For my first analysis, I’ll be reviewing several startups in the ever booming food tech industry. The meal space is huge – every person needs to eat, a considerable amount of time and money is spent cooking, and technology has been slow to change that. Blue Apron is one model trying to disrupt this space, by offering pre-measured and pre-packaged ingredients alongside healthy recipes.
TL;DR – Blue Apron is incredibly easy to use and great for people learning to cook or wanting to experiment with esoteric ingredients, but there are better alternatives depending on the reason for choosing this service.
UI/UX Testing
Website
I won’t get too into the website since the bulk of the business is offline, but the site is set up beautifully, and it makes it very easy to get started. A step by step walkthrough asks you questions to auto-populate your preferences (dietary concerns, number of people you’re cooking for, delivery window, etc.) Beautifully designed, great visuals/pictures of food, all around a great job here.
Package
For $60 a week, Blue Apron sends a box with all of your desired ingredients (3 meals/2 servings each for 6 servings total). Each box is insulated and packed with ice packs to make sure the food stays fresh. The note each week with details about each meal and it’s origin is a nice touch too. Though I understand the necessity, it seems wasteful for each box to include an ice pack each time. Speaking of waste, the amount of plastic bags used for each individual ingredient also seems a bit overboard.
The labeling and exactness of the ingredients was a large reason why I bought Blue Apron – say good bye to unnecessary food spoilage. And for many others it’s the harder to buy ingredients, like ras-el-hanout and tamarind extract, that keep them interested in the meals.
Cooking It Up
The meals came on three separate, very professional looking cards (as seen below). The required ingredients are laid out, the steps are simple, and the pictures help understand what’s happening. For some meals, it’s a bit difficult to understand how to prepare certain ingredients (like small dicing celeriac) but nothing a quick google search can’t fix.
One thing I will note is that the cooking times are deceptive. If you’re a beginner cook, or your kitchen is small, the cooking times will be way longer than what is said (for me, it’s usually been doubled the suggested cook time). Would also be an improvement if the cards mentioned what kitchenware was needed (few times I found myself with proper baking materials).
The meals are definitely delicious and healthy, however the portions are relatively small. I probably eat more than average, but I can’t imagine two grown people splitting these meals. It’s definitely more like 1.5 servings per meal.
Overall
Pros: Blue Apron makes the process of cooking easy, takes out hassle from buying groceries/having to deal with portioning ingredients, is a seamless and well-crafted brand from end-to-end, and definitely has healthy and tasty recipes.
Cons: Serving sizes are small (especially at $10 a meal), cooking time is longer than suggested, and there’s a lot of waste in the packaging
Company Analysis
While I’ve enjoyed my time with Blue Apron, I ultimately ended up being another customer in their churn statistic. The real break was the time/price calculation, where I found myself eating $20 worth of food in one sitting along with taking an hour just to cook and clean. It’s definitely a great product to introduce newbies into cooking, but once they learn the skills I can’t imagine those same customers staying simply because of the price point. The main issues I imagine the company faces are:
- Anyone in a city can find a reasonably sized, healthy meal for $10-$20. If you value your time at minimum wage, Blue Apron is $10 per meal + $8 in lost time for cooking and cleaning. The two are about equal and one requires less work.
- Millenials/new grads would try Blue Apron to learn to cook, but most ultimately value their time and are generally taste agnostic; we don’t really care what we’re ingesting. Plus, cooking is still a chore for people in this bucket rather than a therapeutic or enjoyable activity.
- Adults with families are typically better versed in cooking fundamentals, and can save much more money buying groceries and cooking for themselves and their families vs. paying a considerable premium for Blue Apron. If the pain point is taking the time to grocery shop, it’s cheaper to use Instacart for groceries anyway (and Platejoy if you need help planning the meals).
The target customer would most likely be late 20’s – early 30’s individuals that finally have some disposable income and regular working hours (ideally in a relationship, since people tend to enjoy cooking more with a partner). Interviewing several people that use the service showed that the main reasons people enjoy Blue Apron are the ability to use hard to get ingredients, removing the effort of planning/buying groceries and weekly meals, and expand their cooking abilities and recipe repertoires. Blue Apron is awesome, but you should understand the reasons you’re signing up for the service. It’s great if you want to a) learn the basics of cooking or b) enjoy cooking and want to use new ingredients. If it’s for any other reason, there are better alternatives.
The company has raised at a valuation of $2B, and while I think the company is great and fills a real need, I have a hard time believing that the metrics for this valuation make sense. While their growth is probably explosive as they expand into new cities, I also imagine an extremely high churn rate as customers realize the same things I did.
I’d also be curious to see what type of profit the company turns on each box that it sells to consumers, because if it’s a company that only achieves profitability by massive volumes, I would question their ability to reach that level of scalability. Right now, it must be cost-intensive based on the organic produce, last mile cost for delivery, and relatively expensive packaging. Apparently they do approximately $360M in revenue a year, which would be a “relatively” reasonable valuation multiple of 5.56x. However, given the capital intensiveness, inevitable churn, and competitors moving into the space, whether or not Blue Apron can sustain the valuation is questionable.
If you have any questions or comments, let me know on twitter @nikillinit