Dive Brief:
- Blue Apron intends to transfer its operational infrastructure to FreshRealm, a supplier of fresh meals to retailers, in a deal designed to allow the meal kit company to transition to an asset-light model and focus on its central direct-to-consumer business, according to a Tuesday press release.
- The companies have signed a non-binding letter of intent and expect the transaction, which would bring Blue Apron as much as $50 million, to close in early June.
- Blue Apron has recently been taking steps to improve its financial health and bring up its sagging stock price as looks to become profitable.
Dive Insight:
Blue Apron said it is looking to its arrangement with FreshRealm to help it grow its brand, strengthen its balance sheet and improve efficiency. The deal represents an expansion of Blue Apron’s existing connection with FreshRealm, which produces the company’s heat-and-eat meals.
As part of the deal, Blue Apron plans to transfer fulfillment centers, equipment, expertise and an undisclosed number of employees to FreshRealm. Blue Apron said it does not believe the changes will impact its existing revenue flows.
Blue Apron said the arrangement with FreshRealm will help it speed up product development and commercialization, adding that it hopes to benefit from FreshRealm’s capabilities in the ready-to-heat and ready-to-cook meal sectors. The meal kit maker said it also intends to begin offering unspecified “convenience product options” as it looks to expand its customer base.
“As we continue to evolve, we believe there is an opportunity to simplify our direct role in the fulfillment of our product, allowing us to focus on growing our brand, our customer base and revenue in the long-term,” Linda Findley, president and CEO of Blue Apron, said in a statement. “We expect that this will allow us to focus all our efforts on providing even greater innovation and convenience to our customers as we remain at the forefront of culinary trends.”
In addition to positioning Blue Apron to sharpen its focus, the deal will also bring much-need capital to the company as it manages a range of financial challenges, including a cash shortage that prompted it to cut 10% of its corporate workforce in December.
Blue Apron posted net revenue of $113.1 million during the first quarter, a 4% decrease compared with the same period in 2022 but up 5.9% over the previous quarter. The company had a net loss of $17 million in Q1, an amount that was down by more than half compared with the loss it recorded during the first quarter last year.
Blue Apron is under pressure from the New York Stock Exchange to bring its average closing stock price over $1 for at least 30 days in a row by late June to avoid being delisted from the exchange. The company's shares rose more than 20% on Tuesday morning, to about 57 cents, following news of the deal with FreshRealm. A year ago, Blue Apron’s shares were worth more than $3.50 each.
Last year, FreshRealm completed a $200 million capital funding round, which it described as putting it “in a strong position for expansion.” In October, the company announced that it had brought on Rob Law, who helped lead Amazon's home meal replacement division and build Amazon Kitchen, to serve as chief strategy officer.
