HelloFresh 'close to breakeven' in the US, acquires Green Chef

By Elaine Watson

- Last updated on GMT

HelloFresh 'close to breakeven' in the US, acquires Green Chef as mealkit market evolves
Meal kit brand HelloFresh is profitable for the first time internationally and “close to breakeven” in the US, claims the company, which announced a 52% increase in group revenues to 905m euros (c.$1.11bn) in 2017 the day after unveiling a deal to acquire organic and gluten free meal kit brand Green Chef for an undisclosed sum.

HelloFresh, which had 1.45m active customers globally and 890,000 customers in the US as of Q4 2017 (Blue Apron SEC filings​ shows it had 746,000 customers in Q4, 2017, vs 1m+ in Q1 as it cut marketing spend while it dealt with operational challenges), said US revenues grew 90% to 545m euros ($668m) in 2017, while international revenues grew a more modest 16% to 360m euros ($441m).

According to its full year results presentation, average order value at HelloFresh in the US in Q4, 2017, was 49.50 euros (c.$60), while Blue Apron customers spent an average of $58.00.

The acquisition of Boulder-based Green Chef, which has facilities in New Jersey and Colorado, would help HelloFresh reach “new and previously untapped customer segments​” and “drive synergies for operations, logistics, and procurement,”​ said the company, which was founded in Berlin in late 2011 and went public in 2017 on the Frankfurt stock exchange.

Green Chef is expected to add c. $15m to quarterly revenues in 2018, starting in Q2 2018, said HelloFresh.

Speaking to FoodNavigator-USA last summer,​ Green Chef founder Michael Joseph said his firm had “helped people break long-term habits and create new ones​,” adding that he had received multiple expressions of interest.

“We’re continuously getting inbound interest from potential strategic partners.... CPG manufacturers, retailers, other meal kit companies and​ other related businesses too. These companies value that we've defined our market with the highest quality products, our certified organic model, our custom manufactured sauces, our dietary specialization, and the culinary design of our recipes. The market is very active right now looking for growth and margins, and we are leaders in those departments."​

Online and offline

He added: "This Amazon Whole Foods announcement has absolutely rattled food retailing and CPG markets in a way I have never seen in my life. But I don’t think we’re going to be in an online-only world. If you want to get maximum share of stomach it’s about online and offline and how you integrate the two.​​”

Asked about the millions being thrown at customer acquisition via giveaways and free trials, he added: “The whole industry has really been driven by persistent discounting but what we’ve actually found is that the higher than initial discount, the more free food is given away, the less sticky the customer is.

“When you offer big discounts, you get big results, but you also wind up bringing in people that are never going to be a good fit.”

Check out FoodNavigator-USA tomorrow for our interview with fellow mealkit brand Chef'd, which is aggressively expanding its retail meal kit business.

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