- German meal kit company HelloFresh posted improved margins, revenue growth of 60% and a 69% increase in active customers during its fourth quarter. The numbers were even more promising in the U.S., where active customers rose 106% to 890,000 from the same time a year ago, and the number of orders during the period surged 119% to 3 million.
- During the fourth quarter, HelloFresh said its international business reached full AEBITDA (adjusted earnings before interest, taxes, depreciation, and amortization) profitability for the first time, while the U.S. business came close to breakeven.
- For 2018, HelloFresh expects to reach breakeven in its core business in the fourth quarter and grow its revenues during its fiscal year by 25-30%. For its growth strategy, the company said it will focus on increasing its customer base and expanding its product portfolio in its core markets.
Blue Apron was set to be the darling of the meal kit category when it went public last June, but since then the company has been plagued by high marketing costs, the departure of top executives, subscription losses and challenges opening a new fulfillment center in New Jersey. If HelloFresh's promises going forward hold true, it doesn’t appear that things will be getting any easier for Blue Apron anytime soon.
During a call discussing HelloFresh's earnings this week, Dominik Richter, the meal kit company's CEO, said the fourth quarter was the best one in the company’s history, driven in part by its ability to acquire customers. In addition, he said HelloFresh's technology has allowed it to differentiate itself from its competitors with its “huge number” of taste profiles gleaned from customer data. The company has developed 8 million recipes.
Richter said HelloFresh is uniquely positioned to rapidly experiment with new products — some of these innovations include a broader product portfolio and a dinner-to-lunch introduction in the U.S. The company also will increase its personalization efforts, such as individualized taste profiling.
Earlier this week, HelloFresh acquired Green Chef, adding organic vegan and gluten-free menus — as well as paleo and keto meals — to its meal kit offerings. Tobias Hartmann, president of HelloFresh U.S., said Green Chef’s specialty and diet meal plans will give customers the “maximum” amount of choices in their meal kit decisions.
HelloFresh’s executives are very confident about the company’s current position. Richter noted the company is not seeing entry from any big players that will market online against it. Interestingly, he also indicated the company is not in competition with other meal kit players, but rather other e-commerce companies. Approaching business like a technology company versus a meal-kit-specific company could explain why it’s gaining fast on Blue Apron.
While Green Chef will certainly give HelloFresh a boost in the U.S., the company is smart not to overlook these meal kit competitors, especially as heavyweights such as Kroger, Publix, Walmart, Amazon and Weight Watchers jump into the space or expand their existing presence. These companies have deep enough pockets to deploy similarly robust technology and recipe initiatives. In addition, Blue Apron plans to sell its kits in stores by the end of the year.
It appears that HelloFresh is taking a far more measured approach toward expanding its presence in the U.S. The fact that it is working its way toward breakeven is notable, especially when compared to Blue Apron which famously warned before going public that it had "a history of losses, and we may be unable to achieve or sustain profitability." For now, HelloFresh seems to be on the right track, but with a host of competitors out here, and retailers expanding their presence in the space, it's far from certain what the future holds for the company despite its promising outlook today.