But thanks for all the free trials, VC investors! I've had a few above average dinners out of it.
The amount of people who want to cook and prepare a nice meal is probably a lot less than the amount of people who just want to buy, eat and enjoy a nice meal.
I live in Dublin, not exactly the biggest of cities, but I can't think of a single type of food that I can't order through one of the various home delivery apps available to me. No need to cook food or be constrained by a predetermined set of menus.
It's hard to make the case for a meal in a box service when you can order just about any food imaginable from your phone and it will be delivered within 30 minutes.
I can regularly obtain a $1 (sometimes less) delivery fee by selecting among Uber Eats/GrubHub/DoorDash/etc. The pricing blood-bath between restaurants (and delivery companies) combined with convenience-induced laziness has me doing nutty things like order a $6 froyo from a place ~100 meters away.
Speaking of Blue Apron, I recently threw out half of an unopened meal kit of theirs that convenience-induced laziness had caused to rot away in the fridge.
The delivery trend is strong. Not sure it's a net positive society-wide habit.
Most Americans can't afford 10$ per person per meal. Hell, the minimum wage here in Indiana is 7.25$, if you're lucky at retail you might be making 9$, average household income is $45,943 in Indiana, even just one person earning that you're taking home 35,482$ a year which is about 97$ a day which makes just 1 of these meals a day 10.2% of your net income.
The problem is, people try and apply Bay Area lifestyle to the rest of the country.
The case for home cooking over delivery food most people know already :)
Delivery food and meal kit services aren't really competing for the same customers. Meal kits require prior planning, time and storage space, while delivery food isn't something a lot of people necessarily plan for (or at the very least, don't need to plan for).
ftfy.
We did Blue Apron and Sunbasket both for a while. Both are generally good products, but they both take time we don't really have. (So my wife periodically logs into the app and opts out of everything they'd have otherwise sent automatically.)
The most prominent one started out more than two decades ago by as a kind of subscription service -- every week you'd get a bag containing the produce of the season, along with weird stuff like Hokkaido pumpkins that most people had no idea what to do with.
These days they ship recipes along with the exact quantities of ingredients that you'll need for cooking. Often ingredients that are hard to come by in grocery stores. It's time saving and usually delicious.
Anyway, my point is, they bootstrapped their business, pivoted a bit here and there, and built it to be profitable. So it's certainly doable.
The article mentioned Blue Apron (and competitors) are trying to increase sales at grocery stores, maybe some of them can survive like that if that works.
Then again that would be a rather niche market.
The tricky part with this business model is making the food taste good is an art form and not easy to boil down to a simple 9 step formula. Also difficult is keeping all the ingredients fresh and portioned / ready to cook while keeping the price lower than it would be to go out and eat.
How much does one meal (per person) come out to be ?
If I am correct, they are targeting a relatively well off crowd and not the general populace.
Are their margins large enough to get by on just rich-ish customers ?
I think that's a reasonable price to pay for blue apron convenience. Yes, you might be able to source the ingredients for less. But you lose out on time there, as well as right sizing of ingredients.
Also I don't want to pay ~$9 for their pasta dish and also cook and wash dishes after it. Even if someone who is making minimum wage - they will waste ~30 minutes cooking + ~15 minutes washing dishes and cleaning the kitchen after, so it's about $15 on top of the $9 portion, and you still have to go to grocery because their food is mostly for dinner and for 2-4 times a week because they have limited number of recipes.
On top of that I want to be able to spontaneously decide what I want to eat today, and not being forced to choose my food 2 weeks before. Maybe that works for someone, but whenever we try it just gets really boring and annoying after 3-4 weeks of usage.
Most weeks there's a steak option, a fish option, or both, and there's always a couple non-pasta chicken options. I think the steak options are becoming somewhat rarer, there used to be one every single week.
A while ago they stopped charging different prices for different options. (So of course, I usually try to get the ones that look like the most expensive ingredients). I think that, along with increasing the number of options every week, was probably in response to customer feedback on pain points... but both those things also cut into their profitability. My sense is that they've been reducing the cost of the ingredients accordingly, trying to catch up.
I don't mind the time to cook and clean myself, the whole point for me is I _want_ to be cooking... it's just SO convenient not to have to do menu planning and shopping. And most of the meals cook quicker than what I'd cook myself (you can follow them like a zombie barely realizing what you're doing, for better or worse, ha). I'm willing to pay for that... to a point. If the ingredients and recipes are good. And they are correctly charging the right price for me -- in that any higher, and I'd cancel, they've got me at my max ha.
Even $15/meal is probably less than I'd pay at any restaurant/carry out that wasn't terribly unhealthy, including gratuity and tax.
15$ a meal is pure insanity for 400-600 kcals, I eat 6-8lbs of chicken a week and my weekly grocery bill is right around 50$.
I live in Indiana, the average household income is $45,943, even just one person earning that you're taking home 35,482$ a year which is about 97$ a day which makes just 1 of these meals a day 10.2% of your net income.
Most of the country is not tech workers drawing high 5 and low 6-figure incomes.
If they want mass appeal then they need to have to include people in their market who can't afford to eat out for every meal.
Only if they're missing out on work by cooking their food. It's only an opportunity cost if there's an opportunity.
It doesn't cost me $400 every time I go to bed for the night.
A couple of the caveats here are:
a) The market generally has a discrete floor on contiguous blocks of time: as a reductio ad absurdum, I generally can't sell alternating 30 seconds of work out of every minute and then add that up to 1/2 time. A related concept is that there are fixed costs associated with setting up this exchange.
b) For exempt employees, more hours of work don't translate directly into more pay, though depending on the incentive structure of the firm, they may translate stochastically (e.g. working harder to get a raise). The main point is that this relationship isn't continuous and it isn't frictionless.
That being said, it's really not a bad heuristic for trying to compare the value of time vs money. If I have a preference against spending my time on some task roughly on par with my preference for not working further, I can at the very least set a bound on what my time is worth: e.g. if I know I can reliably get software contracting work for an aftertax $120/hr (incl the time taken to secure the contracts), then it's somewhere between a heuristic and a tautology to say that I'm valuing a marginal hour of free time at >$120, which suggests that I should be willing to spend $120 on something that saves me from an hour of work that's comparably-unpleasant to doing an hour of contract work.
> It doesn't cost me $400 every time I go to bed for the night.
This is a particularly poor example, since ~8 hours is a contiguous enough block that you could get an entirely different job with a night shift, so yea, the opportunity cost is literally $400/sleep if that choice was feasible.
[1] which is actually a pretty common problem for low-wage workers much more so than high-wage workers
Maybe it was just me but I always found Blue Apron to be 45 mins of cook time. If they could find a way to help me make a meal that was 80% as good in 50% of the time, I'd be a subscriber for life.
Very few Blue Apron meals were pasta, from what I can remember. If any.
I think the competitor, Gobble, was better by a fair bit, because less prep was required. But obviously that's a tradeoff.
In my case, I do like cooking, but Blue Apron's subscription model became an endless treadmill that I stopped looking forward to after a couple months.
If the veggie/meat pickers were highly paid experts, would it make a difference? At what pay grade and education level would you be comfortable delegating your veggie/meat picking?
Then there's people like me -- I don't really care too much about getting the perfect vegetable, as long as it's not spoiled and tastes reasonably good, I'm happy with it, and I want to spend as little time as possible -- I'm happy to pay someone else to choose if it it means I can escape a visit to the grocery store.
Ordering takeout is the most efficient way to cater to people in this slice of the market. The intersection of people who don't intimately care about their ingredients and people who want to cook is very small. Most people who want to minimize time spend on food would not entertain the idea of cooking serious meals at home.
My sense is that meat quality has been going down, but I dunno, maybe it's exactly the same meat and the novelty has just worn off.
My sense is also that Blue Apron has historically had higher quality ingredients than some competitors, but I can't say that for sure, and am not sure it continues to be true.
blue apron (or any service like this) needs to have the best quality food in the box, otherwise it's just not worth it... and at ~$10/person per meal, it had BETTER have good ingredients.
anyways, we just cancelled our blue apron account... it was definitely pricey, and where we live (berkeley ca) there are myriad amazing options for groceries. it served it's purpose when we needed it, tho.
it's sad to see them failing, but they chose a very difficult business model, so i'm not entirely surprised. :(
If they gave you access to all kinds of exotic ingredients in appropriate quantities, selected by professional restaurant buyers who definitely know what they're doing, you might find it interesting to use the service just to explore new recipes and variations. You could almost run a whole "cooking by mail" course that way. An obvious next step would be wine service, in areas where that's permitted.
I think with their meal service, there's also an option to pair with a wine that they determine goes well with the meal.
If you get to be that large of a company (100 workers => 4% of staff => ~2500 employees) and you are not making a profit, there is something wrong. Bringing all of those people onboard seems like a waste of investor money.
That said, I am a fan of Blue Apron and I do hope that their figure out a way to operate in a profitable manner soon.
Edit: as replies point out, profitability isn’t a great indicator for the success of a company. While it is fair game to ask, there are other better indicators (churn and burn, existing customer base, etc) that give a better picture. My point was that I think a company at this size should be profitable or working aggressively to make that possible. I think Blue Apron is laying these people off to accomplish that.
I think a much better metric, especially for early stage companies, is their growth rate, their customer acquisition cost, and very importantly, their customer churn rate. Blue Apron's churn rate coupled with their high CAC has always been a giant flashing red flag.
What a bizarre world we live in where this is said seriously and everyone would agree with it.
There’s a vc bubble and it’s going to pop. And we will all suffer for it.
Blue Apron’s high churn rate was probably tied to their offering of free deliveries. That’s how I found out about it and received my first delivery. I did not continue as a subscriber after that, though.
This can go the other way too, I know that I've found myself being more selective in which companies products I use based on their business model and if they're look like a stable company, too many flash and burns.
A better question would be 'unit profitability' - i.e. Uber might be spending billions in new markets, but if they are effectively profitable in established cities - then it's a good sign.
The question is really - is there meaningful growth, are the customers real, do they come back for more or are they dropping subs etc..
If they have truly found 'product market fit' then usually it makes sense to spend spend spend to grow and grab market share.
If they are blowing money on massive acquisition costs and customers are not hanging around ... then this is a problem
If I'm perfectly honest, when asked that question it tends to make me think the interviewee just isn't well versed with startups.
I think that is a much better way of looking at it. Thanks.
As long as they can can prop up the valuation for a short time, they can capitalize shortly after an IPO and externalize the losses on unwitting millions of people who came to own some unicorn stock because they were auto-enrolled in the 2055 retirement mix of some bottom scraping asset manager that charges high fees on a portfolio with loose definitions of what it can invest in.
(although, to be fair, Blue Apron is an obvious case of the next groupon.)
Making ~4x the (approximate) real valuation (which is already probably way higher than what they paid per share to invest) probably meant a significant return. Kind of like private equity strategy from inside a start-up.
I’m sure that employees with relatively low amounts of options plus a lockup period, needing to use their own money to buy the stock, with some more recent employees at relatively bad strike prices by comparison, did get screwed over.
Which is why you never, never accept options-based equity as compensation, and never accept an ultimatum between a competitive salary + low equity vs. less than market salary + higher equity. The lottery winners for whom these arrangements worked out should not factor into your judgment. And likely any experienced engineers should be requiring bonuses, meaningful severance, comprehensive insurance and a host of other forms of compensation.
It's difficult to make your own ketogenic meals solely via your own grocery shopping and recipe research... but I can now eat pretty tasty meals with minimal effort in 2018 via meal services.
> It's difficult to make your own ketogenic meals solely via your own grocery shopping and recipe research
I'm surprised to hear this even more. Have you tried Googling "keto recipes [other search terms]" and meal-planning around it? If you've already tried this, I don't intend this to be patronizing; I'm actually relatively new to cooking most of what I eat, which means things like meal planning are actually pretty new to me. I've just found it to be a really effective way to organize frequent cooking, and once you build up a bit of a repertoire of recipes, it doesn't really take any extra time beyond putting the ingredients and Instacart order together.
[1] Which it turns out means simply "getting enough protein and fiber to not be super unhealthy"....
You might need to just spend a little time researching recipes . I have 3-4 that I cycle through. Also, there's always just straight up meat + veggies to fall back on, for which there are many possible combinations and that's probably the easiest thing to make. Most nights I just bake some chicken or salmon and sautee some veggies. No hard thinking involved there. And I'll have leftovers for the next night.
For me the grocery store is by far the easiest way for me to get stuff I can eat. Restaurants / takeout / convenience stores are a minefield of hidden carbs and sugar.
I not even trying to be keto, but just generally healthy and this is my dinner most nights. Occasionally I'll add some rice or potatoes to the mix. You're right that there are many combinations of meat (chicken/steak/fish) and veggies. In the summer I grill, and in the winter I pan sear or bake.
Even expensive meats like fish or steak, still end up costing less per meal than BA.
[Of course, the new ad blitz is for someone else.]
Personally, I'm currently just not one of their target markets although on paper I probably should be. If/when I move further away than 1 block from a grocery store [I lucked out, a lot], and/or want to eat more complicated prep-time food, and/or have less time or ability to shop for ingredients [and somehow a simple grocery-delivery service just won't cut it] for some ever-increasingly complicated prep-time food, I'll might see the light.
They and other brands (especially all the online mattress and furniture brands now) are heavy on podcast advertising. Podcasts are trying to charge fairly high CPMs these days (I've seen rate cards approaching $75). Analysis I've seen says that typically it's really just high LTV advertisers who can make the numbers work, which means high initial price point or a sticky subscription typically.
So the question is, was Blue Apron's podcast advertising effective at driving revenue? Or was it just not effective enough for the growth needs of VC-backed expectations?
I'd love to find some analysis of the duration of advertisers' flights on various podcasts to see if it shows any trends towards growth or decline in that channel.
The target market for this stuff feels so slim. Either you’re in this “too time constrained to shop, not too time constrained to make food at home” sliver, or in the “don’t want to menu plan” market. In the latter, you pay for this menu planning value add with, what, 30% surplus on the ingredients? Only to be replaceable by a recipe app, basically
Made me laugh. I agree. I have yet to figure out what’s wrong with the Sonicare, seems great.
Luckily I listen to podcasts (mostly electronics) that don’t do inline advertisements. When I hear them in other shows I can usually tell they are coming with the awkward segue that seems to be common MO.
At this snapshot in time, ZipRecruiter would be the "someone else" the ads blitz I mentioned has switched to.
That said, I agree with your broader point. I'm not sure why more stores (some do) don't have more kits. Planning for the next week in a way that includes picking 3 meals that will involve at least a modest amount of effort doesn't work for me--and I like to cook generally.
I get that they appeal to people who like to cook but want some structure (and home delivery) around it. But it seems a pretty niche market. I got Blue Apron once. It was "OK." And, while I've thought about it, I've never ordered from any of these services again.
However I will admit I got tired of the selection. Usually there will only be one meal that I’m actually looking forward to eating and the other 2 are unappetizing enough for me to just eat out.
https://www.dropbox.com/s/ktemanrhxruxi3r/2014-12-23%2014.34...
I took the picture for a friend who was looking into a meal kit play at the time. Seeing it executed so well I couldn’t imagine how a subscription service could compete. They had about 4-6 meal displays like this amongst the regular groceries.
This is too bad, I just started doing Blue Apron and I really like it. I'm actually a good cook but I get stuck in a rut with respect to cooking the same things over and over again so it's been nice to have some enforced variety, especially when it comes to sides or bowl/hashes.
The quality is good, the prices seems fair. Just seems like a fraught model.
But I've thought for a while that:
A) I wouldn't pay any more than I am now for it (in fact, I keep looking around for cheaper alternatives, but there aren't any, probably because...)
B) I suspect they can't make a profit at what they charge.
(especially cause as time goes on, I skip more and more weeks, further cutting into their per-acquired-customer revenue. Either I'm just getting tired of it, or my suspicions that each month the ingredients get cheaper and cheaper are correct, perhaps in response to B above).
I don't expect them (or their competitors) to stay around.
Those who like to cook don't have a problem buying ingredients themselves.
Those who don't like cooking don't mind spending the same amount as a Blue Apron subscription to order takeaway.
The target audience consists of people who would theoretically like to cook, but don't know how to read a recipe book and/or don't want to go shopping or use online grocery shopping.
Ultimately the complex/exotic dishes just aren't offered enough to offset paying $10/ small portion for the more simple dishes.
Also the recipes BA does seem to me like eating in a good restaurant 3 times a week. Take out doesn't even play in the same ballpark.
Rather than providing money handouts to the worst off citizens, why not just cut out the middleman and offer basic prefab housing and cheap nutritious meals instead?
Instead of shipping individual groceries to middle-class hipsters, why not just cut out the middleman and cook the food instead?
Such a restaurant scheme already operates in India (called 'subsidised canteens'), and is used by all classes there since its cheap and reliable. The meals aren't free - they cost a few cents.
I'd happily eat almost every meal at such a restaurant which offered no-frills service, a simple (and probably vegetarian) menu, and very low cost. The menu could be coordinated with seasonally and locally available ingredients, and would probably offer a single choice of food, changed daily.
It would be like a soup-kitchen - but the need to pay a buck, and the presence of the middle classes, would make it acceptable for everyone.
I think if organised well enough, it could actually be more efficient that having everyone cooking at home - better logistics for the use of ingredients, less food waste, less water wasted in cleaning dishes, etc. Not too mention the better division of labour by having dedicated cooks doing the work with professional-grade equipment, rather than everyone spending ages to do it at home (and for a lot of poor people, they lack the equipment or skills to cook proper meals).
They did this. Ever hear of government cheese?
Turns out, the g'ovt isn't a very good grocer. Thus food stamps, and later EBT.
From my experience (work for an investor in and did product/acquisition/marketing for a food startup), there are very few people who will say no to a free meal, but converting those people is hard and there are a ton of variables that are hard to control for. The biggest thing that is tough to plan for is each person's taste. For example, if you pick a free meal and you don't like it will you really buy another one?
I am a really decent cook, but I mostly cook for 2 people so the value of these services to me is the convenience of just-what-you-need serving-size bits of rarer oddities like a small hunk of a special cheese, 3 shoots of green onions, a small bunch of fresh rosemary, exactly the right amount of this sauce or that seasoning, etc. Often unless my partner and I are doubling-down on a specific ingredient for a week or more, a lot of random things end up spoiling before we can use them up.
I think in the end since we're paying more for the ingredients, and generating more waste/recycling, it ends up being a wash on total consumption.
i did try it - and i had two major annoyances:
1. Wasteful Packaging - seemed like a waste of materials / cooler / all the plastic containers. (imagine 10,000s of these shipped everywhere and ending up in dumpsters)
2. I still have to cook! Im paying these guys more than i have to for basic ingredients and i STILL HAVE TO WASTE TIME and COOK! Where is the convenience?
Most of the people in our circles tried it for fun and recipes, 1-2-3 months then bam most quit.
This business model is a total failure. Local grocery stores did start carrying meal kits. But what i REALLY MISS is the guacamole kit from TJ! I wonder why TJ REALLY stopped carrying it...
That said thanks VCs for "free" food!
