There’s nothing quite like ordering delivery from your favorite restaurant to cap off a hard day. Thanks to companies like Seamless and Eat24, all you have to do is press a few buttons on your phone and you’ll have a delivery guy (or robot) at your door before you know it.
Yet ordering delivery and take-out is expensive. Grocery shopping is cheaper, sure, but it requires time spent in the supermarket and hours of prep in the kitchen to hopefully get a recipe right. You might end up with all the ingredients, but there’s always the chance you can screw up one step and pour hours into making a not-so-appealing meal.
That’s why meal kit delivery services like Blue Apron exist. They’re a tad cheaper than getting food delivered and much easier than shopping for food. Blue Apron and other like services give you perfectly portioned ingredients and recipes that let you, the aspiring chef, make delicious, home-cooked meals without putting in much effort. These meals are not as easy as microwaving a burrito, but they’re infinitely tastier and more rewarding.
As a business, these delivery services are worth millions, if not billions. But can you actually invest in them? Better yet, is the industry actually thriving?
Meal kit delivery services are new, and they’re raising a lot of money.
Blue Apron is only five years old. Many of the copycat companies popped up only in the last two years. Venture capitalists have already invested $650 million into the industry in this time frame, as they find the industry disruptive, exciting, and potentially undervalued. Blue Apron alone raised a total of $193.8 million, or around 30% of all VC money invested in the meal kit delivery service industry.
There are too many meal kit delivery companies for such a small industry.
Blue Apron is the most popular meal kit delivery service in the United States, delivering 8 million meals per month. HelloFresh comes in at a close second, delivering 7.5 million meals a month. HelloFresh also operates overseas, delivering to eight other countries in addition to America.
These are far from the only two meal kit delivery services. Eaters with dietary restrictions, like vegetarians and vegans, can subscribed to dozens of niche delivery services, selling everything from specialty meals to American stapes. These companies have much smaller subscriber base than Blue Apron and HelloFresh, which means less revenue and likely less venture capital. Some services even closed up shop in industry’s short time span, like Kitchn Synch, a kosher variation.
It’s worth noting that the meal kit delivery industry is only worth a reported $1.5 billion as of last year. Compare this to the overall $30 billion food delivery business that includes GrubHub and their competitors. While both industries are growing and expect to greatly increase in value in the coming years, meal kit delivery services make a fraction of the restaurant delivery business. Blue Apron and HelloFresh own most of this business, with the others picking up the scraps. Chances are more of them will go the way of Kitchn Synch as the two market leaders become more popular.
So, how can you invest in Blue Apron or HelloFresh?
You can’t…yet. The five-year-old Blue Apron is rumored to be going public later this year, according to CNBC/Reuters. Filing for IPO would likely let the company expand into other countries, cut food costs, and increase subscribers with a bigger marketing budget. If/when this happens, you will be able to invest in Blue Apron from any broker or brokerage. Until that happens, you’re better off subscribing to either company and keeping their revenue up, which might not be a good idea in the first place.