Dive Brief:

• Blue Apron has launched its first pop-up location, Unboxed, in New York City. With this, the meal kit company looks to showcase its special occasion meal kits, forge stronger relationships with customers and provide an experience beyond the online space where it primarily operates. 

• Beyond the initial pop up, the company plans to bring mobile pop-ups to Los Angeles, San Francisco, and Seattle and host movie nights in Austin, Dallas, and Minneapolis.

• Blue Apron, like many meal kit companies, has struggled with high marketing costs and customer retention. The company beat earnings estimates during the most recent financial quarter but missed the mark on revenue, which fell to $196.7 million from $244.8 million due to a drop in customer acquisitions caused by a scale back on marketing costs.

Dive Insight

Blue Apron — named the worst performing major IPO of 2017 — has struggled over the years to sustain customers and keep up with the oversaturated meal kit industry. Now, the company is trying new a new method to build a relationship with customers and offer people a new look at a company many people only know through its website and online ads.

The New York City pop-up shop is open six days a week and features cooking classes, panel discussions with well-known chefs, wine and cheese nights, and the chance to buy products like cooking utensils and a $10 monogrammed blue apron. The West Coast mobile pop ups — each two days long — will allow visitors to experience the meal kit journey from farm to table, while movie nights in Austin, Dallas, and Minneapolis will feature games, snacks, giveaways, and activities. 

It all sounds like great fun. But will it boost Blue Apron's profits?

Pop-ups have become increasingly popular due to their flexibility and the sense of urgency they generate. Brands can offer a large number of products for sale or choose to keep it small and gain insight into customers while also creating a memorable experience. Manufacturers like Kellogg, Pure Leaf, Chobani and others known for their experiential marketing have all opened pop-ups in recent years. Kellogg's "cereal cafe" in New York City gave the company an opportunity to show off fun flavors, while Chobani’s pop up shops have helped the company build excitement around new yogurt flavors. 

Blue Apron's pop-ups will allow the company to build a relationship with consumers and explain what the company stands for and what sets it apart from its competitors — something that's vitally important in the crowded meal kit industry.  

Becoming more familiar with a brand is very valuable for a company. San-Francisco based food retailer Brandless recently launched a pop up in Los Angeles that has caused a lot of buzz. "Even though I knew the brand, I really didn’t know the brand." The store did a spectacular job of educating customers on why their products were different, write Neil Stern, senior partner with retail consultancy McMillanDoolittle, in a Forbes column. 

Blue Apron recently launched an in-store pilot with Costco, but it needs to do more to gain and retain customers. According to Marketing Strategy, Blue Apron spends about $35 million a year on its referral program alone. In Q1 of 2017 the company spent 14.75% of marketing on referrals but gained 34% of its customers from it. The company has tried almost every marketing technique out there from podcast ads, YouTube sponsorships, direct mail, television and radio. The company did successfully reduce marketing costs from 25% of revenue to 20% by Q4 of 2017 but it did come at a cost. Blue Apron lost 15% of customers year-over-year.