunyue Shenghuo and Shiwulian — more precisely, one day out of the weekly plans each company sells. The clear plastic boxes and brown lunch boxes carry QR codes that let you look up each meal's calories, fat, protein and carbohydrates. Everything is ordered online and delivered to your door at a set time.

If you have ever tried a detox juice cleanse, all of this may feel familiar. And like the detox juices that took off before them, these light, barely processed, low-fat, low-calorie meals are turning up more and more often around office workers in China's biggest cities.

Companies selling them have kept appearing over the past two years, without settling on a name for what they sell. Some brands call it a "healthy meal" or a "light meal," some say "nutrition meal," others "fat-loss meal." Nearly all of them stress fresh ingredients, scientific ratios and strict calorie counts. We will call them healthy meals here.

Look at the ingredients or at the plating and they all look alike at first glance, even though a single meal runs anywhere from 50 to 200 yuan. The cooking is boiling, baking, steaming, or nothing at all, so the bar for making one is low — if you don't need to hit exact nutritional ratios, you can do it at home.

Which is why the companies selling healthy meals treat those ratios as the barrier to entry in this business. And the biggest cost, predictably, is the food itself.

What Kind of Market Is This?

No national brand has emerged in this category yet (stretch the definition to include restaurants that consumers link with health, and Wagas might qualify), but Dakai Shajie, which started in Shanghai, has opened branches in smaller cities like Nanchang, Wuxi and Changshu. Haosepai Salad, based in Shenzhen, just raised 22 million yuan.

Like most things that suddenly become popular, healthy meals have no clean starting date. The usual answer is late 2014, and new companies are still appearing. What is certain is that they arrived on the back of the fitness boom.

According to Euromonitor International, the number of gyms in China grew steadily at about 3% a year from 2014 to 2016. Lu Qing, a co-founder of Chunyue Shenghuo, thinks the spread of boutique fitness studios is another signal. Beyond that, "Element Fresh and Wagas have opened a lot of stores in Shanghai and Beijing, and since the end of last year they have been opening them fast. So we decided this was a trend." Riding it, her company — pitched as fat-loss meals for people who train — launched last July. It mainly sells meals by the cycle: three days, a week, a month, a season. It delivers only in Beijing and Shanghai.

Shiwulian was also founded in Beijing and launched this March, also selling meals by the cycle. It was started by James Wang and Meng Chao, Huang Xiaoming's personal trainer — a fact the company has turned into a loud marketing hook.

Ruishi also takes most of its orders online, but it has opened two physical stores in Shanghai, near Jing'an Temple and at Wujiaochang. Founder Jing Dian used to trade fresh produce B2B; some of his partners trained in nutrition. They are all alumni of Shanghai University of Sport.

Ningmeng Juexing, founded in August 2014, was one of the first. It has since stopped delivering fresh healthy meals and become a company that sells packaged "healthy" food online — bagged chicken breast, nuts, energy bars. "A high-quality fresh-meal delivery model is very hard to scale. What you get is high traffic costs and high delivery costs," founder Jin Qianchen told QDaily.

More companies keep joining anyway. The field is crowded with small players, and no large restaurant group has stepped in. For a restaurant company, building a healthy-meal brand for a niche audience carries risk. The safer move is to add healthier items to a menu it already has. McDonald's and Burger King have put salads on theirs; some Sichuan chains sell boiled seasonal vegetables or mashed yam and purple sweet potato.

Investor caution explains why big restaurant groups still have almost no healthy-meal sub-brands. Lu Qing says that when she went looking for funding, plenty of firms held back because they worried the "customer base is too small."

The other reason is that demand is too scattered, says Marco, who runs operations at Kaka Health, a calorie-tracking app, and has worked with several healthy-meal companies.

Who Are These Meals Sold To? And Who Actually Buys Them?

Age, gender, occupation, income, even the office building — Chunyue Shenghuo has a sharp picture of its customers.

"You can see it in the delivery addresses in our system. In Beijing most orders come from around Financial Street; in Shanghai it's Pudong and Jing'an Temple. On income, 34% make 5,000 to 10,000 yuan a month, 21% make 10,000 to 20,000, and about 20% make more than 20,000. Women are roughly 70% to 80% of our customers," Lu Qing says.

Shiwulian's weekly plans start at 799 yuan and target celebrities and senior white-collar workers — people who already spend 150 to 200 yuan a day, or more, on food.

But nearly all of these companies found their first users in gyms and fitness studios.

Lu Qing works out herself, and her earliest "seed users" were friends from the gym. When it came time to promote the brand, she aimed at gyms too. The company runs 20 fitness-related WeChat groups and markets through gyms: buy a meal plan and get a free trial session with a personal trainer, or buy a monthly plan bundled with a discounted gym membership.

Shiwulian puts promotional material inside gyms such as Qingniao and Hosa, and often invites fitness influencers and celebrity trainers to sample its food, hoping they will talk about it on Weibo or recommend it to their own clients.

This is also why so many brands sell by the week (five or six days) or by the month. Lu Qing keeps repeating that changing how you eat — or rather, seeing results — takes a full cycle.

Still, most healthy-meal brands refuse to limit their customers to people who work out. The gym crowd is smaller than the crowd "pursuing a healthy lifestyle," and if you want revenue and some profit, you need as many customers as you can get.

Jing Dian hopes Ruishi can use single meals to recruit them. Most people lack the resolve, or the schedule, to eat healthy meals for a whole week — there are work dinners and social obligations — and a single meal is more flexible. That is also why he opened physical stores. One of them has an open kitchen behind glass, which works as a display: he hopes people who care a little about health will walk past and get curious.

Chunyue Shenghuo, besides its fitness groups, runs WeChat groups with names like "The Aesthetics of a Slimming Life," which sell a way of living. It also created a three-day plan and a single-day meal to pull in newcomers. "Summer's here, and most women will tell you they want to drop a few pounds."

James, Shiwulian's CEO, says most of the company's current buyers have no regular fitness habit. Some parents have even ordered the meals for overweight children. But the customers who come back most often, he adds, are still the ones who train.

At least 60% of Ruishi's customers exercise regularly, and Chunyue Shenghuo says more than 85% of its customers have bought fitness classes — one reason it treats the gym crowd as its primary target. Both figures come from lifestyle questionnaires customers fill out before ordering.

For now, the people who work out and the people who buy healthy meals overlap heavily. Among those we interviewed, quite a few started paying attention to what they ate only after they started training regularly, and then started buying healthy meals.

Shen Jie, who works in media in Beijing, began thinking about food two or three months into her personal-training sessions. After a month of workouts her weight had barely moved. She decided the problem was her diet and started controlling it. Besides cooking her own healthy meals, she buys one about once a week from Glo Kitchen + Fitness, a restaurant run by a gym near her office.

Lu Ye, a doctor in Jiangyin, got her dietary advice from the CrossFit club she joined — reportedly the first in Jiangsu province — and later began buying healthy meals that other members cooked.

Once they pick up information from trainers and social networks, these customers develop a fuller picture of healthy meals and a standard of their own. Shen Jie considers a fat-loss meal unprofessional if it contains mayonnaise, pork or refined white rice. Rebecca Jia, an assistant at an NGO, stopped buying the meals she had been getting after she noticed they were full of high-carbohydrate vegetables like yam and string beans. Long Lv, who has trained for years and works in the food industry, and Marco, mentioned above, can both judge roughly whether a meal's ratios suit their own bodies and goals.

Customers without a fitness habit tend to know less. Whether the ingredients look varied, whether the price seems fair, even whether the food looks professionally made — all of it shapes what they pick.

Almost everyone we interviewed about healthy meals, from trainers to company founders to customers, recited the same line: training is 30%, eating is 70%. We looked up several papers — including research from George Washington University and Indiana University and an article by Brazilian scholars published in Nature — and the saying largely holds up: changing your diet takes off more weight than exercise does. For now, though, the market for training dwarfs the market for eating. The eating market still has to be pulled along by the training one.

Where Is the Barrier to Entry?

Anyone, it seems, can make a healthy meal. The barrier exists in another form: the ratios.

As cooking goes — steaming, boiling, baking — healthy meals are simple. The whole point of the category is to leave food barely processed and use as little seasoning as possible, so its original taste and nutrients survive. Judging by recipe sites and apps, making a salad or something like it at home is no great feat.

"But a simple meal is not a healthy meal. The proportions have to be weighed strictly, and timing matters too — the balance of carbohydrates, protein and fat differs between breakfast, lunch and dinner. And the ratios change with the goal, whether you're cutting fat or building muscle," Lu Qing says.

Jing Dian also rejects the idea that "anyone can make" these meals. "A healthy meal looks simple to make, but the simpler it is, the harder it is to make it taste good. A lot of nutritional-ratio questions are involved."

This is the selling point these companies like to press, and each has built a theory around it.

Ruishi says it worked with Shanghai University of Sport to develop a test "better suited to Asians," built on Western body-type categories, that sorts customers into nine types. It then adjusts the portion and the ratios of each meal to each group's weight and build.

"Making healthy meals takes restaurant experience plus a foundation in nutrition, physiology and biochemistry. How professional you are is what decides whether this business lasts," James says. Working from the glycemic index (GI) of foods, Shiwulian invented what it calls a "Mediterranean slow-carb diet." Its WeChat account explains the core of it: replace everything you eat in a day with low-GI food, and eat plenty of vegetables and protein.

Taste is the other front on which they try to hold on to customers. Next to crayfish, barbecue or spicy hotpot, a bland healthy meal is not much of a pleasure.

To prove that taste and health can coexist, brand write-ups tend to include the words "celebrity chef" or "executive chef at a five-star hotel." Shiwulian's team includes Liu Qingfeng, a chef who worked at one- and two-star Michelin restaurants in France. Jing Dian told me Ruishi's founding team includes a deputy executive chef from the Shangri-La in Shanghai. "We work on the taste so people don't feel that eating a healthy meal is a form of suffering."

But our nature and our genes push us toward food heavy in sugar, salt and fat — not the low-salt, low-sugar, low-fat plates of a healthy meal. Food companies stay in business precisely by hitting the "bliss point" that those ingredients set off in our taste buds. Unlike most of the restaurant industry, which exists to give people convenience and pleasure, this business exists to answer their worry about their health.

What Happens Next?

Every healthy-meal company we interviewed talked about fast growth. Chunyue Shenghuo's sales are rising about 20%; Ruishi's have grown 30% to 80% in recent months. Shiwulian would not give numbers, saying only that it is on a "steady rise."

"Even if you do nothing at all, more and more people in China will work out, and demand will only get stronger," says Jin Qianchen, who thinks healthy-meal companies are living off the fitness industry's windfall.

There is something to that, though it is not the whole story. Some fitness-meal startups founded in 2014 or earlier are already gone — Youyou, for one. Jin Qianchen's own Ningmeng Juexing has changed course too, even if it stayed inside the healthy-food category.

They are all optimistic about the industry anyway. Marco, though, expects prices to fall: "Fitness meals at prices ordinary people can pay have a much better trajectory than expensive ones."

Price is already holding the industry back. Marco works out and used to buy fitness meals; he stopped because the price looked high next to what the food costs to make. Now he mostly cooks his own.

Alex owns Sweat & Co, a boutique fitness studio in Shanghai, and gives members free healthy meals at the gym. He thinks everything on the market is overpriced. By his estimate, a healthy meal that sells for 50 yuan costs about 10 yuan to make. Since he started handing out "free" meals to members this April, "our Dianping rating went straight from four stars to five."

Nearly all the companies we interviewed dodged questions about gross margin. Lu Qing put Chunyue Shenghuo's at around 50%, far above what ordinary restaurants make. That follows ordinary business logic: with no economies of scale yet, a high margin covers the costs.

The awkward part for these companies may be that most of their customers don't think the meals are worth the price. The industry also has a sameness problem.

Restaurant groups have begun to notice the category this year. In April, Pangu Catering, which owns more than 300 outlets including the Busan Cuisine chain, bought Ningmeng Juexing for tens of millions of yuan. Ningmeng Juexing says it was already profitable before the deal.

Who's next? Hard to say. But a shakeout is coming for healthy meals, the way one has come for every new industry before it.

(Shen Jie and Lu Ye are pseudonyms, at their request.)

Cover image from Visual China Group and others