Call Blue Apron what you will: a struggling retailer, a comeback kid, a prime example of hype in the online world, a respectable survivor. But no matter the label, this much is true: As of August, the meal kit pioneer is 7 years old.
We at PYMNTS, being writers, don’t do cakes and gifts for birthdays, but instead prefer writing retrospective stories like this, treatments that serve not only as a history of a particularly newsworthy company, but also a glimpse into the future of the industry in which it operates. So is the case with Blue Apron, whose recent experiences provide one of the more interesting recent rides in digital commerce.
Back to 2012
According to Blue Apron’s own website and other reports, the story begins way back in the halcyon days of 2012. Social media was largely considered more friend than foe, most consumers still used passcodes instead of fingerprints to open their mobile devices, and Tom Brady was merely a great athlete instead of the fountain-of-youth demi-god he is today (PYMNTS is based in Boston, so just go with us on that one).
During those dog days of summer 2012, “Matt Salzberg, Ilia Papas and Matt Wadiak tested the first Blue Apron recipes in their tiny New York City apartments” — at least according to the narrative told by the meal kit provider. “Their goal was to make the experience of cooking with quality produce and specialty ingredients accessible to everyone, no matter where they live or how busy they are. The three hand-packed the first Blue Apron boxes themselves, delivered them to family and friends and received immediate positive feedback.”
The timing seemed perfect. Those oft-derided younger consumers known as millennials — already the culture’s preferred scapegoats for pretty much everything except the bombing of Pearl Harbor — were coming into their own and earning more income. As well, with the Great Recession having recently ended, U.S. consumers were going back to work and putting in longer hours.
That meant there was an apparent opportunity to cater to consumers who’d rather not put in the massive time often required to plan and create home-cooked meals from scratch — a task that usually involved finding a worthwhile, pragmatic recipe (at least for those poor souls who weren’t lucky enough to have Italian grandmothers holding regular master classes in the kitchen) and making a trip to the grocery store. The opportunity has not gone unnoticed by grocery stores and online delivery services, either, of course.
Social Media’s Role
Facebook and other such platforms also played a role in helping Blue Apron grow, according to an interview with the then 32-year-old Salzberg. “In 2012, 20 of Salzberg’s friends beta-tested the product,” the article stated. “Once they made their Blue Apron meals, he says they couldn’t stop talking about it and sharing photos of what they made on social media.” Not only that, but consumers — again, the younger ones most notably, along with the relatively affluent — were becoming more interested in organic and locally sourced products, especially when it came to food. As the Business Insider narrative told it, “Blue Apron, (the founders) decided, would offer a few recipes to subscribers each week. They’d forge relationships with local farmers and create menus based on seasonality and what ingredients were in stock.”
The idea took off, with “growth (looking) like a steady exponential curve, aided by word of mouth and social media marketing,” according to the BI account. An initial funding round of $3 million came from Salzberg’s old firm, Bessemer Venture Partners. More generally, the idea of meal kits and online subscription commerce in general gained steam. Blue Apron headed toward the brass bell of an initial public offering.
As PYMNTS readers know, that 2017 IPO was anything but glorious.
Indeed, Blue Apron was the worst-performing tech IPO in 2017, according to Crunchbase’s ranking. The meal kit company launched at $10 before losing more than half its value and ending out the year at $4.29, representing a decline of a little more than 57 percent. Rumors had Walmart wanting to buy Blue Apron — the retail chain, after all, was and still is engaged in an existential struggle with Amazon, and was trying to pump up its eCommerce offerings.
But the optimism was draining from the meal kit business — or, at least, trust in the current meal kit business model. In an April 2018 Topic TBD with PYMNTS’ Karen Webster, which explored the preparation and delivery of food rendered as a service, Chef’d CEO Kyle Ransford predicted that “I think the subscription meal kit as it’s been known will be vastly diminished in the next two years. It won’t be something that you hear a lot of or get marketed to a lot. I think you’re going to have a lot more choices. The meal kits will be like the beer aisle” one finds in supermarkets, he added.
In fact, Blue Apron and its rival began forming partnerships with brands and stores such as Costco and WW (formerly Weight Watchers). At the same time, retailers and brands were experimenting with their own meal kit products. Not only that, but convenience stores — chasing those same younger consumers — were going upscale and offering their own prepared and even gourmet meals for quick takeout.
Blue Apron was facing fiercer competition — even Amazon got into the game — and was having a hard time holding onto its existing customers. It lost part of its founding generation when new President and CEO Linda Findley Kozlowski transitioned into her role earlier this year, and Papas, Blue Apron’s chief technology officer, decided to step down.
Those struggles are pretty well-known to PYMNTS readers, but a look at the recent financial picture for Blue Apron offers some clarity, along with fresh reason for optimism. Even though Blue Apron continued to shed customers in the first quarter of 2019, it reported a smaller net loss for the period than during the same time a year ago. As well, Blue Apron customers were making slightly more orders during Q1 than during the same period a year ago, and average order value and revenue per customer grew slightly as well.
Outgoing CEO Brad Dickerson recently said the meal kit company has reached an “important point” in its history and is on a clear path toward adjusted EBITDA profitability, as well as a sharpened focus on the opportunities. Earlier in January, prior to the release of its Q4 earnings, Blue Apron reportedly teased the possibility that it would become profitable this year — in part due to the fruit of partnerships with the likes of WW, on healthy meal kits for dieters, a deal announced in December 2018.
More broadly, the meal kit industry seems in the midst of a reinvention as providers try to stand out and survive in a crowded field. Presto Eats is a good example of that. The startup meal kit provider, as explained in a recent PYMNTS interview, has designed its service around a specific appliance — in this case, the increasingly popular multicooker. Versions like the Instant Pot offer various cooking functions, such as steaming, baking and roasting, with the press of a few buttons. Instead of watching and stirring, consumers can simply press a button, which essentially does the cooking for them.
It’s been an eventful six years for the birthday company — and Blue Apron will no doubt continue to provide more good copy for those of us charged with writing such things as meal kit retail keeps changing.