Blue Apron plans to show America ‘a better way to cook’
Blue Apron, the subscription service that delivers pre-measured and packaged gourmet ingredients for home cooking, just received $135 million in its latest round of funding. The company plans to use the funds to expand and improve on its supply chain and fulfillment capabilities.
Founded in 2012, Blue Apron offers plans for two-person households as well as family plans. With the two-person offer, customers receive three meals per week for $59.94. A family of four can receive recipes and ingredients for four meals per week at an individual cost of $8.74 per meal ($139.84 overall).
Recipes are created by Blue Apron’s team as well as guest chefs. Meals, according to the company, take 35 minutes to prepare and are in the 500 to 700 calorie range. The company promises that recipes are never repeated in the same year. Shipping is free nationwide and ingredients are delivered in a refrigerated box to keep the food fresh.
"If you think about what we do, it’s really quite challenging," Matt Salzberg, cofounder and CEO of Blue Apron, told Fast Company. "Every single week, the menu changes 100 percent, and in a high-growth environment it’s quite difficult to keep up with the fulfillment side of things."
![[Image: Blue Apron]](/public/images/discussions/18334/blue-apron-still.jpg)
Blue Apron is not alone in the meal kit market. HelloFresh and Plated are two other startups competing for the same customers. HelloFresh, according to Crain’s New York, announced it had received $126 million in funding back in February. Plated has raised $21.4 million to date.
- Learn More – Blue Apron
- How It Works – HelloFresh
- Eating Well Made Easy – Plated
- Blue Apron Confirmds $2 Billion Valuation in Latest Funding Round – The Wall Street Journal (sub. required)
- Battle to serve fresh foods heats up: Blue Apron nabs $135 million – Crain’s New York
- With New $135 Million Series D, Blue Apron Takes the Lead in Funding For Meal-Kit Startups – Fast Company
Discussion Questions
Is there a big enough market on a national level to support multiple meal kit companies? What do you see as the opportunities and challenges for companies such as Blue Apron, HelloFresh and Plated?
Poll
BrainTrust
Kai Clarke
CEO, President- American Retail Consultants
Just because an idea attracts funding does not mean it will become a successful business. Blue Apron is in a crowded field that is easy to enter and difficult to protect, with little to differentiate it from its competitors. In situations like that, marketing becomes the key to success, and that’s expensive.
There’s always a chicken/egg conundrum with new business models. Increasing availability can actually drive awareness and demand over the mid- to long-term, but in the near-term the ballooning supply almost certainly outstrips demand.
Given the free-flowing capital and lock-in effect of subscription models, we’ll see and hear much more about Hello Fresh, Blue Apron, Plated, Munchery and others. Then, within 18-36 months, I’m sure there’ll be consolidation.
In a word, no. This is a niche market (at best).
The price point is — relative to the average American’s budget — high. This isn’t a convenience offering, the food takes too long to cook, and it doesn’t really appeal to “foodies” who want to shop for their own ingredients and discover their own recipes.
To be honest, this seems like the perfect “date night” product and that is, at best, a limited market.
Everyone wants in the game, as the money flows into these start ups. It may work well for city dwelling foodies who are time starved and basically don’t know much about cooking from scratch. For the rest of us we can get a box of pasta, some ground beef and some veggies, and create a meal for around $3 per person. Takeout pizza and the local restaurants that deliver in these cities are very stiff competition, as the consumers can have food delivered for around the same price.
Is the market big enough for all of this? In major metropolitan areas it is, but there will have to be some wheeling and dealing to keep the consumer appetite for this venture alive and that will cut into the bottom line, which is already challenged by free delivery (remember, nothing is FREE). The nutritional quality with Blue Apron seems high, and that is a selling point, but if they keep it super fresh and interesting word of mouth will help them long-term. I’m still curious how they can do this, including free delivery in Nowhereville, USA, and still make money.
If one of these companies would focus on a narrow target market and play the niche game with a laser focus, it could get some scale and perhaps become harder to replicate.
My selfish shopper side says one of these services should focus on Boomers who need healthier meals for two and are tired of cooking!
Quite frankly, I have been amazed and astounded at the folks I am hearing from who are using these types of food services. Many are using local folks who prepare the meals and deliver several days a week.
The interesting thing is that these meals are not “special.” They are every day meals and many are for families. The reason: busy and/or traveling parents. They want nutritious meals for the kids but just don’t have the time (or don’t want to take/use their time) to think about and prepare meals.
Is this a service for every family? No. Is it too niche? I don’t think so. My husband is a cook who caters and is often asked about this. The issue is that he would need a large base in order to break even on single meals vs. his time.
Blue Apron and others in this space have it right. So my two cents is on them!
Not with the current model. Just as with anything else, there are so many niche markets in this space that a national economy of scale is unlikely to produce an attractive price point for most families at this time. Between the issues of allergies, specific diets for health, diets by choice, and differing tastes, creating menus at a large scale is not likely to happen anytime soon. However, for specific markets it is possible to build niches with groups of consumers who can afford the service.
The growth in the grocery business seems to be in healthier foods, organic foods and prepared foods. The shelf space to expand these product lines is coming from the rest. This product line may be seen as one of the rest causing it to stumble at the gate. With personal time still in shrink mode for the ever expanding lower class, the move away from preparing food towards prepared or semi prepared may help these ventures towards the winner’s circle for investors to celebrate. I on the other hand see the stumble create a trip and fall if for no other reason than expanding foods costs within a growing market of narrowing budget(s).
This is a great concept for home-bound individuals, special diet individuals, and even special communities which assist them (assisted living). The cost at just over $8 is incredible. So long as they manage their operating costs, and continue to get more customers, they should be able to fuel continued growth and be able to support their expansion.
My hunch is that none of the posters have tried any of these mail kits. I have tried them all. Here is my take: