That’s a lot of meal kits.
Blue Apron, the grocery startup that ships boxes of recipes and ingredients to the homes of wannabe chefs, is on track to surpass $1 billion in revenue over the next 12 months, multiple sources familiar with the company’s financials told Recode.
The $1 billion-plus figure — known as annualized run rate — does not represent the company’s projected 2016 revenue. Rather, it marks the number Blue Apron would hit over the next 12 months if it keeps matching or surpassing recent monthly sales totals.
Blue Apron, founded in 2012, is also in talks with banks to take the startup public in an IPO, sources say. Bloomberg first reported the discussions.
Blue Apron customers pay between $60 and $140 a week for the delivery of multiple meal kits. These subscriptions consist of recipes along with all the ingredients to cook a given meal. Through a separate subscription, it also sells wine to accompany the meals.
The startup has been spending aggressively on marketing to push the model into the mainstream, with TV ads and direct mailing campaigns accompanying online ads and podcast promotions. But sources say the company is profitable on an adjusted Ebitda basis — a profitability metric favored by fast-growing public companies that typically excludes stock-based compensation. Blue Apron has raised nearly $200 million in venture capital from investors including Fidelity, First Round Capital, Box Group and Bessemer Venture Partners, where the startup’s CEO Matt Salzberg once worked. It was valued mostly recently at $2 billion when it raised $135 million last year.
A Blue Apron spokeswoman said the company does not “discuss our financing or financial information.”
Blue Apron has been joined over the last few years by a host of competitors including Plated and HelloFresh. Industry sources say Blue Apron is the largest company in this space in the U.S.
If or when the company goes public and has to disclose detailed business information, it will be interesting to see the company’s churn rate, or the percentage of customers that ditch their subscription over a period of time. Ask a former Blue Apron customer why they no longer use the service and you usually hear one of two things: The meals take too long to prep, or they got too busy to cook and felt bad wasting food.
But for customers who have the money and the time, a Blue Apron subscription has effectively become a replacement for grocery shopping, not a luxury. And groceries are pretty integral to most people’s daily lives.