1. Channel: MealKit

Blue Apron’s profitability struggles continue as it focuses on product innovation

Dive Brief:

  • Meal kit maker Blue Apron saw revenue increase 27% year-over-year during the first quarter of 2021, to $129.7 million. The company posted a net loss of $15.7 million for the quarter — the largest loss in three consecutive quarters, but an improvement from the $20.1 million the company lost during the same period in 2020.
  • Average order value reached $61.63 in Q1 — a new record for the company as the number of customers and orders per customer increased 7% year-over-year.
  • To continue driving growth with new offerings, Blue Apron has launched add-ons that let customers pick an appetizer, side dish or dessert each week, President and Chief Executive Officer Linda Findley Kozlowski announced during the company’s earnings call on Thursday.

Dive Insight:

Nearly a year after it turned a profit off pandemic-fueled demand, Blue Apron is once again struggling with the difficult economics of the meal kit business. The company’s current strategy centers on innovation and increasing spend among its most loyal customers.

“Product innovation, which includes add-ons, the newest introduction to our menu, is one of the key pillars of our growth initiative, and we expect to continue to launch new products over the bounds of this year,” Randy Greben, the company’s chief financial officer, said during the earnings call.

The add-ons are now available for customers using Blue Apron’s mobile app and will become available on its website in June, Kozlowski said. It’s the company’s latest effort to attract and retain customers in a business notorious for high churn rates. The company is also adding premium meals, meal prep options and exclusive chef-created menus; marketing new recipes with healthier ingredients; and adding partners.

For example, Blue Apron has teamed up with Disney on meals available for a limited time during the release of Disney movies, which Kozlowski said will continue when “Luca” gets released in June. The company is expanding its WW partnership and now highlighting a WW-approved meal on the weekly meal prep menu, Kozlowski said.

Blue Apron’s executives say the variety is resonating with customers. Premium meals with specialty proteins like duck and scallops and the Wellness 360 campaign, which debuted in December and included an integration with meditation app Calm, have been popular among customers, Kozlowski said.

“In the short few months since launch, we shipped over 1.3 million boxes containing at least one wellness recipe, and this customer segment has become our highest value segment since I joined,” she said.

During Q1, Blue Apron brought in 5.4 orders per customer on average, a roughly 15% year-over-year increase, and its average revenue per customer was up 22% to $331 — the same growth rates for both metrics during the company’s fourth quarter.

In addition to new product offerings, Blue Apron benefited from new fulfillment efficiencies that kicked off in the second half of last year and boosted marketing spending during Q1 — both areas the company expects will raise its profit percentage, Kozlowski said.

In less than a year, the company has shaken up its executive ranks and tapped executives from Peapod, Amazon Marketplace, Deloitte and art supply company Arteza for its board of directors. Charlean Gmunder, formerly a catering executive at United Airlines, became chief operating officer in November, while Greben, a veteran finance leader in the consumer products space, started as the CFO in January.

For Q2, the company projects its revenue will dip, falling between $122 million and $126 million, and have a net loss of up to $17 million. For the year, Blue Apron is expecting to see high single-digit to low double-digit net revenue growth as one-time, pandemic-related expenses come to an end.

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