Losing Its Battle With HelloFresh, Blue Apron Announces Big Layoffs

As the battle for the meal kit delivery market marches on, Blue Apron has announced a huge round of corporate layoffs after a disappointing third-quarter financial result, per Grocery Dive. Around 10% of the company's corporate labor force is reportedly being laid off. Blue Apron apparently needs to cut its expenses by $50 million going into 2023, though the severance payments for these layoffs alone will cost it $1.2 million.

PitchBook says that Blue Apron was started in 2012 after its co-founders put in a serious effort to gather the necessary ingredients for a steak dinner. Annoyed by the work it took to track down the right ingredients, the founders decided to launch a brand that would sell pre-portioned ingredients with cooking instructions. This would allow customers to prepare high-quality meals at home without having to go to the grocery store or buy more than they need. Some studies have shown this meal kits model to be better for the planet as well.

According to Forbes though, the idea may not have been as novel as its founders would like folks to believe. One of Blue Apron's biggest competitors HelloFresh launched a year before. Many of Blue Apron's original promotional materials even seemed heavily inspired by HelloFresh. Grocery Dive adds that the two have been in competition since their inceptions, and now HelloFresh seems to be pulling further ahead.

According to reporting by Grocery Dive, Blue Apron's poor third quarter for this year showed a flat growth rate compared to the same period in 2021, and showed a hard road ahead for the company if it expected to rally back. In addition, many of its liquid assets seem to be running out. This could cause it to fall below the threshold amount needed to stay on good terms with its borrowing agreements. For these reasons, the company sought to lower operations costs with this round of layoffs.

It seems that Blue Apron's customer base is shrinking as well. According to filings with the Securities and Exchange Commission, Blue Apron's number of customers had dropped from 350,000 to 323,000, down from the same period last year. This is especially troubling for the company as its biggest competitor, HelloFresh, continues to grow. It counts 3.67 million customers and growing in the United States at the same time. Blue Apron seems to hope that this reduction in its workforce will be enough to turn things around and make it a more lean competitive force in the market.