American appetites for Lunchables appear to be waning. According to Circana's data, during the quarter that concluded on November 3rd, the sales of these pre-packaged, compartmentalized meals, which are marketed towards children and their busy parents, experienced a 12% decline.

This downturn is significantly impacting Kraft Heinz, the parent company of Lunchables, as their overall sales dipped by 2.2% in the last quarter, with nearly half of this decrease attributed to the struggling Lunchables brand. Kraft Heinz is now in a race to salvage its nearly $2 billion brand. Diana Frost, Kraft Heinz’s global chief growth officer, emphasized in an interview, "Lunchables is a top priority for us, and we are dedicated to ensuring its long-term growth."

The decline in Lunchables' sales is attributed to several factors. Parents have expressed concerns over the nutritional value of these meals, and the brand's attempt to integrate Lunchables into school lunch programs has backfired, tarnishing its reputation. Additionally, the rise of competition in the market for meat and cheese alternatives has eroded sales, as noted by analysts. The repercussions are not limited to decreased sales; the brand's market share has plummeted by approximately 25 percentage points since 2018, dropping to around 60% of the market this year, based on Euromonitor's data. Moreover, new competitors have emerged, such as Lunchly, a brand co-founded by YouTube personalities Logan Paul and MrBeast.

Kraft Heinz has not been a passive observer to these market changes. The company had previously strategized to introduce Lunchables directly into school cafeterias, estimating this move as a $25 billion opportunity for expansion. However, this strategy dramatically backfired. In 2023, Kraft Heinz introduced two versions of Lunchables—Turkey & Cheddar Cracker Stacker and Extra Cheesy Pizza—that were specifically designed for schools. To align with the nutritional requirements of the federal National School Lunch Program, which provides reimbursements to schools for offering affordable or free lunches, Kraft Heinz enhanced these versions with additional whole grains and protein.

The company also promoted Lunchables as a cost-saving solution for schools facing budget constraints, aiming to reduce labor and other expenses. However, this move was met with a barrage of criticism from child nutrition advocates. The Center for Science in the Public Interest, an advocacy organization, stated last year that Lunchables "undermine school nutrition programs and confuse families." In April, the watchdog group Consumer Reports discovered elevated levels of sodium, lead, and cadmium in retail versions of Lunchables and petitioned the US Department of Agriculture to remove these meals from school cafeterias.

Kraft Heinz disputed these findings and argued that the report contributed to the decline in Lunchables' sales. CEO Carlos Abrams-Rivera commented on an earnings call last month, "The negative publicity we received from that misleading interest group seems to be lingering, affecting our brand, which is focused on families and children. Rebuilding trust will take time." Frost defended Lunchables as a "nutritious and delicious" option for children, providing protein, calcium, and potassium, and noted that the company has reduced the sodium content in Lunchables' crackers by 26% and saturated fats by 13% over the past two years.

Beyond the health-related criticisms, Kraft Heinz miscalculated the interest and financial capacity of school districts to adopt Lunchables. The majority of school districts report that the federal reimbursement rate is insufficient to cover the costs of producing a lunch, according to the School Nutrition Association, which represents cafeteria workers and directors nationwide. Recently, Kraft Heinz announced its decision to withdraw Lunchables from schools. Frost stated, "The product did not meet our performance expectations, leading us to discontinue the program. This decision was ours,not affected by any external factors."

The recent challenges faced by Lunchables mark a significant downturn for a brand that pioneered a new food category when it was first introduced in the late 1980s. Oscar Mayer, a meat processing company, was seeking ways to utilize its surplus bologna, which was losing popularity. Lunchables were packaged in regular and deluxe versions, inspired by TV dinner trays, with the deluxe version including a mint and a napkin. (Oscar Mayer selected the name Lunchables from a list that included Crackerwiches, Snackables, and Mini Meals, as detailed in Michael Moss’ 2014 book, “Salt Sugar Fat: How the Food Giants Hooked Us,” which explores the processed food industry.) Moss remarked in an interview, "It was a pivotal moment in our shift towards processed foods. Prior to that, there wasn't much like it in grocery stores. It initiated a wave of fast food, prepared takeout products available in stores."

Lunchables were targeted at busy parents who felt guilty about not having the time to prepare their children's lunches. The bright yellow boxes, resembling wrapping paper, evoked the image of a gift that parents could offer their children for lunch, according to Moss. Bob Drane, the founder of Lunchables, told Crain’s Magazine in 1992, "When two or three kids look up at you longingly and wonder what kind of treat you’re packing for their lunch—our consumer research told us there was a lot of pressure on moms at that moment of the day." For children, Lunchables were designed to instill a sense of "empowerment" as they took the box out of their backpacks and assembled their own lunch, Moss explained. "All day, you gotta do what they say. But lunchtime is all yours," an early Lunchables slogan stated, highlighting the control Lunchables provided children over their meals.

Lunchables quickly became a sensation. In its first year, the brand achieved over $200 million in sales, according to Moss. By 1995, sales exceeded $500 million. Lunchables continued to introduce new lines, such as pizza, burgers, tacos, and desserts, to fuel sales growth. Although the brand has attempted to incorporate healthier ingredients, like fruit in 2023, most of its products remain highly processed and high in sodium and saturated fat. A ham and cheese Lunchables with crackers contains 650mg of sodium and 7g of saturated fat.

Despite the recent setbacks, Kraft Heinz asserts that it is investing in the Lunchables brand. In a presentation last month, the company revealed plans to diversify Lunchables’ flavors and launch a new advertising campaign aimed at both parents and children. "Lunchables is undergoing a transformation," Frost from Kraft Heinz stated.

"We are working on exciting innovations that we will reveal in the coming months." The company is examining every aspect of the offering, from product design to pricing to marketing, and conducting research to understand consumer preferences, she added. David Garfield, the global head of industries at consulting firm AlixPartners, suggested that Lunchables need to make further changes to appeal to parents who have higher nutritional expectations for their children's meals than when the meals were first introduced. "Lunchables are a prime example of a brand struggling to hit a moving target," he said. "Consumer expectations for nutrition have increased." He continued, "Lunchables can't just aim for 'nutritious enough' to meet regulatory requirements or guidelines; they need to do more to be seen as a healthy option for parents to offer their children."