Post-IPO growth means simpler recipes.
When I first heard of Blue Apron in early 2014, my startup-skepticism meter shot way up. What, people can’t even pick out meals for themselves? I thought. (I also took umbrage at the fact that the astmpany had taken the same name as a much-loved independent gourmet specialty foods store in Park Slope, Brooklyn.) But as time went on I seemed to know more and more people who were signing up for the new meal-kit delivery startup. One night at a dinner party in August 2015, a good friend who had just started using it said that my significant other and I should try it—she knew of my skepticism and promised we would be surprised by how much we like it. Reluctantly, we signed up.
She was right. Cut to almost 2 years later, and much to my complete and utter shock, we have become Blue Apron superusers. We have cooked a grand total of 279 dinners. Our weekly delivery arrives on Thursday mornings like clockwork, and three nights a week we cut, chop, prep, and cook one of its organically sourced, creative, perfectly measured, and just-complex-enough meals for two. We have never not cooked everything we were sent. In 22 months, we have paused the service only once, for one week (another time we gave our weekly box to our neighbors). We have kept it going during Thanksgiving and through the holidays. About a year ago, we added Blue Apron Wine to the mix, so now every month we also get a delivery of six mini-bottles of wines to pair with the meals. We are in possession of a Blue Apron zester and a Blue Apron binder for our Blue Apron recipe cards. I am not making this up.
There are many reasons this works for us where it might not for others. While I am a restaurant lover, my significant other deems dining out unhealthy (one of many ways in which we are opposites). But we both dislike waste, and while some complain that the packaging on meal kit delivery services is excessive, which it is, I am of the school of thought that waste from over-purchasing ingredients is worse. Previously, if we had a rare night with time to plan and cook dinner, it would be a production: I would insist on sifting through a box of clippings of recipes I’ve been wanting to try; schlep to the grocery store with the list in hand and overpurchase every item; and then begin cooking, so that by the time we ate it might be 10pm, and worse, the unused produce would live out the remainder of its life in the fridge. With Blue Apron and its ilk, the thinking, planning and deciding part of the process is eliminated. Some could argue quite well that this stifles creativity and experimentation. But there is definitely no extra produce. And the price, at roughly $60 per week, works out to $10 per plate—more than the average American cost per meal of a few dollars per plate, but less expensive than takeout or dining out—or buying too many ingredients.
The main reason we have loved it so much, though, is the product itself. The caliber of the produce, meats and seafood is top-notch; everything is organic, fairly sourced, those that eat grass are grass fed, etc. And the recipes themselves are great. This is not just a way to quickly sling a protein and two sides on the table. From Chicken Pad Kee Mao to Cod Kedgeree to West African Peanut Chicken to Shrimp Perloo, the meals have proved an exploration into cuisines, ingredients, cultures, and processes that, at least for this quasi-experienced cook, were new and different. Yes, there’s more than little bit of a paint-by-numbers aspect to the whole process; everything comes in pre-measured little bottles and bags. But in what other universe would I be making Korean rice cakes at home on a Tuesday night? In the past 22 months, it’s taken me into new realms: I’ve made many a quick kimchi; pickled my own grapes just for a garnish; and crushed grains of paradise with the edge of a pot. I’ve become conversant in millet, sumac, freekeh, and dukkah. Even the more standard dishes come with a twist: burgers with green tomato chow chow; with salmon and dill; with hoisin sauce and shitake mushrooms; and the famous Juicy Lucy, with a well of melted cheddar cheese inside. We occasionally augment the ingredients and entertain with it or for when my partner’s children are visiting. It has increased our range of what we do when we improvise and cook on our own.
Many people don’t like the prep involved. Nothing comes pre-chopped, and we’ve found that it basically takes an hour unless you’re Martha Stewart (I mean this literally. I sat next to Stewart at a Fortune dinner shortly after she launched her own service with Blue Apron competitor Marley Spoon, and when someone asked her how long meal kits take, she said 30 minutes. I stayed silent.) But for me, the prep has become ritualistic and almost meditative. I put on a podcast, set up my mis-en-place, and start chopping away.
My complaints, until now, have been minimal: only once or twice have they forgotten an ingredient (I have friends who have had a tougher time with omissions). I don’t love it when they tell you to use “half” the vinegar in the small bottles; they’re too small, oddly shaped and opaque to eyeball fractional amounts. Being harnessed to the three-meal-a-week commitment can make it feel like we are on some kind of a meal-kit hamster wheel rushing to keep up with the inbound deliveries.
But, in case it isn’t obvious, we have basically been very happy customers.
Recently we’ve noticed some changes. Several months ago, my beau started noticing the meals seemed to have gotten easier and less sophisticated. We had four Korean rice cake, or tteok, dishes from January 2016 through January of this year, but haven’t had one in the past six months. Instead, we’ve had lots of seared chicken; salmon and cilantro-lime rice; seared steak and potatoes; and the like. These are all still very tasty, and in fairness, next week we have bulgogi beef and soba noodles coming. But even the more international dishes seem easier than they were when we first started. There are other signs of increased simplicity that have crept into the process: The recipe cards used to list a few wines from the Blue Apron collection that would go well with each meal; recently, it switched to a symbol-only system so users can match wines and food without having to read.
And then there are the potatoes. About a month or two ago, we noticed that the meals started going heavier on potatoes. Good potatoes, and a variety of potatoes—russet, fingerling, Yukon Gold—but lower-cost, hearty, seemingly “filler food” potatoes.
I couldn’t help but notice that these changes seemed to coincide with the company’s looming IPO.
Last week, Blue Apron went out of the gate with an initial public offering that was less than stellar: it cut its price range in the days leading up to it; it closed flat at its $10 per share opening price but has fallen steadily since; yesterday, it closed at $8.06. Its market cap is $1.5 billion, less than its $2 billion valuation for its most recent private fundraising round in 2015.
Part of this has been panic over Amazon’s sudden move a few weeks ago to acquire Whole Foods. In an instant, Bezos could clone Blue Apron, so the fear goes. Part of the tepid reaction is concern over competition: there are now scores of meal kit delivery services. But much of it is concern over Blue Apron’s ability to continue to grow. It has delivered a total of more than 159 million meals all told, and its $795.4 million in revenue last year was up 133 percent from 2015. It is the leader in the meal-kit delivery pack. But its marketing costs have soared as it has spent boatloads on customer acquisitions such as advertising, heavy discounts, and free meals for referrals. Its losses are climbing sharply: In 2016 the company lost $55 million for the full year; this year, it lost $52 million in the first quarter alone.
To grow, Blue Apron has to get new customers by making itself accessible to a broader band of consumers. It also has to hold onto them: The company doesn’t reveal its churn rate, but most people I know who’ve tried it have abandoned it at some point either for a competitor or, more commonly, for reverting to takeout, cooking themselves, and/or dining out. The company does report orders per customer, which is currently 4.1, down from a high of 4.6 in the December 2015 quarter.
One way to lure new customers is to give away offers for free or discounted sample meals, which the company has been doing with abandon, racking up those bills. With many people intimidated by the very idea of cooking three nights at home, another way to do it is to make using the product easier and more accessible. That, I fear, is what those potatoes signal: they were cost-containing, growth-friendly, pre-IPO potatoes.
The company confirmed my observations—if not the underlying reason for them— when I inquired about them. Nisha Devarajan, Blue Apron’s communications director, said in an email that the company “recently introduced recipe options that are faster to prepare and cook,” for customers who don’t have as much time on busy weeknights. It’s also working on introducing new product expansions, she said, like the ability to select greater or fewer recipes per order, and the ability to choose from a greater number of recipes per week.
As for the potatoes, I wasn’t imagining it: Devarajan said that the culinary team has found through consumer feedback that its customers prefer potatoes over grains—and that potatoes are more versatile than grains, allowing for more creative cooking techniques.
I’m perhaps bracing for these changes because it’s such a classic conundrum consumer companies face after going public: investors want growth, the company makes a run for it, and the subsequent attempt at expansion dilutes the quality of the product or the brand. This is perhaps best exemplified in fashion, when companies like Michael Kors, Tiffany, Coach and many more all suffered at one point or another by chasing ubiquity (Michael Kors, the canonical example of this, recently announced plans to close 100 to 125 stores over the next two years).
Brands with any element of cult appeal have it particularly tough, as die-hard consumers tend to huff and puff the moment a brand looks like it might be “selling out.” Lululemon lost some of its most loyal adherents when its stores started showing up in malls. As I report in my book about Airbnb (book plug: The Airbnb Story), some of the home-sharing giant’s earliest users feel it’s lost the counterculture spirit its small community of users had when it was still a social experiment that the mainstream consumer did not yet know about.
Of course, no company wants to remain a company no one’s ever heard of. And in Blue Apron’s case, putting a meal kit on every table is not just about its growth plans but its mission; it wants to change the way America eats. But by that, it has said very clearly that it means all of America: “We don’t know why Blue Apron wouldn’t have a place in every home in America in some way,” CEO Matt Salzberg told the New York Times in 2016.
For Blue Apron to have a meal kit in every pot—and to achieve success in the public markets— means that the Blue Apron I know may have to change more still. Here’s hoping it doesn’t.