- In what could be the start of an executive-level shake-up, Blue Apron co-founder and COO Matt Wadiak has stepped down from the meal kit company, according to Bloomberg. He will remain with the firm serving in a senior adviser capacity,
- Another noteworthy executive change is the promotion of Tim Smith from VP of Supply Chain to SVP and general manager of Consumer Products, a newly created role and team. According to a company press release, the consumer products team will “drive the innovation roadmap for Blue Apron’s consumer product portfolio, inclusive of its culinary, supply chain, packaging, and consumer insights functions.” Smith's background includes stints at Tyson and as general manager for Emerging Brands Group, an incubator for on-trend, fast growing brands.
- These announcements come less than a month after Blue Apron’s disappointing and well-documented public offering. The company’s shares have lost more than 25% of their value since the IPO in late June.
Some growing pains are to be expected as Blue Apron transitions from innovative upstart to publicly held company. Bloomberg reports that COO Matt Wadiak's background is in prepared foods, and that he helped build Blue Apron’s relationships with farms and other food suppliers. These credentials probably served the company well during its start-up phase. Now, the meal kit delivery company must put a management team in place capable of helping the company quickly scale up, and do so profitably. Shaking up the c-suite may be what the company needs.
Playing in its favor is Blue Apron’s first-mover advantage in the growing $5 billion meal kits business. Blue Apron tops the list of meal kit brands that consumers order online, according to research from Field Agent. But one of the biggest concerns is the huge amount of money Blue Apron spends getting people to try its services. Its marketing expenses increased 180% last year, well outpacing revenue gains of 133%. This kind of upside-down business model is unsustainable over the long run.
On the positive side, analysts see potential for Blue Apron to adapt. As Marketwatch reports, analyst firm SunTrust Robinson Humphrey recently noted, “As Blue Apron scales, it should be able to collect more data on customers and better predict food trends, including the possible addition of snacks, more meals per order and meals catered to dietary restrictions.” SunTrust estimates that Blue Apron revenues could grow 24% over the five-year horizon to $3 billion in 2022. The company generated revenues of $765.4 million in 2016, according to its prospectus.
But meal kit competition is getting stiffer too, which could temper Blue Apron’s outlook. The company no longer competes with other VC-backed start-ups like HelloFresh, Plated and Chef’d. It’s now up against the likes of big-name grocers — Kroger and Publix among them — and big CPG brands entering the meal kit space. According to data from Nielsen Fresh, supermarkets sold $80.6 million worth of meal kits in stores last year, and should see higher returns this year and in the years to follow. New consumer research doesn't bode well for Blue Apron and its online meal kit delivery counterparts either. Field Agent finds that many consumers want to purchase meal kits in the grocery store, not online.
Then there’s Amazon. Earlier this year, the company teamed with Martha Stewart to launch two-person meal kits called “Martha & Marley Spoon through AmazonFresh.” Then it filed a trademark application for prepared food kits via its Amazon Technologies unit and began selling them in limited release. It remains to be seen what can be achieved in the meal kit business once Amazon brings Whole Foods into the fold. The e-commerge giant's entry into the space could spell trouble for other players in the meal kit delivery industry, given its resources and established relationship with millions of consumers.
Needless to say, the meal kit market is a hotbed of activity and that hasn’t gone unnoticed by Wall Street. Following a customary 25 day post-IPO trading period, analysts have now started coverage of Blue Apron, according to MarketWatch. Somewhat surprisingly, many – among them Goldman Sachs, Stifel and SunTrust Robinson Humphrey — are bullish on Blue Apron and its future success in the meal kits delivery space. While these early days as a publicly traded company have been disheartening and disappointing, maybe some fresh blood in the c-suite is the right recipe for Blue Apron as it moves forward.