Meal delivery service Veestro shares three strategies for making a startup profitable quickly

By Elizabeth Crawford contact

- Last updated on GMT

Source: Veestro
Source: Veestro

Related tags: home delivery, Meal kits, vegan, plant-based

Starting a business is one thing, but making it profitable is another, and one which often requires some trial and error, according to Monica Klausner, the co-founder of the plant-based meal delivery service Veestro.

Since launching in 2013, Veestro has grown from a startup on a mission to help people eat more plants in a “super easy and convenient way”​ to a $7 million a year profitable enterprise today, which is projected to earn $9 million this year.

Klausner said that Veestro was able to become profitable faster than the average food and beverage business, which analysts peg around seven years, because she and her brother “are a different kind of entrepreneur.”

She explained that “it is really important to us that our business be around for a really long time, so we have been working really hard on making sure every initiative, or that most marketing initiatives that we embark on has a positive return on investment.”

In particular, she said, the company has undertaken several initiatives in the past six months “that have made a pretty significant difference.”

A new business model

The first strategy was to evolve the company’s business model, which centers on delivering fully prepared and frozen vegan meals to consumers’ homes, to encourage more subscriptions.

When the company first launched, consumers could order as many or as few meals as they wanted at any time and then “come back at your leisure,”​ Klausner said. But, she explained, “in December, we switched the website to encourage people to get on a subscription basis by offering them a less expensive price per meal and free shipping.”

She noted that the price of shipping had always a sticking point for both the company and consumers because it was so expensive. To help maintain margins, the company previously only offered free shipping to consumers who ordered $200 or more worth of meals. But that was out of reach for some consumers and made initial trial a heavier lift.

Now, if consumers are on a subscription, they can get the smallest pack of 10 meals for $117 and still enjoy the free shipping that so many have come to expect.

A new distribution center

The second major change the company made in the past year was it opened a distribution center east of the Mississippi to target the East Coast.

“Before February, we were shipping everything from Los Angeles, so packages that went to the East Coast were particularly expensive because we had to put in a significant amount of dry ice and the package would get significantly heavier, which in turn made it much more expensive to ship,”​ Klausner said.

“Now,”​ she added, “we have a distribution center on the East Coast … and that does two things. One it helps us reduce our shipping and packaging costs, and two it gets food into our consumers’ hands a lot faster.”

More efficient consumer acquisition

The third component of Veestro’s plan to become profitable was “really tightening the bolts on our customer acquisition costs to make sure that every order that we ship is as close to profitable a possible.”

This may sound obvious, but as illustrated by the struggles across the home delivery meal and meal kit industries, it isn’t as easy as it sounds.

One way that Veestro improved the return on investment of consumer acquisition was to educate the customer on the benefits of ordering fully prepared frozen meals – especially compared to meal kits, Klausner said.

“One of the big differences between us and a meal kit is that when you order a meal kit you still have to do all the work and it can take anywhere between and hour or two hours of chopping, prepping, cooking and cleaning. But when you order Veestro, it is not an experience so much as it is a solution,”​ Klausner said. “The food is in the freezer and all you have to do is take it out, pop it in the microwave or oven and then you are all set with your meal.”

This key difference has allowed the company to target and win over many previous meal kit shoppers who realized the meal kits were not as easy as they thought and were looking for the next solution that would be more convenient, Klausner added.

Veestro also has been strategic about which channels it uses to target new consumers, Klausner said.

“When we try a new channel we say, ‘Okay, this is as much as we are willing to spend on acquiring a customer and if we can’t get anywhere near that, we are just not doing it.’ We are very specific about our allowables and almost anal about making sure that our channels perform within our allowable,”​ she said.

Reflecting on the different channels that the company has tried, Klausner said the most productive option has been direct mail.

“Direct mail is one of those really old school things that for awhile was almost like a bad word. But, I feel like nowadays people’s email inboxes are so cluttered that their mail box turns into a better vehicle to reach them. So, we have actually had direct mail campaigns that have been very successful,”​ she said.

Once the company secures a new consumer, Klausner said Veestro uses social media to keep them engaged with the brand.

“Instagram is not terribly conducive in our business because you can’t just buy one meal. So, we can show you a gorgeous meal, but you can’t buy just that meal by itself. So, we use Instagram more to showcase and to engage with our target audience, which is really, really important because even through it doesn’t directly translate into sales, we want to communicate with our audience and engage with them so that the keep coming back to see what we are offering,”​ she said.

A leg up on meal kits

While Veestro has been able to pick up consumers who have become disenchanted with meal kits, she notes that the roller coast of the meal kit space has also challenged the meal delivery space – even though they are very different models.

“It has impacted us in a negative way with investors because a lot of them have been burned with [meal kit companies] and feel like any company in the meal delivery space, whether it is a meal kit or a prepared meal or anything else, falls under the same category as the meal kit. And that is really not the case,”​ Klausner said. “Consumers see us as a very different alternative.”

Investors also have been wary of the prepared meal delivery model because they watched so many meal kit companies either become acquired or go under in recent years.

But again, Klausner said, “we don’t solve for the same problem and our metrics are significantly different.”

Slimmed down packaging

Another major difference between prepared meal companies like Veestro and meal kit companies is the amount of packaging and shipping materials that they use – an issue that because a flashpoint for many consumers with meal kits.

“There is a pretty significant difference in the amount of packaging that comes in our boxes versus the meal kit category,”​ Klausner said. “With meal kits they are sending you pieces of ingredients packaged individually … but with us you have a whole entire meal that is in just one container. So, you have a lot less packaging.”

Veestro recently took this one step farther by ensuring all of its packaging is fully recyclable at curb side and some of its meal trays are even compostable, Klausner said. “We have been working very, very hard to ensure that all of our packaging is sustainable.”

Klausner added that the streamlined packaging again comes back to the company’s mission to make eating a plant-based diet easier and more sustainable so that more consumers will come around to the diet, which she notes has a lower environmental impact and many health benefits.

“In a perfect world, everybody would be vegan. But this isn’t a perfect world, but consumers are starting to understand the differences between the choices they make and how they affect the environment. So it is an exciting time and we are here to help consumers to take that step into a more plant-based lifestyle in a super easy way,”​ Klausner said.

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