- Blue Apron laid off 6% of its workforce on Wednesday, which would be approximately 300 people if the meal-kit company still had about 5,000 employees — the number reported during its June 29 IPO.
- According to an Oct. 18 filing with the Securities and Exchange Commission, the layoffs will impact employees at the company's New York corporate offices and at fulfillment centers around the country. The move is expected to cost Blue Apron approximately $3.5 million, mainly in severance payments, during the fourth quarter of this year.
- In a letter to employees, CEO Matt Salzberg called the company-wide realignment painful but necessary in order to focus on future growth and achieving profitability. "The actions that we took today flowed from the roadmapping and reprioritization exercise that we recently undertook," he said. "As part of that work, we identified the need to reduce some roles, open others, and streamline decision making for greater accountability. Wherever possible, we sought to fill new roles with existing employees."
These layoffs are the latest in a string of problems Blue Apron has experienced since going public in June. In August, the company instituted a temporary hiring freeze and fired part of its recruiting team. A month earlier, Blue Apron's co-founder and former chief operating officer Matt Wadiak stepped down, although he remains with the company in a senior adviser capacity. The company also has been hit with multiple class-action lawsuits, most notably one in August claiming that it offered “misleading” and “untrue statements” in SEC filings prior to its IPO.
The company's stock has plunged nearly 50% since it went public, a move that raised far less cash than the company initially hoped. In its first earnings report as a public company, Blue Apron posted a loss even as it topped revenue expectations from Wall Street. The meal kit manufacturer reported a 9% drop in its customer base from the prior quarter as it trimmed marketing expenses, a crucial but expensive part of its operations used to attract and retail new business.
While the meal-kit industry is a $1.5 billion annual business, and has grown sales 25% over the past few years, the cost of customer acquisition can run as high as $80 per person, according to research firm Morningstar.
Since launching in 2012, Blue Apron has quickly expanded, but it now faces a bevy of other competitors such as HelloFresh, Plated and Chef’d. It’s also up against big-name grocers — Kroger and Publix among them — and big CPG brands entering the meal kit space. Then there’s Amazon, which is currently testing its own meal kits.
It's uncertain whether the job cuts truly reflect some underlying slowdown at the meal-kit maker or a natural rebalancing, as its CEO noted in the letter, to better position the company for the future. "Our leadership and Board did not take this decision lightly, and I want to assure you that we believe it was necessary as we focus the company on future growth and achieving profitability," Salzberg said.
Blue Apron's leadership knows the company must retrench in order to attract and retain customers, become profitable and satisfy its investors. If the company carefully analyzes its previous missteps and puts practices in place to avoid them in the future, it may be able to get back on track as long as meal kits remain popular. But the staying power of that particular trend — like the company's future — remains to be seen.
The meal-kit sector has been active in recent weeks. Albertsons recently bought meal kit company Plated for an estimated $200 million. HelloFresh, which planned an IPO two years ago but cancelled it due to market volatility again, appears committed to making another go of it. HelloFresh announced earlier this week it will soon overtake Blue Apron and has “out-executed Blue Apron across all dimensions.”
The market has sent a message to Blue Apron that its time in the public eye has not gone as planned — a fact reflected in its stock price — and while the company still can turn things around, time may be running out. With high expenses, execution challenges and growing competition showing no sign of abating, Blue Apron must now start to show it has a handle on things — otherwise an activist or another company, perhaps a grocer, could soon come calling.