Dive Brief:
- Blue Apron plans to shift to an asset-light model by selling its production and fulfillment assets to FreshRealm, the manufacturer of its "Heat & Eat" meal line, the meal kit provider announced last week.
- The deal, worth up to $50 million, includes Blue Apron's fulfillment centers in Linden, New Jersey, and Richmond, California, along with personnel and equipment. The companies aim to sign definitive agreements and close the transaction on or around June 9.
- The fulfillment centers will still play a critical role in Blue Apron's supply chain. Under the planned agreement, FreshRealm will exclusively provide all production and fulfillment needs for Blue Apron's meal kit products, subject to certain exceptions, according to a securities filing.
Dive Insight:
Parting with its operational infrastructure will help Blue Apron’s efforts to reach profitability and focus on its core direct-to-consumer business, according to the news release. The company posted a net loss of $17 million in Q1 this year.
“As we continue to evolve, we believe there is an opportunity to simplify our direct role in the fulfillment of our product, allowing us to focus on growing our brand, our customer base and revenue in the long-term,” said Linda Findley, Blue Apron’s president and CEO, in a statement.
Blue Apron's fulfillment centers play a critical role in the company's business today, helping it deliver more than 4 million meals each month.
"Each fulfillment center includes an operation that portions ingredients into exact quantities for each week’s recipes using a combination of automated methods, manual labor, and warehousing, packaging, and shipping operations," Blue Apron said in its annual financial report.
But the cost of operating those centers is significant. Roughly 80% of Blue Apron's employees were based at the two fulfillment centers at the end of last year, the report said. The company also increased its starting wages to $18 an hour in 2021 amid a competitive hiring environment to attract and retain fulfillment center employees.
Blue Apron has adjusted its fulfillment center operations before to help its overall business.
The meal kit firm closed a fulfillment center in Arlington, Texas, and transferred the volume to other facilities in 2020 in order to redirect financial resources into other segments, the report said. Blue Apron temporarily reopened the Arlington facility in January 2021 to help meet expected demand before closing it again that April.
