- Blue Apron, a meal-kit delivery company, submitted a filing with the U.S. Securities and Exchange Commission that would list the company on the New York Stock Exchange under the symbol APRN. The company hopes to raise $100 million in the IPO.
- The prospectus showed net revenue grew from $78 million in 2014 to $795 million in 2016, but at the same time its losses increased to $55 million last year from $31 million two years earlier.
- In the filing, Blue Apron warned it has "a history of losses, and we may be unable to achieve or sustain profitability." It also noted risks to its business including foodborne illness, changes in consumer tastes or preferences, a "novel business model" that makes it hard to evaluate its future prospects and challenges, and other competitors, such as supermarkets.
The S-1 filing from Blue Apron is among the first to give a detailed look at the financials of the much-hyped meal delivery company and the challenges that players in the ultra-competitive sector face to fend of competitors and grow their businesses. Blue Apron, founded in 2012, noted several risks, including the high cost of acquiring and retaining customers, changing consumer preferences and the possibility that it may never post a profit.
"Our expansion efforts may prove more expensive than we anticipate, and we may not succeed in increasing our revenue and margins sufficiently to offset these higher expenses," the document said. "Accordingly, we may not be able to achieve or maintain profitability, and we may incur significant losses for the foreseeable future. "
At the end of March, Blue Apron had just over 1 million customers who averaged 4.1 orders per person compared to 649,000 customers making 4.5 orders each in the first quarter of 2016. At the same time, the average order value dropped to $57.23 from $59.28 during the same time, and the average revenue per customer declined to $236 from $265.
Those figures show the company is gaining customers, but they are ordering less often and even when they do, are not paying as much. The numbers suggest two possible conclusions, neither of which is good news for the company: Blue Apron's newer customers may be less interested in the service than its early adopters — or a growing number of people are abandoning the service after a few uses, bringing down the average order rate and bill per customer.
An interesting point highlighted by Blue Apron in the document is the "significant amounts" spent on advertising and other marketing activities. Give the competitive nature of the industry, meal-kit delivery companies such as Blue Apron and HelloFresh have little choice but to spend big to acquire customers. For Blue Apron, this expense has soared from $14 million in 2014 to $144 million last year, an increase of 930% over that period.
"If any of our marketing activities prove less successful than anticipated in attracting new customers or retaining existing customers, we may not be able to recover our marketing spend, our cost to acquire new customers may increase, and our existing customers may reduce the frequency or size of their purchases from us," according to the company.
As Blue Apron noted in its filing, the future of meal delivery services is anything but certain. A lot of businesses want in on the action and not all of them will succeed. Sprig, which prepared meals and delivered them to consumers, recently said it was shutting down. Startups SpoonRocket and Maple Food also have met similar fates.
Grocers, eager to protect themselves and attract consumers to their stores with more choices, are entering the mix, too. Meal-kit startup Salted announced last month it is teaming up with Whole Foods and other grocers to sell meal kits inside stores. Publix Super Markets and Kroger also have announced they are testing the meal kits at a few of their stores. Regardless of what happens with Blue Apron, the meal-kit space promises an interesting glimpse into the future of the evolving grocery industry.