Dive Brief:
- Meal kit maker Blue Apron reported a 7.5% drop in customers during the third quarter that ended Sept. 30, which the company said was due in part to challenges with finding labor to meet demand.
- Shares of Blue Apron fell as much as 29% Thursday after the company reported the customer loss.
- The company saw net revenue increase 13% to $112.3 million as customers placed larger orders during the period. Average revenue per customer increased to $314, up 22%, and average orders per customer grew 20%.
Dive Insight:
Blue Apron's fortunes have risen and fallen over the course of the pandemic. After earning a surprise $1.1 million profit during the second quarter and sending its stock to a high point of $16.25 a share, the company ran into labor issues during Q3 that prompted fewer meal options and a significant reduction in customers.
Blue Apron tried to hire more employees and increase wages for workers where possible, but struggled to find enough workers to meet the demand for meal kits. The company made temporary cuts to menu options to alleviate production lines, but still couldn’t keep up.
"As it does for other companies, adequately staffing our facilities remains a challenge and, as such, we did not lean into marketing in the third quarter to drive higher growth, as much as we otherwise would have," Blue Apron CEO Linda Findley Kozlowski said during Thursday's earnings call.
Kozlowski said the company has raised wages and implemented attendance bonuses and is continuing to make changes to optimize its fulfillment centers to address demand and boost revenue.
"These practices include ensuring a better packing process across lines, adjusting distribution of labor and better use of our equipment. As a result, where we have implemented improvements over the last few months, we have effectively decreased the labor required to pack per-line by approximately 18% and labor minutes per box was lowered by nearly 22%," she said.
Kozlowski also noted Blue Apron would continue to provide more products to improve flexibility and variety for subscribers and would engage in more efficient marketing to drive engagement and attract new consumers.
Blue Apron reported on the earnings call that its board had concluded its review of strategic alternatives for the company, which was first announced in February prior to the boost the company got from COVID-19. The company did not report any additional details Thursday, but in February said possible options included a sale, merger, raising public or private capital, or a combination of those.
Earlier this month, Blue Apron replaced half of its board of directors. The new appointments include former Peapod, Amazon Marketplace and Deloitte executives as well as the CEO of Arteza, a company that sells arts and crafts supplies to consumers online.
