Future of Recipes

Of late it seems like any news Blue Apron releases is always coupled with words like “comeback” and “turnaround” and punctuated with a question mark. Such was the case again this week when the meal kit company launched a partnership with WW (formerly Weight Watchers) to sell home-delivered meal kits focused on nutrition and wellness.

WW x Blue Apron, as the partnership is dubbed, will offer customers a weekly menu based on the WW Freestyle program, which allows members a freer choice of foods to eat on any given week. Those on the plan aren’t required to buy WW packaged foods, and are instead encouraged to eat what they want and approach the program as a lifestyle makeover rather than a weight-loss plan. All menu options for WW x Blue Apron are two-serving recipes priced at $9.99 per serving, or $59.94 per week. Blue Apron will pay a small acquisition fee to WW for every member who becomes a new Blue Apron subscriber, according to Blue Apron CEO Brad Dickerson.

He also said the deal is a way to expand Blue Apron’s customer base. The question is, Will it?

Blue Apron’s struggles are old-hat at this point. It had the worst-performing major IPO of 2017, and in October of the same year cut 6 percent of its workforce. In Q2 of 2018, the company started selling its meal kits at Costco, but that deal was abruptly halted right before the holidays. Meanwhile, Blue Apron’s stock price temporarily dipped below $1 earlier this month. (It’s back up now.)

Anyway, the home-delivery meal kit is something of an endangered species in the face of retail meal kits. Chef’d shuttered its delivery operation in July of 2018 and was acquired by True Food Innovations. It’s now focused on selling at retail. Albertsons acquired Plated in 2017. Kroger purchased Home Chef and started rolling out its kits on store shelves. Even WW has dabbled with in-store meal kits.

Brands can and do come back, but it’s usually by drastic measures and fundamental changes to the way they operate. Blue Apron’s problem has always been about retaining customers. The service is expensive and time consuming, which are a deadly duo in this day and age when it comes to avoiding churn. When Blue Apron pushed the meal kit concept into the mainstream a few years ago, it spawned a host of other competitors offering faster, cheaper goods. As noted above, many of those services have pivoted and now belong to larger organizations who prioritize in-store sales over home delivery. Blue Apron did team up with Jet.com this past year, to sell its kits to the NYC area via e-commerce company. But it seems like regardless of who Blue Apron chooses as a partner, continuing a home-delivery service won’t retain customers any better than it has in the past.

Remember on A Charlie Brown Thanksgiving when he yells “This year I’m going to kick that football to the moon” then falls flat on his back? Charlie Brown’s problem was he kept approaching that football with the same tactic over and over, hoping something would change. Unless Blue Apron makes a serious adjustment to its business model, it’s in for (another) spectacular crash to the ground.

Much is written nowadays about meal kits, an industry that’s had its fair share of ups and downs in the last few years. Less talked about is what goes on behind the scenes at the fulfillment centers where meal kits are prepped and assembled, a topic UC Berkeley shed a lot of light on yesterday by releasing a study titled “Job Quality in a Meal-Kit Fulfillment Center.”

The study gathers the results of interviews and focus groups conducted with non-managerial workers at a meal kit fulfillment center in California in 2017 and 2018. The report doesn’t actually name any companies, except to quote workers using words like “local,” “organic,” and “high-quality” to describe them. A total of 21 workers participated, the majority of whom were people of color. Ten participants were women, 16 were current employees, and five had worked at the center in the previous six months. The study notes that since interviews and focus groups were only conducted in English, “these findings are not representative of working conditions at all meal-kit companies.”

The study covers a lot of ground summarizing worker-condition areas like food-safety policies, career-advancement opportunities, training, and diversity. Most illuminating, though, is that many of the struggles workers face on the job around hours and wages, and the fact that sub-par technology is often to blame for these problems.

In its first paragraph, the study points out that meal-kit businesses “are often described as technology companies” but that “the meal-kit business model requires more than a group of engineers building a website or app.” Hundreds of non-managerial employees — what the study refers to as “frontline workers” — are needed to prepare and package the boxes that eventually land on consumers’ doorsteps. The study remains objective throughout. Nonetheless, the issues it surfaces around job quality are obvious.

Take, for example, problems around hours and scheduling. While workers were scheduled for 40 hours per week, that could change at a moment’s notice. If demand for meal kits was high, workers completed their full-time schedule. When demand fell — as it’s done considerably in the last year — workers’ hours were cut. With starting pay $13.50/hr., loss of any hours would be a considerable blow to someone’s weekly income. The study also notes that “management frequently cut hours without giving advance notice” and that “unpredictable schedules led to unpredictable earnings.”

Also adding to the unpredictable nature of hours and pay is the technology used to track employee clock-ins and clock-outs. Workers reported “frequent problems with inaccurate recording of hours worked, paid time off, and paid holidays,” all of which “led to delays in workers getting paid.” The fault typically lay with the fingerprint scanning machine to record clock-ins and clock-outs, as the machine “often failed to accurately read a worker’s fingerprints.” So if a worker took a break and the machine missed their fingerprint scan when they clocked back in, that workers hours would go unrecorded. One worker interviewed went as far as to say “I’m always checking my hours every day because I don’t trust the system.”

And a small technical glitch like that often had bigger consequences, since missed payments meant employees had to deal with HR and go through a completely separate procedure that involved a mountain of paperwork. The study didn’t say exactly how long employees had to wait for these “missed” payments, but one imagines that any delay in pay when you’re working for less than $15/hr. causes financial upheaval at home.

The study doesn’t say whether the meal-kit company in question actually owns the fulfillment center or if that work is outsourced, so it’s unclear how directly responsible they are for sub-par technology or unpredictable scheduling (or any of the other issues the study covers). But as Vanity Fair wrote a couple years ago when it profiled the chaotic, violent conditions at a Blue Apron factory, “the downside of growing fast and scaling quickly can be not accounting for the people who put your product together.” As the meal-kit sector continues to struggle for relevance in both the food industry and the startup world, this is likely to become yet-another big issues companies will have to contend with.