Blue Apron, the renowned meal-kit company, has announced its plans to divest its operational infrastructure to FreshRealm. In a non-binding letter of intent, FreshRealm has agreed to pay up to $50 million for the assets, paving the way for a significant development in the grocery fresh meals sector.
Despite transitioning to an “asset-light model,” Blue Apron intends to continue its direct-to-consumer meal kit business. The company will now place its primary focus on product creation, marketing, customer data, customer support, and consumer-facing technology.
The deal is set to be finalized by June 9, and Blue Apron ensures that existing revenue streams will remain unaffected. The shift to an asset-light model enables Blue Apron to concentrate on expanding its well-established brand and delivering the exceptional quality products its loyal customers expect. Furthermore, the company plans to introduce new convenient product options to appeal to a broader customer base in the future.
FreshRealm, headquartered in Ventura, California, has been providing ready-to-heat, ready-to-cook, and kit-based meals to various retailers, including Amazon Fresh, Kroger, Publix, Meijer, and Walmart. The acquisition of Blue Apron’s operational infrastructure will augment FreshRealm’s portfolio with nearly 1 million square feet of facility space. This addition includes meal-production capacity in Linden, New Jersey, and Richmond, California.
FreshRealm also has plans to establish a new facility near Dallas in Lancaster, Texas, further expanding its operational capabilities. By leveraging the acquired infrastructure from Blue Apron, FreshRealm anticipates enhanced efficiencies and increased capabilities, thanks to the additional equipment, expertise, and workforce.
For Blue Apron, this strategic move marks an opportunity to strengthen its balance sheet and drive operational efficiencies as it strives to achieve profitability. The company, which was established in 2012 and went public in 2017, has encountered challenges related to customer declines and supply chain issues in recent years.
In its most recent report, Blue Apron revealed a 13% decrease in fourth-quarter orders compared to the previous year, along with an 11.3% decline in total customer count. However, with this transformative deal, Blue Apron aims to revitalize its financial standing and streamline operations for sustainable growth.
Linda Findley, President and CEO of Blue Apron, expressed her enthusiasm about the new direction, stating, “We expect that this will allow us to focus all our efforts on providing even greater innovation and convenience to our customers as we remain at the forefront of culinary trends. We are confident that we can continue to deliver the same product our customers know and love while increasing efficiency and accelerating our path to profitability.”
FreshRealm, responsible for manufacturing Blue Apron’s line of heat-and-eat meals, anticipates that this collaboration will unlock additional sales channels and enable them to offer a comprehensive product portfolio.
Michael Lippold, Founder and CEO of FreshRealm, emphasized the significance of specialization within the meal industry, stating, “From the beginning, FreshRealm has believed this is best achieved through organizations staying within their core competencies. This announcement positions Blue Apron to focus on the customer experience, while FreshRealm continues on the path to be the leading platform to support retailers across multiple channels with a broad and efficient solutions offering.”
This partnership showcases the dynamic nature of the food tech industry, with both companies strategically aligning their strengths to drive future growth and innovation.