The Growing Business of Meal-Kit Delivery Services

Culinary Practices have surely come a long way since the classic Campbell's Tomato Soup can. With the advent of modern and convenient meal-kit companies like Blue Apron taking the food industry by storm, consumers can now eat freshly prepared meals without compromising on nutrition or taste.

While grocery stores have exploited heat-and-eat sections to simulate home-cooked meals, delivery services continue to evolve, ranging from ready-to-eat meals to pre-portioned kits you cook at home. For instance, Freshly delivers meals like meatloaf with creamy potatoes and spinach to your door in insulated boxes from its Phoenix kitchen via FedEx at a cost of $9- $13 per meal, depending how many meals you order at a time.

The fundamental premise of this business model is that people who do not know how to cook or perhaps don't have the time to can still enjoy wholesome meals without having them taste like metal or be heated up.

For Blue Apron in particular, each meal usually takes 10 minutes or less to "assemble", and comes with illustrated recipe cards and "how-to" videos on knife skills. Moreover, the meals are carefully well-proportioned and planned out in order to meet standard dietary requirements. The time one would normally invest into prepping for dinner or buying groceries is immediately eliminated, which is why one can see the appeal in such a service for young professionals, students and even elderly people who don't have the ability or time to go grocery shopping.

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Therefore, in light of the array of advantages that meal-kit companies sprout, particularly in this day and age when corporate jobs are on the rise and people are becoming busier, it only makes sense that Blue Apron disclosed on Monday that it was aiming to raise as much as $586.5 million in its IPO. In an amended prospectus, Blue Apron said that it was planning on pricing its shares between $15 and $17. At the midpoint of that range, the company would be valued at roughly $3 billion, and at the high end, it would be valued around $3.2 billion. The company plans to sell at least 30 million shares in its IPO, although underwriters can sell an additional 4.5 million shares if demand proves strong enough.

That being said, the meal-kit industry is not all smiles and sparkles. Because of the immense amount of customization required, the variable cost per meal is high and profit margins are thin. Blue Apron's Richmond, California fulfillment center has had numerous safety incidents, including employee violence. There have been instances of staff brandishing knives and workers suffering accidents using equipment they're not qualified to use.

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There have also been complaints about excessive hours, a lack of rigorous hiring practices and high stress levels. It has to regularly ship meals sourced from a wide array of locations, with very little turnover time as one can change his or her order before delivery and extremely low waste levels. High employee turnover has reportedly been common, and the company says it had problems with temp agencies recruiting workers with criminal records and other sub-standard behavior.

Thus, only time will tell if Blue Apron's IPO bid is a gamble, or the company will in fact profit from scaling up and reaping the benefits of size.