What's your business model?

16340

How does HelloFresh make money?

Meal plans range from $59 to $129 per week, but the subscription can be canceled at anytime

Innovation series by Ronny Kerr
December 30, 2016 | Comments
Short URL: http://vator.tv/n/48ab

Editor's note: Our Splash Health, Wellness and Wearables event is coming up on March 23 in San Francisco. We'll have Mario Schlosser (Founder & CEO of Oscar Health), Brian Singerman (Partner, Founders Fund), Steve Jurvetson (Draper Fisher Jurvetson), J. Craig Venter (Human Longevity), Lynne Chou (Partner, Kleiner Perkins), Michael Dixon (Sequoia Capital), Patrick Chung (Xfund), Check out the full lineup and register for tickets before they jump! If you’re a healthcare startup and you’re interested in being part of our competition, learn more and register here.

Also, vote for your favorite healthcare startup before February 16! Vote here!

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UPDATE 2017-01-30: The foodtech industry, like other startup ecosystems, moves very quickly. In the month since this piece was originally published, HelloFresh has cut its per-meal prices to $9.99 for the Classic and Veggie plans and $8.74 for the Family plan, matching Blue Apron's pricing.

Like Munchery, whose business model I covered last, HelloFresh makes money by selling meals. The key difference is that while Munchery delivers prepared meals that only require heating up, HelloFresh delivers ingredients and recipes—the cooking is up to you.

To start ordering from HelloFresh, you must sign up for a weekly plan based on a few different factors, including dietary preference and household size:

Classic Plan

  • 2 people, 3 meals: $69.00 ($11.50 per meal)
  • 2 people, 4 meals: $84.90 ($10.61 per meal)
  • 2 people, 5 meals: $99.00 ($9.90 per meal)
  • 4 people, 3 meals: $129.00 ($10.75 per meal)

Veggie Plan

  • 2 people, 3 meals: $59.00 ($9.83 per meal)
  • 4 people, 3 meals: $109.00 ($9.08 per meal)

Family Plan

  • 4 people, 2 meals: $79.95 ($9.99 per meal)
  • 4 people, 3 meals: $105.00 ($8.75 per meal)

HelloFresh then delivers your box of food and recipes once a week on the day of your choice (Mon-Sat). Shipping is included in the meal plans. Additionally, while customers are treated as subscribers (in that billing and food delivery are recurring), you're not locked in. You can pause, modify, or cancel a subscription at anytime.

Besides the options above, customers have some choice within their weekly deliveries. The team of chefs at HelloFresh create 10 new recipes each week, so you have some choice in the meals you receive. Some of the menu choices for the upcoming week (12/31 to 1/6) include:

  • Spanish One-Pan Chicken with Chorizo and Bell Peppers (Classic Box)
  • Beefed-Up Bolognese with Poblano Peppers and Thyme (Classic Box)
  • Zucchini Flatbreads with Balsamic Onions, Olives, and Walnuts (Veggie Box)
  • Cranberry Turkey Burgers with Green Salad (Family Box)

As mentioned above, HelloFresh doesn't just deliver food. In fact, the company delivers boxes with perfectly pre-portioned ingredients (wrapped in special cooling material to keep them fresh in transit) that correspond with recipe cards. The recipes offer step-by-step instructions, an ingredient list, and nutritional information for each of the included meals. HelloFresh says the only ingredients you need to have in your home are salt, pepper, sugar, "a good cooking oil," and butter.

That's pretty much it. The company makes its money by selling meal plans to customers in the U.S., the U.K., and several countries in Europe (where HelloFresh got its start). Less clear is how much money the company actually makes.

Earlier this week, HelloFresh secured €85 million ($88.5 million) in new funding, bringing the company's total raised to approximately $364 million. Existing investor Baillie Gifford and an unnamed new investor participated in the round, which values HelloFresh at €2 billion—about a 20 percent drop from its valuation in 2015.

Gründerszene (a German publication) reports that HelloFresh, like many of its fast-growing peers in the foodtech space, has had to invest so much in marketing and customer acquisition that it has been operating at a loss. I've reached out to HelloFresh to see if they'll share any details around financials or number of customers currently subscribed to the service, and will update if I hear back.


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