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Only 50 percent of Blue Apron customers stuck with the service after the second week.
In recent years, delivery meal kits have become one of the biggest trends in the culinary world, with companies like Blue Apron, Plated, and even The New York Times getting in on the action. However, a new report shows that consumers might be abandoning these subscription services en masse just months after subscribing.
Though these pre-packaged ingredient services win over customers with the promise of convenience and reduction of food waste, a new report by Fast Company reveals that up to 90 percent of consumers are dropping their meal kit subscriptions within the first 6 months.
Research firm 1010data crunched the numbers on customer spending within the burgeoning industry and found that only 50 percent of Blue Apron customers stuck with the service after the second week. This rapid drop in subscribers was similar for competitors like HelloFresh and Plated. Spokespeople from all three companies claimed the 1010data was incorrect, but failed to come forward with counter data.
Despite reports of rapidly retreating customers, meal kits have been raking in big bucks from investors, raising a collective $650 million in venture capital since the industry's inception in 2012. And,while many have dropped their initial service within the first weeks, hoards of others have signed up– meaning a 500 percent growth across the industry since 2014. In 2016 alone, the meal kit industry is expected to sell $1.5 billion in product.
According to Blue Apron CEO Matt Salzberg, "[customers] who stick with us adapt Blue Apron to their lifestyles. They order week after week after week and it becomes the way they cook dinner for their families." However, the newly released data shows that few customers might actually be committing to these services following an initial trial. This can be particularly costly for the companies given that most, including Blue Apron, offer first-time use discounts and coupons, which means lost revenue spent on customers who won't be coming back for more.
While HelloFresh and Blue Apron have both recently explored initial public stock offerings—valued at $2.6 billion and $3 billion respectively—this data could send potential investors fleeing as quickly as the company's subscribers.