Investors Questioning Viability of Meal-kit Startups

Heather Haddon reported yesterday at The Wall Street Journal Online that, “Investors are losing their appetite for meal kits.

“Just a few years ago, the business of delivering packages containing premeasured ingredients that people assembled into meals was a novel one, drawing hundreds of millions of dollars from venture capitalists and other investors.

“Now, many are questioning the viability of meal-kit startups given logistical hurdles, the high cost of attracting and retaining customers and the arrival of often bigger rivals.”

“Once-Hungry Investors Pass on Meal-Kit Startups,” by Heather Haddon. The Wall Street Journal Online (January 8, 2018).

The Journal article explained that, “An estimated 70% of customers of Blue Apron Holdings Inc., the largest such provider, stop regularly buying its meals six months after signing up, while more than 80% of HelloFresh S.E users weren’t active, according to Daniel McCarthy, an Emory University professor who researches meal kits and other subscription services.”

Ms. Haddon noted that, “Early investor enthusiasm helped pave the way for the initial public offerings of Blue Apron and HelloFresh last year. But investors have become more cautious. Last year, around $274 million was invested in 18 meal-kit companies, down from a peak of 25 deals worth $308 million in 2015, according to data provider PitchBook Data, Inc.

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