The Rise and Fall of Blue Apron

Blue Apron is a meal kit delivery service that was founded in 2012 and went public in 2017. It offers customers a variety of recipes and ingredients to cook at home. However, Blue Apron has faced many challenges and difficulties in recent years, such as declining revenue, customer churn, rising costs, competition, and lawsuits.

According to its latest financial report, Blue Apron had $124.5 million in revenue and 1.1 million customers in the second quarter of 2023, which were down by 15% and 18%, respectively, from the same period last year4. The company also reported a net loss of $18.6 million and an adjusted EBITDA loss of $9.6 million for the quarter4. Blue Apron has been trying to improve its performance by cutting costs, launching new products, partnering with celebrities and brands, and expanding its distribution channels4 . However, these efforts have not been enough to reverse the downward trend and restore profitability.

On September 29, 2023, Blue Apron announced that it has agreed to be acquired by Wonder Group, a food delivery startup founded by entrepreneur Marc Lore, for $13.00 per share in cash, which values the company at approximately $103 million. This represents a significant premium over Blue Apron’s recent trading prices, but a steep discount from its initial public offering price of $10.00 per share in 2017.

The deal is expected to close in the fourth quarter of 2023, subject to customary closing conditions and regulatory approvals.

Wonder Group is a company that aims to create the “mealtime super app” that offers a range of cuisines and occasions for at-home dining and food delivery. It leverages its culinary engineering and vertically integrated model to provide high-quality and flavorful meals to customers. Wonder Group plans to continue operating Blue Apron under its own brand and enhance its product offerings and customer experience by leveraging the synergies between the two companies.

In conclusion, Blue Apron is a meal kit delivery service that has been struggling with various challenges and losing market share and value for several years. It has agreed to be acquired by Wonder Group, a food delivery startup that hopes to create a leading platform for mealtime. The acquisition is expected to benefit both companies and their customers by offering more choice, flexibility, and convenience for at-home dining.

Blue Apron's History And User Growth

Blue Apron was founded in 2012 by Matt Salzberg, Ilia Papas, and Matthew Wadiak, who wanted to help people cook delicious meals at home with fresh and pre-portioned ingredients.

The company grew rapidly and reached its peak in the first quarter of 2017, when it had about 1 million customers and $244.8 million in revenue. It also went public in June 2017 at $10 per share.

However, Blue Apron faced many challenges after its IPO, such as declining customer retention, rising marketing and operational costs, increasing competition from other meal kit services and grocery delivery platforms, and legal disputes over labor practices and trademark infringement.

As a result, Blue Apron’s customer base and revenue declined significantly over the years. In the fourth quarter of 2022, it had only 298 thousand customers and $124.5 million in revenue. Its stock price also plummeted to less than $1 per share in 2020.

In September 2023, Blue Apron announced that it agreed to be acquired by Wonder Group, a food delivery startup founded by Marc Lore, for $13 per share in cash, which valued the company at about $103 million4. The deal was expected to close in the fourth quarter of 2023.

Wonder Group planned to continue operating Blue Apron under its own brand and enhance its product offerings and customer experience by leveraging the synergies between the two companies.

It's Decline

There are several factors that have contributed to Blue Apron’s decline over the years. Some of the main reasons are:

Competition

Blue Apron faces intense competition from other meal kit delivery services, such as HelloFresh, Home Chef, and Sun Basket, as well as grocery delivery platforms, such as Amazon, Walmart, and Instacart. These competitors offer more variety, convenience, and affordability to customers, making it harder for Blue Apron to retain and attract customers.

Customer churn

Blue Apron has struggled to keep its customers loyal and engaged, as many of them cancel their subscriptions after a few orders or switch to other services. According to estimates, only 9% of Blue Apron’s customers open the app daily2, which indicates a low level of stickiness. Blue Apron’s customer base has declined significantly over the years, from 1 million in 2017 to 351 thousand in 2019.

Costs

Blue Apron has high operational costs, such as packaging, shipping, marketing, and labor, which eat into its margins and profitability. Blue Apron has been trying to cut costs by laying off workers, closing facilities, and reducing marketing spending, but these measures have not been enough to offset the revenue decline and the losses.

Monetization

Blue Apron does not currently generate any revenue from its service, as it charges customers only for the cost of ingredients and delivery. Blue Apron has not disclosed any plans for monetization, such as introducing premium plans, advertising, or partnerships with other brands. This raises questions about its long-term sustainability and growth potential.

These are some of the main reasons for Blue Apron’s decline. I hope this helps you understand more about the challenges that the company faces. If you have any other questions, please feel free to ask.

Acquired By Wonder Group

Wonder Group acquired Blue Apron through a tender offer and a second-step merger. According to the press release1, Wonder Group offered to buy all outstanding shares of Blue Apron’s Class A common stock for $13.00 in cash per share, which valued the company at about $103 million. This represented a 137% premium over Blue Apron’s closing price on September 28, 20231. The tender offer was expected to close in the fourth quarter of 2023, subject to customary closing conditions and regulatory approvals.

Following the successful closing of the tender offer, Wonder Group would acquire any remaining shares of Blue Apron that were not tendered in the tender offer through a second-step merger at the same consideration per share paid in the tender offer. Wonder Group was founded by entrepreneur Marc Lore, who is also the former CEO of Walmart’s e-commerce division235. Wonder Group aims to create the mealtime super app that offers a range of cuisines and occasions for at-home dining and food delivery.

It plans to continue operating Blue Apron under its own brand and enhance its product offerings and customer experience by leveraging the synergies between the two companies.