Blue Apron, Struggling to Woo Investors, Lowers Price Range for IPO
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No reason why Amazon couldn't just tack on nice recipes to their food delivery service and the acquisition of Whole Foods makes that direction even more likely. Blue Apron is in a dangerous and precarious spot and that's being reflected in the lowering of valuations.
We're going to see more "disrupters being disrupted" as value chain consolidation continues to evolve.
I also see it from my own perspective: As blue apron gets millennials cooking again, more and more of them will remember what the grocery store was for -- as they will now experiment with recipes on their own, buy their own ingredients, maybe attend a farmers market or two and meet the growers of their food and support local farms. As grocery stores become more convenient to check in/out, Blue Apron's value goes further and further down.
Sample size: New York (Brooklyn and Manhattan) and Los Angeles.
FWIW, cooking isn't an interesting side hobby for me: I cook pretty every meal my family eats from scratch, and it's hard enough planning and executing 21 meals a week without dealing with artisinal suppliers.
What are you thinking expecting major metropolitan areas to be good places for farmers markets?
Although I'm told the one in Seattle is supposedly legendary...
As an aside, it's interesting to see how others introduce new foods to the rotating menu. I'm pretty conservative: cook a new dish and serve it on the side on night T, and if it works, it becomes the main dish on T+1.
You need to look for local farmer's markets, not the faux-distributor's ones. I think what you need to know about Farmer's Markets is that you must buy (can only buy) in-season produce. While this might disappoint the regular grocery shopper who is used to bad tomatoes in December, to the the chef, its a great delight to be able to pick from only the right season's produce.
You have to go to a "real" farmers market. The best way to tell is check out where all the delivery trucks are and read some of the boxes. If you see "product of California"" or "product of Mexico" on many of the boxes and you are in a farmers market no where near Mexico or California, you are at an outdoor grocery store.
It's a shame.
Compared to the modern supermarket where everything is available all the time it is certainly a pain in the neck. But in exchange you (sometimes) get produce that's so much better than the visually flawless but tasteless items you often get in a supermarket that it doesn't even seem like the same plant.
Farmers markets are not part of a serious urban domestic supply chain where reliability matters. They are for fun, and that is ok! I love picking up a weird jar of flavored honey or some fresh blackberries for snacking. I just wish people would stop suggesting that farmer's markets are some kind of solution to all that ails the urban cook.
I get the urge to go back to simpler times when people spent two hours shopping before spending all day over the stove, but by and large, I think it's silly. We've moved on, and the number of people that turn up unannounced at our home for a warm evening meal tells me that even the degraded produce in markets today is more than sufficient to produce great meals.
I live between the Union Square and Abington Square farmers markets in Manhattan.
Delicious food
Great variety
Low prices in season
Friendly farmers
They've made nearly all grocery stores into disappointments. I get over 90% of my food from them and my CSA. Plus I bring my compost there. Because of them I cook nearly everything from scratch, with ingredients picked around 24 hours before I bought them.
Shopping at those farmers markets, and picking up my CSA delivery is the highlight of my week: I can't wait to see what I'm going to love eating.
And I definitely don't want to drag my compost through lower Manhattan.
Vegetables from the farm is how I create meals every day, plus legumes and nuts from the bulk food store, probably 90+% of my calories. I don't buy packaged food. My vegetables come from the farmers market and farm share.
I bring compost through Manhattan because I love living here and the alternative is putting it into landfills, which I'm not willing to do. It means carrying a few pounds a few blocks maybe once a month to where I was going anyway to get vegetables that are more delicious, healthy, and cheap than any alternative.
These are all improvements to my life.
Sometimes I'm feeling like something specific for dinner that may not be in season - and thanks to modern agriculture I can still go to the supermarket and get the ingredients. That's definitely not a need that the farmer's markets can fulfill.
But you absolutely can cook very reasonable dinners with the seasonal ingredients you get at the farmer's markets, and I enjoy doing so frequently. Doing this repeatably and reliably for dinner requires a wider breadth of recipes, but IMO is a skill well worth cultivating for not just nutrition but taste.
Personally, the changing of food with the seasons is IMO one of the great joys of life.
It feels like you're talking past the others in the thread here - many of whom can and do rely on CSAs and farmer's markets for their everyday cooking (and not just "fun treats"). Nobody's saying you must not use supermarkets (I sure do), or that CSAs/farmer's markets are the only way to go, but they are fairly complete sources of ingredients for meals.
The only other problem left at this point is the efficiency equation -- can I think of, buy and then execute on the ingredients faster than it takes for me to drive, get seated, and eat my meal at a restaurant. I am finding the more I do it, the more the answer becomes: yes.
The only time I go to steak places is for business dinners as they often seem one of the defaults for high-endish places to take customers. But I basically never go on my own. They're generally pretty boring and steak is something I can make easily at home. When I go to fancier restaurants I usually have something that would be way too fussy for me to make at home or that I simply couldn't do a good job of.
If that’s actually the pitch, I’m...astounded. Unless they’re in the field picking this shit themselves, they’re the very definition of “middle-man”. If they want to make themselves feel better, call it “value added reseller”, but you’re still a middle-man.
And maybe they are out there, in the field at the crack o’. But I have my doubts.
Furthermore fresh ingredients get delivered to you in the right portions. When I've done this in the past I end up with way more ingredients than I need that end up getting thrown out.
These services also give you a way to quickly try a meal out and decide if you like it or not to make it again in the future. If so you keep the recipe card.
There is absolutely value in these meal services.
I think it's likely that Amazon and Whole Foods can replicate this process though and they will be able to drive down costs due to their distribution power and economies of scale.
Unless you're throwing out ~60% of the ingredients you buy, surely grocery shopping (Or, if you don't want to shop, grocery delivery services) are more economical. It's also probably better for the environment, given the amount of packaging that goes into Blue Apron meals.
That said, the waste argument in the other direction also seems overblown (all the plastic bags etc. that BA and many of its competitors use). I'm pretty sure that if you looked at the carbon footprint--or whatever measure you want to use--for Chinese takeout or other prepared food options that people don't think twice about versus "wasteful" BA, you'd probably find those other options were a heck of a lot worse.
(I agree BA is probably somewhat wasteful compared to regular grocery delivery but I'm betting it's pretty small potatoes in the scheme of things.)
Without sounding crass or like a broken record, thats all most of Silicon Valley startups are: the new middleman. More efficient, sure, but still a middleman. I believe the colloquial term is "platform".
(1) They've opened several proprietary warehouses,
(2) They've developed direct sourcing relationships with numerous farms, cutting out any distributors/wholesalers/etc,
(3) They've hired chefs to figure out how to take real-time supply data from (2) and convert it into recipes, with the right portions, that account for seasonality, weather, and other supply variations,
(4) They've executed a consumer marketing campaign that's led to over 159 million meals served across 25 million orders
then sure yeah, they're just a "costly middleman".
I don't use this service, but you might try reading their S-1. It contains a lot of interesting commentary on their strategy, and hard data on the business. I don't know whether this thing will be worth its IPO price, or have a lot of upside when it goes public, but I do think there's space in the market for a company that handles all the logistics and gets the exact right quantity of stuff on your table. Per their S-1, 21% of all food purchased in the US is thrown out - that's plenty of room for innovation.
Also, consider that they've done all this on $195 million vs. $675 million blown by Instacart. I know for sure which one I'm more impressed by, but you be the judge.
[1] https://www.amazon.com/b?ie=UTF8&node=14828691011 [2] https://www.amazon.com/b?ie=UTF8&node=16207550011
I sense Amazon will consider how they can build off of that supply chain to open up new opportunities. One of these opportunities might be different meal kit services.
For comparison, Blue Apron claims they have 150 farms. But I can't find anywhere, for example, what farm produced the produce for any particular meal. Maybe the information is there, but I suspect produce is mixed together in order to ensure the supply of each menu just works. So, a WF-based supply should be able to use a the "local" tag on their meal kits and create a much more distinctive differentiation.
Meal kits will be popular, but I don't sense there will need to be a large national distribution. Even Amazon will probably need to contend with regional and local providers. But Amazon does a good job of being a business platform, such that they might be the place a local business could source the ingredients and distribute to customers. I don't see how larger companies like Blue Apron could become platforms.
Then you're not really at a farmers' market, are you? At mine I look at the sign and it tells me what farm's table I'm standing in front of.
It's crossed my mind more than once to go into Shaw's, buy a bunch of stuff, and sell it at the farmers market that sets up in that very same parking lot every Saturday. Given that our supermarkets even sell local stuff, I can still call locally grown and not be lying to anyone.
And that's a stand on a farm much less a farmers market.
Seriously though, the idea is that people want to do their shopping in one place. If you do produce, there's a lot of pressure to stock all of the produce anyone could want, for fear that they won't stop just to buy what you grow.
It's a lot more complicated than this and it's distressing you reduced it so much.
The expansion for Amazon would be dramatic and expensive.
Right now, Amazon is a warehouse business that re-sells food products which already pass regulation and inspection.
You're talking about Amazon becoming a food business that prepares uncooked food and re-sells food, which must be regulated and inspected.
These services don't just send you a prepackaged spice container, they individually portion out most of the spices, oils, liquids, creams, etc etc into exact amounts needed.
I guess Amazon could try and find a supplier which would buy high quality ingredients and spices for precise repackaging, but one thing is for sure: it's far more complicated than "add recipes to prepackaged food delivery business"
Amazon has WholeFood's staff prepare what are essentially Blue Apron boxes. Produce, meat, and the deli can pre-portion the specific spices and ingredients for each recipe choice.
And then AmazonRestaurants/AmazonNow uber competitor can same day (next hour!) deliver it to you.
That's a real product strategy there. It's noon, you're texting your wife about dinner, you're both having a stressful day, you order a Amazon/WholeFoods dinner for four.
Sell the whole package, not individual servings. A dozen eggs; a half-liter of olive oil, the shaker of paprika, etc. Then, when new recipes come up, the customer typically only needs one or two things; you can track what bulk items they've recently purchased and suggest that maybe they want to reorder a new bottle. Yeah, the first couple orders might be expensive, but it would quickly turn into a groove where most delivery items are perishables, and the overall cost would be less.
If I lived slightly farther away from a supermarket than I do (1 block), I would totally subscribe to a service like this.
This probably isn't much of a stretch from supermarket delivery services that have reorder options - if WF/A doesn't have that already in the works, I expect they will soon. It really just coordinates it with a menu-of-the-day service. And if WF/A is smart, they'll make an API for this so anyone with menu-of-the-day inspiration can create their own startup built on the food delivery platform and take a small cut.
I don't see this ending well for Blue Apron.
https://grist.org/food/dear-blue-apron-youre-just-making-it-...
https://www.buzzfeed.com/ellencushing/these-are-the-trashy-c...
Promoting reusing or recycling all their packaging obfuscates that there is so much of it.
There are other services that have more of a focus on reusable containers but I have to wonder how much boils down to virtue signaling. I'm a bit skeptical that a reusable insulated package that UPS needs to make an extra trip to pickup is really that much less wasteful than what BA does.
Why would you say this? When I worked in restaurants, I remember very little waste (other than actual food waste and spoilage, of which there was tons.)
Well yes. Not plastic bags but the overall level of wastage. (To say nothing of the energy/materials overhead associated with operating a restaurant.)
I have nothing against restaurants. I'm just saying that Blue Apron packaging waste is pretty small potatoes compared to a lot of other ways of obtaining food.
But of course, most plastic recycling is a myth, especially if you add in the environmental impact of collection and processing.
We live in an area where it is inconvenient to find the variety and quality of meats and vegetables available.
It is very obvious to me, that operationally, there are significant differences in the material handling and logistics from each provider.
We now mostly rely on Home Chef. It's variety of ingredients and recipes rivals that of Plated, but its packaging is more thoughtful, like Hello Fresh. In my experience, Home Chef has the most accurate order packaging, as well (missing or wrong items).
I would put my money on Home Chef.
They should have a Blue Apron section in all supermarkets. In the market, we mostly have a choice of cooking from scratch or fully cooked. Having TV dinners everyday does not work for most and starting from scratch is always painful. A middle ground section would do wonders.
Additionally, the fact that they can get squeezed from suppliers, delivery services and supermarkets makes it a hard for it to stay independent as a company. I bet it will eventually get acquired.
I agree with you though. Stores already carry a lot of semi-prepped vegetables, marinated meat and the like. Selling an everything you need kit with a recipe card seems a pretty logical next step.
Couple with their shop for you service and it's basically blue apron.
0. https://medium.com/@byrnehobart/the-slow-motion-trainwreck-f...
We miss you byrneseyeview!
Also in my mails I increasingly see ads/coupons from local grocery stores for quick to prepare meal boxes. May be they are catching up on this trend.
What am I missing here?
I personally think a much better model is high quality cooked or pre-cooked food delivered to your home. Deliver cooked restaurant quality food rapidly, like the ultimate take-out. Or just pop something in the oven for 20 min, etc. Cooking is time consuming and often annoying, the major pain point (for me and most people I know anyway) is not going to a grocery store once a week or finding recipes which are abundant online, it's the actual act of cooking for 30-60 minutes, for every dinner (or lunch), before 5 or 10 minutes of eating.
Maybe I'm the wrong target demographic, who knows.
These services are for people who want to cook but feel they benefit from having someone else handle most of the planning and the shopping.
In urban locations, there are tons of options to have take-out delivered.
On top of that maybe they'd stop putting kale in everything because it's so damn cheap to source.
Kale is extraordinarily trendy right now, that's probably the other reason it'd be included
Of course, whether that's a big benefit (or even interesting) to you or not will vary, but I think it's a material difference.
(FWIW we tried Blue Apron for a little while and thought it was ok, but the pain points they solve aren't big pain points for us. And we found that the recipes we kind of hit or miss for our tastes. So we canceled a long time ago.)
That's today. Today Whole Foods is not in this business. It will be, however. Because already today I can walk into smaller grocery stores in NYC ( C-Town, Associated, Key Foods ) and in some higher end ones there are meal kits ready. I'm not even talking about Wegmans which periodically makes Whole Foods look like a third rate store. Granted, at this time these are just pre-seasoned steaks and sides already packaged, kebobs already assembled, sides already portioned. They are at a 0-10% markup to the non-assembled prices of the raw ingridents at the same supermarkets.
Supermarkets have been doing this for years in a prepared foods or partially prepared foods section. They know what their customers buy and they know how much they buy. All of that was pre Amazon-Whole Foods days.
Amazon-Whole Foods is the elephant in the room. One needs to be rather irrational to bet on BA or anyone else raising money before knowing what Amazon - Wholefoods do to this market, especially considering that Whole Foods dwarfs all meal services combined in any major metro. Without those major metro customers BA and likes cannot survive.
I'm still waiting for the 4 ingredients or less service -- even if they are processed first. I don't need to make everything from scratch.
In all fairness, one approach seems to be to pre-make spice blends and the like which aren't pantry staples. This simplifies recipes but but not necessarily in a way you could do on your own.
This is frozen food. I don't believe there's much profit between grocery stores and restaurants for people who don't care for culinary quality.
But I actually agree that the use case for these services is pretty narrow. I know they don't really work for me. If I could get quality grocery delivery where I live I might get meal kits as part of that but as a standalone offering the tradeoffs just aren't right. Every time I think about signing up for a delivery in a couple weeks I look at the recipes and go "Eh, maybe I'll just buy the ingredients for that next time I go shopping."
As far as going out to eat, many of the meals rival anything I could pay to have served to me at a restaurant (as well as the time spent traveling).
I'm not sure how valuable your time is, but mine is better spent having somebody deliver me the exact ingredients I need to create a delicious meal with minimal effort on my part (aside from cooking, which I enjoy).
Maybe you enjoy waiting in lines and traveling? I do not.
Particularly for the latter purpose, I appreciate that they give me exactly what I need, because I probably don't want to use it again any time soon.
To put this into perspective: US spending on Halal food, which is a narrow religious niche, is $20 billion/year.
IMO, the beef was generally terrible, but most everything else was high (enough) quality.
My biggest complaint is no web UI discoverable way to cancel your account. You have to call someone (or google the hidden cancellation page).
So, for many months now, I've been googling "blue apron" or "plated" and clicking on the paid search ad every week to cancel my upcoming deliveries. ;)
https://wrhambrecht.com/openipo/
I first learned about it during the Google IPO, but after that, I never saw any companies doing an auction IPO that I was interested in investing in.
Their meals are overpriced for what you get from what I have seen, I fail to see their value over simply buying the stuff local and and finding a recipe online for free.
for their $60 per week to get 6 small portion meals I can buy over 2x that number of meals shopping at my local store, + snacks and other household items
I tried a couple of these services and while I liked the convenience, I couldn't stand the waste -- a couple dozen little plastic jars and baggies each week going into the recycling.
The value for Blue Apron for us:
* I don't have to look through and choose recipes.
* I don't have to spend a hour in the store, we pretty much just get staples (eggs, milk, etc) these days.
* I don't throw away near as much food. We used to throw away around 50% of food purchases due to changing schedules / spoilage. We actually saved money moving to Blue Apron.
* Blue Apron can include specialty ingredients that I won't normally have (e.g. I'm not routinely going to the Korean grocery).
I like to cook. Blue Apron makes it easy to do that while exposing us to new and interesting recipes without committing a lot of time to the process. That's worth money.
Now, curated recipe lists without having to buy the groceris through them is a subscription service I'd pay for. I already subscribe to Bon Appetit for the recipes.
Google: quick and easy <protein> skillet with <what i have in a fridge>
> * I don't have to spend a hour in the store, we pretty much just get staples (eggs, milk, etc) these days.
In less than 6 months of cooking you would get entire pantry of all kinds of dry and canned ingredients needed by buying them in a reasonably sized containers as needed or as the opportunity presents itself
> I don't throw away near as much food. We used to throw away around 50% of food purchases due to changing schedules / spoilage. We actually saved money moving to Blue Apron.
That just means you are overbuying/overcooking. After 6 months of cooking a cost of a "complex" BA like meal without BA should be $2-3 per person even in the most expensive markets in the US.
Blue Apron's cost can never match a cost of buying protein/pantry/vegetable items on sale as neither BA has the infrastructure and volume to match grocery chains nor does it have other ways of squeezing the margins.
Now, you may decide that you do not want to have a pantry or use Google or know that $0.49-0.59 is a good price for chicken thighs and $0.99 is a good price for whole chicken in NYC or that you should not buy turmeric at Chelsea market because it is 4x the price at any other grocery store and that's why you would use BA. The problem is that there are just not enough people like you to make BA profitable, especially now with Amazon buying Whole Foods.
These are your most expensive ingredients in NYC today in a non-upscale ( and non-ethnic ) supermarkets. At best you are getting 1/4lb per portion. All other ingredients would barely make a dollar if you don't buy a precious single onion and instead buy a bag of onions or instead of getting a single carrot, you buy a small bags of carrots.
Obviously you don't buy salmon when it is $16/lb as you know that at some point over next few weeks it would be $11/lb. The last one that I got at Chelsea market was $9.99/lb because they did not correctly predict how many were going to be bought as fillets and sushi so they wanted to offload the last two at the end of the day before getting another 10 next morning.
BA cost of raw ingredients is at best 5-10% better than yours when you walk into a random supermarket and just buy non-insanely priced items.
I've cooked and bought groceries in NYC several times and while the prices are definitely competitive with some hunting, the 99c whole chicken I found was total garbage and basically was like water and salt.
My step-dad used to swear he couldn't tell a difference between the $1.99 special chicken and the regular stuff I bought that was $4 - 6.99. To me the $1.99 tastes like eating saline solution (I've had saline injections, it tasted like that to me). Maybe it's just a question of taste.
But yeah, I guess if you have celiac's or live with someone with celiac's you're just kind of shit out of luck for Blue Apron.
Have you ever tried printing out a recipe online, driving to the grocery store, and picking up all the ingredients? It's a pain in the ass. Try finding tandoori spice rub, or pink lemons, or dried currants. Chances are your local supermarket doesn't have one or two ingredients, so you leave it our or sub it, but that makes a difference in the taste. On top of that, you're usually forced to buy much more than you need for any given recipe, making it pretty wasteful, and more expensive than it should be. Not to mention all the time wasted physically moving around the supermarket, driving, gas to the supermarket, etc.
The recipes taste great and they're easy to follow. I routinely have better meals cooking blue apron than going out to eat. For me, this is a much faster, cheaper, and better solution. That's not to say this is a great business, personally I think anyone can copy this service, in particular larger companies, so I probably wouldn't buy the stock.
I guess that is the other difference for me, I am no interested in these complex meals with these odd ingredients.
Give me a protein, some greens or steamed veggies, maybe a baked potato and a salad I am good to go...
Anymore I am getting to the Meal Prep Sunday style of cooking where I make a batch of something, then reheat it through out the week.
I like simple good meals.
Made the Chiles Rellenos last night, sure I could get a can of tomato paste for fifty cents, but I only needed a 4th of the can. When I made the catfish curry, I was thinking to myself, where do I even buy curry? Apparently I can go on Amazon and get a 5 pack of 12-serving cans.
I don't think the plastic mass I have to deal with is good, but I also threw out a bunch of my roommate's moldy leftovers while cooking my Blue Apron meal.
As I said in a comment yesterday, I suspect that Blue Apron deliberately puts somewhat oddball ingredients, often in small quantities, in their recipes precisely to discourage people from thinking "Oh, I can just pick these up at the grocery store."
I now know what ramps are for example. (They're pretty much scallions :-))
However I can see someone just starting out being tricked by one of the many crap recipes out there and just simply wanting the convenience of a quality recipe with the exact ingredients.
Food Wishes, Serious Eats, Cooking With Dog, America's Test Kitchen, Maangchi, the forums of pizzamaking.com
Bon Appetit recipes tend to be good when I make them, but they publish a lot of recipes and often times they aren't for food I actually want to make. Good Eats was nice when I was initially learning how to cook, but he sometimes goes over board, especially his weird unitasker rule. The correct rule should be to always critically evaluate bringing a new tool into kitchen, don't clutter it up with a lot of items you will rarely use, and make sure the tool is as easy as possible to keep clean.
The value proposition is, primarily, saving time shopping, meal planning, and portioning-out ingredients.
Whether this is sufficient to justify the cost depends on how you value your time, and whether you find value in spending it on those a activities.
Not having to entertain in a grocery cart or plan meals around ingredients that can't be bought in small quantities is even better. I suppose it depends a bit on the types of things you like to eat.
Occasionally there is one that I'll have a snack afterwards, but I tend to have a pretty big appetite and find the quantity fine.
Take it a step further, buy pre-made meals from someplace like ICON meals and you just have to heat them up.
Its it's not a food product it's a lifestyle product.
As a food product it's no different from buying cheap prechopped supermarket produce and throwing it in a pan. Saves a few minutes or an hour a week at the expense of having to be at home to get the delivery.
As a lifestyle product it's an effortless way to feel like you are cooking for yourself, being healthier, not shovelling readymeals or takeaway food into your mouth so you feel better about yourself. Also the fact you pay quite a lot for it gives you incentive to actually follow the routine.
I have been using blue apron for more than 2 years.
I'd say It's the highest quality meal at its price point.
It makes it so I don't have to think about picking a recipe and selecting ingredients on Instacart or whatever.
The services are fine and in a somewhat different situation I'd probably use them more. But I understand why a lot of folks don't really get their purpose.
My local Supermarket chain, could just put up a rack with meal kits, and destroy most of their market.
It'll give you a Twitter referral which should bypass it.
www.ReadAcrossTheAisle.com
a really good food delivery service with options to click a receipe and all have the quantity(ies) of all of the necessary foods added into your cart will kill this whole microshopping silliness.
most who seriously want to cook probably want to choose their own ingredients.
[] actually, people who want ridiculously complex meals, but for some strange reason want to cook it instead of buying it already made might like this.