How Blue Apron Brings Home the Bacon
We've all had this experience: You've got a great recipe, but the dense ingredients list requires you to go to three different stores, as well as stock up on such once-in-a-while items as cloves or saffron when all you need is a pinch.
You might have thought it was wasteful. You're not the only one.
In 2012, Matt Salzberg and Ilia Papas, along with chef-turned-entrepreneur Matthew Wadiak, launched Blue Apron, a weekly subscription service for home cooks, specifically to eliminate this waste and save prep time.
"Ilia and I wished we had this service in our lives," says Salzberg, Blue Apron's CEO. "We found it hard to cook higher-end things; it would end up costing us an arm and a leg."
At Blue Apron, "meal kits"--composed of premeasured ingredients and recipe cards--are shipped to customers in refrigerated boxes for about $60 a week. The kits feed from two to six people at a cost of roughly $10 a meal.
"Even if you're not a good cook, the No. 1 thing we provide to people is we're removing failure," says Papas, Blue Apron's 32-year-old CTO. But don't call Blue Apron a subscription service. Of course, it is. People can sign up for weekly deliveries with the option of skipping shipments if you go out of town.
But the company wants to go beyond the mailbox. "Our mission is to make incredible home cooking accessible," says Salzberg, 30. "We're trying to teach people new things. The other part: creating access to better and fresher ingredients and trying to transform the grocery supply chain."
Blue Apron has more than 300 employees and dishes out more than 600,000 meals a month for roughly $70 million in annual sales. (This figure is an approximation only. Blue Apron wouldn't disclose its revenue.) But, to make the kinds of changes Salzberg alludes to, the New York City-based company will need to attract millions of customers.
Jack Plunkett, a retail analyst at Plunkett Research in Houston, is skeptical. "Anecdotally speaking, I never hear anyone talking about how they enjoy their subscription services," he says, referring to what's become known as subscription fatigue. "There are so many [companies] competing for this home-meal dollar that it's going to be a real challenge."
Of course, Salzberg, who used to work as a venture capitalist at Bessemer Ventures, readily admits the difficulty of the task at hand. "The system isn't built around getting food to your table; it's built around getting food into grocery stores," he says.
Still, he's confident. In May, the company raised $50 million in investment capital, which put Blue Apron's valuation somewhere near $500 million. And with plans to launch the service in each of the lower 48 states by the end of this year, the gang at Blue Apron appears to be cooking up something good.
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DIANA RANSOM | Articles Editor
Diana Ransom is Inc.'s online articles editor. She has been covering the never-dull world of small business and entrepreneurship for years, at a variety of publications, including The Wall Street Journal, SmartMoney.com, the New York Daily News, Fast Company, and Entrepreneur. She lives in Brooklyn, New York.