With reference to the information provided, examine the likely numerical value of the cross elasticity of demand between UK meal-kit delivery services.
| Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | |
|---|---|---|---|---|---|
| FreshBox | 42.1% | 40.5% | 39.0% | 37.5% | 35.8% |
| PrepChef | 24.3% | 25.1% | 26.4% | 27.8% | 29.2% |
| OrganiCart | 12.0% | 11.5% | 10.8% | 11.2% | 11.5% |
| SimplyCooked | 9.5% | 10.2% | 11.1% | 11.9% | 12.0% |
| Others | 12.1% | 12.7% | 12.7% | 11.6% | 11.5% |
| Subscription service provider | September 2023 |
|---|---|
| FreshBox Premium (4 recipes, 4 people) | £48.99 |
| FreshBox Standard (3 recipes, 2 people) | £31.99 |
| PrepChef (3 recipes, 2 people) | £29.99 |
| OrganiCart Organic (Normal tier) | £41.50 |
| PrepChef – NHS/Student discount | £19.49 |
In the last few years, competitive industries have turned heavily to behavioural science to hook new consumer segments. Subscription platforms like FreshBox and PrepChef widely utilise 'default biases' and monthly 'nudges' to shape purchasing routines. The automatic pre-selection of weekly meals and immediate 'opt-out' steps (instead of 'opt-in') bypasses rational decision-making, keeping families locked in to recurring billing.
However, throughout late 2022 and early 2023, high inflationary pressures and a severe cost-of-living squeeze have forced consumers to evaluate their luxury subscription choices. While subscription cancellations in the market rose to a record high, discount competitor PrepChef actually saw its portion of the market swell. Consumers reporting rising subscription fatigue quoted price, perceived lower value for money, and lack of menu variation as primary drivers when choosing to terminate their existing FreshBox subscriptions. Meanwhile, PrepChef's quality satisfaction and price ratings surged, helping it secure historic retention rate lows.
To combat heavy substitution, major meal-kit brands often exercise third-degree price discrimination. For instance, PrepChef relies heavily on promotional discount partnerships targeting students and key workers (offering codes and up to 35% off memberships). These targeted discounts capitalise on the highly elastic demand curves of younger, budget-conscious consumers. Conversely, legacy customers who default onto standard rates pay a much higher premium, exploiting their relative price inelasticity.
