Meal kits/Blue Apron: returning to the fray

Restaurants forced to shut their doors in the pandemic had a choice: close kitchens down or package up the short ribs, garnishes and emulsions for delivery. Dishoom’s bacon naan, Arabica’s tagines and a three-course meal from L’Enclume’s Simon Rogan are all available to make at home.

A Michelin-starred seal of approval and kitchen fatigue among lockdown cooks have given meal kit companies a temporary boost. Blue Apron, an early mover in the US, was beset by competitors. Once on the brink of extinction, it reported a sales jump of more than a fifth in the last quarter of 2020, to $115.5m. 

Unfortunately, the reprieve looks temporary. At the start of the pandemic, Blue Apron had a single profitable quarter. Quarterly losses have returned, as in every period since it listed in 2017.

Still, it has survived. Between Blue Apron pitching to join the markets and its listing, Amazon bought supermarket chain Whole Foods. With the market wary of the ecommerce giant’s plans, Blue Apron had to cut its IPO pricing from up to $17 per share to just $10. Later, the price fell below $1 and it evaded delisting with a one-for-15 reverse stock split.

A new boss — Etsy’s Linda Kozlowski — has raised order values 22 per cent in the past year. Her plan is a good one: focus on loyal users instead of handing out freebies to disengaged ones. But the market is too crowded to raise prices and turn a profit. Rivals including HelloFresh compete for customers keen to prepare a meal but not shop. Food delivery services scoop up anyone too lazy to cook. Raw Generation dispatches vegetable juice for those who have given up on solid food altogether. 

Vaccine distribution and shop reopenings will put a stop to high-end food boxes. Meal kit companies such as Blue Apron will struggle to keep the attention of customers when lockdowns end. The company has vowed to introduce new products. But nothing is likely to match a waiting table at a restaurant.

The Lex team is interested in hearing more from readers. Are we right to be bearish on Blue Apron? Please tell us what you think in the comments section below.