The end of the meal-kit
This past year, Blue Apron stocks have gone down 60% with no signs of recovering. In its last attempt to make the service survive in its last quarterly earnings, Blue Apron’s CEO said that they will focus on other areas, including meal delivery from local businesses.
The problem is that Blue Apron’s business model is not sound. Their unit of economics will never be profitable. And there is no way to fix a broken business model.
Blue Apron grew by subsidizing their meals, offering great meals for the same price of the raw ingredients from the local supermarket. The problem is that meal kit’s business cost a lot more than the raw ingredients. Packaging, delivery and preparing the food adds ton of extra cost.

As the old saying: There is no free lunch. Surprisingly, selling 1-dollar pizzas for 75 cents is not sound business, but it makes a great growth story! Either consumers or investors will have to pay the bill. Until now the bill has been paid by investors. But at some point they will run out of money. At which point, blue apron either will charge customers more money or deliver a much worse service.
Customers will leave in droves. There is no point paying for all the extra cost when you can get all the ingredients from a store nearby. All will be left is a nice Silicon Valley story.
