Meal-kit service Blue Apron files to go public

Blue Apron has just filed to go public. But its losses are also growing rapidly: It lost almost as much money in the first quarter of 2017 ($52 million, on quarterly revenue of $244 million) as it did in all of 2016 (when it lost $55 million on $795 million in revenue). According to the company's filing with the Securities and Exchange Commission, Blue Apron is also unprofitable.

At the end of the first quarter, Blue Apron had 1 million customers who made 4.1 orders each - compared with 649,000 customers making 4.5 orders apiece a year earlier.

Blue Apron posted a net loss of $52.2 million for the first quarter of 2017 on revenue of $244.8 million. The subscription service pulled in almost $800 million a year ago but lost around $55 million overall.

One thing is clear from the prospectus the company filed on June 1: Teaching America to cook is an expensive undertaking. In 2016, the company tripled its marketing spending in offline venues, such as outdoor billboards and transit stations, to increase brand awareness. With dozens of meal kit startups fighting for customers (the industry still has low penetration rates in the U.S.), discounts and hefty marketing expenses are often needed for companies like Blue Apron to convince consumers to try their kits. It signs them up using a referral program, direct mail, television, and podcasts (lots of podcasts), among other things.

The company also spends a ton on marketing. Founded in 2012 as a way to deliver meals to homes in a direct-to-consumer model that circumvents both grocery stores and restaurants, Blue Apron has, to date, delivered 159 million meals across the USA, representing about 25 million paid orders through the end of March. The company grew its customers at a consistent 18% quarter-over-quarter in three of the last four quarters.

Blue Apron's venture investors include First Round Capital, SG Growth Partners and Bessemer Venture Partners. Most are 25 to 34 years old.

At the same time, average order value and orders per customer haven't grown much in the past two years-and have actually declined slightly in recent months. Those numbers include all of Blue Apron's meal deliveries business, as well as sales of wine and kitchen utensils, so they're not ideal indicators of the core business.

  • Zachary Reyes