You can’t go online, watch TV, open your mail, or walk down the street without seeing an ad for a food delivery service these days. From Plated to HelloFresh and Blue Apron, there’s apparently an endless appetite for the services.
Two of the cofounders of Blue Apron sat down with Yahoo Finance editor-in-chief Andy Serwer to reveal how they managed to expand across the country in a matter of just a few years.
The company, headquartered in New York, was founded in 2012 and has already reached a valuation of $2 billion, based on the latest funding round in June.
The company has 3,000 employees and delivers more than 5 million meals a month across the United States.
Friends Matt Salzberg, a Harvard MBA who serves as CEO, Matthew Wadiak, a Culinary Institute of America-trained chef who serves as COO, and Ilia Papas, an e-commerce veteran who serves as CTO, saw a need for a service like Blue Apron in their own lives as busy, young professionals who didn’t have time to shop for ingredients to cook with at home.
How does it work?
There are two plan options: the 2-person plan, which costs $9.99 per person, per meal, and a family plan, which costs $8.74 per serving per meal or $69.92 per 8-serving delivery. There’s no membership fee and no commitment.
Salzberg says they have conducted studies at grocery stores nationwide and found that purchasing the meals' ingredients at an average grocery store—not even a premium one—would cost customers 60% more than having them delivered by Blue Apron.
The ingredients come divided neatly in little packages with step-by-step recipes. The meals take about half an hour to prepare and have about 500 to 700 calories per serving.
Wadiak says there’s a big need to help people cook at home. “People have more interest in cooking than they ever have before, and there actually isn’t enough opportunity to do that at home in a strategic way where you don’t have to run around for an hour or two hours every day.”
The simple explanation for the company’s rapid growth: emotion
While Salzberg attributes some of the company’s success to its business model, he thinks there are other, perhaps more important reasons for the company's growth.
First, the logistics. Salzberg says they cut out the middlemen, working directly with suppliers to avoid waste and get people fresher food at a lower cost.
But the other reason he cites when asked about the company's speedy expansion is less about the dollars and cents of it all.
“The fundamental reason, I think, that we’ve been able to grow this fast is because our product emotionally connects with our customers,” he said. “If you think about home cooking and food and the special place that that has in our culture and in our personal lives—you know, most people’s happiest childhood memories are cooking a family meal with their loved ones, at that kitchen table with their family—that emotional involvement with people causes them to tell their friends, causes them to talk about it at work, and it causes them to really become advocates for our product, and I think that’s the reason we’ve grown so fast.”