What happened
Shares of Blue Apron Holdings (APRN) soared 17.7% higher this week compared to their close last Friday, according to data from S&P Global Market Intelligence, on no specific news that would account for such a big run higher, though it appointed a new director to its board and the meal kit company said it would be coming out with breakfast options.
At just under $5 per share, Blue Apron has lost virtually all of its value from its 2017 IPO as meal kits have become commoditized as competition from supermarkets, big box stores, and other providers destroyed whatever market advantages it once held.
Image source: Getty Images.
So what
Blue Apron got a bit of a reprieve during the pandemic as the lockdown orders had consumers turning to meal delivery outfits for food. But once the economy reopened again, it started losing customers once more.
In its fourth-quarter earnings report last month, Blue apron reported 336,000 customers, down 15% from the pandemic high of 396,000 customers reached in the months following the outbreak.
It does seem as though the customers it has kept like the service as Blue Apron also reported that even though the number of orders taken fell for the quarter, the average order value rose and the revenue generated from each customer was up.
Blue Apron has vacillated between spending tens of millions of dollars to bring new customers in to accepting the fact that it's only going to be a small, niche food delivery stock, to once again believing it can grow its base.
Now what
The addition of a breakfast menu might actually be a smart move for the meal kit maker as it says 35% of its customers have asked for such items. The selection is varied and sounds tasty, but whether that's enough to keep customers subscribed remains to be seen.
Adding popular diet options along with other add-ons and collaborations have failed to keep subscribers returning in sufficient numbers. It just underscores the fact that a meal kit delivery business is a tough one to make a profit in because, especially in an inflationary environment, the service is a high-cost luxury that can be readily canceled to save money.
Beverly Carmichael's appointment to the board brings some strong restaurant experience to Blue Apron as she served in executive positions at Red Robin Gourmet Burgers and Cracker Barrel Old Country Store.
It's a lot to ask of one person to turn a business around, let alone one who is only serving as a director and not in a day-to-day executive capacity at the company.
