Sprouts a Generation’S Quest for Wholesome Ingredients and Nurturing Food Experiences

A Business Plan Proposal Sprouts A generation’s quest for wholesome ingredients and nurturing food experiences

Paola Gonzalez MPH-RD Candidate 2017

Table of Contents 1. Table of Contents 2. Confidentiality Statement 3 3. Executive Summary 3 4. Business overview 5 4. 1 Mission statement 5 4.2 Vision statement 5 4.3 Business goals & objectives 5 4.3.1 Short-term goal – Phase I 6 4.3.2 Long-term goal – Phase II 6 4.4 Keys to success 7 4.5 Organizational plan 7 4.5.1 Business structure 7 4.5.2 Expertise 8 5. Market Analysis 9 5.1 Industry Analysis 9 5.1.1 Industry Trends 10 5.1.2 Porter’s Five Forces 11 5.2 Consumers – Target Market 13 5.2.1 Target Market Rationale 13 5.3 Competition 14 5.3.1 Strengths 14 5.3.2 Weaknesses 14 5.4 Competitive Advantage 15 6. Market Strategy 16 6.1 Growth Strategy 16 6.2 Communication Strategy 17 7. Products & Services 19 8. Financial Plan 20 8.1 Financial Overview 20 8.1.1 Startup costs 20 8.1.2 Operation Expenses 21 8.1.3 Revenue 21 1

8.2 Projected Income Statement 22 References 23 Appendix A - Nutritional Guidelines 26 Appendix B - Competitor Analysis Table 29 Appendix C - Projected Income Statement 32

2. Confidentiality Statement The information and intellectual property contained in this business plan are strictly private and are supplied on the understanding that they will be held confidentially. Neither this Business Plan, nor any of the information contained herein, may be reproduced or disclosed under any circumstances without the prior written consent of this writer, Paola Gonzalez.

3. Executive Summary Nutrition is a critical requirement for children’s health and optimal development. Childhood represents a stage where intellectual and physical growth is the most rapid, with doubling of brain size and quadrupling of body weight (UNICEF, 2012); childhood lays the foundation for the development of cognitive, motor, and social/emotional skills throughout life (Prado et al., 2012). Given this rapid development and increased nutrient utilization for growth, children are most susceptible to the effects of poor diet quality and malnutrition1, as the lack of adequate availability of nutrients impairs both physical growth and behavioral experiences. Therefore, malnourished children are not only at higher risk of failing to reach their full developmental potential, but also at risk for later neuropsychological problems, poor school achievement, early school dropout, low-skilled employment, and poor care of their own children, thus contributing to an intergenerational effect (Prado et al., 2012). In this context, optimal nutrition and correction of nutritional deficiencies during childhood are of particular significance, as beyond these early years of life most of the adverse effects become irreversible. At the other end of the spectrum, pediatric malnutrition in the form of overfeeding and obesity is widely documented in the literature, and reinforces the complex nutrition paradigm known as the “double burden of malnutrition2.” Per recent statistics worldwide, in 2016, 41 million children under the age of 5 were overweight or obese, while 155 million were chronically undernourished (WHO, 2017). Whereas in the United States, the prevalence of both underweight and obesity sums up to 20.5% of children with increased health risks due to being an unhealthy weight (Fryar et al., 2017).

The Academy of Nutrition and Dietetics recognizes that a child’s nutrition and health status is an “upstream” determinant of the nation’s health (Ogata et al., 2014). Proper child development relies on a solid nutritional foundation, including healthful eating patterns that support nutrient adequacy long-term, prevent acute nutrition problems (i.e., iron-deficiency anemia), and ensure their well-being throughout the lifespan. With this in mind the Dietary Guidelines for Americans (DGA), recently shifted its focus from individual foods/nutrients to healthier eating patterns within appropriate calorie levels that emphasize nutrient density, variety and amount. More specifically, the guidelines emphasize nutrient-dense foods and beverages (such as whole grains, vegetables, fruits, seafood, and dairy), that are low in solid fats and added sugars (SoFAS), starches, and sodium, and instead high in health promoting-naturally occurring components, such as vitamins, minerals, and fiber.

1 defined as an imbalance between nutrient requirements and intake (Mehta et al., 2013). 2 characterized by the coexistence of undernutrition (i.e., micronutrient deficiencies), along with overweight, obesity or diet-related noncommunicable diseases (WHO, 2017) 3

However, the Healthy Eating Index (HEI) - a tool designed to measure compliance with the DGA on the basis of density (quality) of food consumed, showed that most Americans, including children aged 2 to 19, follow eating patterns that do not align with the DGA. Using NHANES data from 2007-2010, HEI scores revealed an eating pattern below the recommendations for all food components, except for total grain and total protein foods (Ogata et al., 2014). However, the composition of these food groups remains questionable, as total grain intake exceeds limits for refined grains and falls short on whole grains, whereas the protein group lacks variety with limited intake of seafood and legumes. Moreover, current intakes of SoFAS and sodium exceed recommendations3, contributing to inadequate energy balance, with higher prevalence observed in older children and adolescents (Mendez et al., 2014). At the same time, many are not meeting the recommended intake of the nutrients of public health concern (calcium, dietary fiber, potassium, iron and vitamin D)4. According to the DGA, low intakes for most of these nutrients occur within the context of unhealthy eating patterns, due to low intakes of specific food groups (whole grains, vegetables, fruits, seafood, and dairy) that contain these nutrients. For example, vegetable intakes relative to recommendations is lowest among boys ages 9-13 and girls ages 14 to 18 years, whereas fruit intake is lowest among girls ages 14 to 18 years. While intake of fruit is high among children ages 1-8 years, about half of this intake comes from fruit juice rather than whole fruit. Overall, dietary quality is low for children of all ages, with higher prevalence in older children (Banfield et al., 2016). Based on the above evidence, healthful eating patterns that include a variety of nutrient-dense foods, from all food groups, would provide substantial health benefits for children of all ages. However, children’s eating patterns and nutrient intakes are affected by a variety of factors, thus supporting these healthy choices requires prior understanding of social, environmental and behavioral barriers to change. First, the food environment affects learned responses, habits, and the extent to which children are able to self-regulate. The greater availability of fast food, convenience foods, and full-service restaurants has provided more opportunity for eating outside the home, with fewer families eating meals together (WHO, 2017). Portion sizes and cost also determines the quality and quantity of food provided to children, self-served portions, and intake (Ogata et al., 2014). While the portion sizes of many packaged, processed and restaurant foods have increased, their relative cost has decreased. Whereas, the cost of fresh produce remains high (WHO, 2017). Making difficult for many families to make the healthy choice a priority, thus depriving growing children of the nutrients they need. Second, social aspects such as parental modeling, feeding practices, family rules and food advertising also affect children’s intake -

3 <10% of calories per day from added sugars and saturated fats, and < 2,300 mg per day of sodium 4 According to NHANES data from 2013-2014, most children aged 2 to 19, fail to meet the Dietary Reference Intakes (DRI) of 19-38 g/d for dietary fiber (with intakes in the range of 10.8-16.4 g/d), of 10µg/d of vitamin D (with a range of 3.7-6.1 µg/d), and of 4,700 mg of potassium (with a range of 1811-2665 mg/d). While, the calcium intake of younger children (2-11 years) meets the recommended intake, the intake of both males and females aged 12-19 falls below recommendations.

distort their responsiveness to energy intake and natural ability to self-regulate, and play a major role in the development of long-term eating habits. This global transition to convenient, cost-efficient and processed foods, has led to drastic changes in family practices and to a global homogenization of diets that are higher in SoFAS, sodium, and lower in essential nutrients, than the traditional/less processed diets they often replace. As a soon to be registered dietitian and faced with these challenges, I feel compelled to share my knowledge and guide decisions to promote healthy eating habits, not only within the limits of my reach but on a broader scale. As such, the idea of “Sprouts” was born out of the urge to reach a larger audience and to provide families with the support they need to cook simply and eat healthy while meeting a child’s nutritional needs for optimal growth. Our goal is to offer 1) accessible tools that guide best feeding practices, provide nutritional advice, and simplifies meal planning and grocery shopping, and 2) affordable and convenient food delivery services to help caregivers in providing meals that meet general and specific dietary needs5 and fulfill the demands of a growing market.

4. Business overview 4. 1 Mission statement We recognize the importance of proper nutrition early in life and its critical role in lifelong health. At Sprouts, we strive to help children grow healthy by providing optimal nutrition through wholesome recipes and balanced meals while connecting families to appropriate feeding practices, real and nutrient-dense foods.

4.2 Vision statement “Support a generation’s quest for wholesome ingredients and nurturing food experiences” We believe children deserve the opportunity to thrive by letting them meet their needs from a variety of wholesome ingredients and nurturing food experiences, for a lifetime of health.

4.3 Business goals & objectives The business goals and objectives included in this section are staggered into two phases (Phase I and Phase II) following a phased rollout plan included in the Growth Strategy proposal (refer to section 6.1.). Phase I is aimed to position our company and reach our target market providing services through online platforms. After achieving our targets for Phase I, we plan to move onto Phase II, which initially include food delivery in a small-scale, expanding operations as the business grows.

5 Specific dietary needs refer to conditions/diseases that require specialized nutrition support, such as a high- calorie/high-protein diet (refer to section 5.2, for additional details). 5

4.3.1 Short-term goal – Phase I Our short-term goal is to establish two robust online platforms (Website and App) that simplify meal preparation and to build our core digital recipe library that meets the requirements of children and adolescents, ages 4-18, for general and specific dietary needs. Objectives

• By January 31st, 2018, the project start date, constitute and register a Limited Liability Company (LLC) and associated trademarks. • By the end of February 2018, start recruiting external consultants/outsource companies for core areas including IT/web development, marketing, recipe development/chef(s). • By June 30, 2018, the end of a 6-month period after the project start date, create, test and approve at least 400 core recipes based on previously established nutritional standards (See Appendix A). • By June 30, 2018, create baseline content and wireframe for online platforms (Website & App) and establish network of advertising partners per Communications Strategy. • By December 2018, launch fully functional online platforms (Website & App), and upload the App to the Apple and Google stores. This will be achieved by using online prototyping tools to create a detailed, screen-by-screen mock-up/layout of the Website and App, and working with an outsource app designer company. • Within one-year period after launching online platforms, recruit at least one part-time position to aid with social media management and content development. • Obtain $$ USD in seed capital from varied sources (i.e., Angel investors, start-up competitions) over a one-year period after the project start date, to aid with funding of the company's operation for the first two years. • By the end of a three-year period after the project start date and in preparation for Phase II, develop strategic partnerships with at least two raw material suppliers (i.e., local farmers, retail and wholesale stores) and one or more service providers, including packaging and delivery services.

4.3.2 Long-term goal – Phase II Expand services by incorporating targeted food delivery, and establish the required infrastructure to produce and sell ready-to-heat & serve meals using the most popular recipes from our online platforms. Objectives

• Within a five-year period after the project start date, define proper and most convenient packaging, logistics and distribution channels based on research and market analysis. • By January 31st 2023, five years after the project start date, launch a “food delivery pilot” in North Carolina, and expand operations geographically in accordance to demand. • By December 31st, 2023, achieve a solid customer base and maintain a customer retention rate between 10 – 15% (in alignment with industry trends).

• By December 31st 2023, aim to increase the scale of food production by at least 50%, and incorporate new distribution channels accordingly. • Within a five-year period after the project start date, build business partnerships with: o Hospitals and pediatric RDs from across the country to promote business and brand awareness. o Selected chefs/cooking institutes to design new menu options. o Third party locations to increase service coverage and offer alternative delivery channels (i.e., food pickup). • Within a five-year period after the project start date, recruit at least one full-time position for each core area including IT/web development, marketing, logistics, food safety.

4.4 Keys to success • Recipes designed by RDs that meet age-appropriate recommendations for optimal nutrition, including the Dietary Guidelines for Americans. • Pioneering food services that target specific nutritional needs for the pediatric population. • Strong online platforms and efficient customer service. • Savory and nutrient-dense age-appropriate recipes and meals. • Affordable and competitively priced food delivery services for selected target markets. • All natural6, fresh, minimally processed7, and convenient ready-to-heat & serve meals. • High-quality packaging materials that ensure safety and freshness of our products. • Delivery services that meet and exceed those provided by existing companies.

4.5 Organizational plan 4.5.1 Business structure A food company that guides food choices prepares sells and delivers minimally processed, ready-to-heat & serve, balanced meals, with the aim to support caregivers in their quest to provide nutritious meals to children and adolescents. Our menus meet nutritional guidelines for the general pediatric population as well as for children with specific dietary needs, including recipes tailored by dietitians and crafted by chefs. Sprouts operates through online platforms, that allow for greater reach and accessibility, and provides custom and seamless selection of recipes and ordering, conveniently adapted to the busy schedule of today's families. The platforms offer enough flexibility for users to filter recipes based on dietary needs/preferences/dislikes, to choose between meal plans or a la carte ordering, along with one-

6 While the FDA has not established a formal definition for the term “natural”, it has considered the term “natural” to mean that nothing artificial or synthetic (including added color or artificial flavors) has been included in or added to a food product. Whereas, the USDA defines “natural” as a product containing no artificial ingredient or added color and is only minimally processed. 7 Per the USDA, minimal processing means that the product was processed in a manner that does not fundamentally alter the product. However, this definition applies to raw meat & poultry. At “Sprouts”, we abide by the FDA definition of “natural” and consider the term “minimally-processed” to mean that only processes used to make the food edible, preserve it, or make it safe are used. Therefore, excluding the use of synthetic preservatives and other artificial additives to mask quality or extent shelf-life. Our products are intended to be as fresh as possible; with short shelf-life and preserved by relatively mild techniques. 7

time, scheduled or recurrent delivery options, and additional benefits to members/frequent customers. Sprouts crafts the recipes simplifies the prepping and cooking, so our customers/caregivers can be accountable for providing while trusting children to do the rest.

4.5.2 Expertise Paola Gonzalez, biomedical engineer, MPH/RD candidate (December 2017): translates nutritional recommendations/guidelines into recipe and menu development, performs nutrition analysis, creates content and disseminates evidence-based nutritional information through online platforms, builds networks and works with other pediatric RDs to develop online content, promote business and brand awareness. In addition, oversees food management, including food safety, food production, delivery, and service. Carlos Penaherrera, financial management, MBA/MPP candidate (May 2018): provides advice on financial planning and management, collaborates with marketing to carry out market and industry analysis, analyzes costs and works closely with other areas to determine budgets, develops strategic and long-term business plans. Also, builds and manage relationships with key external business partners, including customers, suppliers and service providers, and evaluates and arrange appropriate sources of financing for Sprouts. Additional expertise needed: IT/Web developer: builds and manages online platforms, works with marketing to improve interface and usability to enhance customer experience, works with logistics to facilitate order processing. Marketing: monitors and analyzes market trends to define the best product mix for Sprouts, analyses competitors' products and services to define most appropriate positioning strategy and price for products, revises marketing strategy to promote product and brand awareness, produces engaging content to capture the attention of target market. Chef(s)/Recipe Developer: provides expertise on menu planning and recipe development per established guidelines, contributes to product testing, follows food safety standards. Logistics: manages the supply chain of Sprouts including order processing, material handling, and delivery; establishes procedures for the reception, storage, and inventory of food products; works to create, maintain and expand distribution channels.

5. Market Analysis 5.1 Industry Analysis Meal-kit delivery services have increased dramatically over the past few years, serving millions of meals to tens of thousands of customers. Relative to the overall food and grocery industry in the U.S., the meal-kit delivery service segment remains marginal, particularly regarding revenue. According to Marketline (2017), the food services industry in the U.S. reached a value of 646 billion dollars in 2016 of which the meal-kit delivery service segment accounts for only 3 billion. However, the meal-kit delivery service stands out as one of the greatest disruptions in the food industry in the last ten years and continues to outpace the growth of the food industry as a whole. The food industry is expected to sustain a compound annual growth rate of 3.3% (Marketline, 2017) between 2016 and 2020 compared to an expected annual growth rate of over 25% for the meal-kit delivery segment (Wilson, 2017).

Also, today’s consumers find researching and shopping online far more convenient than brick- and-mortar visits (Bogaisky, 2014); consumers are moving more and more away from physical stores to more accessible and convenient sources to obtain products and services. The fast development of technology has made it possible for this nascent industry to expand. The majority of meal-kits (90%) are ordered online through websites or mobile applications for delivery (Meyer, 2017). Ready-to-serve meals (another modality in this segment), remains relatively small compared to the traditional meal-kits, but it is also expected to grow at an annual compound growth rate of over 21.8% between 2018 - 2023 (Mordor Intelligence, 2017). As more consumers, with little to no time to cook at home, are looking for greater convenience.

Traditional services like retail stores and foodservice operators (i.e., restaurants) struggle to cater to the demands of working and parenting consumers or young adults who do not have the time or skills to cook at home or to go out every day for lunch or dinner. The consequence is an increasing demand and acceptance for meal delivery services. The problem for the existing players in this industry, however, remains in retaining customers. According to a survey conducted by L.E.K. Consulting, only 20% of customers continue to order after ten weeks after their first order (Wilson, 2017). A vast variety of companies offering products, over 150 companies in the U.S., increases the demands coming from the customer for lower prices, greater variety of recipes, and better packaging (Wilson, 2017).

Furthermore, consumers today are becoming increasingly conscious about the quality of food they are consuming; they understand the important role food choices play in their health, but they still struggle to make changes to improve their food selection (FMI, 2016). Increased access to information online has also influenced consumer behavior, and now people have more access to nutritional information and to other details about their food such as where it was produced. According to the results of the 2015 Global Health and Wellness report published by Nielsen, health attributes are relevant factors that affect purchase decisions, particularly of younger generations. From 30,000 people surveyed, 40% of generation Z and 38% of Millennials respondents were willing to pay a premium for food with healthier attributes (Nielsen, 2015).

However, higher pricing and limited availability of healthier choices remain a barrier to some8, although this appears to be diminishing as the market is rapidly catching up with the demand. A shared recognition of the role that healthy food access plays in promoting stronger local economies, community development, and healthy people has sparked support and moved access and affordability to the forefront of the agenda (Bell et al., 2013).

Adding to this further, a recent meta-analysis showed that the frequency of shared family meals is significantly related to the nutritional health of children and adolescents. Those who shared family meals 3 or more times per week were more likely to be in normal weight range, have healthier dietary and eating patterns, and were less likely to engage in disordered eating9, than those who share fewer than 3 family meals together (Hammons et al., 2011). With this in mind, it is not surprising that the 2016 Shopping for Health research’s results suggest that parents want to have more family meals each week. However, while 71% would eat dinner with their kids every night in their “ideal” world, fewer (57%) actually do so, and the results suggest parents are actively looking to food retailers to assist them (FMI, 2016).

5.1.1 Industry Trends Understanding how trends influence the industry is essential to any business plan. Trends provide a scope of current/future directions, and therefore, help to make predictions for staying competitive and meeting consumers' demands. This section describes the findings from our research and analysis of the major trends that drive the meal- kit delivery service industry.

• Growing use of mobile technology. The fast development of digital technology is reshaping many industries. Consumers who are used to shop online through apps or websites, with maximum convenience and reliability, expect the same in the meal-kit delivery service. Online food-delivery platforms are expanding choice, convenience, and reach. • Convenience. It is true that people frequently cite cost as a factor influencing their food purchasing decisions; however, according to a report produced by McKinsey & Co regarding customer behavior in the food industry, convenience matters more than price (Hirschberg et al., 2016). It is important to note that convenience refers to many factors. On the one hand, the time required for preparation is critical. On the other hand, a variety of options and meal planning capabilities are additional characteristics that customers value. Likewise, speed of delivery is another relevant variable in customer satisfaction, with an average 60 percent of consumers across markets citing it as a key factor. The latter presents challenges for the industry, particularly for smaller firms who do not have enough scale in their operations to reduce the cost of offering shorter waiting times for customers.

8 Between 6-9% of all U.S. households are still without access to healthy food, with nearly 30 million people living in low income areas with limited access to healthy food retailers (Bell et al, 2013). 9 From a total sample size of 182,836 children and adolescents (mean age: 2.8-17.3), benefits of sharing 3 or more family meals per week included a reduction in the odds for overweight (12%), eating unhealthy foods (20%), and disordered eating (35%), and an increase in the odds for eating healthy foods (24%). 10

• New techniques to manage food. Given the increasing competition in the segment, many companies have started to allocate more resources to develop additional differentiators from their competition. A usual target for this investment is mastering new techniques to process or manipulate food while maintaining its nutritional properties. Flash freezing is one example of the methods that are being used more in the industry. By immediately freezing ready-to-eat meals, companies claim that they can lock in each meal’s nutrients while increasing the capacity of the food to ensure the transition from the producer to the end consumer (TNW, 2017). • Leading healthy habits with education. The increasing need for people to know more about the food they are eating and its origin has been pushing companies to focus on fresh, natural and organic products. Consumers are now more interested in understanding the nutritional value and overall health benefits of the food they eat. This trend drives an increasing demand for transparency, such that consumers want to know the origin of their food as well as what it can do for their well-being.

5.1.2 Porter’s Five Forces Porter's Five Forces Analysis Model, name after its originator Michel E. Porter of Harvard University, as the name entails, analyzes the five competitive forces (competition in the industry, potential of new entrants into the industry, power of suppliers, power of customers, threat of substitute products) that shape every industry. Porter's helps determine an industry's weaknesses and strengths, as well as its profitability and attractiveness.

General Overview • Companies are focusing more on using mobile technology as a more attractive and convenient alternative to promote their products and services to potential buyers. Over 27% of consumers in the food industry now use mobile technology to purchase meal kits (Statista, 2016). • Online operations are significantly easier and less costly than running a traditional brick- and-mortar food chain (Marketline, 2016). This increases the likelihood of big companies entering the market as less investment is required. • Low fixed costs and relatively low barriers to entry entice new competitors into the industry (Marketline, 2016)

Force One – Competition in the Industry (Moderate) • The meal-kit delivery service is heavily fragmented; there are over 150 competitors of small and medium size. Furthermore, the attractiveness of this segment is increasing the attention of large competitors, such as Amazon, that could potentially explore ways to enter the industry (Wilson, 2017). • Products of many companies are highly undifferentiated, which increases rivalry. As a response, many companies are shifting their strategy towards niches or by offering additional services to consumers, as mentioned before. • Low fixed costs and dynamic market revenue growth in recent years alleviate rivalry to an extent, limiting the onset of price wars, and as long as the market keeps expanding competition could still be assessed as a moderate threat (Marketline, 2016).

Force Two – Potential of New Entrants into the Industry (Strong) • The allure of cost savings, access to a greater variety of products and services, coupled with the increased convenience of online retailers has driven more and more consumers to purchase goods online. This situation significantly increases the likelihood of new entrants/competitors. • The ease of search engines and price comparison websites mean that the sector is highly competitive. Consumers, now more than ever before, have access to large sources of information that allows them to be more informed about the characteristics of a product and how it compares with the competition. • The leading online retailers can reduce prices significantly because of their large scale. This situation could be deterrent for prospective new entrants. However, constant change in consumer behavior and diversified audiences creates sufficient opportunities that can be exploited by new entrants. • There are few entry barriers to the market due to low fixed costs, little regulation, and easy access to suppliers for virtually everything in the value chain of the meal kit delivery service segment.

Force Three – Power of Suppliers (Moderate) • IT infrastructure providers have a strong power and much depend on them. There are numerous players in the industry which has driven the operating costs of every e- commerce related activity down and has made it less costly than running a traditional brick-and-mortar store. Virtually all companies in the meal-kit delivery service rely 100% on their online platforms for their operations. • There is a risk of forwarding integration from large corporations (i.e., Amazon) in the food industry, including large food chains. However, the need for specific skills and resources required for the meal-kit delivery service represent a challenge that many of these companies are not willing to undertake. • Businesses in the meal-kit segment have a high reliance on delivery service companies, like FedEx or UPS for the delivery of their products. Suppliers of delivery services are usually large and diversified which give them the capacity to exert substantial power in negotiations. The scale of these providers allows them to offer expedited deliveries which is a characteristic greatly appreciated by the end consumer and that can hardly be provided directly by a food delivery company on its own.

Force Four – Power of Customers (Moderate) • Buyers are on average small but significant in number; consumers are highly fragmented. Buyers are assumed to be individual people making orders online. • Reliable internet access is contributing to this trend (internet penetration lies around 88% in the US.), (MarketLine, 2016). This aspect is appealing to the meal kit delivery service as companies need to achieve a sufficiently large customer base to remain competitive.

• Technology has given consumers the ability and tools to find any product/service for the lowest price. The growth of social media, review sites, and price comparison sites has led to the emergence of an increasingly informed consumer. • Switching costs are virtually non-existent, the vast offering of products in the market makes it easier for consumers to find alternatives across various companies

Force Five - Threat of Substitute Products (Moderate) • Even though the meal-kit delivery service sector is growing and the market keeps expanding, many consumers still prefer the traditional experience of buying groceries and preparing meals directly or simply going out for food. Over 68% of consumers have no interest in ordering online (Statista, 2016). • There are many companies offering products with similar characteristics, which paired with the increasing availability of information and low switching costs, makes it easy for consumers to buy from multiple companies. This is an accepted reality among the industry and has shifted efforts of many businesses to offer additional services (i.e., increased customization) that could capture the attention of their potential clients and ultimately increase the frequency of their purchases.

5.2 Consumers – Target Market Our products and services will be tailored to children and adolescents, ages 4-18, and their families and caregivers, which ultimately provide care/access to food. Initially, we will focus our efforts and services towards meeting the nutritional guidelines for the general pediatric population as well as for children with higher calorie/protein needs., and thus segmenting our target market as follows:

General Pediatric Nutrition: • Preschool- and school-aged children High-calorie/High-protein Nutrition: • Burn/illness/trauma recovery • Cancer • Cystic fibrosis • FTT/catch-up growth • Child/Teen athletes • Eating disorder protocols

5.2.1 Target Market Rationale As already underlined in the Executive Summary of this paper, the prevalence of an unhealthy weight and poor diet quality affects greater than one-fifth of children and adolescents in the United States. This negatively impacts their overall development and associated health outcomes, including increased risk for multiple concurrent micronutrient deficiencies (Bird et al., 2017). Yet, this number does not account for those affected by high risk nutritional disorders, that often lead to higher metabolic demands, increased fecal losses resulting from malabsorption,

13 and increased work of breathing among other imbalances. Ultimately, a larger proportion of children are considered to be at risk of malnutrition and/or FTT, as a result of the higher energy- protein demands10. Moreover, it is important to note that criteria for diagnosing malnutrition is relatively new, current indicators are a work in progress and not widely implemented (Bouma, 2017). Thus, malnutrition continues to be under-diagnosed and information about prevalence rates is still scarce. Prevalence rates for underweight children are often used as a proxy of malnutrition, however, these are not interchangeable, meaning that more than likely the prevalence rate of malnutrition is underestimated, and rates may be higher than that of underweight children. In this scenario and faced with the pressure to meet specific requirements, families/caregivers are often challenged by limited high-calorie high-protein food options, taste fatigue from long-term use of nutrition supplements, satiety, and food palatability issues. In fact, a number of studies have demonstrated that only 11% to 23% of children with Cystic Fibrosis (CF) aged 7 months to 12 years meet the recommended 120% to 150% of the RDA for energy (Carey, 2009). Meaning that the vast majority are just unable to reach that higher, but critical, caloric goal. While the latter statistics, only represent a specific segment, taking the Cystic Fibrosis population as an example, serves to underscore the area of opportunity for nutritional interventions aimed to address these higher calorie-protein demands in other populations with similar needs.

5.3 Competition 5.3.1 Strengths After analyzing several of our competitors in the industry, going over their websites, communication strategies, and reviewing customer’s feedback; convenience and reduced food waste turned out to be the main strengths of these services (especially those providing prepared, ready-to-heat meals).

Also, reliable logistic operations using pre-established distribution channels and trusted carriers (i.e., FedEx, UPS), ensures speed of delivery and for the most part, nationwide coverage. Of note, the use of these delivery carriers or third-party services impacts operating costs. Based on the research, these additional costs are often transferred to the customers as “delivery fees,” and in a minor proportion accounted for in the final price.

While both a strength and weakness, variety of recipes and meals offered, was valued highly by most customers and was found to be a key determinant of long-term customer retention and satisfaction.

5.3.2 Weaknesses Among the weaknesses, one that stood out the most was the no so environmental-friendly packaging. Despite, companies are currently working to reduce the amount of packaging they use for their products and are working with innovative packaging solutions (i.e., eco-friendly,

10 Per ASPEN guidelines and the Nutrition Care Manual recommendations, requirements go up to 1.2 -2 the DRI for age, and 1.5-2 the DRI for protein. 14

ZerO2™, vacuum skin packaging) to keep their products fresh longer, customer’s reviews still indicate this is one of the major areas of opportunity. Per one customer review: “There’s a ton of packaging involved to keep the food cold, and I now have a few dozen ice packs in my apartment. I have no use for them, and I don’t want to throw them away, so they’re just sitting there. These services all do have recycling programs where you can ship back your ice packs, but that is more of a pain than just going to the grocery store and buying these ingredients in the first place.” (Lazzaro, 2016).

Another notable weakness affecting primarily those that only deliver ingredients as opposed to prepared meals (i.e., HelloFresh, Blue Apron), is that they failed to assume all customers are equipped with basic cooking knowledge, skills and desire to prepare meals from scratch. Several customer’s reviews, indicate that while these services partially save time (i.e., no grocery shopping needed), there is still a lot of time devoted to chopping ingredients, prepare the food, and cleaning. Moreover, even for those invested and with a basic level of cooking skills, in some instances (despite following a recipe) it takes longer to prepare a meal compared to the average time marketed by these companies.

Also, for the most part (refer to Appendix B) the meal plan pricing is comparable to eating out, and thus, not affordable for most families. This affordability issue becomes even more critical for those companies offering only delivery of ingredients, as the latter turns out to be more expensive than buying ingredients in a supermarket (Seeking Alpha, 2017). Plus, without a substantial added-value to justify the price (ingredients are not transformed/processed, no further expenses incurred by companies), their long-term sustainability of these businesses remains questionable.

5.4 Competitive Advantage While the majority of businesses alike deliver prepared ready-to-heat meals, less than 4%11 offer kid-friendly meals, nor they direct their product/services (including marketing and communication strategies) towards children. As evidenced by Appendix B, the adult market is a highly competitive one with more than 50% of companies offering delivery nationwide and variety of meal plans, thus tailoring our products/services to children remains an attractive niche.

Moreover, our philosophy differs from the majority of businesses, as most of the meal plans offered by these companies are guided by fad diets or trends (i.e., paleo, low carb, whole30), as well as restrictive low-calorie menu options to promote weight loss. Our intention is to shift this mentality, and rather encourage a variety of real foods and simple ingredients, without excluding entire food groups or labeling foods as good or bad. In alignment with the DGA, our focus is on healthier eating patterns within appropriate calorie levels that emphasize nutrient density, variety and amount. We aim to give children the opportunity to thrive, by letting them choose from a variety of wholesome meals, while at the same time simplifying cooking and meal preparation for families and caregivers.

11 Estimates obtained from the analysis of 25 companies, with detailed results included in Appendix B - Competitor Analysis Table. 15

Also, as highlighted elsewhere in this document, an additional advantage is that our recipes, meal plans, and recommendations are guided based on trusted nutritional advice from a certified registered dietitian.

6. Market Strategy 6.1 Growth Strategy Based on both the Industry and Competitor Analyses, launching a “food delivery” business requires a strong infrastructure and significant amount of resources to reach the necessary scale and remain competitive, thus surpassing our capacity without a large investment up front. Given financial limitations and associated risks, our initial growth strategy will focus on developing robust online platforms (Website and App) as a means to create a recipe database and a source of initial revenue, that will serve as the capital to expand our operations towards food delivery. With this in mind, the Growth Strategy is divided into two phases, as follows:

Phase I – Online Platforms This phase will rely heavily on online services, creative marketing, and e-commerce, giving us the opportunity to reach our target audiences, while building loyalty with a core set of customers and generating revenue. Initially, the Website and App12 will serve as digital recipe libraries, outlets for trusted nutrition advice and as marketing tools to reach our target population. On the one hand, the App is intended as a free personalized meal planning app, that will simplify meal prepping and grocery shopping, by providing a variety of personalized recipes along with an organized grocery list. Access to the App along with its basic features will be free. However, the App’s “PRO-version” or premium version will be our main source of revenue. Through this version, we will be offering additional customization options, exclusive recipes, smart suggestions on grocery shopping items, and other added benefits for a monthly or yearly membership (refer to Financial Plan section for more detail). On the other hand, the Website will provide the opportunity to network, reach broader audiences, create relationships and advertise with businesses alike (refer to Communication Strategy section).

Phase II – Food Delivery After reaching our short-term goal and objectives for Phase I, our Growth Strategy is to expand our services by incorporating targeted/small-scale food delivery. Thus, moving forward the intention of Phase II is to use our revenue to launch a “food delivery pilot” in North Carolina. Through this pilot, we will be offering affordable and convenient, minimally-processed, nutrient- dense, ready-to-heat & serve meals in a small scale to selected locations for pick-up or to targeted customers (i.e., hospitals, outpatient care settings, schools, catering services). Provided success and with the acquire “know-how,” the aim is to expand operations geographically in a

12 Our App will be compatible with iOS and Android, available worldwide in Spanish and English. 16 staggered fashion (i.e., North Carolina and surrounding states, East Coast, etc.) and in accordance to demand, ultimately offering nationwide coverage.

6.2 Communication Strategy Section 1 - Strategy Overview This communication strategy is aimed to delineate how to effectively reach, communicate and engage with our target market.

Communication Objectives

1. Create brand recognition and product awareness, with special emphasis in North Carolina to attract the “food delivery pilot” target market, and to subsequently expand operations. 2. Generate awareness about the critical role of nutrition early in life to draw attention and create demand for our products and services. a. Emphasize how our recipes offer nutrient-dense meals following nutritional guidelines to meet the needs of healthy growing children as well as children with specific dietary needs. b. Spread the importance of building a healthy relationship with food early in life to raise healthier generations. c. Underscore how food choices and feeding practices are fundamental to a child’s future health; what a child eats early on can lay the foundation of food preference, and healthy eating habits. 3. Emphasize that the use of our products and services, builds on the premise, that eating healthy does not have to be complicated, and thus, Sprouts supports caregivers in the effort of nourishing their children.

Target Audiences

1. Customers – “Opinion Formers”: as they ultimately provide/shop/cook food (i.e., parents and caregivers). 2. Professional Advisors: as they provide care and nutritional recommendations to children and adolescents, and ultimately guide parent’s decisions (i.e., pediatric Registered Dietitians, pediatricians). 3. Agents/Retailers: as they ultimately provide/coordinate nutritional health services, referrals and food service (i.e., Hospitals, outpatient care settings, schools - “a la carte items”). 4. Advertising Partners: as additional sources to reach target market, such as; online health hubs and influencers (i.e., Healthline, WebMD, blog/vloggers), selected written media (i.e., Parents Magazine).

Desired Action (Target Audiences)

1. Become a member/frequent user 2. Subscribe to get email updates

3. Provide feedback to improve experience 4. Become an advocate of our products/mission (i.e., share stories or testimonies, engage on social media) 5. Purchase products and services 6. Advertise our products and services, word-of-mouth marketing 7. Contribute with online content

Section 2 – Communications Platforms 1. Website Articles/Blog ● New featured article once a week, including: o Editor’s weekly post, guest-posting (featured pediatric RDs) o Specific questions/research topics from customers o Storytelling – sharing stories of success o Q&A ● Advertising with other businesses alike & networking o RD’s personal/business blogs, online health hubs and influencers. 2. Email Marketing ● E-newsletter once every 1-2 weeks ● E-books/e-handouts ● Customer segmentation messaging (new leads vs loyal customers) o Customer Loyalty Rewards (i.e, coupons & discounts, same day delivery) o Calls to action (i.e, free downloads, rewards, request customer feedback) 3. App ● Featured recipe of the day updated every day ● Website blog’s RSS feed built in the App, for immediate access to the latest content. ● Ordering information & shipping status o message upon product delivery ● Communication Center o Customer Feedback 4. Facebook ● Multiple updates each week (ideally several per day) ● Periodic posts promoting alternative resources or important messages o Advertising businesses alike, additional resources for target audience. o Health agencies updates/guidelines (i.e, USDA, FDA). 5. Twitter ● Multiple tweets each day 6. Pinterest ● Multiple pins each week 7. Instagram ● One post daily o featuring dishes, stories of success, kids eating healthy

7. Products & Services

Products • Online platforms o Website o App compatible with iOS and Android (available worldwide in Spanish and English) • Ready-to-heat & serve meals that meet recommended nutritional guidelines for the pediatric population.

Services – Phase I: • Online content including evidence-based nutritional advice/information. • Library of recipes that can be filtered based on an initial screening/user’s profile (i.e., personal data, dietary needs, preferences/dislikes). o Robust library fed by recipes from our site, our partners, and from the web. o Family friendly recipes tailored to meet the needs of the general pediatric population as well as of children with specific dietary needs. o Nutritional breakdown per serving. o Embedded calculator for scaling recipes up/down to make the right amount. o App PRO version: step-by-step recipe videos to ensure 100% results • Personalized meal plans based on user’s selection of recipes and suggestions from our smart feed (based on initial screening and user’s settings) o Customization of meal plans: the user can add snacks, remove or choose as many meals per day as they would like to plan for. o The App conveniently plans out future weeks based on past choices • Automatically generated grocery list based on a selected recipe or meal plan for an entire day/week. o Items grouped either by meals or category to help save time at the grocery store. . The App allows the user to edit the list to check off items as they buy or items already available at home. o Connected to other social media platforms so the user can share recipes/grocery lists with friends and family via email, Facebook, Twitter, etc. o App PRO version: smart suggestions on grocery shopping items, allergy warning embedded in the grocery shopping list. • Food GPS o Guide for eating out based on location and nutritional needs. o Nutritional breakdown for restaurant dishes. o App PRO version: Recommendations for what to eat at selected restaurants based on user’s profile • Personalization Options and Additional Features (included in the App PRO version) o Recipes that can be customized by adding notes

o Users can create and edit their own recipes, or source recipes from the web. The App will analyze the recipe against the DGA Key Recommendations. o “Cooking Mode”: the app displays recipe instructions without letting user’s phone lock. o Build-in timer: to set a clock during “cooking mode”. Services - Phase II: • Meal preparation, cooking, and packaging following quality and food safety standards o Meals that meet nutritional guidelines for the general pediatric population as well as for children with specific dietary needs. o High-quality packaging materials that ensure safety and freshness of our products. • Food delivery to selected locations and targeted customers o Affordable and convenient, minimally-processed, nutrient-dense, ready-to-heat & serve meals

8. Financial Plan 8.1 Financial Overview The first two years will be devoted to building the library of recipes and relevant content for online platforms to position our company and reach our target market. We do not expect to have revenues during this period. The initial capital needed will come mainly from personal savings. In parallel, we intend to participate in rounds to obtain capital from angel investors and venture capital funds, as needed.

8.1.1 Startup costs In the beginning the operation of the company will be run from my home to minimize the costs associated with an independent space. Most of the startup costs are associated with legally incorporating the company as a LLC which approximately will represent an investment between $350 to $450. The registration examination for dietitians’ fee (or RD exam), approximately $200, will also be included as part of the startup costs. The most relevant investments at this stage will be associated with the acquisition of the nutrition analysis software, marketing expenses, and development of the online platform that will support the mobile app. We estimate that during the initial year of operations we will invest around $699 in the required software, $600 in marketing expenses mostly related to purchases of photography props, and $2,000 in development of online platforms. The following table provides the estimated investments in the platform and app development over a four-year period:

Year 1 Year 2 Year 3 Year 4 $2,000 $4,000 $4,000 $2,000

8.1.2 Operation Expenses Other relevant expenses for the operation of Sprouts include:

• Platforms Operation: This expense is related to the maintenance and general management of the platform after launching. In year 1 we estimate this cost to be zero as the platform will be still in development. Starting in Year 2, we expect this cost to be on average $2,000 for the first four years. Of note, this estimate is subject to the features/services that will be developed for both the app and the website. • Academy of Nutrition and Dietetics subscription: we estimate this cost to be $234 per year on average. • Nutrition Analysis Software yearly fee: As mentioned above, we will invest $699 in the acquisition of a nutrition analysis software needed for the development of the library of recipes. We will also have to spend around $200 in the yearly maintenance fee associated with the software. • Google & Apple Store Fees: we will have to pay a one-time registration fee of $25 to Google and a $99 yearly fee to Apple to offer our mobile app on their app stores. • Selling, General, and Administrative expenses: this category of expenses comprise utilities, internet and phone, office supplies, recipe development, and other minor expenses. The most relevant cost in this category is recipe development which includes purchasing ingredients, kitchen supplies, and other items needed for the preparation and validation of each recipe, which ultimately will be included in our library. We estimate a yearly expense of at least $2,400 directly related to recipe development plus other resources allocated to this end as marketing expenses. Once we start generating sales, we estimate to allocate around 20% of our total revenues to marketing and promotion.

8.1.3 Revenue As previously stated, we do not expect to have revenues during the first year of operations. Starting in Year 2, we estimate 5,000 downloads of the mobile app. Initially, we plan to offer a one-month trial of the premium service to all customers. After the trial period, we are assuming that on average 15% of the total downloads will transition from free to premium service, and we are assuming this percentage will be constant in subsequent years per industry trends. In Year 3, after launching and incorporating all the additional features/services into the website and the mobile app, we expect to increase the number of downloads four-fold. After that, we assume an average growth rate of 25% in our customer base from year to year (based on current industry trends, as detailed on the Marketing Analysis section). In Year 1 and 2, we estimate to invest $15,000 from personal savings. We will participate in investment rounds starting in year three from which we expect to raise over $100,000 in capital to scale the business. These rounds of investment are outside of the scope of this project and therefore are not included. Free users are expected to generate zero revenue in Year 2. However, once the online platforms are positioned, we expect to obtain revenues from this group through online advertisement. We assumed that every “free” user will generate the equivalent of 15% of the revenues generated by premium users.

Initially, revenues from premium users will come mainly from up-front payments as they purchase the premium version of the app. For the projections of the income statement, we assumed an average price of $3.99 for the premium version of the mobile app. We based this estimate on current market prices. It is important to note that the price of the app might vary as we approach the launch date based on our analysis of the market at that time.

8.2 Projected Income Statement See Appendix C – Projected Income Statement

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Appendix A - Nutritional Guidelines

Table 1. 2015 Dietary Guidelines for Macronutrients – Acceptable Macronutrient Distribution Ranges (AMDR)

Age CHO Protein Fat 1-3 years 45-65% 5-20% 30-40% 4-18 years 45-65% 10-30% 25-35% > 18 years 45-65% 10-35% 20-35% Added sugars and saturated fat < 10% of kcals.

Table 2. Early School Age to Adolescents (Myplate.gov)

Food Groups Age 4-8 years Age 9-13 years Age 14-18 years (1200-1600 kcals) (1600-1800 kcals) (1800-2200 kcals) 2 ½ - 3 Cups 3 Cups 3 Cups Dairy1 1 Cup equivalent = 1 C milk or yogurt, 1 ½ oz of natural cheese, 2 oz of processed cheese, 1/3 C shredded cheese 3 – 5 oz 5 oz 5 – 6 oz Protein 1 oz equivalent = (Meat & Others) 1 oz cooked beef, poultry or fish, ¼ C cooked legumes, 1 egg, 1 Tbsp, ½ oz nuts Grains 4 – 5 oz 5 – 6 oz 6 – 7 oz (breads, cereals & 1 oz equivalent = 2 starches) 1 slice whole grain bread, 1 6” tortilla, ½ C cooked cereal/rice/pasta, 1 C dry cereal 1 – 1 ½ Cups 1 ½ Cups 1 ½ - 2 Cups Fruits3 1 Cup equivalent = 1 C of fruit or 100% fruit juice4, ½ C of dried fruit, 1 small or ½ of a large whole fruit 1 ½ - 2 Cups 2 – 2 ½ Cups 2 ½ - 3 Cups Vegetables*** 1 Cup equivalent = 1 C of raw or cooked vegetables or vegetable juice, 2 C or raw leafy greens 4 teaspoons 4 – 5 teaspoons 5 – 6 teaspoons Fats and Oils 1 teaspoon equivalent = 1 t oil, margarine, butter or mayonnaise, 1 T salad dressing, sour cream or light mayo 1Whole milk is recommended for children younger than 2. Older children can have lower-fat, calcium-rich choices such as fat-free or low-fat milk, yogurt and cheese. 2Half of all grains should be whole grains. 3Includes one source of Vit C daily and one source of Vit A every other day 4Recommended to limit fruit juice to 4-6 fl oz for children 1-6 y.o, and to 8-12 fl oz for children 7-18 y.o

Table 3. Estimated calorie needs per day, by Age, Sex, and Physical Activity Level.

MALES FEMALES Moderately Moderately AGE Sedentary1 Active3 AGE Sedentary1 Active3 active2 active2 4 1,200 1,400 1,600 4 1,200 1,400 1,400 5 1,200 1,400 1,600 5 1,200 1,400 1,600 6 1,400 1,600 1,800 6 1,200 1,400 1,600 7 1,400 1,600 1,800 7 1,200 1,600 1,800 8 1,400 1,600 2,000 8 1,400 1,600 1,800 9 1,600 1,800 2,000 9 1,400 1,600 1,800 10 1,600 1,800 2,200 10 1,400 1,800 2,000 11 1,800 2,000 2,200 11 1,600 1,800 2,000

MALES FEMALES Moderately Moderately AGE Sedentary1 Active3 AGE Sedentary1 Active3 active2 active2 12 1,800 2,200 2,400 12 1,600 2,000 2,200 13 2,000 2,200 2,600 13 1,600 2,000 2,200 14 2,000 2,400 2,800 14 1,800 2,000 2,400 15 2,200 2,600 3,000 15 1,800 2,000 2,400 16 2,400 2,800 3,200 16 1,800 2,000 2,400 17 2,400 2,800 3,200 17 1,800 2,000 2,400 18 2,400 2,800 3,200 18 1,800 2,000 2,400 1Sedentary means a lifestyle that includes only the physical activity of independent living. 2Moderately active means a lifestyle that includes physical activity equivalent to walking about 1.5 to 3 miles per day at 2 to 4 mph, in addition to activities of independent living. 3Active means a lifestyle that includes physical activity equivalent to walking more than 3 miles per day at 3 to 4 mph, in addition to the activities of independent living.

Sprouts’ Meal Patterns

General Pediatric Nutrition High Calorie-High Protein Nutrition 4-8 years 9+ years 4-8 years 9+ years (1200-1600) (1600-2200) 1600+ (1600-2200) 2200+ (2200-3200) Kcals 400-530 530-730 530-730 730-1060 CHO 55 – 73 g (55%) 73 – 100g (55%) 66 – 91g (50%) 91 – 132 g (50%) FAT 13 – 18 g (30%) 18 – 24 g (30%) 18 – 24 g (30%) 24 – 35 g (30%) PRO 15 – 20 g (15%) 20 – 27 g (15%) 26 – 36 g (20%) 36 – 53 g (20%) Sodium < 633-733 mg < 733-766 mg < 733-766 mg < 766 mg Sat Fat (%) < 4.3 – 6 g < 6 – 8 g < 6 – 8 g < 8 – 12 g Or less than 10% Or less than 10% Or less than 10% Or less than 10% Added sugars < 10 – 13.3 g < 13.3 – 18.3 g < 13.3 – 18.3 g < 18.3 – 26.6 g Or less than 10% Or less than 10% Or less than 10% Or less than 10%

Our meal patterns are within appropriate calorie levels (based on age, sex and activity levels – Table 3) and macronutrient distribution (based on AMDR – Table 1), and emphasize nutrient density, variety and amount. Instead of following intricated details (i.e., counting cups/oz of different food groups), we integrate the DGA’s Key Recommendations13 and focus on:

• Emphasizing variety of fruits & vegetables 14 o Vegetables from all the subgroups – dark green, red and orange, legumes (beans and peas), starchy and other. o Emphasize whole fruits.

13 https://health.gov/dietaryguidelines/2015/guidelines/chapter-1/key-recommendations/ 14 Dark-green vegetables: All fresh, frozen, and canned dark-green leafy vegetables and broccoli, cooked or raw: for example, broccoli; spinach; romaine; kale; collard, turnip, and mustard greens. Red and orange vegetables: All fresh, frozen, and canned red and orange vegetables or juice, cooked or raw: for example, tomatoes, tomato juice, red peppers, carrots, sweet potatoes, winter squash, and pumpkin. Legumes (beans and peas): All cooked from dry or canned beans and peas: for example, kidney beans, white beans, black beans, lentils, chickpeas, pinto beans, split peas, and edamame (green soybeans). Does not include green beans or green peas. Starchy vegetables: All fresh, frozen, and canned starchy vegetables: for example, white potatoes, corn, green peas, green lima beans, plantains, and cassava. Other vegetables: All other fresh, frozen, and canned vegetables, cooked or raw: for example, iceberg lettuce, green beans, onions, cucumbers, cabbage, celery, zucchini, mushrooms, and green peppers. 27

• Making at least half of grains as whole grains • Offering fat-free or low-fat dairy (including milk, yogurt, cheese and/or calcium fortified plant-based products)15 • Providing variety of protein foods (including seafood, lean meats and poultry, eggs, legumes, nuts, seed and soy products. • Using oils over solid fats • Limiting calories from added sugars, saturated fats, and reduce sodium intake • Offering adequate portion sizes for age

15 Cream, sour cream, and cream cheese are not included due to their low calcium content. 28

Appendix B - Competitor Analysis Table

BUSINESS LOGO / LINK "HEALTHY" FEATURES DELIVERY DETAILS COST SUBSCRIPTION DEALS ITEM

THEY DELIVER AND YOU COOK

Farm-fresh, seasonal produce. Nationwide Meat with no added hormones. This is a subscription service, For two: $59.99 ($9.99 per serving) for Sustainably-sourced seafood. meaning a box is set to be delivered Ingredients are carefully packaged in a three meals, six total servings. Shipping 1.- BLUE APRON Plus, recipe cards, how-to videos and every week. However, can skip a refrigerated box so food stays fresh, no included. food traceability at consumer's week or cancel at any time. need to be at home to receive box. fingertips. https://www.blueapron.com

Loyalty Program where Nationwide, except Hawaii and Alaska. members earn points by For two: meals range between $19 and Shipped from California. Uses couriers like engaging in media (creating $54. No subscription or minimum required. Weekly subscription service (for Offers a wide range of recipes to meet OnTrac and Fedex. an account, posting reviews, Shipping is free on orders over $40. Any customizing meals), however 2.- CHEF'D healthy, gluten-free, or Paleo needs. answering questions, order less than $40 will have a shipping subscription not require for ordering. Costumers select delivery date, anywhere referring a friend, subscribing between 8 A.M. and 8 P.M. cost of $10 to a newsletter) Every 1,000 points is worth $10. https://www.chefd.com/

All meals are high in protein, low in carbs, and contain zero gluten, refined Selected States (1). There are some ZIP sugars, or hormones. codes in the selected states that their Ingridient lists and nutritional information Most popular meal plan includes 6 meals delivery partners aren’t able to reach within Subscription service. Discounts for new customers 3.- FRESHLY available on website. per week for $59.99 (or $9.99/meal). our 48-hour delivery period. To cut down on food waste, Freshly also donates extra meals to local shelters and farms. https://www.freshly.com

Vegetarian $ 10.49 per meal. Omnivore Nationwide, except Alaska, Hawaii, and $11.99 por meal. Vegan $11.99 per meal. parts of Louisiana. Subscription service, however, Variety of diet plans: Paleo, vegan, Carnivore $13.49 per meal. Gluten-free customers can skip a delivery, or gluten-free, omnivore, carnivore, $13.49 per meal. Paleo $14.99 per meal. 4.- GREEN CHEF Boxes designed with "in-box temperature cancel subscription based on specific vegetarian zone" feature, to keep each separate cut-off times. Above prices do not include ingredient in its own spot. $9 shipping https://greenchef.com and handling per box.

Nationwide, except Hawaii & Alaska. For two: meal plans start at $ 60 per week Subscription service, however Delivers easy-to-follow recipes with pre- Students get 15% off for Offers 2 plans: classic and veggie. (for 3 meals), shipping included ($9.99 per customers can pause, modify or 5.- HELLOFRESH measured ingredients. every HelloFresh box. serving) cancel a subscription anytime. Boxes are layered with insulating liners and ice packs to keep ingredients cool.

https://www.hellofresh.com

All active subscribers have Deliver to 98% of the United States. access to a referral program; Each meal is $9.95 per serving (unless Subscription service, however, those who sign up using the Ship fresh produce using a biodegradable, otherwise noted). Delivery is free for customers can skip a delivery, or referral invitation receive a Ten new recipes each week. 6.- HOME CHEF insulated box with water soluble, cool gel orders over $45. Shipping can range up to cancel subscription based on specific $30 discount off of their first packs designed to keep food refrigerated, $10 for orders less than $45. cut-off times. order and the active not frozen. subscriber earns $30 in Home Chef credit. https://www.homechef.com

The standard Peachdish delivery includes 4 All active subscribers have Nationwide, except Alaska, Hawaii, and servings of meals for $50 - or $12.50 per No subscription required to order, access to a referral program; Puerto Rico. serving - but orders are customizable. PeachDish provides the flexibility to those who sign up using the Requires a minimum order total of $45 become a subscriber or to checkout referral invitation receive 4 Partners with an in-house chef and Box delivery typically between 11:00 AM for any individual shipment. as a guest customer. Guest free meal off of their first 7.- PEACHDISH dietician. and 5:00 PM, but carriers can deliver up to Shipment is free for most states, except customers pay a $12 guest fee per order, and the active 8:00 PM on the scheduled day. Available for some states (AZ, CA, CO, IA, ID, KS, shipment plus any additional state subscriber earns $25, delivery days are based on delivery zip ME, MN, MT, OR, SD, UT, WA, WY) that shipping fees. whenever a referral received code. are charged with a their second delivery. https://www.peachdish.com $15 fee.

100% antibiotic-free meats, beef with no added hormones, and seasonal, hand- Delivers to over 95% of the U.S. packed produce from trusted purveyors. For two: $11.95 per serving. Subscription service, however For new customer only, 50% Box is hand-packed and shipped via local $47.80/week + $7.95 shipping. customers can pause, modify or 8.- PLATED off of their first week. Promotes organic produce, locally couriers or FedEx, arriving between 8am cancel a subscription anytime. sourced ingredients, and sustainably and 8pm. sourced fish (whenever possible). https://www.plated.com Delivers to 34 states throughout the Northeast, mid-Atlantic, and West Coast. Subscription service, however PURPLE Meals are shipped on Mondays in boxes Plans start at $72 per week, for one or Vegan food. customers can pause, modify or 9.- insulated with ice packs, so no need to be two, 2 meals per week . CARROT cancel a subscription anytime. home to accept delivery. Non-toxic, recyclable packaging made from post- https://www.purplecarrot.com consumer waste.

PREPARED MEALS

Starting at $6.50 per meal (i.e. chicken Healthy meals, simple ingredients. Nationwide. Service to Canada coming with rice). Delivery Fees not included Ingredient list and nutritional information soon. Offers pick-up locations only in the (calculated separately based on distance, Subscription service, however on website. Louisville, KY area. weight & size of the package). customers can pause a subscription 1.- BITE Availability to build custom orders from Delivers via Fedex overnight one day prior They recommend to order in quantities of anytime. each of the food groups, or to select pre-to selected delivery, ships 4 days a week 12, 20 or 30 to maximize value and built meals. (Mon-Thur). because it matches the box size. https://www.bitemeals.com

BUSINESS LOGO / LINK "HEALTHY" FEATURES DELIVERY DETAILS COST SUBSCRIPTION DEALS

ITEM

Full Program for 7 days (breakfast, lunch, Nationwide. dinner and midnight) $179.90. Meals targeted for weight loss. Program for 5 days (breakfast, lunch and Includes free support from RDs, weekly Delivers via FedEx. It can take up to 6 dinner) $149.95. program emails, customizable menu business days for the order to arrive based Lunches & Dinners x 7 days $149.95. Customers choose a 5 or 7 day 2.- BISTROMD from over 150 options. Snacks available on ground delivery time from their Lunches & Dinners x 5 days $119.95. weekly program no commitment. as well. Meal Plans: Standard, Gluten warehouse. In Alaska, delivery is only Offers a 25% off plus free shipping on first Free, Diabetic, Menopause. available to Anchorage, Fairbanks and week. Eagle River. Free shipping. Additional shipping charges http://www.bistromd.com apply for AK and HI.

Nationwide, except Hawaii & Alaska. Meals targeted for weight loss, weight Is a meal plan service. As a meal Local Pickup service available in the gain, sports-specific, and specific meal plan service, all orders are For new customers only, Washington DC Metro area, Baltimore programs (i.e, Balance, Carb30). considered standing orders unless 10% off their first week area, New Jersey, San Francisco Bay area Menu: Balance. 5 Days per Week (10 Balance menu is available in a 1200 and specifically requested otherwise at order. and the greater Los Angeles area. Meals). Lunch, Dinner + Sides. 1600 calorie per day options. These the time the order is placed. A For partners, $40 on every 3.- DIETTOGO $117.59/Week; $11.76/Meal. SHIPPING meals are low in fat, low in sodium with standing order means your order will meal plan sale with multiple Delivery via Fedex. Meals are prepared COSTS DEPENDS ON THE AREA no added artificial ingredients or be delivered each week until you opportunities for larger fresh and then flash frozen, packed on dry preservatives. The Carb30 contains request the service to be altered, commissions & bonuses. ice and shipped immediately to ensure less than 30 net carbs per day. paused or stopped. optimal freshness and taste upon arrival. https://diettogo.com Nationwide, except Hawaii & Alaska.

Home Cooked Meals. Delivers meals in insulated boxes with gel Subscription service, however Organic, non-GMO. packs that keep the box at refrigerated Four meals per week $60. Delivery charge customers can pause, modify or 4.- FACTOR 75 Specific meal plans: Keto, Paleo and temperatures (tested in all seasons across based on location. cancel a subscription anytime. Dairy-Free Meals. all climates). All packaging material can be recycled. Zero Oxygen™ packaging https://www.factor75.com guarantees freshness up to 9 days.

5.- FITZEE FOODS This business has definitely closed

https://www.fitzeefoods.com/

Meal plans: Healthy, Diet, Gluten-Free, ‘A LA CARTE’ orders over Organic, Vegan, Senior, Fresh, Low Nationwide, except Hawaii & Alaska. $100 (about 10 meals) Carb and Vegetarian. Standard Plant-based meal Plan: 1 meal, 5 receive a 5% discount. Subscription service, however Food is clean and organic. Everything is Meals are shipped fresh (never frozen) days a week and 0 extras $73.75. Orders over $150 (about 15 customers can pause, modify or 6.- FRESH N'LEAN naturally low in fat and sodium, with no every week in specially designed coolers $14.75 per serving. A La Carte $100 meals) receive a 10% cancel a subscription by phone only. added sugar. with ice packs. Delivers via UPS or FEDEX minimum order discount. Orders over $200 Cuisine styles range from Mediternean, for Friday delivery. (about 20 meals) receive a Continental, Asian, and South American. 15% discount. https://www.freshnlean.com

7.- FRESHOLOGY This business has definitely closed

www.freshology.com

Meal plans: Original, Protein+, paleo Selected Locations (2). and vegetarian. Made from fresh high quality ingredients. Meals shipped via Air service. Orders Subscription service, however No GMO’s, no additives, no hormones placed before 1:30 PST will be delivered Lower Plan - ION Original. 3 meals, 5 days customers can pause, modify or 8.- IONUTRITION or antibiotics. two days after, end of day. Orders placed a week and 0 extras $179.85 per week. cancel a subscription by phone only. Proteins include all natural cage free on Thursday, Friday, Saturday and Sunday poultry, wild caught fish, and grass-fed (anytime) will be delievered by Wednesday beef and bison. end of day. http://www.ionutrition.com

Offers weight loss meals, specialized Ample delivery service to the greater Los Plans start at $30.95/day. For personal Referral program, NutriFit® diet food delivery, weight gain menus You may choose weekly plans at our Angeles area, Orange County, Santa catering programs, delivery is free in L.A. deposits two days of meal and sports-specific meal programs. daily rate or take advantage of Clarita and some of Ventura County in with a $50.00 average minimum order credits into ones account for Supports different dietary platforms and discounted 14-day or 28-day rate, Southern California. Local pick-up available value. Shipping costs are passed on every new referral, or three 9.- NUTRIFIT approaches in addition to the which requires advance payment. As at their west L.A. facility. Now delievery directly from UPS to the client. There is an days for recommending two Mediterranean and Dash diets, renal with any changes to your plan, you nationwide also available via UPS and additional $25 packaging fee per week people who receive food at diets, diabetic diets, gluten free, vegan, may suspend your service FEDEX. shipments to cover cost of materials the same address. vegetarian, and Paleo-friendly meals. https://www.nutrifitonline.com 5 meals subscription starting at $72.00. Nationwide. Subscriptions service, no added fee Pre-Made Paleo, Grass-Fed, Grass In the Eastern Region, all orders equal or for subscription, and it may be Finished, Antibiotic-free, Free-Range greater than $295 receive free shipping. All Delivers via FEDEX, 2 consecutive cancelled at anytime within 7 days of PRE-MADE and responsibly sourced, Whole 30 orders $50-$99.99 - shipping $20, All business days in transit with Standard the next scheduled renewal date via 11.- approved, Hand picked, locally sourced, orders $100-$294.99 - shipping $15, All PALEO Shipping. Meals may be frozen for up to 8 telephone or email communication. Organic vegetables, Gluten-Free, Grain- orders equal or greater than $50 for days when required, but usually delivered in Every subscription must have at least Free, Lactose-Free meals. Georgia receive free shipping. 1-4 days. one renewal. https://premadepaleo.com

For weekly a la carte meals, there is a Delivers to Los Angeles, CA and Phoenix, $24.95 per day minimum order. Ordering AZ. a la carte offers the most flexibility as you Subscription service, once started Six meal programs for weight loss: the may order any combination of meals and Sunfare will continue to deliver meals Signature Diet, Vegetarian Diet, Gluten Meals are delivered in microwaveable snacks on any day(s) of the week you until the meal plan expires. They will N.A. 12.- SUNFARE Free Diet, Paleo Diet, Optimal Cleanse, packaging; however, based on the meal choose. You may also cancel individual automatically restart a meal plan and Family Dinners. program, hot and cold food items may or meals and snacks, and will only be billed unless an phone cancellation is may not be separated into individual for what you receive. NOTE that a la carte received. containers. plans will automatically roll over each week until we are notified of a stop date. http://www.sunfare.com

BUSINESS LOGO / LINK "HEALTHY" FEATURES DELIVERY DETAILS COST SUBSCRIPTION DEALS ITEM

A combination of plant-based protein, Nationwide. vegetables, and superfoods. Food will be delivered in two or three For new customers only, $50 Meals are free of gluten, dairy, eggs, $255/week - plan for 3 days. Price per day Subscription service, however deliveries per week. off of first order (offer valid meat, and seafood, and ingredients are $85. Delivery cost according to zip code. customers can pause, modify or 14.- SAKARA Uses third party shipping carriers for meal on any program valued over organic. Sakara is able to accommodate Or subscribe & save $26/week cancel a subscription anytime. up to three allergies for an additional fee deliveries, including FedEx and hand- $239) for those living on the East Coast and delivery partners who will update delivery https://www.sakara.com Southern California. status.

COMBINED - THEY DELIVERED AND YOU COOK AND MEALS PREPARED MEALS

Ready-to-eat dishes include a wide range of entrees, salads, sides, and Depending on the meal, ready-to-eat kids’ meals. Delivers to over 1,000 cities across the dinners range from $8-$20. Kid's meals Or cooking kits for home cooking. Each U.S. (3) range from $5-$7. Sides and desserts Subscription service, for $8.95/month A meal that is regularly kit designed to whip up a meal for two in range from $4-$8. Cooking kits range from or $85/year. Membership allows to priced at $13.95 can be 1. - MUNCHERY 15 mins. Meals are delivered chilled. Food is $20-$30 and include 2 servings. Delivery offer more affordable prices on each offered at $11.25 with Parteners with local farmers to provide immediately chilled after it’s cooked to charges range between $3 and $5 for meal. membership. seasonal, all-natural, and organic maximize its freshness. same-day deliveries. Delivery is free for produce, offers antibiotic-free meats, weekly shipping subscribers. and use wild-caught fish whenever https://munchery.com/ possible Delivers to San Francisco, South Bay and parts of the East Bay (Oakland, Alameda, Grocery store that offers meals that are Berkeley, Emeryville, Albany). ready to eat, boxed lunches, and prepared meats. Free delivery on orders above $50. For Subscription service, however All orders are to be placed before midnight Collaborates directly with over one orders below $50, the delivery fee is customers can pause, modify or N.A. 2.- LUKE'S LOCAL for deliveries going out the next day hundred local foodmakers, farmers and $3.99. (minimum order is $20). cancel a subscription anytime. (Monday-Friday delivery). ranchers for a rotating selection of produce, dairy, and artisan goods. Meals are delivered in insulated sleeves with ice packs to keep them fresh. https://lukeslocal.com

1. California (CA), Texas (TX), Illinois (IL), Washington (WA), Georgia (GA), Arizona (AZ), Colorado (CO), Tennessee (TN), Oregon (OR), Missouri (MO), Utah (UT), Oklahoma (OK), Alabama (AL), Indiana (IN), Louisiana (LA), Nevada (NV), Arkansas (AR), Kansas (KS), South Carolina (SC), New Mexico (NM), Mississippi (MS), Iowa (IA), Idaho (ID), Nebraska (NE), Kentucky (KY), Wisconsin (WI), South Dakota (SD)

2. Akron, Albuquerque, Amarillo, Anaheim, Anchorage, Arlington, Atlanta, Aurora, Austin, Bakersfield, Baltimore, Baton Rouge, Birmingham, Boise, Boston, Buffalo, Chandler, Charlotte, Chesapeake, Chicago, Chula Vista, Cincinnati, Cleveland, Colorado Springs, Columbus, GA. Columbus, OH, Corpus Christi. Dallas, Denver, Des Moines, Detroit, Durham, El Paso, Fayetteville, Fontana, Fort Wayne, Fort Worth, Fremont, Fresno, Garland, Gilbert, Glendale CA, Glendale AZ, Grand Prairie, Grand Rapids, Greensboro, Henderson, Hialeah, Houston, Huntington Beach, Huntsville, Indianapolis, Irvine, Irving, Jacksonville, Jersey City, Kansas, Laredo, Las Vegas, Lexington Fayette, Lincoln, Little Rock, Long Beach City, Los Angeles, Louisville, Jefferson, Lubbock, Madison, Memphis, Mesa, Miami, Milwaukee, Minneapolis, Mobile City, Modesto, Montgomery, Moreno Valley, Nashville Davidson, New Orleans, New York City, Newark, Norfolk, North Las Vegas, Oakland. Oklahoma City, Omaha, Orlando, Overland Park, Oxnard, Philadelphia, Phoenix, Pittsburgh, Plano, Portland, Raleigh, Reno, Richmond, Riverside, Rochester, Sacramento, Salt Lake City, San Antonio, San Bernardino, San Diego, San Francisco, San Jose, Santa Ana, Scottsdale, Seattle, Shreveport, Spokane, St. Louis, St. Paul, St. Petersburg, Stockton, Tacoma, Tallahassee, Tampa, Toledo, Tucson, Tulsa, Virginia Beach, Washington, Wichita, Winston Salem and Yonkers

Arizona 159 Cities, California 1237, Colorado 43, Idaho 51, Maryland 17, Nevada 64, New Jersey 23, New Mexico 9, New York 89, Oregon 130, Utah 159, Virginia 6, Washington 155, Washington, D.C. 1, Wyoming 51.

Appendix C - Projected Income Statement

2018 E 2019 E 2020 E 2021 E 2022 E 2023 E

Revenues Number of premium downloads 0.0 750.0 3,500.0 4,375.0 5,468.8 6,835.9 Number of free users 0.0 4,250.0 19,833.3 24,791.7 30,989.6 38,737.0 App Sales 0.0 2,992.5 13,965.0 17,456.3 21,820.3 27,275.4 Add revenue 0.0 0.0 11,870.3 14,837.8 18,547.3 23,184.1 Own investment 10,000.0 5,000.0 0.0 0.0 0.0 0.0 10,000.0 12,992.5 49,168.6 61,460.7 76,825.9 96,032.4 Expenses Company Incorporation (550.0) Platform Development (app+website) (2,000.0) (4,000.0) (4,000.0) (2,000.0) Software and other licenses (699.0) (200.0) (200.0) (200.0) (200.0) (200.0) Marketing (600.0) (598.5) (2,793.0) (3,491.3) (4,364.1) (5,455.1) Platform operation 0.0 (500.0) (2,000.0) (2,000.0) (2,000.0) (2,000.0) IOS and Google store cost 0.0 (124.0) (99.0) (99.0) (99.0) (99.0) SG&A (5,330.0) (5,330.0) (5,330.0) (5,330.0) (5,330.0) (5,330.0) (9,179.0) (10,752.5) (14,422.0) (13,120.3) (11,993.1) (13,084.1) Cash Flow 821.0 2,240.0 34,746.6 48,340.5 64,832.8 82,948.3 Taxes 188.8 515.2 7,991.7 11,118.3 14,911.6 19,078.1 Income 632.2 1,724.8 26,754.9 37,222.2 49,921.3 63,870.2

*E Expected results