Yesterday, Blue Apron, one of the country’s first and most visible meal-kit delivery services, filed an IPO seeking to raise an undisclosed amount — the documents lists $100 million as a placeholder, but that number will likely change, according to Bloomberg. The company, which was founded in New York City in 2012, is now valued at $2 billion. It will be the first meal kit delivery start-up to go public.
In its 170-page Security and Exchange Commission filing, Blue Apron dropped a few hints at what’s to come for the brand. New products and offerings make it sound like subscribers will have more flexibility in their plans: touted are changes like “the ability to select greater or fewer recipes per order” and “the ability to choose from a greater number of recipes each week.” (Currently, subscribers can choose from six recipes per week, receiving a mandated three different meals; there are no details about the projected timeline for any changes.)
The company also says it’s set up to deliver to almost every doorstep in the U.S., with “a ground-based delivery network comprised of several third-party partners capable of delivering to geographies covering over 99% of the U.S. population.”
But based on its filing, the company that wants “to build a better food system,” according to their mission, appears to be on somewhat shaky ground. Marketing costs are eating up its profits, and its customers appear to be spending less on each order. Here are some interesting excerpts pulled from the SEC paperwork:
• Blue Apron’s net revenue grew 338 percent between 2014 and 2015 and 133 percent, up to $795.4 million, between 2015 and 2016. But its losses have also climbed each year: “In 2014, 2015, and 2016, we incurred net losses of $(30.8) million, $(47.0) million, and $(54.9) million, respectively.”
• Marketing costs are its biggest expense, and as a percentage of net revenue are on the rise. A large amount of this marketing budget is going towards promotional meal boxes and free giveaways (like in its “refer a friend” program). In 2016, it spent $144.1 million on marketing.
• During the first quarter of 2017, Blue Apron tallied 1,036,000 customers — defined as “the total number of individual customers who paid for at least one order across our meal, wine, or market products in the three months ended March 31, 2017.”
• The average Blue Apron customer places roughly four orders every three months (BA tallies “orders” across its meal kit, wine , and market platforms, though, and “does not reflect the product mix chosen by our customers”). The most recent average order is $57.23. (The current two-person plan pricing is $59.94 per box.) In 2016, 78 percent of orders were for the two-person plan and 22 percent were for the family plan.
• Blue Apron now has over 5,000 full-time employees, “of which more than 85% were engaged in fulfillment operations. None of our employees is represented by a labor union or covered by a collective bargaining agreement.”
• A huge part of Blue Apron’s business is sourcing. The company works with more than 300 different suppliers, and “the majority of our food purchases are from suppliers who have entered into exclusivity arrangements with us.”
• To help offset the demands it places on meat suppliers, Blue Apron bought BN Ranch, a meat purveyor, earlier this year. Now that it’s in the farm business, it has additional regulations to meet: “We recently began conducting livestock and poultry operations, which are subject to a variety of federal, state and local legal and regulatory requirements, including regarding the discharge of materials and pollutants and animal welfare.”