- Blue Apron is closing a Jersey City, New Jersey, facility with workers being given the option to transfer to a new location about 15 miles away in Linden, according to Bloomberg and CNBC. The meal-kit delivery company estimates the closure would affect 1,270 people, or about 24% of its workforce.
- Blue Apron expects about 470 workers will not transfer to the new location, according to CNBC. Employees have until October to decide if they would like to move to the new location, so the number of jobs lost could be more or less than 470.
- Earlier this year, Blue Apron said it planned to bring more than 2,000 jobs to the Linden, New Jersey, location.
The fact that Blue Apron is opening a new facility in the Garden State is hardly news, but the possibility that it could potentially lose nearly 10% of its workforce through the move is worth noting. There is no way to know if the 470 people not expected to make the transfer will be replaced, or whether Blue Apron will use this change as an opportunity to trim its ranks because of efficiencies gained in the new plant or underlying challenges in its meal-kit delivery business.
Blue Apron, which went public in late June, has had a rough time on Wall Street. Its stock traded Monday below $6 a share, nearly 40% below its IPO price. In late July, Blue Apron co-founder and chief operating officer Matt Wadiak stepped down, but he will remain with the firm serving in a senior adviser capacity. A law firm is currently investigating claims of whether the meal kit company's board breached its fiduciary duty to investors, according to a press release.
Blue Apron uses about a fifth of its cash to attract and retain customers — a business cost that has soared from $14 million in 2014 to $144 million last year, an increase of 930% during that period. At the same time, revenue has failed to keep up. The company has warned it "may be unable to achieve or sustain profitability." While it has done a nice job adding customers, the average order per person and the average order value continue to drop as more people are added to the fold.
On the positive side, some analysts see potential for Blue Apron to adapt. “As Blue Apron scales, it should be able to collect more data on customers and better predict food trends, including the possible addition of snacks, more meals per order and meals catered to dietary restrictions," analyst firm SunTrust Robinson Humphrey recently noted, Marketwatch reports.
Blue Apron, which is facing tough competition from other independent meal-kit companies, grocers such as Kroger and Publix, as well as Amazon-Whole Foods, will face a big test Thursday when it reports earnings, its first as a public company.
Investors will be closely watching figures such as its cash-burn rate, how much money it has on hand — a sign that could indicate how soon the company would have to sell more shares to raise money — as well as how it is doing attracting and retaining customers, along with how often they are using the service.
Blue Apron's first month as a public company has been one the company would probably like to forget, but it's not too late to turn things around even if the road ahead appears to be a daunting one for the meal-kit pioneer.