Meal-kit delivery company Blue Apron Inc. has put preparations for an initial public offering on hold, people familiar with the matter said, delaying selecting bankers while it focuses on improving its financial metrics.
After starting to interview banks in September to advise on the IPO, Blue Apron has pushed back formally hiring underwriters until some time next year, said the people, who asked not to be identified because the details aren’t public.
Even with more than $800 million in annual revenue this year, the company has struggled to improve profit margins as much as management wanted in the face of more competition, the people said. A stronger performance is needed to support the $3 billion valuation that the company was targeting in an IPO.
Blue Apron is trying to reduce the cost of acquiring customers, and get that number into better alignment with the lifetime value of its subscribers, one of the people said. Delaying the IPO process gives it more time to work on this, the person said.
A representative for Blue Apron declined to comment.
Founded in 2012, Blue Apron sends boxes of pre-portioned ingredients and instructions for customers to cook meals at home. The $59.94 box includes enough for three meals that feed two people, including recipes such as sesame chicken and cod en papillote.
Like many of its subscription-based rivals, Blue Apron offers generous sign-up discounts to new customers. It’s harder to get them to stick around when the markdowns end. While the New York-based company was one of the first to create such a service, new entrants to the market have given subscribers plenty of other options.
This month, Blue Apron competitor HelloFresh took a haircut on its private valuation when raising new cash. The Berlin-based company is now valued at about 2.09 billion euros ($2.18 billion) including new money raised — about 20 percent less than 15 months ago. Plated, a smaller rival, is worth less than $200 million, one of the people said. Those valuations will be on investors’ minds when evaluating a potential Blue Apron IPO, the people said.
Newer entrant Sun Basket has a similar model, promising organic and non-GMO ingredients and plans catered to paleo, gluten-free and vegetarian diets. While slightly more expensive — $9 more than Blue Apron’s two-person, three-meal box — it’s another rival that could make it more difficult for Blue Apron to keep subscribers, one of the people said.