YapStone Blog

“Blue Apron is Famous for Cooking Up Success: Here’s How They Did It” written by Molly Reynolds.

Nothing says bliss like the first bite of an incredible meal. Recently, I was gifted a 4-course meal for two at a very upscale restaurant on New York’s Upper East side, easily valued at $500 when all was said and done. The meal was incredible, but later whole experience got me to thinking. What one does one do when they have expensive pallets or crave fresh, exotic, creatives meals, like the one I’d just had, with an Olive Garden budget?

I certainly don’t see that restaurant as an option. These days it’s clear really “good eats” may require deep pockets. Now consider that you, based on a recent study, are a part of the 50 percent of Americans that still cook between 3 to 6 days a week. How can you duplicate those truffle fries you saw prepared on a tv show like Chopped last week or recreate that deletable Barramundi served over a wild-rice pilaf you saw posted on Facebook? I mean, have you seen the prices of truffle oil lately?

The struggle has been real, that is until about 5 years ago when three guys decided to take matters into their own hands and bridge that pallet to price gap. And so Blue Apron was born.

“We wanted to cook at home more often, we wanted to try new ingredients, new recipes, but we found it really expensive and difficult to go and shop for everything at all the different stores…so we really just said wouldn’t it be awesome if we had a service that delivered recipes and all the ingredients you needed to cook those recipes in the right amounts?” stated Matt Salzberg, CEO and co-founder of the mega successful New York startup that burst onto the scene in August of 2012.

Matt, along with co-founders Matt Wadiak and IIia Papas, discussed the idea of a company with a simple mission: deliver gourmet meals to you, packed with fresh and pre-measured ingredients. This recipe would mean anyone could enjoy that “upper class” meal for a fraction of the cost in their own home.

What followed in the next 4 years has been impressive. Blue Apron has quickly claimed king-of-the-hill status in the new “meal-kit” market by providing Americans who like to cook with the ability to prepare exciting, healthy, gourmet meals for roughly $10 per person. Since it’s inception, when the three guys literally started out preparing meals from their tiny New York apartments, Blue Apron now sends out about 8 million meal kits a month to roughly 1 million subscribers.

They have a workforce of about 4,000 employees and several facilities able to reach about 98 percent of the country. Right about now you should be asking yourself a very reasonable question, how has this company grown this exponentially in just five years? What was their “recipe” for success? Well, break out your cutlery and let’s dig in.

Taking The Stage

Any good performer will tell you that in order to have a successful show, you must know your audience. This rings true for business owners as well. You’ve heard the saying we eat first with our eyes, right? Well if that’s true, social media has made salivating gluttons out of us all.

I think it’s safe to say that, at least here in America, we are in a food craze. Need proof? Back in February it was reported that Instagram had over 244 Billion posts with the hashtag “food” or “foodporn”. We are currently living in a reality where celebrity chefs like Bobby Flay and Rachael Ray are household names and cooking competition reality shows, like Top Chef,  have won Primetime Emmys.

We are constantly being inundated with images of fantastic meals and viral videos of culinary decadence like this that leave us wanting to try our own hand at becoming culinary masters. The lights were on, the stage was set, and the audience was in their seats. All that was left was for someone to enter. The creators of Blue Apron took notice and that’s exactly what they did, grandly from stage right.

“We knew people were cooking at home and we said can we find a way to make it more fun, you know, more enjoyable and more affordable for people,” says Salzberg.

Blue Apron saw the writing on the wall and took advantage of the window the current trend was creating. Every successful business must be able to anticipate a need and then find a way to meet that need. The added bonus comes when your business can actually disrupt the current market and that was the case with Blue Apron. They came into the current food delivery market, aware that the minds of most consumers were on experiencing great food, with the fresh idea of not just delivering a grocery list to your door, but instead an entire culinary experience. Their mission statement sums it up best:

“Each week we send hundreds of thousands of customers all the pre-measured and perfectly proportioned ingredients they need to prepare delicious and healthy meals at home. We introduce our members to new ingredients, flavors, and cooking techniques with seasonally-inspired recipes that are always delicious, fun and easy to prepare.”

And on this statement they delivered. Tapping into your audience’s desires is key to success for any business and I believe one of the main reasons Blue Apron increased their subscribership substantially in the first three years.

Making Good On A Promise

Another area the guys at Blue Apron knew would be key in solidifying their place in the meal kit market was sustainability. Another of their key commitments when starting this business was to provide their subscribers with good, healthy ingredients at affordable prices. But how could they guarantee this week after week?

It’s one thing to help a few people create great meals from their own kitchen, it’s another thing entirely to give that experience to millions of people each month. Figuring this out would prove to be another block on which they would build their empire. To help them make good on what they set out to achieve, Blue Apron established partnerships with about 150 farms to not only ensure that the ingredients remain affordable by cutting out the middleman and dealing with farmers themselves, but also to make certain the ingredients their customers are using are always top quality ingredients.

Quality ingredients appeal to consumers greatly in a time when healthy eating is a huge concern. Now, more than ever, the average consumer is taking more responsibility in terms of what they used to fuel their bodies. There used to be this thought that if it was healthy, it was also “taste-free”.

Blue Apron does its part to disprove that myth by partnering with world renowned chefs to ensure that the recipes they provide are top notch. Blue Apron has successfully invented a model that would give their customers healthy, artisanal meals on a weekly basis; however, the most important thing is that they figured out was how to maintain that model. Suddenly what seemed to be out of reach, or at best occasional, for most people not only became a reality but it became super convenient as well. And that leads us to our next building block.

Convenience, The Main Ingredient

In a time when the promise of easy access is like a mating call to most consumers, companies that “overstand” this tend to thrive. Blue Apron understood that from the start. Taking a cue from other hugely successful juggernauts, Blue Apron decided to build its business on the subscription based business model. This business model is not only the most efficient way of taking the “work” out of procuring desired goods from the customers by delivering them directly to their doors, but as with companies like Netflix, successful subscription based business models also provide their customers with multiple options, making the service even that much more appealing.

Companies with well thought out consumer options tend to fare better because consumers feel like they have an active role in deciding how the company can best suit their specific needs.  Blue Apron took notes and created two delivery plans to offer their subscribers and within those plans the ability to customize their dietary preferences and identify their food allergies. They added to the convenience train eliminating the need for a customer to be at home at the time of delivery by creating “refrigerated” shipping boxes that keep your order fresh for up to 24hrs after delivery and allowing their subscribers to skip weeks to accommodate their ever changing lives. Things like vacations or the unexpected need to postponed deliveries are not a problem for Blue Apron. Skipping a week is as easy as the click of a button, as is the customer’s right to cancel their subscription at any time. In my opinion, Blue Apron has hit a homerun when it comes to giving their subscribers options. These considerations keeps their customers happy, and every knows that happy customers are loyal customers.

Making things equally fundamental in keeping current customers as it is in getting new ones.

Consumers are more likely to try new things if they don’t feel like they tricked into something by simply trying it. I truly believe Blue Apron’s understanding of this, specifically, is another reason for the company’s fast growth.

I was first introduced to Blue Apron when a friend invited me over for dinner to try a meal that had been gifted to them by another friend. Included in their box was another invitation for someone else to try a week’s worth of meals. I think you would be hard pressed to find someone who doesn’t at least know someone who’s experienced a Blue Apron meal, let alone heard of Blue Apron. They’ve achieved this renown by creating an easy way for new customers to try, fall in love with, and ultimately become devoted subscribers to their meal kits. Word of mouth travels fast, especially when it’s accompanied with the endorsement of a full belly. Now, this marketing strategy doesn’t come without a huge price tag.

Financial platform Zirra reports that Blue Apron’s marketing expenses in the first quarter of 2017 were bigger than then their entire marketing budget for 2015.  Conversely, however, the numbers speak for themselves. In the same article, Zirra reported that Blue Apron’s revue was growing faster than its losses with a revenue increase of 133% between 2015 and 2016. Impressive by any standards.

A Winning Dish

So it’s clear that Blue Apron has been successful. The young company reports revenues from 2014-2016 grew from $77 million to $795 million. Yes, that is dollars.

Salzberg attributes the company’s financial gain to something he calls “supply chain efficiencies” which allows them “to get people fresher food at better prices”. This model is based upon the relationship Blue Apron has with farmers and how they directly work together to plan menus and coordinate what ingredients to exclusively plant for Blue Apron customers. The success of creating and maintaining these “supply chain efficiencies” has been hugely profitable.

If the numbers themselves don’t convince you of the company’s meteoric rise, or the fact that Matt Salzberg landed the cover of Forbes Magazine in 2015 with the header “To Infinity And Beyond” perhaps the fact that the company’s IPO hit the market this June will seal the deal. Earlier this year the company’s valuation was close to 1.5 billion dollars, and while that is about a billion dollars less than initial IPO predictions expected, it is still a very impressive milestone for a company. Going public is not only considered the “holy grail” for many small business owners, it also signals that the business has hit some very impressive hallmarks like high growth prospects and an innovation in products or services, all of which easily spell success.

Blue Apron is indeed a business unicorn. Should you need further proof, look no further than number 58 on this list. No one can truly predict what the future will hold for any business, but no one can argue that Blue Apron has gotten off to an impressive start. I imagine whatever the shifting whims of the market may demand in the future, Blue Apron will adjust accordingly. It’s a company that is committed to continued learning. “Blue Apron is a symbol of lifelong learning within the culinary field…” states the company on their website. In fact, Blue Apron got its name by paying homage to the French chefs who wore blue aprons while still learning to cook. So, if history be our guide, Blue Apron has already proven that they are great students and committed to continually serving up the very best for both their customers, and now their investors, for years to come.