Is this the future of groceries? Blue Apron raises $3 million for subscription meal kits

By Erin Griffith , written on February 19, 2013

From The News Desk

First things first: Blue Apron, a subscription meal kit startup based in Brooklyn, has raised $3 million in Series A funding from First Round Capital, Bessemer Venture Partners, angel investor David Tisch, Nat Turner and Zach Weinberg, co-founders of Invite Media, Jason Finger, founder of Seamless, Jim Moran, founder of Yipit, and Graph Investments.


There are plenty of reasons busy New Yorkers wish they could cook more often. Schlepping groceries home from the store without a car is the worst, not to mention most of us stay at work long after the stores close and arrive home too hungry and tired to slave away on a home-cooked meal. Oh, and we have an endless supply of fine dining options nearby.

Blue Apron's meal kits, delivered in a cold pack with all the perfectly portioned, ingredients to a healthy dinner, seem like the perfect solution. They include exotic ingredients and ambitious recipes, simplified for amateurs into 35-minute cook times and printed on beautiful, clear recipe cards. Since Blue Apron can buy its ingredients in bulk and plans for seasonality, the meals kits are only $10 a person per meal -- cheaper than your average takeout order.

Like FreshDirect, the grocery delivery company, I thought this was the type of thing that was built for New Yorkers and would not have much appeal outside the city. It's the same as all the startups built by and for nerdy white guys to solve their own problems. In fact, CEO Matt Salzberg, former associate at venture capital firm Bessemer Partners, based the idea on his own desire to cook more.

But I might have been wrong in that assessment. Blue Apron, which launched last year, has slowly expanded its footprint to now deliver "pretty much anywhere East of the Mississippi." The majority of Blue Apron's 6,000 subscribers are outside of New York, Salzberg says.

For New Yorkers, the beauty of the service is the convenience of delivery. For rural subscribers, the beauty is the access to new, interesting ingredients they can't get in their local grocery store (or at least can't get cheaply). The middle of the country is interested in the so-called foodie movement thanks to rise of the Food Network, but they don't always have access to all the right tools.

I observed this a few years back, when my mom in Ohio asked me if had heard of a food called kale. I laughed, thinking my mother needed to get out more, until I realized I've never seen vegetables like kale, or bok choy, or romanesco in her local grocery store, even though they are ubiquitous in the food magazines and TV shows she loved. (She ultimately ordered kale seeds online and planted some in her garden.) Services like Blue Apron are bringing the foodie movement to curious cooks outside of big cities.

Today Blue Apron announces a round of funding to help it expand from the East coast to nation-wide.

For a startup CEO and first-time entrepreneur, Salzberg sticks closely to his script. Perhaps its his Harvard MBA training and private equity background. (He worked at Blackstone Group.) His job now is a stark contrast from that world: He's up at 2 am in the Bronx, haggling with food wholesalers at the city's massive fish, meat and vegetable markets. By day, he's managing a climate-controlled Williamsburg warehouse of up to 25 people who portion, package, and ship the meal kits off each week.

The business is more food and logistics than tech startup, and the best way Blue Apron can succeed is to get the logistics formula exactly right. Executive chef Matthew Wadiak plans the meals, then the ingredients are procured, split, and shipped. That seems difficult enough to make profitable, but the meals must also be interesting, easy to learn, and presented in a sensible way. Most people who cook use a "pull" method to get new recipes -- we find them on our own, and if they are a disaster, it's a wash -- we were the ones that chose that recipe. But with Blue Apron, the pressure is on for each recipe to deliver.

I haven't had a chance to try the meal kits from Blue Apron or its competitors yet, but the New York Times recently did. The reviewer noted that Blue Apron's ingredients are fresh, and the recipe cards are clear. The only con was that Blue Apron's recipes seemed unnecessarily adventurous.

I'd add another personal con: You must purchase a subscription that delivers meals three times a week. That is a problem for anyone with an unpredictable schedule that keeps them out most nights. A meal kit subscription isn't like a subscription to the New Yorker -- if you get behind, you can't exactly catch up on a long flight a few months later. It's the same reason I'd never join a CSA or food co-op. My anxiety over when I'll find time to eat the food would grow each day in my mind like the mold I imagine growing on the food.

But its competitors in the market all require similarly large commitments. HelloFresh, the Germany-based Samwer Brothers company, requires three kits a week for $12.50. The company has a jump on Blue Apron, having raised $10 million from the Samwers' Rocker Internet, Vorwerk Ventures, Holtzbrinck Ventures and Kinnevek. The company has 100 employees and has delivered more than a million meals at $12.50 per person, with the same thrice-weekly requirement.

Plated has a four-kit minimum with meals going up to $15, and Chefday has no minimum, but meals cost $17.50. FreshDirect's version of this has a minimum order of $60.

[Image courtesy mejuan]