Blue Apron, a popular brand in the fast-growing meal kit industry, has just announced that it is delaying its IPO for the time being in order to improve its financial metrics.
The company began to interview banks in September of 2016 for the anticipated launch of its IPO, but decided to wait until this year to move forward, according to Bloomberg News. Despite annual revenue last year of more than $800 million, competition from other big names in the industry like Hello Fresh as well as new niche meal kit services continue to divide market share. Blue Apron is targeting a $3 billion valuation for an IPO.
The meal kit industry is booming, and it’s no wonder. People are looking to eat healthier, which means turning to home-cooked meals. But who has the time to grocery shop, cook, and plan dinners when you have a family and career?
Companies like Blue Apron became popular with those who work long hours and don’t necessarily have the time to eat healthy, but do have the desire. They provide the ingredients and recipes and deliver them to your door each week, so you don’t have to shop for groceries or think about what to cook. Blue Apron charges $59.94 per box, which includes three dinners for two people.
Blue Apron faces stiff competition from Hello Fresh, which has recently expanded its global reach and is valued at about $2.18 billion. However, more competition could come from niche meal kit services for those on more discerning diets. For instance, Sun Basket Inc. offers organic and non-GMO ingredients and recipes catered to paleo, gluten-free and vegetarian diets, for about $9 more per box. meal kit services offers gourmet meals with artisanal ingredients, including meat with no added hormones or antibiotics and sustainably caught fish - but for a higher price tag, too.
Blue Apron is trying to differentiate itself by sharing the eco-friendly environmental footprint of its process, hoping to appeal to millennials who make up a large portion of the company’s customer base. Since there is so much wasted food in America (about half of all the country’s available food supply is discarded according to Blue Apron’s website), significant resources are lost in food production, which means higher prices for consumers. Because Blue Apron’s model allows them to predict orders each week, they can work with farmers to utilize crops and help them grow only what is needed. Offering pre-portioned ingredients also means that customers aren’t left with extra food at the end of the week.
The meal kit industry is predicted to keep growing, so Blue Apron may not be the only company eyeing an IPO this year, and they will likely face more competition in the coming months. For more information on this meal kit service, pleae read our Blue Apron review.