Blue Apron: meal kit maker is chopped up, sold and reheated 

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Like planking and peplums, meal kits are a 2010s trend that has grown stale. Blue Apron, once a near $2bn company, has been sold to mobile restaurant start-up Wonder Group for $103mn. That should unnerve investors in European rival Hello Fresh.  

Boxing up perishable individual ingredients cuts down preparation time and food waste (just don’t mention the additional packaging). It lets consumers focus on particular meal types, such as keto or vegan. 

But after more than a decade of business, Blue Apron has failed to produce both profit and sales growth. Revenue was funnelled into marketing and discounts to attract new customers. Rivals like Home Chef and Hello Fresh fought for the same market share. Blue Apron’s marketing spend was equal to 18 per cent of revenue last year. At Hello Fresh it was equal to 17 per cent. 

Blue Apron can be commended for persuading customers to buy more. In the last set of quarterly earnings, active customer numbers fell 6 per cent while revenue dropped 3 per cent. But such incremental improvements are not good enough for a former growth stock. Sales peaked in 2017 — the year Blue Apron went public. Last November it withdrew its annual revenue target.

Even after selling fulfilment centres and other assets to meal company Fresh Realm, Blue Apron could not break even. Salvation has come in the form of fellow food delivery company Wonder Group. It has purchased Blue Apron at $13 per share, twice as high as the level at which the stock was trading. 

This optimism is unwarranted. Wonder Group has already had to switch from its expensive plan to kit out trucks with kitchens into food delivery. Sending out prepared food is cheaper but demand is still lagging. Hello Fresh may be profitable but it too is reporting slowing growth. It kept margins intact by cutting spending. To find more customers, Wonder Group could soon find itself saddled with a very big marketing bill.